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Economy Watch

"Recovery or False Signal"

Evidence is mounting that the US economy is in recovery.  After a year of declines, US economic output rose in the Q3 2009 at a rate of 2.2%, which was followed by a more impressive increase of 5.7% in Q4.  

Holiday sales did not cause retailers to break out the champagne, but the year-over-year gains of 6% were a relief.  Announced job cuts declined to about 45,000 in December, a figure that had been as high as about 240,000 in January of 2009; additionally, the unemployment rate made its biggest drop since early 2007.  Still, job growth is elusive with a January net change in employment of -45,000.

Companies and investors are concerned about the impact of rising interest rates and that recent gains in corporate profits are tied to cost-cutting, rather than new sales. Other issues pressuring business confidence: a potential new wave of commercial real estate debt defaults, and uncertainty regarding government actions on banking regulation, healthcare policy, environmental regulation, and taxes.  

In the midst of these conflicting signals one thing is certain: if sustained job growth does not appear in the next 8-9 months, the US economy will not sustain this nascent recovery.

Contributor:  Dr. Terry Clower – Director, University of North Texas Center for Applied Economics

IMF’s $114m to Help Haiti Economy

Bank of England Expects Slow Recovery

Canadian Dollar Rises Most in Month as Greece Concern Eases

Industry Updates

FDA requests $4.03 billion to "transform" food safety system and more

American Petroleum Institute's Jack Gerard comments on administration's FY2011 budget plan

Data on Service Sector Show a Struggling Recovery

Aircraft Makers Count on Asia for Growth

In The Spotlight...

Feature: A/P Fraud Detection

Accounts Payable Fraud is a cost area that can certainly snowball out of control.  What can you do without spending thousands on software?  MAXIMUS offers three simple audit exercises to deploy:

First, perform a vendor file clean-up, focusing on duplicate vendors.  This will identify potentially fraudulent vendors and will also reduce the number of duplicate payments made.  Second, compare the vendor file with the employee file, using address and name matching – watch for fictitious vendors.  Third, look for ‘rounded’ invoice amounts, and/or above-average invoice amounts per vendor.

While there may be few, if any “issues” with your system, it is an exercise that not only can find lost dollars, it can also act as a proactive “warning” – a preventative step taken on a regular basis in your company.

The above steps can provide a quick review of the ‘health’ of your Accounts Payable data.  It may also uncover areas in which additional support is necessary. If you are considering such an undertaking, MAXIMUSalliance can help.  Our Decision Analytics and Fraud Detection team is just a phone call away.

Contributor:  Christine Warner; MAXIMUS/Manager – IT & Fraud Detection

Monthly Outlook

February 2010

We enter February much like the Groundhog. This year, the groundhog retreated – six more weeks of winter!  Burrow warmly, groundhog.

It may be that this country, the economy, leadership is looking to “burrow,” and for MUCH longer than six weeks.  Potential cause:  employment reports, inventory news, Greece, Australia, financial regulation.  Potential effects:  laggard growth, in the face of opportunity.

The opportunities are there, and emerging.  While a 5.7% GDP increase is likely unsustainable, there is indication that the economic “winter” may soon give way to Spring.  (It always does.)

Ahhh Spring.  New Life, and all that.  Sarcasm aside, February may bring “new life,” if for no other reason that our psyches are ‘done’ with the doom & gloom. 

INNOVATION will lead industry and the economy forward.  (It always has.)  And by definition, “innovation” is not predictable.  AND we do know that “necessity is the mother of invention,” so….

This month the outlook is:  GLIMMER.  A glimmer of hope; a glimmer of light. A peek from ‘burrowing’ reveals some optimism – optimism that will emerge from innovation in the ol’ face of adversity.

The next BIG THING is a “glimmer” in someone’s eye - at this very moment.

“Nothing is more common than a good idea.  Nothing is less common than a good idea carried out.” - Will Rogers