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why New Zealand’s small businesses may be in worse shape than they were in 2008

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WITH rising costs and rushes in consumer spendingsmall businesses have been struggling recently.

Continued economic pressures cause significant stress and burnout amongst small business owners, while confidence continues to say no.

Data from the Ministry of Business, Innovation and Employment shows the corporate the variety of liquidations increased by 40% in the primary eight months of 2024 in comparison with 2023 Construction, retail and hotel industry have been hit hard by rising costs and falling spending.

The economic climate has been in comparison with following the 2008 global financial crisis (GFK). This time, nevertheless, the issues of small and medium-sized enterprises may be more serious.

New Zealand in the course of the 2008 crisis

GFC, rooted in excessive taking risks in credit markets in the United States, Ireland and elsewhere, was one of the serious economic shocks in the post-war period.

Globally, central banks I quickly lowered my interest rates of interest to encourage lending. By rate of interest cuts governments encouraged consumers to spend money to get out of the crisis.

New Zealand official money rate dropped sharply from 8.25% in July 2008 to 2.5% in May 2009. Falling rates of interest have benefited many mortgage holders.

The the federal government has also moved forward capital spending, encouraged investment and provided support for small businesses.

At the identical time, China had growth spurt and developed an appetite for New Zealand agricultural exports. Trade between each countries almost 3 times between 2007 and 2016.

These conditions place our performance in terms of gross domestic product per capita amongst preferably in the OECD. In the present crisis, we’re among the many worst.

Holding the belt tightly

This time it’s different. New Zealand is trying to avoid wasting itself from economic problems. High inflation and subsequently higher rates of interest have forced many New Zealanders to tighten your seatbelts.

According to one studyAustralian and New Zealand consumers reduced their spending at small and medium-sized businesses by 60% – essentially the most of any region surveyed.

The government also radically reduced spending and made hundreds of public sector staff laid off. Further rate of interest cuts may be on the horizon to assist achieve inflation neutrality tax relief.

While all small businesses are facing the identical storm, they will not be in the identical boat.

Some, corresponding to technology firmsor in specific locations corresponding to construction firms in Southare still in demand. There have also been changes in consumption city ​​centers to suburbs, shopping malls and online.

But for others, the upkeep cost crisis has forced customers to repair quite than replace takeaway meal as a substitute of eating in a restaurant and going to bargain hunting on the Internet, quit the gym or do more DIY.

In fact, credit reference agency Centrix found that it currently stands at 461,000 consumers in New Zealand is in arrears with repayments. Savings measures for consumers have hit many retailers in addition to small service firms.

Foreign gueststhat typically spend in these categories are also still below pre-pandemic levels. Customer spending is restricted.

Small businesses are experiencing a “cost of doing business” crisis. Costs increased rapidly. Wages, materials, rents and the price of capital increased. Further compliance costs and lack of infrastructure stretch business budgets.

However, passing on the rise to customers is usually inconceivable given the constraints of shrinking discretionary purchasing power. In short, less purchasing power and rising costs for a lot of small businesses mean the candle is burning at each ends.

Too expensive to shut

The seriousness of the situation is unlikely to be fully reflected business closure statistics. Small businesses do every thing to survive. People are working longer hours and cutting back on the cash they take out of the business to administer money flow.

Leaving the workforce can be difficult in a good labor market – in part because fewer positions can be found for the growing variety of job seekers.

Business loans are frequently secured against family home or by personal guaranteewhich suggests business liquidation is the worst case scenario and relatively rare.

Instead, small businesses do every thing they can to increase their runway to avoid legal liquidation. They are likely to close quietly if they run out of options.

However, rising rates of interest have increased exposure. And as home values ​​decline, small businesses are less capable of leverage the family home for extra financing.

These processes worked in the other way in the course of the 2008 crisis, when initially shrinking demand was accompanied by a decline in the price of credit. Simply put, gasoline has been added to the tank.

Interest rates to the rescue?

There is hope. The recent reduction in rates of interest has improved economic sentiment, and business confidence has reached approx the best in ten years in September.

On the eve of it “no frills” budget.Finance Minister Nicola Willis warned of inauspicious times before the economic situation improves.

Global declines in rates of interest mean Willis’ predicted rise has begun, however the final result is just not guaranteed.

There were consumers pessimistic on the New Zealand economy for over two years, a stark contrast to the GFC where their confidence grew rapidly.

Demand from Chinakey New Zealand market, faces its own economic challenges.

Government narrative shapes conditions for the economy. Yes, we’d like to ‘stand by the books’, but this must be balanced with encouraging small business and innovation.

Like others small economiesNew Zealand needs a sustained commitment to infrastructure and exports, in addition to investment in science and innovation to support the small business sector.

The government must provide small businesses with the arrogance to thrive and forestall long-term recovery from the economic downturn.

This article was originally published on : theconversation.com
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Business and Finance

No, the boom in battery factories in America is not over – construction of the largest factories is proceeding as planned and it is planned to employ over 23,000 people

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The United States is experiencing the largest-ever boom in investment in clean energy production, driven by laws such as the bipartisan bill Act on infrastructure investments and employment and Act on reducing inflation.

They have these rights used billions of dollars government support to drive private sector investment in clean energy supply chains across the country.

For several years, one of us, Jay Turner, and his students at Wellesley College have been tracking clean energy investments in the U.S. and sharing the data on the website The big green machine website. This study shows that since the Inflation Control Act went into effect in 2022, firms have announced 225 projects with a complete investment of $127 billion and the creation of greater than 131,000 latest jobs.

You could have seen on the news that these projects are in danger of failure or significant delays. In August 2024, the Financial Times reported this. 40% of over 100 projects he assessed that they were delayed. These include battery production, renewable energy and metals and hydrogen projects, as well as semiconductor manufacturing plants. The technology industry magazine The Information recently warned of this 1 in 4 firms left from government subsidies for investment in batteries.

Workers assemble battery packs for electric vehicles in Spartanburg, South Carolina. New battery factories in the state will help move the supply chain closer to U.S. electric vehicle factories.
BMW

We checked all 23 battery cell factories announced or prolonged since the Inflation Reduction Act was signed into law – just about all of them are gigafactories which might be expected to produce greater than 1 gigawatt-hour of battery cell capability. These factories have one of the highest employment potentials of all the projects supported by the Act.

We wanted to discover whether the U.S. clean energy production boom was about to fizzle out. Most of what we learned is reassuring.

The largest battery factories are on the right track

While exact investment amounts are difficult to determine, our study shows that planned capital expenditure shall be $52 billion, which would supply 490 gigawatt-hours of battery production capability per 12 months – enough to put about 5 million latest electric vehicles on the road.

While not all 23 firms have announced hiring plans, the facilities are expected to create nearly 30,000 latest jobs, with projects primarily in the U.S. Southeast, Midwest and Southwest.

We wanted to know whether these projects were progressing as planned or whether there have been delays or problems.

To do that, we first contacted local and state economic development agencies. In many cases, local and state tax incentives support these projects. Where possible, we now have tried to confirm the status of the project through public data Or formal announcements. In other cases, we looked for messages to see in the event that they existed construction proof Or hiring.

Our study shows that 13 of 23 projects are on the right track, with total planned capital investment exceeding $40 billion and production capability of nearly 352 gigawatt hours per 12 months. Importantly, they include most of the largest projects with the largest investments and expected production.

Our calculations show that 77% of total planned capital investment, 79% of proposed jobs, and 72% of planned battery production are on the right track, meaning the project is likely to be accomplished roughly on time and overall as expected. result. level of investment and employment.

Three projects are on the bubble. These have shown progress but have experienced delays in construction or financing.

Five others show deeper signs of distress. We do not yet have enough information to draw conclusions about the two projects.

An example of an ongoing project is the Envision AESC battery plant in Florence, South Carolina. His the scale has been enlarged twice since it was first announced in December 2022. It is now a $3 billion investment with the goal of producing 30 gigawatt-hours of batteries per 12 months supplies the BMW factory in Woodruff, South Carolina.

In early October 2024, South Carolina Secretary of Commerce Harry Lightsey visited the Envision i facility published a video. Construction of the plant began in February 2024, and 850 employees are working six days per week to complete the 1.4 million square foot facility by August 2025. Once full production begins, the project shall be accomplished expected to hire 2,700 people.

The 2024 elections could end or speed up the boom

However, much relies on what is going to occur in the upcoming elections.

Our data suggests that the real risk facing these projects and projects like them is not sluggish demand for electric vehicles, as some suggest – in fact demand continues to grow. It’s not the local opposition that did it either it only slowed down a number of projects.

The the biggest risk is policy change. Many of these projects are counting on advanced manufacturing tax credits approved by the Inflation Reduction Act through 2032.

During the campaign, Republicans are promising to repeal key laws under Biden, including the Inflation Reduction Act, which incorporates funding for grants and loans to support clean energy, as well as tax incentives to support domestic manufacturing.

While an entire repeal of the Act could also be unlikely, an an administration hostile to clean energy redirect unspent funds to other purposes, slow the pace of grants or loans by slow project approvals, or find other ways to make tax incentives tougher to obtain. Although our research focused on the battery industry, concerns concern investments in wind energy AND solar energy too.

So will the great U.S. boom in clean energy production soon come to an end? Our data is optimistic, but the policy is uncertain.

This article was originally published on : theconversation.com
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Business and Finance

Jaylen Brown is launching his own sports brand thanks to Kobe Bryant

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NBA champion Jaylen Brown did the other of most superstars once they were offered a giant contract. He turned down the offer, but as a substitute decided to start his own brand, crediting the thought to the late Kobe Bryant.

In an exclusive interview with and , a Boston Celtics player discussed his latest enterprise, 741, a footwear and sports brand. After meeting with several firms and never feeling the offers thrown at him, Brown announced that he followed the trail that the nice Kobe planned. The Lakers legend was planning to start his own sports company, so he decided to do the identical.

After turning down $50 million in sponsorship deals, he launched 741 in September.

“Honestly, I got the thought from Kobe (Bryant), rest in peace. Before his death, he planned to launch his own shoe brand, sign contracts with athletes and offer them higher deals and percentages. I remember reading an article about it and pondering it was bullshit. I analyzed my own experiences of working for big corporations and the way they value your creativity and also you. I’ve tried every brand and none of them stood out. Everyone approaches things the identical way. I used to be on the lookout for a brand of the long run, not a brand of the past. I could not find it so I had to start.

Brown also stated that he also helped design products for his line. Outside of design, he said that creating 741 allowed him to explore his creativity.

“I designed all the pieces myself. I used to be just on the factory in South Korea, on the road, ensuring all the pieces was done the way in which I believed it must be. I’ve done probably close to $50 million value of deals (from other brands) to start something on my own. And it wasn’t because I didn’t like the cash they were offering. It’s because these contracts pigeonholed me and didn’t allow me to be creative.

Brown also said he didn’t want to force anything when it comes to brand promotion. He favors a slow-build approach and admitted that “it doesn’t have to be the hottest brand on the street tomorrow.”


This article was originally published on : www.blackenterprise.com
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The next president will play a key role in shaping US trade policy – here’s what voters need to know

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From the ports of Los Angeles to the cornfields of Iowa, U.S. international trade policy is a force shaping the lives of each American. With the November 2024 presidential election approaching, discussing trade policy will not be just an educational exercise – it’s a civic responsibility.

as economistI even have spent years studying this topic. Trade policy has a huge impact on the best way industries operatefrom production locations to competitive dynamics. These changes impact on a regular basis life, from the associated fee of your morning coffee to job security in your area people.

And since the president has broad control over trade policy, each presidential election is a referendum on the difficulty.

The two most up-to-date administrations – President Donald Trump and Vice President Mike Pence from 2017 to 2021, and President Joe Biden and Vice President Kamala Harris from 2021 to present – ​​have taken very different approaches to trade policy. The contrast shows how the president’s economic philosophy can reshape the country’s global business strategy.

Both Trump and Harris will be on the ballot in November. Harris is Biden’s trade policy is anticipated to proceed if he wins. This comparison provides insight into how the next U.S. president will manage trade.

2017–2021: Trump and Pence on trade

During his time in office, Trump pursued a protectionist trade agenda.

Protectionism refers to government policies that restrict international trade to profit domestic industries. These measures include tariffs – taxes on imported goods – quotas and regulations that make imports costlier.

One of the Trumps first official acts was withdrawal from the Trans-Pacific Partnership, a colossal 12-nation pact that might cover 40% of world production. His decision cost America each access to lucrative Asian markets and a powerful counterweight to China’s economic influence.

Closer to home, Trump renegotiated the North American Free Trade Agreement (NAFTA). United States-Mexico-Canada Agreementtightening regulations for automotive manufacturers. Effect? However, the remuneration of employees in the automotive industry and vehicle prices for American consumers increased, it hardly stimulated any additional domestic automotive production.

Trump also introduced tariffs trade war with China and the European Union, claiming that it might solve unfair practices and reduce the US trade deficit. This strategy, nonetheless, triggered retaliatory tariffs that resulted in higher consumer prices and job losses in American industries depending on imported components. While some sectors have benefited from this approach, U.S. farmers have suffered from export losses, requiring government subsidies.

Trump and his latest running mate, J.D. Vance, have signaled their intention to revive their “America First” trade strategy. Their campaign platform calls for large tariffs, including: general rate of 10% on all goods and more aggressive 60% customs duty aimed specifically at Chinese products.

2021-today: Biden and Harris on trade

In turn, the Biden-Harris administration has adopted a multilateral approach, emphasizing cooperation between countries.

Administration kept most of Trump’s tariffs on Chinese goods in place and part for importing steel and aluminum from other countries. However, they’ve reframed the measures under: wider push stop climate change and protect staff’ rights.

The administration has also launched initiatives equivalent to An Indo-Pacific economic framework for prosperityor IPEF, signaling a return to Obama-era trade strategies that prioritize regional partnerships in the Pacific. IPEF goals to strengthen economic ties with Asian countries by coordinating policies to increase supply chain resilience and promote clean energy, relatively than focusing solely on tariff reductions.

The Biden-Harris approach emphasizes international cooperation while valuing domestic job creation, particularly in the clean energy and manufacturing sectors. However, lots of Trump’s tariffs on Chinese goods, steel and aluminum have been maintained costs high for some US businesses and consumers.

Building on Biden administration policies, Harris’ campaign has signaled that its goal is to protect lower- and middle-income households from latest tariffs this might raise prices while maintaining a tough stance on China through existing tariffs and trade restrictions.

Presidential powers and influence on trade

The president plays key role in determining US trade policy.

The president can negotiate international trade agreements, although Congress must approve them to grow to be law. The executive branch also controls tariffs; under laws equivalent to the Trade Act of 1974, the president can impose them without the consent of Congress.

In addition, the president can declare a nationwide trade emergency, appoint trade representatives, issue executive orders to administer federal trade policy, and impose sanctions that may affect global trade dynamics.

Free trade agreements can boost exports and promote economic growth, but they may displace some staff. However, import tariffs protect some domestic industries, but raise prices for American consumers. Studies show that tariffs imposed under Trump and continued by Biden have led to higher prices, reduced production and declining employment, harming US economy.

Trade policy also affects diplomatic relations and global supply chains. So when voters review candidates’ trade policy positions, they need to look beyond the bits they hear. Understanding how each approach affects labor markets, consumer prices and global competitiveness will help voters solid informed votes that align with their vision for the country’s future.

In the world of trading, every vote counts.

This article was originally published on : theconversation.com
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