On today's episode of The Art of Dental Finance and Management podcast, Art meets with Dennis Kushner, principal of Fordham Road Collaborative Group. Art and Dennis discuss national and global economic issues affecting dentists including:
- Interest rates
- Pandemic challenges
- Global influences
- Potential tax legislation
- National debt
- Economic indicators and trends
Reach out to Art if you have any questions regarding dental finance and management for your dental practice. More information about the Eide Bailly dental team can be found at www.eidebailly.com/dentist.
Being more strategic in all aspects of your dental practice will lead to increased profitability.
Show Notes and Resources:
- Eide Bailly’s Dental Practice
- Decisions in Dentistry magazine
- Academy of Dental CPAs
- Fordham Road Collaborative
- The Employee Retention Credit – Extended and Expanded (Again)
Art Wiederman, CPA: And hello, everyone, and welcome to another edition of The Art of Dental Finance and Management with Art Wiederman CPA. I'm your host. Welcome to my podcast. I'm thrilled to have you with me. And today, we've got a great, informative episode. This is the Art of Dental Finance and Management. Today is the finance part. My very, very good friend, Dennis Kushner, who is an unbelievable wealth of knowledge when it comes to the US global economies, all the economic indicators, inflation. We're going to kind of give you an idea of where our economy is.
We are about 13 months into the COVID-19 pandemic. We have millions and millions of people who have gotten shots. We hope we're on the other side of this. But we'll get the real story from Dennis here in a moment. But I want to give you some information.
First of all, I want to thank my wonderful partner, Decisions in Dentistry magazine. We've got some really, really exciting things planned with them for the coming year, which we'll share with you as we go down the road. They have great clinical content and over one hundred and forty amazing clinical continuing education courses that are available for one low price. So go on to their website at www.DecisionsinDentistry.com.
Also, if you are not working with a dental CPA, this is as good of a time as any to be working with one. We're actually recording this on April 15th, which would normally be a tax day where I would finish up my what I've done for 30 plus years as we kind of finish up, hope the phone doesn't ring. Hope clients don't call this morning. And then what we do is we go out for a nice lunch and celebrate the end of taxes. But that's not the way it is this year. If you haven't been watching, your federal income tax returns are due May 17th. But if you do have an estimated payment, they would have been due by April 15th. We're going to publish this in late April. So when you hear this, you'll have a couple of weeks, get your taxes done.
If you're looking for a dental CPA our firm is in Tustin, California. My email address is awiederman@EideBailly.com. And the number is 657.279.3243. If you have any questions. I also wanted to let you know our dental series on May 12th is going to be on metrics. Go to www.EideBailly.com/dentalseries and register. It's going to be with the folks from Dental Intel and my good friend, Dr. Jeanette Kern. We're going to be talking about how to find profit holes in your dental practice.
Quick update for you. Again, we are doing consulting for dozens and dozens of dentists to get you the Employee Retention Tax Credit, as well as full PPP forgiveness. If you believe that you had a 50 percent reduction in your gross revenues and you have not filed for your PPP one loan for forgiveness yet, I would recommend you consider holding off. Maybe let us do an analysis. We are getting doctors tens of thousands, in some cases one or two hundred thousand dollars in refunds. With the Employee Retention Credit, you need to have had at least a greater than 50 percent reduction in your gross revenues in any quarter of 2020 and then you're in the game. So if you have let me know we have an intake form, we can help you with that. So you want to make sure that you take advantage of that.
OK, well, with that said, let's get to my guest, my good friend, Dennis Kushner. I met Dennis through a networking group called the Ellermeyer Connect Group, which is an amazing, dynamic group of individuals in all different walks of life, not necessarily dentistry. And Dennis, does this amazing report, which basically is the gist of our podcast today, is called The Kushner Report. And he is affiliated with a company called Fordham Road Collaborative. And you can go to their website, www.FordhamRoad.Net/thekushnerreport, which gives you the latest on global U.S. and regional trends in the economy and finance. It's published it comes out the last Thursday of every month from eight to nine a.m. and you can access the most recent recording by clicking the video button when you go to that website.
Dennis is a partner of the Fordham Road Collaborative. He's based in San Diego. Dennis has had an amazing career, he's led turnarounds as a turnaround consultant and restructuring of small to mid-market companies. He's been a CEO, COO, CFO, probably a CHO. I don't know what that is, but he's probably done that, too. Dennis' hands on experience in finance, accounting, operations, mergers and acquisitions and business development have enabled him to make a substantial contribution to both the top line and bottom line performance. His reports are highly sought after by chief executives across the country. And I'll tell you, I listen to this report for several years as Dennis was doing it. And what you're about to hear is pretty amazing. So, Dennis, you have to be amazing this morning. Good morning and welcome to the Art of Dental Finance and Management.
Dennis Kushner: Thank you very much. It's a pleasure to be here this morning and to address the audience and to help people in the dental care process as well.
Art Wiederman, CPA: Well, I want to before we get started on this, I want you first to tell me a little bit about your new venture with Fordham Road Collaborative. Tell us a little bit about that.
Dennis Kushner: Well, we basically will do a lot of work for four firms across the country. We have an establishment on the West Coast. We do some consulting. We've done some turnaround work. And a lot of areas where companies, for example, let's assume a company would like to do an acquisition. Well, a lot of times the people that want to do the acquisition or the people that want to be acquired really don't have the skills or the knowledge or the experience in terms of what takes place before the transaction can occur. And we can in a lot of these people and kind of walk them through the process. We can also take time, for example, if we do an acquisition, we can take it all the way through to do the full integration of the acquisition, which most people don't. They just say the deal is done. They walk away and the companies, both the acquiring company and the company being acquired, have a lot of problems trying to get integrated into the new company. And so we've done a lot of that type of work.
We've also done work with small startup companies that are kind of they don't have the affordability to hire a major consulting firm or a firm accounting firm, cetera, to get some help with how do we go forward. We're kind of stuck in neutral. Organic growth is kind of quiet. What do we have to do? And we can kind of work with them with our years of experience and management, we can kind of help them and guide them to moving in the right direction.
Art Wiederman, CPA: I've seen in my career as a CPA and I've dealt with businesses other than dental practices, obviously not as much as you have, but there's a right way to do this and a wrong way. And obviously, having a transition consultant like Dennis is great. So if you guys know of anybody who is doing a merger or sale, whatever, Dennis would be a great person. We'll let Dennis give his information a little bit.
Also, Dennis, before we get into our topic, I know that you have always been a staunch supporter of the military, in particular the Marines down in San Diego where you live. Tell us a little bit about that work, because I think that's just wonderful, wonderful work that you do.
Dennis Kushner: Well, I spent most of my career in Silicon Valley, and when we moved to San Diego, I got involved with the United States Marines here in San Diego and I sat on the board of directors for the what's called the MCRD, which is the Marine Corps Recruiting Depot Museum Foundation, which basically is a museum that starts from the beginning of the Marine Corps and taking it all the way up through now in the Middle East. And we have a huge building where we have a lot of things that talk about the history of the Marine Corps, what we're doing in addition to that. After that, I'm now a member of what's called the Marine Corps League, Southcoast Coast Detachment twenty two, which is based in San Clemente. And there's we have a lot of folks in the group that we just had. We just lost our last person from World War Two last fall. But we've got people in there from Korea, Vietnam and the current Middle East organizations as well, and a lot of these are former veterans, men and women, both equally and we have a good time.
We do a lot of volunteer work at Camp Pendleton with active Marines and also with their families. We do a lot of volunteer work. I've been able to participate in some parades, which is great in Dana Point and San Clemente, and it's kind of exciting being around these people. The Marine Corps is a fraternity and it's great. It represents a fraternity and sorority of people that, you know, once you're a Marine, you're always a Marine. And to me, it's a proud organization. And I try to do whatever I can to assist them with what we try to do in helping people either active in the Marine Corps or have just left the Marine Corps.
Art Wiederman, CPA: Well, as you and I both know, that people who have left the military, it's a tough life. Some people have had challenges. And thank you for all that you've done for your service to your country and all this kind of stuff. We are I'm always very, very appreciative of hearing that. I always love to hear the great stuff you're doing with the Marines.
All right. Well, let's talk about the economy, Dennis. I mean, I heard there was a pandemic going on the last 13 months. We'll talk about that a little bit. But let's start with some key economic indicators. I'm going to let you start, which one do you what do you want to start with first?
Dennis Kushner: Well, let me talk a little bit about what I do. Typically, I look at some significant economic indicators on a monthly basis. So first of all, this impacts everybody on this call today. For example, if we look at the global GDP for 2021, we're looking at five point five percent growth and next year we're looking at four point two percent. So this is very healthy after what we've seen over the last 15, 18 months and over the last several years. So we're going to see we believe there will be substantial growth over the next two or three years going forward.
The United States, for example, we're looking at growth this year at six point four percent and could even be higher than that as we get rolling later in the year. And then, of course, next year, we're looking at five point five percent. So two very strong years in the economy going forward. Now, one of the concerns is and I'm going to talk about this a little bit later, is inflation. So inflation in 2021 right now. It's pegged around two point four percent on that. That's for the entire year. So right now, we're seeing a lot of things going up right now and we'll talk about that as well. But most economists believe that if the barometer has always been around two percent, there's not a problem if we reached three percent, but we start exceeding that.
There's some concerns whereby the government may have to take steps with monetary policy to see what we can do in terms of tightening up things. And then, of course, next year, we're looking at two point three after going through what we've gone through in the last 15 months. Unemployment right now is around six percent. We expect it to be around four point seven percent by the end of this year and then dropping down to four point three percent in 2022.
The real concern we have right now and I have is that you look at the price per barrel of oil. If you go back several months ago, it would drop into the teens with some concerns. And what happened was that most oil producing countries, including the United States, decided to cut production levels substantially, which they did. And now we've seen as of a day or so ago, the price for oil at four. West Texas Intermediate is running at sixty dollars and 18 cents. Now, the forecast for the year is generally looking at fifty seven dollars to 70 cents a barrel.
So here's the situation. The economy in the United States is picking up as well as across the pond, every place else. The biggest concern we have is that China, Japan and South Korea have a huge appetite for oil, that the demand is going to go. And the concern I have is if we don't see the spigots turned on for production, the price for oil could exceed 70 dollars a barrel. And that would be a problem because then it cuts back on people's discretionary income, which affects everybody. Whether you're going to go to the dentist, the doctor, if you want to go to Disneyland, you're going to have less money, so to speak, and you'll have to reallocate that for other things, perhaps food and other things along those lines.
Art Wiederman, CPA: I mean, we're seeing that here in California, Dennis. I mean, you look at the gas prices are in excess of four dollars a gallon, pushing to four and a half. And you're saying they could go higher?
Dennis Kushner: Well, let me tell you what's interesting. You go back year over year and we've seen gas prices have risen over twenty two and a half percent. Now since January, I think gas prices, at least in San Diego, are up somewhere over 50 cents a gallon, maybe 60 cents a gallon. And I'm not sure where that's going to stop. But like I said, the real key is hopefully the meetings of the mind will take place where we'll start to see production take place. Now, Iran has indicated that they're going to start producing more oil and hopefully that we'll see that happen around the world.
And again, we're only at we're going into April. We're midpoint through April. But I think as we get going and more people are going back to work and there's more demands taking place like flying airplanes and everything else, they're going to have to turn on the spigot sooner or later.
Art Wiederman, CPA: Do you think that the advent of electric cars is going to be enough of an effect to have anything to do with oil prices down the road?
Dennis Kushner: You know, yes. Yes, it will be. But, you know, I'm going to talk about the growth sectors. One of the things I'm going to talk about is the automobile industry and how they're going through what I would call a new industrial revolution type of an environment. I'm going to talk about that during this topic.
All right. So what I want to do now is let's take a just a quick look at the global economy. You know, what a global perspective which is critical to the United States. Over the past few weeks, multiple central banks within the emerging markets have started a process of tightening monetary policy. So policymakers of Brazil, Russia, Turkey, et cetera, are raising interest rates, while some countries, such as South Africa and Mexico are kind of holding on right now to see what's going to happen with their own economies.
But economists really believe that most emerging market central banks will tighten monetary policy despite their respective economies still recovering from the COVID-induced slowdown. So I think there's concerns and I think a lot of people are getting prepared to take steps. Now, what's interesting is China, which is a major competitor for us right now, have just announced and released a five year plan for venture capital and technology in the technology sector.
So basically, China's unveiled its strategic economic vision for the next five years. It's a lengthily plan to redistribute monies within their country. And basically the direction is to focus on high technology industries related with venture capital backups. So what you're seeing now happening is that at the end of last year, China spent eight hundred and seventy three billion dollars raising money in their guidance fund to basically put together investments in startup companies. And so they're calling for R&D being spent on an annual basis, about seven percent to 2025. So they're serious about getting involved in technology.
So we're going to see that coming down upon further down the line later this year. So it's going to be a major competitive issue. And I'm going to talk a little bit about what's going on with the semiconductor industry and the chips. We're now seeing a real problem in the industry right now because companies such as General Motors and Ford and recently Subaru are shutting down factories because they're running out of chips. And it's going to affect cell phones with Apple. It's going to affect televisions and everything else. They think the problem in this situation is going to go through in the beginning into probably into 2022. And I'll talk a little bit about what's going to take place in this area.
So if you look at what took place in the United States, the good news is the fourth quarter right now, even though it's still not firm indicators, are that basically we had six point three percent growth in gross domestic product at the end of the year, somewhere around three hundred and twenty five dollars billion in spending, which is incredible, which is great, very strong. If you remember, the third quarter last year or two was somewhere around thirty eight point three percent. So that's good news going into this year.
In addition to that, the administration about a week ago announced that what they want to do basically is have a new fiscal policy infrastructure proposal that's being batted around right now. What we're talking about this, the proposal is addressing bridges, roads, water and power, electric vehicles and factories, airports, public transportation authority, et cetera, for projects. And these projects, when they get started, will probably take at least a decade to complete. And the two point two trillion may not be enough in this particular area. You've got to remember, the country has been around for a long time and our infrastructure across this country is in trouble. And we haven't really spent a lot of money in the last 50 years that we should have spent. And then hopefully we'll see that happening.
So here's your question, Art, and that is, how do we pay for this? Well, actually, here's the issue on the table right now is, is the thoughts of raising corporate taxes right from twenty one to twenty eight percent and taxing international U.S. companies that have profits over there. It stands right now. They pay ten point five percent. They're looking at taking that up to twenty one percent. And there's a lot of money being made offshore. So that'll be a big source of revenue. And then, of course, we're talking about raising personal income taxes from thirty seven to thirty nine point six percent for those that have over four hundred thousand dollars in the bracket.
And then finally, they're looking at increasing capital gains. And what that rate is, is kind of determined later on. But that's kind of what's on the table right now. And that's going to be discussed probably over the next couple of months, two or three months to try to come up with if they want to do it.
Art Wiederman, CPA: So let me ask you this, I mean, this is the always the, you know, raise taxes, spend money, raise taxes, spend money. So theoretically, we're going to put two trillion dollars into the economy. Infrastructure creates jobs, creates tax revenues. You know, you talk about trickle down and all this, but what does a raise in the corporate tax rate? You're talking twenty one to twenty eight. Some people are talking twenty five. What does a raise in the corporate tax rate do? Does it keep corporations from spending money and employing people? I mean, it's a double edged sword, isn't it?
Dennis Kushner: It depends on what sector you're in. OK, if you're in high tech or biotech, which is booming, if you're in, you know, the security area, if you're in retail, you've got a problem. If you're in some of these others were nonprofits, it's going to be an impact in terms of getting more fair share of money. But it's hard to tell. I mean, we've gone through this in the past, but at some point in time, it's all about the viability of your business. And again, it's going to force companies to rethink and relook at their strategy. Look at the types of products and services that they provide to the consumer and decide, for example, they may decide to divest themselves of certain business units that they feel are not profitable given this change.
So I think they're all sitting around looking at what contingencies will take place. Keep in mind, even though you have a corporate tax rate of twenty one percent in the past before it was change on the prior administration, you have to ask yourself, with all the deductions, how much taxes do these people really pay?
Art Wiederman, CPA: Not a lot.
Dennis Kushner: So we don't really know what that is. So whether it goes up to twenty eight or thirty five percent, that's fine. But the barometer is how much do they really pay it. And that's hard. That's hard to figure out at this point. In the past they've said it was a lot lower than that on an average across the board, maybe it was. Twenty four percent of it was twenty eight. But, you know, we don't really have the data on that. But clearly it's going to raise eyebrows in terms of what do we do in investing money for our company, new products, services, technology, et cetera. What about hiring? And you just going to have to look at this whole thing across the board. So we'll have to wait and see. But I'm sure right now, corporations, finance departments, accounting groups such as yours are all thinking about what is this going to do to my customer, my client or my corporation? If these taxes begin to go up, how are we going to deal with it?
Art Wiederman, CPA: Well, and they've got I mean, you've got you've got a six a six member majority that the Democrats have in the House. It's 50 50 in the Senate. Everybody says that Mr. Manchin is the tipping point for the Democrats. If he so goes Mr. Manchin, so goes the Democrats. I mean, that's what I've heard. And it's so this is not a slam dunk for the Biden administration to get this through.
Dennis Kushner: Well, you know, keep in mind, whether you're a Democrat or Republican, the real key is that, you know, we're not that far away from a midterm election called November of twenty, twenty two. And if you're a Democrat or Republican, I mean, in the back of your mind, if you want to get reelected, you're going to have to watch what goes on now, because we've been through some very, very bad times over the last 15 months. And so you're going to have to really be careful about what you're willing to do and what you'll sacrifice in terms of what decisions you're going to make. And so maybe not all the Democrats are going to say we're going to do this. Or if they do, maybe it's a lesser degree. Maybe it's focusing on the ones that are really critical. We don't know. But I'll tell you what, it's really going to put these people on stage in terms of what the decisions are, what is the financial impact, not only to you and I, but our families, our kids, our grandkids. What is this going to do long term? I think it was all going to have you know, we're printing money quite a bit of money right now into the economy to keep it going, you know, with the stimulus package over the years. But at some point in time, we're going to have to deal with the debt.
Art Wiederman, CPA: Yeah.
Dennis Kushner: And when that's going to happen.
Art Wiederman, CPA: Well, and I don't know. Are we I don't know if we're going to talk about debt later in this conversation, but maybe we are. OK, so we'll get that. I think the next thing we're going to talk about is it's so much I want to get to U.S. employment report. That was the next thing we're going to talk about.
Dennis Kushner: So I don't want to spend a lot of time. But let me tell you this. We were the economists believe that we're trying to add about seven hundred and eighty three jobs per quarter to get started for this year and start ramping up as we go forward. Well, March was an explosion. It was incredible. We saw the increase in payrolls of nine hundred and sixteen thousand jobs were created in the month of one month and one month, and unemployment went down from somewhere in the eight to nine percent. So it's down to six percent across the board. And so the real key here is for those of you in the dental business, and that is that health care in the educational sector saw an increase of one hundred and one thousand jobs. But more importantly, we saw leisure and hospitality increased jobs by 280000. Now, I bring this up is because those people, most of them are hourly types of people. Are having a real hard time not only paying rent, but trying to survive, and the last thing you're going to do is go to the doctor unless it's absolutely necessary or go to a dentist. So hopefully these people will go back to work, start generating income and can go back and spend money for the services that they really need to do in the dental area or in health care, et cetera, as it was before this took place. So this is a positive move and hopefully they'll have more discretionary income to do this. Well, some people will have insurance, too.
Art Wiederman, CPA: Yeah. And the thing is, Denis's, that we've been talking about the fact that I've been telling Dennis on this podcast and lectures and webinars that, you know, 15 to 20 percent of the American public is literally not leaving their house to go shopping, not to do anything. And as we hopefully by the summer or fall get to herd immunity, 70, 75 percent more of these people will leave. More of these people will start spending money. Also, haven't people been saving a lot more? If you're not doing anything, you're saving?
Dennis Kushner: Well, you know, here's the thing. We had two plan vacations last year and obviously they got canceled. So I didn't spend that money so I can reallocate that money to something else. Or maybe I take the trip next year. So you're right. But a lot of people have cut down a lot of money. Going out to dinners, going to luncheons, going to concerts, so going to a ballgame, taking in other kinds of entertainment. So a lot of money was left on the table, so to speak, at home. And a lot of people right now are doing renovation to their homes. I mean, if you look at Home Depot and you look at Lowes, their businesses are booming. There's a lot of people are buying stuff on their own. They're doing work to their homes or they're having work done by contractors. So the whole construction process is booming. You know, it's amazing.
Art Wiederman, CPA: I know. I know.
Dennis Kushner: So we'll just have to see a redeployment of those funds once the economy gets back on balance here.
Art Wiederman, CPA: Right. And dentists are having a difficult time finding employees. Even with everything that you're saying, people still don't want to work in the dental office. Maybe they're looking at changing careers. So it has been a challenge for dentists finding employees, if you ask them. I talked to them every day, but the hope would be as we start, everybody gets, you know, vaccines and they're you know, we get to this herd immunity that people start going to work in that.
Yeah. I mean, what people don't realize, and this is something that the dental profession and the ADA is trying to do is to let the public know that the dental office is probably one of the safest places you could walk into of any business out there. So it's pretty cool. Let's I know inflation and interest rates are things that we started at the beginning. And yeah, that is a concern. And talk about just kind of give our audience for those who don't really understand the interplay of inflation, interest rates, maybe a little inflation 101, how that works and where you see this going.
Dennis Kushner: OK, so first of all, let me talk briefly about interest rates right now. So the Federal Reserve, the you know, the open market Federal Open Market Committee meets periodically and they talk about the status of the economy, what we see, what we want to do. And basically, they're holding rates flat right now to where they've been over the last several months. And it looks like interest rates in general by the Federal Reserve will keep it in tact, probably going into sometime in 2022. That's kind of where we are as of today. Now, keep in mind that the Federal Reserve, the federal government basically has been purchasing. Basically, 40 and 80 and 40 billion dollars worth of Treasury securities and mortgage backed securities continue to stimulate the economy, and that's going to continue for the time being. So I think that's what we'll see happening.
If you look at mortgage rates for homes and everything, they're starting inch up a little bit. OK, we're seeing that inching up a little bit. So and that's probably, you know, where we'll see that going. I think that interest rates on credit cards, there's talk about seeing that going up a little bit. But in general, I think they're going to be doing this very conservatively, very carefully. So interest rates are kind of out there right now. We'll see what happens. But clearly, they've got tools in the box, if you will, to use in the event that all of a sudden we're going to have to raise rates. So we'll see where that goes.
Now, the biggest concern we have right now and we talked about this Art, was inflation. Right. In the month of March, the inflation went up the highest it's been up in two and a half years. And that was a bomb. That was a big concern. And so, for example, consumer prices rose in March for the fourth month in a row and the pace of inflation hit the highest level, as I said, in two and a half years. And this is because the U.S. economy is recovering from a pandemic. Now, as I said earlier in my conversation, the consumer price index went up by six tenths of a point. But the real key here was the rise in oil prices. So we've seen oil prices going up maybe as high as, what, nine point one percent in the month. As we said earlier on a year to year basis the last number I saw was around twenty two and a half percent. And that's significant. And we're going to have to watch that very carefully going forward.
You know, keep in mind, there's a demand. You know, we have a lot of demand for goods and services. If you go to the shore, you know, we're all the ships are coming in with all the containers. We know for a long period of time they couldn't unload the containers. And this morning they were talking about the containers. Before this, we start seeing things turning around. They could take the containers from the docks and line them up one by one, going all the way across from California to New York and halfway back. And that just tells you with all the products are sold. Inflation is happening when you go out there and people want a product or service and it's not available when they're going to raise the price. What you're seeing happen.
Art Wiederman, CPA: And the problem is that the dentists who are stuck in PPO plans, which is another reason to maybe look at ways that we can reduce our dependency on PPOs and insurance. If you're on a PPO plan and you listen to this podcast and say we got inflation, I've got to raise my prices. If you're contracted with a PPO, you can't. In fact, they're going to try and reduce your price.
Dennis Kushner: Yeah, you're right. Let's listen. Last month, we saw price increases in some cases substantial for rent, automobile insurance, used cars, home furnishings, recreation and personal items are going up. They're going up, you know, exponentially. I can't tell you how much, but they're going up. We're seeing that happening across the board. Keep in mind that, you know, tomatoes and lettuce get to a store, but how do they get there? Well, they're driven by trucks and also oil prices continue to go up. It's going to raise the price of food. So everything is going to go up together as long as the price of oil continues to rise. It's a problem. Soon we're going to be getting into where they have, you know, fuel for the summer. And I'm not sure what's going to happen on that pricing. That's another concern we have. But the real key is to keep our eye on the level of production is critical.
Art Wiederman, CPA: And I mean, think about the travel and entertainment industry once that starts opening again. The cruise industry, some of these cruise companies are starting, I think, in July. I mean, they're going to raise their prices. They've lost billions and hundreds of billions of dollars.
Dennis Kushner: Well people now are beginning to fly. So you're going to see more demand for fuel for the airline industry. I mean, it's up substantially. You're going to see more. You know, as people get vaccinated, they're willing to get on planes and go someplace, wherever they want to go. And they're going to be vaccinated. They'll have a card, that'll be really like a passport. So you'll see things happen. You know, if you look at the whole hotel industry within the leisure and hospitality marketplace, the problem you have is this. Because of Zoom and all these types of products, corporations are going to spend more time having meetings with Zoom rather than flying everybody to Texas or to Georgia or D.C. So you're going to see a lot less travel going forward, not only this year, but going forward. So in the business sector, you can see where companies can cut a lot of money on travel and entertainment. Maybe once a year you get together someplace. But now what they're going to do is really cut back on everything.
Art Wiederman, CPA: It'll be interesting to see what the convention business, whether it's ever going to come back at all. Like the I know most of the state dental convention, the California Dental Convention was canceled for 2020 and 2021. Will there be one in 2022. I don't know.
Dennis Kushner: I talked to a lot of people in the industry and their planning conventions next year. I'll give an example, they have a Marine Corps program that takes place in San Diego convention center, a five day deal. You know, you get to see new products and services and people come from all over the world, every place to see this. Well, guess what? Because of what's going on at the border, people are being housed in parts of the convention center. So as far as I'm concerned, we're not going to see anything there for the time being. So there's an example where a lot of people would come to San Diego from other parts of the United States or outside the country. They're not going to be doing this right now. You look at the security show that they have at the Moscone Center that has huge it's the largest security information security trade show in the world. And I don't think they're doing anything until next year. So that stuff will come back. It'll come back slowly, but it's following the rules.
Art Wiederman, CPA: So real quick, Dennis, I want if someone wants to get a hold of you that maybe they have a friend or relative or they're involved in a company that needs some help or some of the other things that you and your group does, how would be the best way to get a hold of you?
Dennis Kushner: Oh, it'd be a dtkushner@FordhamRoad.net, as we showed earlier. We can show that at the end of the program, our email address.
Art Wiederman, CPA: OK, we'll do that.
Dennis Kushner: Yeah, but I want to talk about is you mentioned earlier and that is let's talk a little bit about retail sales and the consumer index. This morning, the news came out that for March retail sales were up nine point eight percent, which is a grand slam home run in the industry. And that was huge. And a lot of this is taking place because of the economy is picking up and the stimulus checks that are going out there. The consumer is going to drive the economy without a doubt. And a lot of that about how you feel, what you want to do when you have this money. People are spending the money, which is very good and strong for the economy. I think that what you're going to see happen, that's going to happen. Without a doubt it's going to help the economy. Now, if you want to look at that, let's take a look at the health care sector you mentioned earlier.
Art Wiederman, CPA: Let's do that. That's who we're talking to today.
Dennis Kushner: Right. So I think what you're going to see happening and this is going to be for all aspects of health care, you're going to see a lot of consolidations taking place this year and next year. For example, hospitals, assisted living, dental practices and all kinds of programs are going to see consolidation. And the reason I bring this up is companies have to grow by organic growth. So if you can't grow, you have an option. You can either. And we're not going to talk about closing the business. We're going to talk about either you acquire somebody else or you get acquired.
Therefore, you ought to strengthen what you're trying to do. And like you said, there's a lot of practices that can't find people. Well. They may have to get together with another firm and merge and therefore, you know, build the client base that way. So the cost of commercial real estate is very expensive. If your revenues are down, it's just going to it's going to cut back on your profits. And, you know, the concerns are working with people because of the pandemic. But that'll come back. All those people will come back when it happens. Keep in mind, in the health care industry, there is an expansion in the aging population. People are living longer and more people are entering the retirement community every single day in this country. There's going to be a tremendous demand for health care services, dental services, where people, as you get older, need to go to the dentist more often.
Art Wiederman, CPA: Implants implants implants.
Dennis Kushner: Yeah. So there's a tremendous marketplace for the demand for the dental, I believe, in the dental area, as well as in just health care in general. But the thing to keep in mind is this the impact of technology and processes that have taken place over the last three to five years in the industry in general, is incredible. And if you want to have a competitive advantage over somebody else, you've got to have the best technology in place to attract people to come to your practice, to, you know, to be using because people want to be able to find out exactly what's the root cause of my problem and how are you going to fix it and get the schematics. We are sitting in the chair.
Art Wiederman, CPA: You've got CBCT machines that are becoming a lot more prevalent in general. I never thought in my wildest dreams 10, 20 years ago you'd see general dentists buying CBCT machines, digital scanners. I just had a crown done after a root canal. And yeah, I've been in hundreds of dental offices, Dennis, and I actually got to see how the technology works. It is really, really cool technology. Not that I didn't know that before, but it's when you see it on your own tooth and your own mouth and how they can move the picture around. And then the crown making, the CAD CAM machines and lasers and I mean the technology since I started in dentistry in the 1980s and not only dentistry but in every industry has been remarkable. I'm looking forward to the next dental show that I get to go to so I can see all the new stuff that they're coming up with so.
Dennis Kushner: Well, you know. And there's also cycle time, for example, you know, go back a few years ago and you needed to have a crown replaced, you may have to go back in two or three weeks. There's a temporary and come back in three weeks. Well, I know my wife had a crown taken care of almost within the time she was there, they made something and was taken care of. So what I'm saying is so we're seeing more money being spent on technology to help reduce cost, improve cycle time and be able to treat more people, if you will, in a day than they normally could in the past. Again, I don't run a practice, but it's all about efficiency. It's all about process improvement and at the same time generating more revenue. So you're going to see this going forward. And like I said, if you look at the expansion in the senior citizen market, it's going to boom. I mean, people are living longer. They're living into the 90s. Some people are living to be 100.
Art Wiederman, CPA: We're towards the end of baby boomers, you know, we're baby boomers and stuff like that. So let's talk about some of your other sectors. We talked about retail, right. Biotech?
Dennis Kushner: So let me tell you about biotech. It's called Back to America. In other words, you're seeing drug development and manufacturing and also in terms of instrumentation, it's moving back to the United States where it should be and we need to be able to control the process more by having things developed in the United States where people and, you know, I've spent half of my career in biotech in the Bay Area with companies like Genentech and Gilead Sciences. And I mean, the things that are going on are incredible. But you're going to see more and more consolidation. You're going to see players like in San Diego we have a lot of small biotech companies that continue to get acquired because of a specific kind of drug or an instrument that allows a company to expand what they're doing. So I think we're going to see a lot more money being spent in that area and coming through. So that to me, it's important.
Art Wiederman, CPA: Hey, Dennis, I want to jump in on that one for a second. Is I mean, that was shown in March and April and May of last year when the medical and the dental professions were having a horrible time getting hold of PPE. Why? Because we weren't producing enough of it in this country. We had to go find it in other countries and they couldn't get it. So I think that's another reason why we're going to see.
Dennis Kushner: If you think about what I said earlier about mergers and acquisitions, here's what you need to keep in mind is interest rates are low, money is cheap. So if you want to buy somebody, it's incredible how much money is available out there for companies to buy other firms and get acquired. So you're going to see more deal flow versus if interest rates were substantially higher.
Art Wiederman, CPA: I sell dental practices and the interest rates for dental practices are still in the low to mid three percent. I mean, that's cheap, cheap money. Yeah.
Dennis Kushner: We talked about the automobile sector. Yeah. So I call this the new industrial revolution. You've heard Ford, General Motors, Volvo and other companies I can't remember right now. They're all going to all electric, you know, by 2025 or 2030. They all want to move into the electric marketplace for cars and move away from fossil fuels, which is fine. But here's the situation. I don't believe we have the infrastructure in place to accommodate the introduction of all these vehicles across the country. For example, they build stations, you know, near the railroad stations right now. We can leave a car and charge it. Or when you go to Sprouts or you go to Vons, you'll see these little stations where you can do that. Well, the question comes up is you're putting more demand for energy and where is that going to come from?
So, for example, people are, you know, with computers and appliances, the demand is going more and more. Now, not everybody has solar. So, for example, I have a neighbor that drives about two hundred and fifty miles. She's got a charger, I guess it's a Volt Chevrolet, and it could be charged for seven or eight hours. The tremendous demand on that, you know, and there's a shift from the price of gas to electric. But one of the biggest concerns I have is what are you going to do with all the batteries?
Art Wiederman, CPA: Yeah. Yeah.
Dennis Kushner: And that's a huge concern. What do you do with them? And, you know, if you buy a Tesla. I've seen some of those batteries. They're huge. So there's an issue about what do we do about disposable batteries? Secondly, let's talk about affordability. The concern is the middle class and the lower economic class. How can they afford to buy an electric car? What is it going to take? And if they buy one, how are they going to be able to service it in terms of charging etc.? So those are issues that are going to have to be dealt with.
A bigger issue is this. Take a look at the weather throughout the United States. And what do you do with inclement weather in Minneapolis and New York and Wisconsin and other places like that where the weather is really bad in the wintertime? What happens to your vehicle? Can it be charged? What happens? Look what recently happened in Texas where they were using windmill technology. You remember everything kind of froze. These are issues that they're going to have to deal with going forward.
Now, keep in mind that the oil and gas companies around the world are huge and, you know, Russia's economy is really predicated on crude oil. And so you look at Russia, China, Korea, North Korea, South Korea, they all have a huge appetite for oil. And I don't think that Chevron and Exxon and all the other oil companies are just going to shut down and walk away. I think it'll be a big battle going forward. I think you'll see more maybe hybrids, if you will. But will everybody buy an electric car? I don't know. But who knows? I mean, it's going to be a long, long play before that happens. I believe California wants to go all green by I forgot what the date was. That's huge since we have probably the largest population in the country living in California, something just south of 40 million people.
Art Wiederman, CPA: We talked about oil and gas, right? And then technology. Anything else you want to say on technology?
Dennis Kushner: Well, I think the tech sector is, you know, just so much going on here. If you look at cyber security, the demand for software and other kinds of products to safeguard our assets in this country, whether it's your personal assets, your dental practice, your corporation, there's going to be tremendous demand for support in that area with technology and everything else daily, hourly to continue to deal with all the things that are going on that we've been faced with. So there's going to the technology space is going to continue to grow in all aspects.
Art Wiederman, CPA: I want to make a comment about that. First of all, last night we did our Business of Dentistry webinar series, which I was talking about, and the subject was cybersecurity. We had Anders Erickson from Eide Bailly, who's an expert. He was explaining all of the things that dentists have to do to make sure that your IT is up to snuff and everything is protected. Because when the bad guys get a hold of you folks, it's not pretty. They shut your business down, they ransom you. They are really, really, really smart. And we also talked about fraud and embezzlement. So if you want to see that webinar, go to our website, which is EideBailly.com, go to our YouTube channel and the Business of Dentistry. That should probably be up. It'll definitely be up by the time that this podcast comes out.
And it was interesting that I was watching Dennis we were chatting a little bit before we came on that the chairman of the Federal Reserve, Jerome Powell, was asked by Scott Pelley on 60 Minutes last week, you know, he's talking about everything that you've said. The economic numbers are really good. You've got six, seven percent growth. You've got unemployment coming down six, five, four percent. And so Scott Pelley asked Jerome Powell, what is the one thing that is going to upend the U.S. economy's recovery? And he said cyber attacks. He said if the bad guys get a hold of the financial system and the business sector, they can stop payments, they can shut the economy down. So that is, like you were saying, a big, big concern for.
So doctors, if you do not have a good cybersecurity plan, get one. Do it today or tomorrow, please, please, please. I've had clients who have been shut down by and they've been ransomed and it's not fun. So, Dennis, I think one of the last things we're going to be talking about today is the debt. And that is something that I have always I mean, I think what is it? We're up to about six trillion dollars. I mean, the CARES Act was three point two trillion. The stimulus in December was nine hundred. That's four point one. The American Recovery Plan Act was one point nine. So that is six trillion. President Biden is proposing the infrastructure bill is another two point two trillion. I mean, you know, I remember, Dennis, that in 1981 when President Reagan was elected and Jimmy Carter left office, interest rates were at 20 percent and the national debt was nine hundred billion dollars. So from 1776 to 1980, we accumulated 900 billion of debt. So since then, we're now where is it now? It's got to be over twenty five trillion, right?
Dennis Kushner: Oh, yeah. Yeah. And don't forget, you know, somebody one of the senators or congressmen I can't remember who it was, was talking about eliminating all the debt for education, which is something like one point three or five trillion. I mean every day you hear about something. My, my point is, you know, how much more do you mortgage? The future of the debt structure here's what I see happening. First of all, you're going to see taxation for corporations. It's just a matter of when and how much. Two taxation for individuals. When and how much, is it going to be gone? Is four hundred thousand dollar the right number? Who knows? People have to do that and then you've got capital gains. I mean, you know, it's amazing. And then what the states want to do and then the counties and the cities, I mean, it's just unbelievable that everybody's got their hand out because we're between a rock and a hard place.
Most cities around the country have gone through the reserves that they've had that they've built up over years, and they're really running on empty right now. They're hoping the federal government will give money to the state and state will give money to the respective counties to bail them out. We'll wait and see what happens. But the biggest concern is printing the money. And again, it weakens the value of the dollar. You know, how much is the dollar, the value of the dollar today by something Art versus five years ago? And that's happening.
Art Wiederman, CPA: But it's a math problem. So I think Dennis and you know these numbers better than I do. I think the revenues of our country, I mean, tax revenues and Social Security, it's somewhere in the three. Well, maybe it's less what everything that's happened with the pandemic. But in a normal year, three to three and a half trillion dollars, I mean, if you have 30 trillion dollars of debt, every single one percent increase in interest rate on that debt is 300 billion dollars. It's 10 percent of our total revenues. I mean, it's a math problem. So something's going to have to give. They're going to do something. You think they'll do anything with Social Security somewhere down the road? Because that's a, you know, a big deal.
Dennis Kushner: Let me say something. To me, most a lot of people, white collar jobs, for example. At some point in time, I think it's like maybe May or June, I can't remember which date would be they end up that's the amount of money that they stop taking out of their checks for social security.
Art Wiederman, CPA: May 15th.
Dennis Kushner: So my point is this. One thing they could do is continue not to pay for it all year instead. I mean, there's one example, that's one way to continue money moving into that. By not cutting off in May and at the end of the remaining seven months for everybody. OK, number two, I think what they have to look at is when can people at certain ages go because people are living longer? Maybe they move to the time frame from 65 to maybe it's 68. I don't know.
Art Wiederman, CPA: They've already done that. I mean, my full retirement date. I'll be 62 in August. My full retirement date is not sixty five. It's sixty six and nine months. So, you know.
Dennis Kushner: But these are things that they can do easily to, you know, to move that up the scale. Because like I said, people are living a lot longer today than they have in the past. But you know, a lot of people today, a lot of people earn a lot of money. The question is what percent of the people are paying into Social Security that are cut off on May the 15th they don't pay any more for the year. And if you paid for the entire year, just hypothetically, I've heard this discussion, pay for the entire year of not just cutting it off in May. How much is it? How much money is it? Well that generates a lot of money.
Art Wiederman, CPA: Yeah, right. Right now the maximum is right around one hundred and forty thousand dollars that you pay to Social Security. About ten years ago, fifteen years ago, they made Medicare unlimited. I can see them doing I mean they would raise hundreds and hundreds of billions of dollars. It would, you know, and it's not going to tick off voters. That's the other thing is that we spend a lot of money on entitlements through our budget. And that's one of the reasons they haven't touched Social Security or anything like that, because there's, what, 60 million, seventy five million voters that are over the age of 65, especially with the baby boomers getting into that age. So, you know, that's one thing. But the debt really scares me. Not as much maybe in your lifetime or my lifetime. But at some point, the folks that are loaning us this money are going to say, I want more. And it's going to given the only way to do it is that they can either cut spending or they can raise taxes. And nobody's willing to cut spending right now because that's not politically correct and stuff. So it's something that's scary.
And, you know, that's why I tell you, doctors save money, save money. Cash is king. Cash is king. Fund your retirement plans, invest in technology in your businesses to make you stand out from everybody else because you want to get to the age of 55 or 60 or 65 and have several million dollars saved so that you don't have to go to work. And if something happens because this economic stuff that Dennis is talking about, as you can tell, he's just an absolute frickin genius when it comes to knowing all these different things. I'm supposed to say that because he's talking to me. Right. But, you know, you've got to be prepared. And if you're getting to the age of 60 and you have five hundred thousand dollars saved, you're not going to be a happy camper. And my mission my legacy is to beat you guys over the head to save money and to be ready for retirement. That's what you want to do.
So, Dennis, my God, there's just so much great, fantastic information. Anything else you got you want to talk about? We've covered jobs, we've covered inflation, we've covered interest. Anything for my dentists.
Dennis Kushner: I'd like to give you some pearls of wisdom. I teach strategic planning in my corporate life and everything. And I think planning is critical to the viability of your business. And so even though you're a dentist or a doctor or whatever you're doing, you may not be a finance person, but you could get services. I really think that you need to take a look at your business and look at who your competition is and what are you doing. What can you do that provides a better service, if you will, to your clients versus your competition. And whether you buy somebody or not I think that's key. It's not only just cutting back on how many toothbrushes you give away. That's not the issue. The issue is looking at the competition. Why would somebody select you as their dentist versus somebody else? So I think there needs to be more planning in that area. And how do you provide the best competitive advantage and grow your business? A lot of business is growth referral business.
Art Wiederman, CPA: Yeah, it was really funny, Dennis. So I gave a lecture back when we were giving live lectures about two years ago to a local dental society. We had about 50 people in the audience and one of the guys that I was lecturing with was a dental marketing guy and one of the people sitting in the front row. I won't forget this for a long time. He stood up and he said it was actually the marketing guy who was saying, listen, I just had a big box dental practice chain open up across the street. And it's nice and it's new and I can't compete, and I got up and I said, you know what? You have to compete, you have to go out there, you have to differentiate as Dennis was saying, differentiate yourself, social media, website and service.
I mean, if you want to look at service, look at Google Ritz Carlton, the Ritz Carlton chain is an absolute mega example of what services and Dennis is absolutely right is you have to make yourself differentiate yourself. You're not just a dentist, you know, who are you? So that's a really good point.
Dennis Kushner: One last thing I want to interject, if I may say is this. You know, you have the how is the business run from the time somebody wants to set up an appointment to checking their insurance and everything else? That is another critical element that frustrates people being able to contact the dentist to get an appointment, having things done properly, where they plan ahead for your next visit and everything else. A lot of companies just don't do a very good job of running the day to day affairs of the business. Even if you're a good dentist, if you don't have a strong back office that provides the best service and process to your customers, you're going to lose customers. So that's another thing where it's important.
Art Wiederman, CPA: Great point. I mean, doctors, you need to you need to basically take a step back and say, if I were a patient in my practice, would I walk out of here and say, wow, this was a great experience and I'm going to go home and I'm going to call my neighbor or go knock on his or her door and say, you need to go to the dentist. Think about it for your own practice.
If the answer is no, then you need to make changes. If you have that front office person who's been there for thirty five years and will not change the way he or she does what they're doing, you need to make a change. We talk about the definition of insanity, doing the same thing over and over again and expecting a different result. So there you go.
Mr. Kushner, you are a wealth, a wealth of information. And I thank you very, very much for your wonderful insights. I hope this information I'm sure it's been helpful to our listeners again, folks, where this is going to come out right around the end of April. So it's very timely. And, you know, you get to watch the bouncing ball.
I mean, if you're going to borrow money, if you're going to expand your business, I mean, people are going to start living their lives. They already have. You go to restaurants here in Southern California you see they're open. In California, Dennis, they're all Governor Newsom said they're opening June 15th. The whole state's going to open up, you know, and so these are things that are happening. And hopefully we don't have another wave of this virus. But, you know, this virus isn't going away. And if we have enough information to control it. And the health care and the health care professionals are doing a great job in that but, you know, invest in your business, invest in your people, invest in continuing education. These are all the things that you as a dentist need to do.
And again, I mean, interest rates, they could go up, inflation could go up, interest rates could go up. And but right now, I mean, Chairman Powell, just like you said, Dennis, Chairman Powell on 60 Minutes said they're probably not touching the base interest rates at least into 2022. So that's a good thing for people that want to expand their businesses. Dennis Kushner, one more time. How do people get a hold of you?
Dennis Kushner: Well, you can go to the Fordham Web site that he gave you earlier. Our contact information is there. If you want, you can always reach me on my on my personal cell, which is 408.621.0930.
Art Wiederman, CPA: All right. Dennis Kushner, my good friend. Hang on as I sign us up here. What a great job with great information. Thank you so much for what you do to help businesses, what you helped educate all of us about the economy and what you're doing with your involvement in the military, in the Marines. It's just wonderful.
Folks, if you want to get a hold of me in my office in Tustin, California, 657.279.3243. If you have a greater than 50 percent reduction in your gross receipts, probably in the second quarter of 2020, do not file for forgiveness or consider not filing for forgiveness until you get a hold of us. We're doing these analyses. We got these spreadsheets that people from MIT would be proud of and we are getting tens and tens of thousands of dollars back from many of our clients.
Make sure that you attend our next webinars. We've got three coming up. Actually, we have those will be before this comes out. So actually, May 12th, Wednesday night. Is going to be Metrics of Your Dental Practice, and then I'm excited in June, we're going to have Gary Takacs talking about how to reduce your dependency on insurance, go to www.EideBailly.com/dentalseries.
One more thing, folks. Just want to remind you again, we are now because of all the stuff I'm doing with the ERTC and the PPP, we are now publishing every other week. So it's every other week you'll see us and it's still going to be great content. I've got some fantastic guests like Dennis coming up here. Well, that will do it, folks, for this episode of The Art of Dental Finance. Don't forget to go to www.DecisionsinDentistry.com and www.ADCPA.org if you're looking for a dental CPA.
That is it for this edition of the Art of Dental Finance and Management with Art Wiederman, CPA. It's a pleasure to talk to you. Thank you for the honor and the privilege of your time. Thank you for all the wonderful comments. Please tell all of your friends about our podcast. I mean, we've got thousands of people listening to us every single week. And again, this is Art Wiederman for the Art of Dental Finance and Management signing off. Have a wonderful day and we'll see you next time.