The Small Balance Intersection Update - September 1, 2024

Chart of The Day:

In March 2023, 15% of the private sector workforce had access to a pension plan, versus 86% of state and local government workers, according to the U.S. Bureau of Labor Statistics.?

In contrast, about 60% of families headed by someone born in the 1930s had pensions, according to Boston College’s Center for Retirement Research. Americans ages 55 to 64 had a median balance of $185,000 in retirement accounts in 2022, according to the Federal Reserve.?

Flexibility Boulevard

Navigating 2024's Labor Market: Strategies for Small Businesses

As the labor market evolves in 2024, small businesses face significant challenges and opportunities. Remote and hybrid work models have become the norm, offering access to a broader talent pool but requiring operational adjustments. Employees now prioritize work-life balance, wellness, and flexible schedules, compelling businesses to adapt to retain talent. The rise of the gig economy offers cost-effective staffing solutions, but competing with larger firms remains tough, especially as small businesses typically offer 10% lower salaries for similar roles. Additionally, adapting to new workplace expectations and managing increased labor costs, such as a 4.5% rise in total compensation, are pressing concerns. Effective strategies include offering unique benefits, investing in technology, fostering a strong company culture, and upskilling current employees. By embracing flexibility and staying informed about trends like increased automation, diversity, and portfolio careers, small businesses can turn these challenges into growth opportunities.

Street Name: Flexibility Boulevard Traffic Sign: Yield to Innovation Header: Navigating 2024's Labor Market: Strategies for Small Businesses

For more detailed information, please refer to the original article here.

Growth Avenue

Consumer Spending Fuels Q2 GDP to 3.0% Growth"

Consumer spending played a crucial role in driving the U.S. economy's growth to an annualized rate of 3.0% in Q2, according to a revised estimate by the Commerce Department. This revision, up from an earlier estimate of 2.4%, was largely fueled by consumer spending, which increased by 2.9%, higher than the previously reported 2.3%. Despite restrictive policies affecting the labor market and construction investments, consumer resilience continues to propel economic growth. However, the increase in imports, driven by higher domestic demand, led to a 0.77 percentage point drag on GDP from trade, the largest since Q1 2022. On the corporate side, profits rebounded strongly, rising by $57.6 billion, or 1.7%, reversing the prior quarter’s decline and reaching a record high. This surge in profits was entirely from domestic industries, with foreign profits dipping slightly. Additionally, equipment spending grew by 10.8%, with significant investment in transportation and information processing, reflecting businesses' shifting capital allocations amid the AI-driven tech boom. However, overall economic growth, when averaged with Gross Domestic Income (GDI), suggests a still-solid growth rate just above 2%.

Read the full report here.

AI Apps Zone

Creative Tools and AI Assistants Lead the Top 100 Gen AI Consumer Apps

The latest report on the Top 100 Gen AI Consumer Apps reveals significant trends in the rapidly evolving AI product landscape. Creative tools dominate the rankings, with 52% of the top web apps focused on content generation or editing across various modalities such as image, video, music, and speech. Notably, music generator Suno made a significant leap, rising from #36 to #5 in the rankings. ChatGPT remains the top product on both web and mobile platforms, but competitors like Perplexity and Anthropic’s Claude are gaining ground. Bytedance is making a strong push into the AI space, with six of its apps appearing on the list across both web and mobile, reflecting its new R&D division, Flow. A new category, "aesthetics and dating," has emerged on the mobile list, featuring apps like LooksMax AI and RIZZ, which focus on improving users' attractiveness and dating success. Discord remains a critical platform for AI apps, with many using it to build communities and test products before launching standalone versions.

Read more on a16z

Compliance Avenue

IRS Highlights New Warning Signs for Incorrect ERC Claims

The IRS has issued new warnings regarding incorrect claims for the Employee Retention Credit (ERC). These warnings focus on five common issues observed during claim reviews, including essential businesses wrongly claiming the credit despite not experiencing a decline in gross receipts, businesses failing to prove how a government order suspended their operations, and incorrect claims involving wages paid to family members. Additionally, some businesses erroneously claimed the ERC for wages already used for Paycheck Protection Program (PPP) loan forgiveness or for employees who were actively providing services. The IRS advises businesses to consult tax professionals and use available resources like the ERC Eligibility Checklist to correct these errors. Failure to resolve incorrect claims may result in audits, penalties, and repayment.

Read more on IRS.gov