How Will the Economy Impact the Construction Industry in 2024?

How Will the Economy Impact the Construction Industry in 2024?

Understanding how economic trends influence construction can provide valuable insights for businesses and professionals in the field. For instance, high interest rates and slower economic growth will put increasing pressure on construction and manufacturing this year. Here’s a comprehensive look at how the current economic landscape is likely to impact construction in 2024.

Inflation and Interest Rates

The economy is still experiencing inflation pressures from energy prices, wages, and consumer spending, which impacts project financing.

Additionally, with interest rates playing a pivotal role in construction financing, the Federal Reserve’s actions this year regarding cutting interest rates hold significant sway. Lower interest rates will stimulate borrowing for construction projects, reducing overall borrowing costs for businesses and clients. This creates incentives for investment in construction ventures, particularly in the residential sector.

Supply Chain

Late last year, construction companies were still facing supply chain issues, but construction firms can expect supply chain improvements as the year progresses, which will help reduce delays in construction projects. The pandemic changed communication methods between the construction industry and suppliers, with construction firms adopting communication technologies to streamline material ordering workflows. With access to more complete and speedy information, construction firms are empowered to keep projects on track.

Labor Market

The construction job sector experienced growth last year. However, construction job openings have decreased recently, even though wages have increased by 4.9%. This highlights the importance of competitive pay and innovative training programs to attract and retain employees.

Recession Worries

Higher employment and higher wages create more spending power and add to the supply and demand issues perpetuating a potential recession. With interest rates stalling and contributing to a decrease in project financing power, an economic recession is still top of mind for businesses. While signs at the moment are pointing to a soft landing, the construction industry should still be preparing for economic shifts.

Shifting Geopolitical Landscape

The Israel-Hamas conflict heightens concerns about the possibility of broader tensions in the Middle East, which could potentially impact energy and other raw material prices. U.S. sanctions on Iran might exacerbate these issues, while ongoing tensions between the U.S. and China could contribute to inflationary pressures.

 

Small Businesses Should Prepare for These Possible Hurdles in 2024

Small Businesses Should Prepare for These Possible Hurdles in 2024

Small businesses are not immune to the effects of broader economic shifts. As highlighted by the pandemic, major global and domestic events have the potential to profoundly influence businesses across the board, regardless of size. In 2024, larger economic conditions and fluctuations could have a significant impact on small businesses. Read on as we delve into four hurdles that have the potential to affect small businesses this year.

Economic Uncertainty

The previous year presented challenging economic hurdles for businesses of all sizes. Surging inflation significantly affected businesses, leading to spikes in overhead expenses and interest rates. Although recent data from the Office for National Statistics (ONS) indicates a gradual decline in monthly inflation rates, they still surpass the government’s targeted 2%. Small businesses will likely feel a greater impact compared to more established businesses, given their absence of cost-saving benefits from economies of scale, which typically provide some breathing room during challenging economic climates.

Political Tensions

Election years can introduce some unpredictability and prompt a certain level of economic insecurity. Businesses and investors may hesitate to make significant decisions until they have clarity on the direction of future policies, which can lead to a slowdown in economic activity. Additionally, campaigns and debates that focus on economic issues can contribute to market volatility.

International Instability

Ongoing geopolitical pressures, such as the conflict in Ukraine and the hostilities between Israel and Hamas, can affect international trade and the overall U.S. economy. These tensions, as well as others around the globe, have the potential to spark trade conflicts and disrupt the international movement of goods and services, potentially resulting in shortages of raw materials and production delays. This, in turn, can escalate import and export expenses, contributing to overall price hikes.

Is a Recession Happening?

This has been the question posed by businesses and consumers since late 2022. A lingering uncertain economic forecast could make companies hesitant to invest in bigger expenses, such as new research, equipment, or real estate. While the Federal Reserve’s incremental interest rate hikes have helped to suppress inflation, whether or not we’ll come out of this economic rollercoaster with a “soft landing” is still a question mark. Small businesses should still be preparing for the possibility of a recession this year.

 

 

Does the Federal Reserve Expect to Cut Rates Anytime Soon?

Does the Federal Reserve Expect to Cut Rates Anytime Soon?

After two years of rapid interest rate hikes, which sent mortgage and credit card rates soaring, investors and consumers are wondering when the Federal Reserve is planning to lower interest rates. In short, the Fed is looking for more positive signs from the economy, but rate cuts will likely happen in 2024. Read on to learn how soon this might happen.

Inflation and the Fed

In March 2022, the Federal Reserve initiated a series of rate hikes as a strategic measure to combat soaring inflation rates, a traditionally effective method used to curb consumer spending and mitigate price surges. Since then, the central bank has executed 11 rate hikes, which have significantly reduced the annual inflation rate to 3.1% in January, down from its peak of 9.1% in June 2022. However, January’s figure was higher than economists’ projections – and persists above the Fed’s target of lowering inflation to 2%. Given January’s hot inflation data, deep rate cuts aren’t likely to happen soon.

When to Expect the First Cut

Because January’s number was higher than previously forecasted, economists are now projecting the Fed’s first cut will happen farther along in 2024 than they had earlier estimated. This means the Fed’s next meeting in March is unlikely to result in cuts, and some are saying the May meeting may even be too soon. Instead, most economists aren’t expecting the first rate cut until the Fed’s June 12 meeting.

What Does This Mean for Americans?

Borrowers likely won’t see changes to loan terms anytime soon. Credit card rates, auto loans, and other credit products that are based on the Fed’s benchmark rate will likely stay steady at or near their current levels until the first rate cut.

Mortgages are slightly different. When inflation growth is worse than expected, mortgage rates tend to increase. Therefore, we might see a rise in mortgage rates in the upcoming weeks, but ultimately stabilizing around 6% by year’s end.

What to Do with Your Money in the Meantime

Here are some steps you can take with your money while you wait for rates to drop.

Open a Certificate of Deposit

When the Federal Reserve reduces rates, annual percentage yields (APY) on savings accounts also decrease. However, interest rates on certificates of deposit (CDs) remain unchanged once the account is opened, ensuring a fixed rate regardless of any fluctuations in APYs.

Strengthen Your Credit Score

If you’ve been holding out for lower rates before applying for a mortgage or personal loan, it’s time to prepare. Lenders heavily weigh your credit score in the approval process to determine the interest rate you’ll receive. While a credit score of 620 is the starting point for a conventional mortgage, aiming for a score of at least 750 can help you qualify for the most favorable rates.

To be sure your credit score is primed for the best rates, make on-time payments of credit cards and loans in full; request higher credit limits in order to lower your credit utilization ratio; and hold off on applying for new lines of credit as the application could require a hard inquiry that hits your credit.

Changes Are Coming to 529 Plans. Here’s What You Should Know

Changes Are Coming to 529 Plans. Here’s What You Should Know

Investing in a 529 plan – typically regarded as the best way to save for a child’s college education – has become a more attractive savings vehicle thanks to a new federal law going into effect this year. Read on to learn more about the change affecting 529 plans.

What is a 529 Plan?

A 529 college savings plan is a state-sponsored investment account that enables you to save money for a beneficiary and pay for education expenses. These plans offer tax-free earnings and withdrawals for tuition and other qualified higher education expenses (QHEEs) such as tuition, supplies, and room and board. Additionally, due to the 2017 Tax Cuts and Jobs Act, the funds in a 529 plan can also be used for elementary or high school tuition for private or religious schools (with QHEEs capped at $10,000 per year).

However, 529 plans have always had a limitation worth considering: the money in a 529 plan could only be used for education. Withdrawing the funds for other purposes would draw penalties, so if you set up a 529 plan and your child ends up not needing it – whether they attend public school, get a full scholarship to college, or decide against a college path – accessing the funds without accruing penalties typically necessitated changing the beneficiary on the plan to someone else, until now.

How are 529s Changing?

Previously, withdrawals from a 529 plan for non-QHEEs incurred a 10% federal tax on the earnings portion of the withdrawal, in addition to potential state taxes. However, as of January 1 of this year, unused funds from a 529 plan can be rolled over into a Roth IRA account tax-free.

Rules for Rollovers

There are still some rules and restrictions that are important to know.

  • Rollovers are not allowed until a 529 plan has been open for at least 15 years
  • Funds converted from a 529 plan to a Roth IRA must have been in the account for at least five years
  • A maximum amount of $35,000 can be rolled over from a 529 plan to a beneficiary’s Roth IRA
  • Annual Roth IRA contribution limits apply to rollovers (the contribution limit in 2024 is $7,000)
  • Conversions are limited to the beneficiary’s Roth IRA, meaning parents cannot convert the unused funds of a 529 plan in their child’s name back into their own retirement account

No Additional IRA Investments During Transfer Years

Because the annual contribution limit is restricted to $7,000, if you transfer the full $7,000 from a 529 plan to a Roth IRA, the account holder will be unable to contribute additional funds through another traditional IRA or Roth IRA within that year because the annual limits are already being monopolized by the 529 to Roth IRA conversions each year. Ideally, the beneficiary also has a tax-advantaged retirement account like a 401(k) through an employer.

Keep in mind that the 15-year minimum for an account means that you’ll need to think about the long game. If you’re interested in starting a 529 plan for your child, you might think about establishing it with a small amount even before you’re ready to begin contributing to it.

How Healthcare Practices Can Overcome Common Challenges with Electronic Health Record (EHR) Implementation

How Healthcare Practices Can Overcome Common Challenges with Electronic Health Record (EHR) Implementation

Electronic Health Records (EHR) deliver enhanced efficiency, improved patient care, and streamlined workflows. However, the implementation of EHR systems is complex and challenging. In this article, we explore common challenges faced during EHR implementation and provide insights into overcoming these challenges to achieve a seamless transition.

Choosing the Right EHR System

The market is flooded with various options for EHR systems, so organizations need to carefully evaluate and select a system that aligns with their specific needs. This typically necessitates thorough research of vendors and systems, as well as having a grasp of the timeline needed for implementation. Additionally, you’ll want to establish a generous and flexible budget that allows for additional or emergency resources. Implementing a system that caters to the unique requirements of the practice with an expert vendor that is transparent and knowledgeable ensures a smoother transition.

Communication and Training

When implementing EHRs, effective communication and patience during the rollout are paramount. Here are some valuable tips for fostering smoother communication and ensuring successful training:

  • Enable and Support the Launch Team: Healthcare providers should grant launch staff the authority to proactively manage unexpected challenges. A clearly defined escalation strategy helps to swiftly address emergencies and mitigate potential frustrations among both staff and patients.
  • Develop resolution strategies: Go-live support teams should establish detailed protocols for identifying and resolving technical issues, including issues with both hardware and software. Designate individuals responsible for each type of problem and be share they share solutions for issues. Keeping everyone involved in all stages of identifying and solving issues will go a long way in making the transition as smooth as possible.
  • Support from Leadership: Implementing EHRs can be disruptive to a working environment. Leaders who communicate effectively to staff and patients on successes at setbacks, who can acknowledge the benefits and the challenges of an EHR rollout, and who can make sure users are aware of available support staff if issues arise can ensure a smoother implementation experience.

Workflows

Emphasizing the significance of workflows is crucial for healthcare professionals as they strategize, document, and communicate information regarding EHR implementation. Recognize that healthcare workflows vary, with certain processes being more integral to the well-being of patients.

Consider these workflows that warrant special attention in your EHR implementation:

  • Blood banks: Blood banks play a vital role where lives depend on efficient processes. Therefore, it is imperative to ensure that your EHR implementation thoroughly addresses the intricacies of this workflow.
  • Medication Reconciliation: Before the EHR system goes live, organizations need to confirm that the system effectively tracks patients’ medications both pre- and post-admittance.
  • Patient Movement: Tracking patients’ movements throughout their hospital stay is paramount for ensuring proper care. This aspect of the workflow is critical to maintaining a holistic view of patient care and facilitating effective communication among healthcare teams.
  • Level of Care: Accurately documenting a patient’s stages, whether they are in the ER or ICU, significantly influences accurate medical billing and ensures appropriate levels of care.
  • Careful Transport: The careful monitoring of how patients are physically transported within the facility deserves special consideration during EHR implementation so that patients are moved smoothly and securely.
Social Security Beneficiaries Should be Aware of These Changes in 2024

Social Security Beneficiaries Should be Aware of These Changes in 2024

As of January 1, 2024, a series of Social Security changes took effect, influencing both the benefits received by beneficiaries and the eligibility criteria. Whether you’re currently a beneficiary or in the process of applying this year, you’ll want to be aware of these significant changes. In this article we’ll go over the most important points to know.

New Year, Bigger Checks

Annually, the Social Security Administration (SSA) implements a cost-of-living adjustment (COLA) to ensure beneficiaries can keep up with rising expenses. The adjustment considers the percentage shift between average prices in the third quarter of the present year and the third quarter of the preceding year.

The COLA for 2024 is 3.2%, so monthly payments for recipients increased by that amount beginning in the new year. According to the SSA, that’s an average monthly increase of about $50.

When it comes to the timing of your payment, it still depends on your date of birth, adhering to Social Security’s standard payment schedule. Typically, if your birthday falls within the first through 10th day of the month, your payment will be processed on the second Wednesday. For those with birthdays between the 11th and 20th day of the month, payments are scheduled for the third Wednesday. If your birthday occurs after the 20th day of the month, you can expect your payment on the fourth Wednesday.

New Year, High Social Security Taxes

Because the Social Security tax wage base also increased by 5.2%, wealthy taxpayers could be subject to higher taxes. The Social Security tax wage base for 2024 is $168,600, which is up from $160,200. This means that some workers will be paying about $521 more in Social Security taxes than they would have paid if the wage base didn’t increase. Additionally, self-employed workers are taxed at 12.4%, meaning they could owe an extra $1,041.60.

Full Retirement Age and the Earnings Test

There are two significant factors to be mindful of when it comes to Social Security benefits: full retirement age (FRA) and the earnings test.

While you can begin receiving benefits as early as age 62, you become eligible for full benefits upon reaching the FRA, determined by your birth year.

For instance, if you were born in 1962, you would reach your FRA at 67 years old. However, if you were born in 1964, your FRA would be 67 years and 8 months, requiring an additional eight months of patience compared to those born in 1962. This illustrates how FRA varies based on the year of birth, impacting when individuals become eligible for full Social Security benefits.

As for the Social Security earnings test, this becomes relevant if you’re still working and earning income while receiving Social Security and have yet to hit FRA (it’s also why many experts suggest holding off until FRA).

Essentially, surpassing a specified income threshold triggers the SSA to withhold a certain amount above that limit. In 2024, for workers who won’t reach FRA the entire year, the earnings test cap is $22,320. This means $1 in Social Security benefits will be withheld for every $2 in earnings that exceed $22,320. For workers who will reach FRA at some point during the year, the earnings test cap is $59,520. This means $1 in Social Security benefits will be withheld for every $3 in earnings that exceed $59,520.

Keep in mind, this is just a temporary hold. Once you hit FRA, your benefit checks will factor in those temporary withholdings. Also note that earnings from investments or payouts from retirement plans, for instance, are not considered in the earnings test.