Current Events in December 2016

The non-manufacturing sector of the economy rebounded in November after a slight cooling-off the month before.

The latest Non-Manufacturing Institute for Supply Management Report On Business put the non-manufacturing index (NMI) at 57.2% last month -- 2.4% higher than in October.

This represents continued growth in the non-manufacturing sector for the 82nd consecutive month and at a faster rate than in October. It's also a 12-month high and the highest reading since the 58.3 registered in October of 2015.

The Non-Manufacturing Business Activity Index increased to 61.7% -- 4% higher than October, reflecting growth for the 88th consecutive month and a faster rate in November.

The New Orders Index dipped 0.7% to 57%, and the Prices Index decreased 0.3% from October to 56.3%. Still, prices rose in November for the eighth consecutive month, but at a slightly slower rate.

The Employment Index increased 5.1% to 58.2%.

Individual industry performance

The 14 non-manufacturing industries reporting growth in November were:

1. Agriculture, Forestry, Fishing & Hunting;
2. Retail Trade;
3. Arts, Entertainment & Recreation;
4. Transportation & Warehousing;
5. Other Services;
6. Management of Companies & Support Services;
7. Construction;
8. Finance & Insurance;
9. Professional, Scientific & Technical Services;
10. Accommodation & Food Services;
11. Information;
12. Health Care & Social Assistance;
13. Wholesale Trade; and
14. Mining.

The two industries reporting contraction were:

1. Real Estate, Rental & Leasing; and
2. Public Administration.

Pirelli Tire is recalling 1,190 P Zero All Season tires, size 275/40R19 101W, manufactured February 29, 2016, to October 29, 2016, as an original equipment fitment exclusively for certain Maserati cars.

Due to an incorrect carcass component, the tires may develop cracks in their lower sidewall, possibly resulting in a loss of air.

A loss of air may result in tire failure or a loss of vehicle control, increasing the risk of a crash.

What to do

Pirelli will notify Maserati owners and the dealers that purchased the tires as replacements. Pirelli will work with Maserati to replace the tires, free of charge. The recall is expected to begin in December 2016.

Owners may contact Pirelli customer service at 1-706-368-5800.

Numerous studies have extolled the benefits of getting a full night’s sleep; those who do so have been found to have more energy and better overall health due to better body self-regulation. Unfortunately, many of us continue to not get enough sleep at night, and new research suggests that health deficits are not the only thing we have to worry about.

Researchers at RAND Europe – a not-for-profit organization – have found that sleep deprivation costs the U.S. economy an average of $411 billion every year. They say this is due to higher mortality risk and lower productivity levels from employees who go to work tired.

“Our study shows that the effects from a lack of sleep are massive. Sleep deprivation not only influences an individual’s health and wellbeing but has a significant impact on a nation’s economy, with lower productivity levels and a higher mortality risk among workers,” said Marco Hafner, lead author and researcher of the study.

Economic losses

The study, entitled “Why Sleep Matters – The Economic Costs of Insufficient Sleep," analyzed the economic impact of insufficient sleep in five countries. While Canada, Germany, Japan, and the U.K. are all burdened with billions in losses due to lack of sleep, the U.S. beats them all with a loss of $411 billion, 2.28% of the country’s GDP.

The researchers note that if workers get up to one hour of extra sleep per night, it could make a huge economic difference. They say that individuals who get between seven and nine hours every night – dubbed the “healthy daily sleep range” -- can lower their mortality risk by 7%.

“Improving individual sleep habits and duration has huge implications, with our research showing that simple changes can make a big difference. For example, if those who sleep under six hours a night increase their sleep to between six and seven hours a night, this could add $226.4 billion to the U.S. economy,” said Hafner.

Recommendations

The researchers make several recommendations that they believe would improve sleep outcomes. For individuals, they say that setting consistent wake-up times will help the body stay regulated. Limiting the use of electronic items before bed and getting physical exercise during the day are also key points.

Further, they suggest that employers design and build brighter workspaces, provide facilities for daytime naps, monitor and assess psychosocial risks connected to sleep loss, and discourage the use of electronic devices after the work day has concluded. Public authorities can also help by encouraging health professionals and employers to provide sleep-related help.

You can view the full report of the study here.

Having an active child can run parents ragged, but a recent study suggests that it also gives them an edge when it comes to subjects like reading and math. Dr. Eero Haapala, along with fellow researchers from the University of Eastern Finland, looked at children in Grades 1-3 and found that boys had better academic aptitude if they were physically active.

However, on the other end of the spectrum, Haapala noted that "boys who had a combination of low levels of physical activity and high levels of sedentary time had the poorest reading skills through Grades 1-3.”

Better academic results

The study was conducted as a part of two studies -- the Physical Activity and Nutrition in Children Study at the University of Eastern Finland and the First Steps Study at the University of Jyväskylä. Researchers from each study attempted to find connections between physical activity, sedentary behaviors, and reading and arithmetic skills.

In all, 153 children between the ages of 6 and 8 in Grades 1-3 were tested. The researchers used heart rate and movement sensors to measure physical activity and sedentary time and standardized tests to measure reading and arithmetic skills.

While no strong association between the factors was found for young girls, the researchers found that young boys in Grade 1 who showed moderate-to-vigorous physical activity and low sedentary time had better academic scores. Those who were less active tended to perform worse on standardized tests.

“Our results provide some evidence that promoting a physically more active lifestyle may benefit the development of reading skills in boys during the first school years,” the researchers concluded.

The full study has been published in the Journal of Science and Medicine in Sport.

If you overpaid your taxes this year (too much withholding is the main culprit), you'll have a refund coming. And, of course, you'll want that money as soon as you can get it.

The first thing you'll need to do is have all the documents you need -- things like W-2s and 1099s -- before you file your return. You also may need a copy of your 2015 tax return to make it easier to fill out a 2016 tax return.

Beginning next year, taxpayers using a software product for the first time may need their Adjusted Gross Income amount from a prior tax return to verify their identity. Learn more about how to verify your identity and electronically sign your tax return at Validating Your Electronically Filed Tax Return.

The Internal Revenue Service (IRS) will begin accepting and processing tax returns once the filing season begins.

Updating your ITIN

Under the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), any Individual Taxpayer Identification Numbers (ITIN) issued prior to 2013 or that haven’t been used for tax-years 2013, 2014, and 2015 will no longer be valid for use on a tax return as of Jan. 1, 2017.

If you have an expiring ITIN and need to file a return in 2017, you'll have to renew it. It typically takes seven weeks to receive an ITIN assignment letter, but can take longer -- 9 to 11 weeks if you wait to submit Form W-7 during the peak filing season or send it from overseas.

Taxpayers who don't renew an expired ITIN before filing a tax return next year could face a delayed refund and may be ineligible for certain tax credits. You can get more information on the the ITIN information page on IRS.gov.

Mandated delays

If you claim the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) on your tax return, the IRS must hold your refund until February 15.

This new law requires the IRS to hold the entire refund -- even the portion not associated with EITC or ACTC. This change helps ensure that you get the refund you are owed by giving the agency more time to help detect and prevent fraud.

By the way, you shouldn't rely on getting a refund by a certain date, especially when making major purchases or paying bills. Though the IRS issues more than nine out of 10 refunds in less than 21 days, some returns are held for further review.

What to do

The easiest way to avoid common errors that delay processing a tax return is to e-file. E-filing is the most accurate way to prepare a return and file. There are a number of e-file options:

• IRS Free File,
• Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs,
• commercial tax preparation software, or
• a tax professional

Use direct deposit

With direct deposit, the refund goes directly into your bank account. There is no risk of having the refund check stolen or lost in the mail. This is the same electronic transfer system used to deposit nearly 98% of all Social Security and Veterans Affairs benefits into millions of accounts.

Direct deposit also saves taxpayer dollars. It costs the nation’s taxpayers more than $1 for every paper refund check issued but only a dime for each direct deposit made.

The U.S. housing market has gone through some changes in 2016. Prices of homes have risen, requiring larger down payments from buyers.

At the same time, inventories in many housing markets have continued to shrink, giving sellers even more leverage and making it harder for buyers to find the home they want.

Housing experts see more of the same ahead in 2017, with a few wrinkles. The composition of the typical homebuyer is evolving and interest rates, which have been at historic lows for years, are expected to rise.

The Realtor.com 2017 housing forecast projects home prices will increase 3.9% with only a 1.9% increase in existing home sales. Interest rates, which have been under 4% for most of 2016, are expected to reach 4.5% in the coming year.

Little election impact

“We don’t expect the outcome of the election to have a direct impact on the health of the housing market or economy as we close out 2016,” said Jonathan Smoke, chief economist for Realtor.com.

“However, the 40 basis points increase in rates in the days following the election has caused us to increase our interest rate prediction for next year.”

Smoke says since first-time buyers are almost all dependent on mortgage financing, and a majority are already dealing with other financial challenges, he expects some first-time buyers will be priced out of the market in 2017.

As a result, Realtor.com has lowered expectations of Millennial marketshare to 33%. Even so, it expects Millennials and Baby Boomers to continue to dominate the market. And perhaps of interest to sellers, Boomers are less likely to need a mortgage so they may be the more reliable buyer in a case of competing offers.

Midwest rising

Coastal markets have set the pace over the last few years, but Realtor.com suggests Midwestern housing markets could take the lead in 2017. Markets to watch are Madison, Wis.; Columbus, Ohio; Omaha, Neb.; Des Moines, Iowa; and Minneapolis, Minn.

One reason for rising expectations in the Midwest is the higher concentration of Millennials in that region. These markets also tend to be more affordable, making it easier for first-time buyers to purchase a home.

While prices will continue to rise, they won't rise as much. The Realtor.com forecast calls for a 1% increase in 26 of the 100 largest markets. It says the smallest markets are likely to see the largest gains.

The job market is always in a state of flux, especially in recent years. Today's hot job with a lucrative salary and benefits may go to a robot next year.

So how do you know where to look when it's time to change jobs, or even careers? CareerBuilder and Emsi have assembled a list of what they consider the hottest jobs for 2017 based on compensation, job growth, and the recent number of existing positions.

The study focuses on five main categories where there is on-going demand and a significant number of job postings each month. Not surprisingly, it found numbers crunching and revenue generation will be in demand.

“Our research shows that employers are very invested in expanding headcount in areas such as analytics and data science, product development and sales as they strive to stay competitive in B2B and B2C markets,” said Matt Ferguson, CEO of CareerBuilder. “Skilled laborers will also see high employment demand in the year ahead as will workers in clinical roles.”

Here are the hot jobs

People thinking about making a career move in 2017 will likely be interested in the findings.

Sales jobs lead the categories by a wide margin. The study found more than 16 million sales jobs this year, paying from $12.91 to $22.13 an hour. There were more than 13 million jobs for people with trade skills, and those jobs paid more – from $17 to $25.70 an hour.

The highest potential pay, however, may lie with jobs in business and financial operations. There were nearly eight million of these jobs posted this year, an 8% increase over the last four years, paying between $32.95 and $57.97 an hour.

Information technology jobs are growing the fastest – at a 12% rate over the last four years. These jobs pay between $30.91 and $49.41 an hour.

Health care positions also remain in demand, growing at an 8% rate. These jobs pay $29.82 to $43.61 an hour.

While rising college loan balances remain a cause of concern, there is a bit of good news. The number of students using private loans from commercial financial institutions has declined while the number of those opting for federal loans has risen.

A study conducted for the National Center for Education Statistics (NCES) found that private student loans fell by 50% from 2008 to 2012.

The distinction is an important one. Private loans are different from federal loans because they're made by banks, credit unions, and other commercial institutions and are not federally guaranteed.

They tend to be like other commercial loans, with terms usually based on market conditions and the borrower's credit history.

Just another consumer loan

Like other consumer loans, the lenders set the terms and conditions of the loan, usually basing them on the market and the borrower’s credit history. Federal loans generally have terms that are more advantageous to the borrower.

According to the research, private loans only accounted for 5% of undergraduates in 2004 but surged to 14% by 2008. It then dropped to 6% in 2012.

At the same time, the percentage of students taking out federal loans through the Stafford program increased from 35% to 40% over the same period.

It's probably no surprise that private loans dropped sharply after 2008, since the credit crisis hit with full force late that year. Lending standards tightened and banks and financial institutions made fewer loans for any purpose.

Better off with federal loans

“Generally private loans have stricter terms and harsher penalties for non-payment than federal loans do,” said Jennie Woo, Ed.D., lead author and a senior education researcher at RTI, which conducted the study. “Students who are eligible for federal loans are better off getting them instead.”

The study focuses on one possible reason so many consumers are struggling with college loan debt. The proportion of borrowers who took out private loans was highest at private for-profit schools, especially in 2008. These schools tend to be among the most expensive, and some – like Corinthian and ITT – have closed their doors, stranding students with the highest loan balances and the least favorable terms.

The Consumer Financial Protection Bureau (CFPB) advises students to always choose a federal loan if possible. It points out that the interest rate on a federal loan is fixed, while the rate on private loans often fluctuates.

The nation's unemployment rate fell to 4.6% in November, it's lowest level in nine years, according to figures released by the Department of Labor (DOL). At the same time, 178,000 jobs were created with major gains in professional and business services and in health care.

The 0.3% decline in the unemployment rate came as the number of unemployed persons declined by 387,000 -- to 7.4 million.

On and off the job

Among the major worker groups, the jobless rate for adult men fell to 4.3% last month, while the rates for adult women (4.2%), teenagers (15.2%), Whites (4.2%), Blacks (8.1%), Asians (3.0%), and Hispanics (5.7%) showed little or no change.

The civilian labor force participation rate was little-changed in November at 62.7% as the employment-population ratio held at 59.7%. Both have been fairly steady in recent months.

Employment gains and losses

Employment in professional and business services rose by 63,000 in November, with accounting and bookkeeping services adding 18,000 jobs. Health care employment rose by 28,000 in November and construction had 19,000 hires.

Other major industries -- mining, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, financial activities, leisure and hospitality, and government -- saw little change in their workforce size over the month.

Dollars and cents

Average hourly earnings for all employees on private nonfarm payrolls fell 3 cents to $25.89 following an increase of 11 cents in October. Over the year, earnings are up 2.5%.

Average hourly earnings of private-sector production and nonsupervisory employees edged up 2 cents to $21.73.

The complete report is available on the DOL website.

Mercedes-Benz USA (MBUSA) is recalling 672 model year 2016-2017 S63 AMG Coupes, S65 AMG Coupes, S550 Coupe 4Matics, S63 AMG 4Matic Convertibles, and S550 Convertibles manufactured June 29, 2015, to March 15, 2016.

The seat belt extenders may not retract as intended and could break the event of a crash.

If the seat belt extender does not retract and/or the extender breaks, the seat occupant may not be properly restrained, increasing the risk of injury.

What to do

MBUSA will notify owners, and dealers will update the control unit software, free of charge. The recall is expected to begin in mid-December 2016.

Owners may contact MBUSA customer service at 1-800-367-6372.

Toyota Motor Engineering & Manufacturing is recalling 744,437 model year 2011-2016 Toyota Sienna minivans manufactured January 4, 2010, to August 12, 2016.

If the power sliding door is unable to be opened when commanded, such as if the door is frozen shut, it may subsequently open unexpectedly, possibly while the vehicle is moving.

If door opens while the vehicle is moving, there would be an increased risk of injury to the vehicle occupants.

What to do

The remedy for this recall is still under development. Interim notices are expected to be mailed to owners by January 21, 2017.

Owners may contact Toyota customer service at 1-800-331-4331. Toyota's number for this recall is G04.