Over the past many weeks, HBAGNO's board and professional staff continue to build relationships with our local, state, and Federal policy makers (legislative & administrative) in an effort to ensure that the HBAGNO has active representation in all industry-related policy conversations.

 

For example, in our previous newsletter, we distributed this article (insert link here) written in nola.com regarding a proposed vinyl siding ban in Historic Gretna. This ban was pioneered by Council Member Marino of the Second District.  In a recent follow-up meeting, HBAGNO senior leadership and staff, armed with information provided by the Vinyl Institute, and a representative from HBAGNO-member Norandex Building Materials, met with Council Member Marino and the Mayor of Gretna Belinda C. Constant, to discuss adverse consequences that could result from an outright building material ban. Subsequently, the Mayor and Council Member Marino are requesting more time to visit the findings brought to them in our meeting. We will continue to bring updated information to our members on the status of this ordinance and we will continue to stand by the premise that banning quality materials, manufactured and distributed locally by our members, is not good public policy.

 

We will continue to actively work on building relationships with local, state, and Federal policy makers in an effort to educate them on the value that residential and light commercial construction brings to a state, region, and local community.  We also promise to keep you, our members, informed.  You can help make our legislative and government relations efforts even stronger by helping to be our ears and eyes in your parish or local municipality.  Please don't hesitate to contact me (insert email link here) if you have any questions or need any additional information.

 

Let us not forget that the closer we work together, the stronger our voice is.

Gulf Coast Bank's Community Rewards Program will be giving away a total of $50,000 to 10 local non-profits to assist them in their missions in our community. This year, over 400 non-profits registered for our 3rd Annual Community Rewards Program.  Help NOEL finish in the money!

The voting period is from Wednesday, February 25th until Wednesday, March 25th at 8 p.m. Voting is limited to one vote per day per valid email address.

If this is your first time voting, or if you've forgotten your Access Code, enter your email address, then click Email my Access Code and your unique Access Code will be sent to your Email account. Otherwise, enter your information and click Vote. For further inquiries, please email marketing@gulfbank.com.

The combination of ongoing weak GDP growth and a steep rise in corporate inversions designed to reduce US corporate tax liabilities has again brought the perennial idea of tax reform to the fore.  Done right tax reform is a winner.  By closing loopholes and lowering marginal rates the economy can better perform and GDP growth can be raised.  That said, despite the positive rhetoric coming out of Capitol Hill, don't count on it soon.  Moreover, the sharp, and short-lived seven day brawl about scaling back tax breaks for 529 college savings plans is painfully instructive and illustrative as to why.

 

In his State of the Union address, President Obama proposed doing away with the tax-free treatment of capital gains in 529 college savings plans.  Instead, he proposed increasing the size of the American Opportunity Tax Credit, available only to families with pretax incomes of less than $180,000, from $1,000/year to $1,500/year and to allow it to be used for five years, up from four.   

 

Looked at in isolation, the economics behind this particular policy is pretty solid.  First, there is limited evidence that tax breaks designed to increase savings actually do so.  Rather, the evidence generally finds that tax breaks reward individuals who would have saved anyways.  Worse, the tax incentives don't seem to increase the total amount of savings either! 

 

Second, most of the tax shelter goes to higher income households.  According to the White House, 70% of the benefits from 529 plans go to households with incomes greater than $200,000, while a GAO study from 2010 found that 47% of families with a 529 plan had incomes above $150,000.  A recent College Savings Foundation study found that not quite 10% of 529 account holders have household income below $50,000.  In short, these plans give tax breaks to wealthier households who already send their kids to college and would have saved as much with or without the plan.  By contrast, giving all households with incomes below $180,000 slightly more money for college might raise the percentage of kids from middle- and lower-class households that attend college. 

 

More concerning is that be it via 529 plans, the American Opportunity Tax Credit, guaranteed student loans and now increasing student loan forgiveness, government, through the tax code and elsewhere, heavily subsidizes college costs, and in the process dramatically inflates the cost of college tuition.  Real tax reform would scrap these inflationary subsidies and implement a more coherent and more focused approach.                     

 

But here is the rub, taking away the advantageous tax status of 529 plans created an instant coalition of three powerful groups that rolled the administration.  The groups included parents with kids bound for college fearful they were about to lose a valuable tax break that they "deserved," higher education that was concerned it was losing a subsidy and the financial industry which feared losing the billions in fees associated with administering a huge $250 billion program.       

 

While everyone claims that they want a simpler tax code with lower rates and bereft of deductions, loopholes and credits, taking any of these away creates winners and losers.  And while the winners may be numerous, what they stand to gain is nebulous and distant.  By contrast, losers quickly organize themselves and make themselves heard.  If doing away with something as small as this was impossible, good luck with larger tax issues that touch deeper pockets.      

 

Your Jefferson Parish Department of Inspection and Code Enforcement continues its progress in maximizing the benefits of what the My Permit Now system has to offer. You may now visit our homepage at www.jeffparish.net, Department of Inspection and Code Enforcement, and access real-time reporting of building permits issued within unincorporated Jefferson Parish. The technology allows you to filter your search using various requirements including your date range and the type of permit.

Looking at 2015, the domestic economic landscape finally looks solid if unspectacular.  Unemployment rates should keep falling, house prices are likely to rise by 5%, and despite poor global economic conditions, the American economy will strengthen.  Moreover, despite a deep partisan divide in Washington, the government will not close down nor will it fail to pay its bills.  In addition, the ongoing improvement in household balance sheets, the improving fiscal health of state and local governments, and the likely rise in capital expenditures by firms, albeit not very large, all but insures better economic growth.  The only serious domestic problems are weak wage growth and inflation that is a bit low. 

 

With this in mind, I expect full-year 2015 GDP to come in at no less than 2.85%, a healthy rise from the expected 2.4% GDP growth experienced in 2014, and the strongest since 2005.  As for new housing starts, they should rise by about 14%, with total starts coming in at 1.14 million.  For all of 2015, single-family starts should total 750,000 up from 640,000, while multifamily starts should hit 390,000, up from 350,000.  Housing sales should rise by about 5% and end the year at 5.6 million.  Housing inventories should rise by about 200,000 units, to 5.5 months of inventory up from 5.0 months now.        

Given the improving labor market, expect net new monthly job growth to average roughly 220,000/month, which while down from 240,000/month in 2014, is excellent given the shrinking size of the working age population.  As a result, the unemployment rate should steadily fall from 5.8% today to 5.2% by year end and possibly lower, depending upon the behavior of the labor force participation rate (LFPR).  If the LFPR rises, and that would be a good thing, unemployment may end at 5.3%, but if the LFPR falls, an unemployment rate of 5% would not be out of the question.     

    

Inflation will remain completely benign, with overall inflation possibly drifting lower, while core inflation (which excludes food and energy) shows modest upward drift.  The combination of anemic growth in Europe and Japan and declining oil, gas and commodity prices will keep the CPI essentially where it is now, slightly below 2%.  Add to this declining import prices due to the rising US dollar and slow wage growth,  and core personal consumption expenditure inflation, the Feds preferred inflation measure, will not exceed 1.7%, well below their 2% target.  This will give the Federal Reserve ample time to slowly raise the federal funds rate from where it is now, between 0% and 0.25%, to 1% by year end, with the first rate rise probably occurring in June.  The thing to keep in mind is that this rate rise, the first in a decade, is likely to be accompanied by some stock and bond market volatility.          

       

As a result of faster GDP growth in 2015, 10-year Treasuries will end the year at 2.7% and 30-year mortgage rates will probably hover around 4.5% as the yield curve flattens due to faster rising short-term rates.  But a combination of slightly easing credit market conditions and increasing consumer spending due to increased employment and rising wages will keep the economy and the housing market on track despite mildly rising interest rates.  Finally, I put the chances of a recession in 2015 at 5%.  So look forward to steady economic activity in 2015 and fear not rising interest rates.