The Consumer Board released October’s Consumer Confidence Index number today and it was below what anyone was expecting. It fell to 47.7 for the month which is the Board’s second lowest reading since May.

to put the number into perspective; a number higher than 90 means that the economy is doing well and anything above 100 says that there is strong growth in the economy. The lowest that the Consumer Board has ever measured was the record low of 25.3 in February 2009. It only took a few months to climb back up to 53.4 last month.

The reason that consumer confidence is so important is because it is the number that tells how much consumers are spending on items. Because spending on these items accounts for 70% of the United States economy (according to the government), it is an important economic indicator.

So, what does a drop in the consumer confidence index number mean? It shows that consumers have a grim outlook of the future.

According to Lynn Franco, the director of the Conference Board’s Consumer Research Center, “Consumers also remain quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays.”

This news is not welcomed by the retailers in the country. Last year, spending around the holidays fell to levels not seen since the 1960′s. With so many retailers across the United States still hurting and struggling and also going out of business, many of them are counting on this holiday season to prop them up and maybe put them in the black for the year.

The Consumer Board gets the Consumer Confidence Index by sending surveys to 5,000 homes across the country. For October’s numbers, the cutoff date was October 21st.

I honestly think all the figures and indexes like this put people into worry-mode. When people are truly worried about their jobs and their finances they don’t spend. For the past couple of months, people have been worried about their income even with plenty of job security. Jobs aren’t being lost at the rate that they were and there are plenty of places where people are working and not having to worry whether or not their job will be there the next day.

The Consumer Confidence Index was something that we didn’t have before the 60′s and it seems as though the country’s consumer spending was not that bad through the 50′s (after WWII anyway).

What do you think about the Consumer Confidence Index and any of the other financial indexes that come out telling you how the economy is doing? Are there any of these indicators that you follow to tell you how things are going?

I believe I would follow the unemployment numbers a bit more closely than this one.

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What you can learn from this ebook

In the course of a busy day, you may write a check at the grocery store, charge tickets to a ball game, rent a car, mail your tax returns, change service providers for your cell phone, or apply for a credit card. In each transaction, you reveal bits of personal information, like your bank and credit card account numbers; your income; your Social Security number (SSN); or your name, address, and phone numbers a goldmine of information for an identity thief. Once a thief has that information, it can be used without your knowledge to commit fraud or theft.

Identity theft is a serious crime. People whose identities have been stolen can spend time and money cleaning up the mess the thieves have made of their good name and credit record. They may lose out on job opportunities, and loans for education, housing, or cars. They may even get arrested for crimes they didn’t commit.

Can you prevent an identity theft? As with any crime, you cannot completely control whether you will become a victim. But according to the Federal Trade Commission (FTC), the nation’s consumer protection agency, you can minimize your risk by managing your personal information cautiously.

It looks like the airlines are at it again. They are really wanting to get any money that they can from you, the flyer, whenever and however they can. They pull dirty, sneaky tricks and expect consumers to just fall for them or accept them as the way it is. However, it kind of is “just the way it is” because I think in the United States, we have become accustomed to being kicked around by the airline industry.

So, what have the airlines done this time? Well, they have decided, all within hours of each other, to start charging an extra $10 per ticket if you decide you want to fly during the busiest travel days of the year.

The $10 charge that the airlines are imposing will be in the form of a “miscellaneous surcharge” that will be added to all the tickets that are for the days of November 29th, January 2nd, and January 3rd. The four airlines that have all decided to go this route are American Airlines, Delta, Northwest, and U.S. Airways.

Of course U.S. Airways has decided to take part in a new kind of charge. This is the same company that keeps increasing its baggage fees and even charges you an extra $5 if you want to check-in your baggage at the desk in the airport. That is outrageous in my honest opinion. When I was in Maryland for my cousin’s wedding in July, I asked my uncle if I could use his computer to print out my check-in information and when I told him that it would cost me an extra $5 if I waited until I got to the airport he looked at me and said, “Wow…that’s outrageous.”

So, when you go shopping for those plane tickets for this holiday season, remember that not only will you be paying extra for checked baggage, but now you also have to consider this new fee. That means when you’re looking at Orbitz or wherever you go to buy your tickets, the price that you’re seeing is not the price that you will pay. In some instances, your ticket will cost $30 or more than what the internet says. At least that is my understand of how this fee will work.
My guess is that the airlines don’t want to give you an upfront quote due to the fact that the lower price they actually see on the website will draw some customers in who are simply looking for the cheapest fare.

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The new data from the United States Department of Labor was released recently and the outlook for recovery in the job market is a bit depressing. The data suggests it will take many years for the labor market to fully recover to the level it was before the recession. This is even if the economy is turning around.

Unemployment rose to 9.7% in August which equates to 14.9 million people who are out of work and are currently looking for a job. The unemployment rate of 9.7% is the total population, when you divide that number into populations such as teenagers the number can vary greatly. The unemployment rate for teenagers is around 26%.

What is going wrong with the system right now is that to keep up with population increase and other natural increases, 125,000 jobs have to be created every month to keep up. Currently, we’re still losing jobs every month. Even though we’re losing jobs at a much slower rate than earlier this year, we’re still not gaining any ground.

Here are some figures from MSNBC and the Department of Labor about the current economy and unemployment:

2014: The year Moody’s Economy.com predicts the unemployment rate will finally dip toward 5 percent, considered to be the “normal” level.

7.4 million: The number of jobs lost since the recession started.

24.9 weeks: The average duration that unemployed workers are out of a job, the highest level since the Department of Labor started tracking the figure in 1948.

4.98 million: The number of people unemployed longer than 27 weeks, also the highest level since World War II, although the growth in the size of the labor market over time contributes to that.

9 million: The number of workers forced to take part-time jobs who would rather work more hours.

25.5 percent: The unemployment rate among teenagers, the highest level on record since 1948, breaking the previous high of 24.1 set in 1982.

10.1 percent: The unemployment rate for men over age 20.

7.6 percent: The unemployment rate for women over age 20.

8.9 percent: The unemployment rate for white workers over 16 years old, short of the record 9.7 percent from 1982.

15.1 percent: The unemployment rate for black workers over 16 years old, far short of the record 21.2 percent from 1983.

13 percent: The unemployment rate for Latino workers over 16 years old, short of the record 15.7 hit in 1982.

1.4 million: The number of construction jobs lost since December 2007 as the housing crisis intensified.

65,000: The number of construction jobs lost in August, mostly in nonresidential and heavy construction.

537,000: The number of financial sector jobs lost since the recession began, including 28,000 shed in August.

829,000: The number of retail jobs lost since the recession started and consumers pulled back spending, including 10,000 lost in August.

544,000: The net increase in health care jobs since the recession began, with 28,000 being added in August.

2.6 percent: The rise in average hourly earnings over the last year, with a boost of 6 cents in August bringing the average to $18.65.

0.8 percent: The smaller increase in overall weekly earnings over the last year, which was held back by workers getting fewer hours.

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The banks that were supposedly too large to fail last year when the government decided to bail out crumbling banks are now bigger than they were just a year ago. Even with measures in place to try to keep banks from getting too large, somehow these banks have gotten bigger and continue to grow.

J.P. Morgan Chase holds more than $1 out of every single $10 deposit made in the United States. Big surprise, so does Bank of America and Wells Fargo. Along with Citigroup, these banks issue half of the mortgages in the country and two out of every three credit cards.

FDIC chairman Sheila C. Bair has said regarding the weight of the banks on the financial system, “It is at the top of the list of things that need to be fixed. It fed the crisis and it has gotten worse because of the crisis.”

A few problems with these banks being bigger than they once were is that:
1) Consumers will have less choice when it comes to banking services and these banks will likely take advantage of that situation.
2) The bigger the bank, the more likely it is to think that the government will prop it up if things start to go south. This could lead to more risky moves on the banks’ parts.
3) The government’s stakes in these companies is large, but it still does not have voting shares.

Of course, this all came about due to banks failing or otherwise being “too good of a deal to pass up.” Meaning, that banks like Wachovia were simply too cheap with too large of a customer base to not purchase. That’s what Wells Fargo did, and that’s what has been happening all across the banking industry. However, it does seem a bit counter productive when you start to think about it.

These banks were once too large to fail and nothing has changed it seems. The only difference is that every dollar banks are lending is being scrutinized and those who want to borrow money to buy homes or other things are also being scrutinized as hard as the banks are in some situations.

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The discount retailer Dollar General is planning its initial public offering in an attempt to raise up to $750 million in a preliminary filing. However, it is unclear how the proceeds will be spent. What many investors do know is that a large portion of the money will be used to pay down the company’s debt.

There will also be a $200 million dividend paid to the existing shareholders.

Dollar General has been doing particularly well in the current recession due to the fact that many consumers have been looking for a way to save money and make their dollars stretch a bit further. Dollar General isn’t like actual dollar stores like the Dollar Tree. Dollar General sells name brand goods like Clorox, Herbal Essence, and Huggies. The stores feature prices that are sometimes cheaper and the stores are small so that shopping is quicker and more manageable to shop in.

Sales have grown 13% in the last quarter for the discount retailer. The growth means that Dollar General has become one of the big guys in the retail game. Wal-Mart sales have declined 1.2% in the most recent quarter and even CostCo’s sales were down 8%.

Unfortunately for Dollar General, the debt the company owes is something that keeps investors at bay. The company’s debt stood at $4.1 billion as of May 1st. The company’s lease obligations aren’t even factored into the total debt. Of the 8,577 stores that the company runs, most of them are leased.

The amount of debt and lease obligations could be something that holds back some investors from putting their money into the company, regardless of the amount of profits and sales the company has realized in the past year.

As a response to the success of the cash for clunkers program, GM will be turning on some of the plants that were temporarily shut down and will begin amping up production.

The employees that were cut to 4 days a week will begin working their 5 days a week again; the workers that were left without jobs when their plants halted production will have jobs again. No one is complaining about the good news for jobs.

But, is this really a good idea for GM?

Sure, the company will be producing the more fuel efficient cars, thanks to the cash for clunkers program these are the cars that are being bought up as though they won’t be there tomorrow. However, after the program is over and consumers go back to not being able to afford the cars without the huge down payment of an old car or truck, what will happen to the extra cars that they are producing?

The cash for clunkers program was always a temporary fix to a much larger problem with auto makers. I believe that GM is smart for trying to cash in on it, but it’s a bit too little too late because the program will be out of cash in September and what will happen then?

I hope GM doesn’t get itself into a lot of trouble by amping up production on the cars and then losing money on them.

UPDATE: The Cash for Clunkers program is set to end on Monday at 8:00 PM. So GM should probably think twice about restarting the production.

What you can learn from this ebook

In an effort to describe, understand, and quantify the growth of greenwashing, TerraChoice Environmental Marketing Inc. conducted a survey of six category-leading big box stores. Through these surveys, we identified 1,018 consumer products bearing 1,753 environmental claims. Of the 1,018 products examined, all but one made claims that are demonstrably false or that risk misleading intended audiences.

Based on the survey results, we identified six patterns in the greenwashing, which we now recognize as the “Six Sins of GreenwashingTM”.

Of the 1,018 products reviewed, all but one committed at least one of the Six Sins of Greenwashing.

These findings suggest that greenwashing is pervasive, the consequences of which are significant:

• Well-intentioned consumers may be misled into purchases that do not deliver on their environmental promise. This means both that the individual consumer has been misled and that the potential environmental benefit of his or her purchase has been squandered.

• Competitive pressure from illegitimate environmental claims takes market share away from products that offer more legitimate benefits, thus slowing the penetration of real environmental innovation in the marketplace.

• Greenwashing may create cynicism and doubt about all environmental claims. Consumers – particularly those who care most about real environmental progress – may give up on marketers and manufacturers, and give up on the hope that their spending might be put to good use. This would eliminate a significant market-based, financial incentive for green product innovation and leave committed environmental advocates with government regulations as the most likely alternative.

In a recession, everyone feels the pinch. One of the worst hits is the cost of living continuing to increase while many are losing their jobs and homes. Without any extra income (or even a complete and sudden loss of income) it is difficult to pay for goods and services that are the same as they were a year ago, but still cost more.

Certain monthly bills, such as telephone or cable bills, continue to rise. However, these services can be seen as an expense that in unnecessary and are often the first to go when it comes time to cut costs.

However, bills like electricity and gas are almost necessary. Over the winter, some who have seen very hard times were freezing to death. I can imagine it will be worse this year versus years in the past, this summer many people will likely have heat strokes in their own homes.

In light of the current economic crisis, some of these companies may want to consider measures to help their customers get through times when they have a hard time making ends meet.

Other than monthly bills, consumer goods are seeing a rise in prices. More and more every month, consumers have to pay more for the same amount of an item and sometimes the same price for less. In February 2009, the consumer prices index (CPI) rose 0.4 percent, the highest rise in prices since July when gas was over $4.00 a gallon and the CPI rose by 0.7 percent.

The reason the CPI rose 0.4 percent while unemployment rose to the highest levels in nearly a quarter century was due to the increase in oil prices (yet again).

College tuition is another key player in inflation. Although I don’t have any exact numbers to back it up, while I have been in college (since August 2004), I have paid an average of 10% more every year onto my already (what I think is) outrageous tuition.  Here’s an interesting fact, this year tuition and admissions at my school are going up but classroom spending and faculty numbers are falling.

On the other side, while lower prices sound like a good idea, the decrease in prices can actually make a recession worse by

- Lowering wages – When prices of items decrease, wages also decrease as employers attempt to cut costs.

- Layoffs – Employers who are not receiving the same income will begin to lay off workers as they are unable to keep them on payroll.

- Lowering home and stock prices.

As you can see, either side of the argument has its fair share of points that need to be considered. However, I feel as though raising prices, versus keeping them steady through times like these, can be seen more as “kicking them when they’re down” rather than actually helping the economy. I also find that anyone would be hard pressed to find an average consumer that knows the “other side” to rising prices. Most consumers just feel the pinch on their own wallets, and I can say that I’m really no different.

Well…maybe not, but it looks like the Federal Reserve may be stopping any new efforts to “revive the economy” at its meeting this week. According to economists, Chairman Ben Bernanke and his colleagues don’t want to “overdo” the stimulus medicine and that “stimulating the economy” through the Fed may fan the flames of inflation later, so the Fed is expected not to make any new moves this week.

Over the past year, the Fed has done everything it could do to try to help stimulate the economy including putting $1.2 trillion into the economy in an attempt to lower interest rates. The lower interest rates were meant to get consumer spending up.

The Fed is also expected to hold the key lending rate to banks at the record low of near zero percent. It has said in the past that it will keep the rate low for “an extended period.” Economists believe that the rate will stay between 0 and 25% until sometime next year.

It is looking more and more like some of the things that the government has done to help the economy has had a bit of an effect…after all it was just in January when the first stimulus was passed and took effect. Since then, home prices have stopped declining as rapidly and are actually starting to level out in a lot of places, and in the last month, consumer spending has increased and the jobless rate has also started to slow down. Some analysts think that the economy is declining, but at a much lesser rate than the final quarter of 2008. The April-June quarter is between a 1 and 3% decrease, while the final quarter of 2008 was 6.3%.

Of course, some of the problem is that we will not know whether the economy would have recovered as quickly without the government interfering as much. A lot of the government agencies we currently have in place were put in place to keep a depression like the one seen in 1929 from happening again.

A problem that is happening now is that mortgage rates have started to increase again, and while eventually mortgage rates need to go back up, right now the housing market is still hurting and home buyers are still a bit scarce. To help this out, the Fed may decide to start buying more mortgage backed securities as well as government debt to help drive the rates of mortgages down.

Saving money is a wonderful thing. It gives banks money to invest, it gives the average person money to invest, money is thrown into markets that would not have otherwise seen those dollars, and the list goes on. Unfortunately, the economy we live in is driven by consumer spending. Money circulates even further, creating jobs and supporting industry, if spending rises or stays static.

The savings rate, which used to be reflected by negative numbers, has risen all the way to 5.7% in April. (Here’s a hint: If savings rates were once in negative numbers, we were spending more than the money we made.) In a time when what we really need is spending, that is when Americans have decided we are going to save. That is so amazingly backward. Let’s spend when we really need to save and let’s save when we really need to spend.

The economic problems we are currently facing were somewhat created by the large amount of personal and government spending, fiscal irresponsibility, and escalated debt. Unfortunately, personal spending, not government spending, mind you, on a small scale from a vast array of consumers, is actually one of the best repairs for the economic problems we are in right now. The funny thing is that most Americans thought they were already saving. They thought a lot of what they were spending was considered saving: home improvements to raise home value, real estate purchases, and much more, expecting these were all investments, with the hope of a positive return. This was further fueled by even higher home values and a corresponding “wealth effect”. Investors felt the same way about the stock market. Investments in the bank were low, creating falling CD and saving account interest rates. It was logical, however, due to a much less return from banks than alternative investments. “What drove the savings rate down was stock price appreciation and housing appreciation. People spent on those because they thought it was like saving,” said J.P. Morgan Chase economist Bruce Kasman.

The belief that investing is saving was obviously wrong, because it helped lead to the depreciation of banks, helping to cause this disaster. The proper saving is always good for a thriving economy. However, right now, no saving is good for the economy. Nobody had been saving before, so saving now is the right mode of recovery. Spending, which is growing, will actually be one of the most effective economic recovery actions the recession has seen. When the economy has recovered, all the indexes are solid, and joblessness is not so pitiful, feel free to save again… the right way.

On Tuesday, almost 800 Chrysler, Dodge, and Jeep dealers will go out of business across the country. About a month ago, Chrysler asked a bankruptcy court its permission to end franchise agreements for what amounts to 25% of its dealerships. The reason Chrysler is doing this is to cut costs; if its trying to cut costs closing these dealerships may be the way to go just because Chrysler can’t keep up inventory levels for the amount of dealerships it currently has.

Now another problem has arisen amongst Chrysler’s attempt to come out of bankruptcy.

Three of Indiana state pension and construction funds wants the United States Supreme court to stop the sale of Chrysler to Fiat because they believe that they are getting a bad deal in the sale. Yesterday, there was an emergency filing at the Supreme Court by consumer advocacy lawyers.

The sale of the majority of Chrysler LLC’s assets to Fiat Group SpA in Italy was approved Friday in New York, but there was a contingency that would allow anyone who had any complaints until Monday to air their grievances.

The group who initially wanted to file the complaint with the Supreme Court says that the deal between Chrysler and Fiat “unfairly favors the interests of Chrysler’s unsecured stakeholders ahead of those secured debt holders.” The secured debt holders include the funds filing. The funds’ lawyers also claimed that the Treasury Department acted unconstitutionally by using money from the TARP funds to provide money to Chrysler due to bankruptcy. It is claimed that the government intervened without permission from Congress.

In this case, Chrysler is in a lot of trouble and getting out of bankruptcy is best for ALL stake holders of the company and not just the unsecured or the secured debt holders. If I were a stake holder in Chrysler, I would rather the company try to make a speedy recovery from bankruptcy than to have to wait and watch my fund drop more and more because the company is in a prolonged bankruptcy. Arthur Gonzales, the judge overseeing Chrysler’s case, was the judge that approved the sale to Fiat last weekend and he even said that the deal was the ONLY alternative to liquidation.

If Chrysler liquidates, how much will your securities be worth then?

We should always pay attention to our expenses, especially in an economic downturn. Now more than ever, it is important that we cut our own personal costs and save money. One of those places to cut is in the monthly bills. It is extremely common to find you are paying too much for car insurance. Car insurance is a necessity if you own a car and drive it, especially if you have an accident and need it, but it is important to make sure your auto insurance company is not getting rich off of you. How do you know the difference and how do you change it?

There are online services that let consumers find the best rates from a vast selection of auto insurance companies nationwide. These companies are using these services to compete for your business, ultimately resulting in lower costs. You simply enter your expectations into the website and instantly receive quotes from a wide range of reputable automotive insurance companies.

One of the most effective of these services is www.GoInsuranceRates.com. Their website is absolutely free and they offer you the best insurance quotes from a nationwide market of reputable companies. The site also contains reference information that helps you understand how different policies work, more about each company and how to save the most money possible as compared to your insurance needs.

Reputable companies such as Progressive offer estimates from other insurance companies so you can compare them to the Progressive rates you are receiving. Sometimes Progressive does report rates that are lower than their own so it seems that they are being as honest as possible.

Car insurance rates are constantly changing and have actually dropped significantly in the past 12 months. Of course, your insurance company is not going to call you up and let you know their rates have dropped. If you operated a business, would you let your customers know they could save 30% on their plan by going elsewhere or starting a brand new policy? No. That would be your biggest secret. With a minimal amount of time on a website much like Go Insurance Rates,  you may be able to save hundreds of dollars. If it comes down to it, start calling around. You know the Geico slogan, “15 minutes could save you 15 percent or more on car insurance.” Well, it’s the truth. Spend an hour making four phone calls and you could easily receive some of the best rates in the industry.

Consumer confidence is one of those leading economic indicators mentioned in yesterday’s A Lesson in Recession, and it is rising! Despite jobless numbers that consumers have cared so much about that also causes money issues, combined with low home prices, consumer confidence is on the rise. The humorous thing is that it has not increased actual spending yet. “Consumers are not likely to spend just because they think things will get better,” said Mark Vitner, senior economist at Wachovia. “They will actually have to see them get better.”

To best describe the economy’s current challenges, a closely monitored housing index released Tuesday showed home prices fell at the sharpest rate ever in the first quarter, though the drop-off was worse as a combined figure at the beginning of the quarter. Americans are also fighting an unemployment rate that’s expected to climb to 9.2 percent by the end of the month, up from 8.9 percent, as companies lay off more workers.

What you are likely seeing here is that the normal Macy’s shopper is okay with getting her jeans from Wal-Mart. People who have never looked at a coupon in their lives are now considering even clipping a few. Consumer confidence is up, but the amount being spent does not reflect it because people finally understand the concept of conservation. The fear is that this conservation is at the wrong time. When consumer confidence goes up, we hope that people will buy the price inflated Guess jeans or something instead of being okay with Wrangler from Wal-Mart. More money circulating through the economy, even if it is from inflated designer prices, is the key here, and for the first time in a long time we are just not seeing it.

The Conference Board’s Consumer Confidence Index’s 14.1-point surge to 54.9, following another big gain in April, is encouraging. Economists surveyed by Thomson Reuters were expecting 42.3. Just a few months ago, in February, confidence levels had hit a new historic low of 25.3. May’s confidence level is the highest since eight months ago when it was 61.4. The levels are also closer to the 58.1 we had just last May before the recession began, though this is still far from healthy. A reading above 90 means the economy is on solid footing. The Consumer Confidence Index is determined by a mail survey of a representative sample of 5,000 U.S. households from May 1 to May 19.

The consumer confidence report offered encouraging news to merchants and customers, after confidence plummeted to historic lows late last year causing so many retail establishments to run into so many problems and discouraging spending. Consumer confidence sank to a measly 38.8 in October after the recession began, when we were still arguing about what to call it, at that time lowest level since The Conference Board started tracking the data. It has fallen even lower since then. Thankfully, the recent two-month stock rally has helped spur dramatic rebounds in April and May, restoring a sense of strength that may bring us out of the recession quicker than expected.

The consumer confidence level has increased at a fairly steady rate for a couple of months, but the numbers that came out today were much higher than anticipated as far as the increase goes. The Conference Board’s Consumer Confidence Index has a 14.1 point surge; increasing to 54.9 for the month of April. Economists were expecting a Confidence Index of 42.3. This comes just months after February’s lowest level ever of 25.3.

The consumer confidence interval is determined by a mail survey of a sample of 5,000 households in the United States from May 1st to May 19th.

The confidence interval increase means that many people are feeling more optimistic about the future of the economy including unemployment numbers. However, it is likely that the unemployment rate will hit just above 9% in the next month or two. It is nice to see that people think that things are getting better even when there are is a lot of grim news coming from economic indicators.

Today when the consumer confidence index rose, so did stocks. The Dow Industrial Average rose over 200 points, or 2.4 percent today after the news about consumer confidence came out.

The consumer confidence index began falling in October, when it fell to 38.8. At the time, it was the lowest number that had ever been seen since the Conference Board started tracking the confidence index.

This, by no means, means that people will begin throwing their money away on expensive clothing or other things that have been deemed “unnecessary” in the past few months. What was once just something that may have been a splurge is now seen as frivolous and is possibly frowned upon in some social circles.

Another reason that people aren’t spending their money on those things is that there aren’t as many jobs going around anymore and that the actual wealth going around is much less than it was even a year ago. With people having less and less money, I am actually pretty surprised that the consumer confidence index has risen. Perhaps people are getting so tired of the current economy that they are being overly optimistic on the surveys that are being sent out.

I mean, even this news is coming out in a positive light following the news last week that housing prices has fallen in the sharpest decline in the first quarter of the year.

In my optimistic point of view, perhaps this is the beginning of some sort of economic increase. If you follow the stock market, commodities market, and other indicators, then perhaps things are starting to pick up.

The United States is entering a much needed economic recovery. The worst of the recession is over. (Keep an eye out for articles this week detailing why that assertion is correct.) Unfortunately, the economic mood deteriorated last week as investors began to question whether the recent rally was premature. They were also warned about British government debt that raised concerns about how much money the U.S. government owes, mixed with the longstanding concern that we are borrowing entirely too much money from China and other countries.

As stocks rallied, starting in early March, investors were able to find signs of hope in reports that showed a still struggling economy. As the rally is slowing down, investors are rather uneasy going into this trading week, which will see through to two reports on April home sales and the latest assessment of consumer confidence. Combine that with a potential June 1 Chapter 11 bankruptcy filing by General Motors, and you have investors all over the country ‘sitting on pins and needles’.

What is scaring investors right now is the amount of jobless figures that are still going up. What investors fail to realize is that there are two kinds of economic indicators: leading and lagging. Leading indicators are economic actions that foretell an upward moving economy. Lagging indicators are economic actions that react slowly to economic changes, therefore leaving no predictive value. Jobless figures are a lagging indicator due to the fact that jobs are not created by most companies until capital is obtained or accounted for that support them.

Jobless figures are not going to go up until all the leading indicators, which are very strong right now, manifest themselves in the way of solid economic recovery. Economic recovery can and will not happen quickly because a strong recovery happens slowly as a solid foundation is formed under each step. The economy will waver a little with each rally followed by a short decline as that slow recovery has solidarity formed under it. You are also guaranteed to see a few more struggling businesses, especially in the financial market, hit Chapter 7 bankruptcy, liquidate, and be swallowed up by stronger businesses. When that occurs, there is nowhere to go but up because there are fewer weak businesses to slow down and weaken the recovery.

Major leading indicators squeezed out a gain last week. The Dow Jones industrial average rose 0.1 percent, while the Standard & Poor’s 500 index ended the week up 0.47 percent. The first test of ability to build on these gains comes Tuesday, when the Conference Board releases its May consumer confidence index which should provide some insight into consumers’ willingness to spend. Ron Weiner, president and chief executive of RDM Financial in Westport, Conn., says that while any positive news about consumers would be welcome, the market is likely to have just a short-term upward movement. “We want the consumer to be out there, we want them to spend,” Weiner said. “For the most part, however, we don’t see consumers going to pull us out of this economy because they are also paying down debt at the same time.” Investors are also concerned about retail due to the Commerce Department’s disappointing retail sales report for April, which took the market by surprise May 13 and sent stocks plunging.

Analysts say more stabilization in the housing industry is needed for a recovery to occur. A government report is also due this week on U.S. home prices during the first quarter of 2009. The housing data could be a big force in shaping investors’ attitudes. A housing recovery is crucial to helping boost consumer confidence and to allow banks to put aside some worries about eroding asset values.

Credit card holders feel they just won, but the new credit card legislation that President Obama signed into law Friday does not mean that you can start racking up those purchases worry-free. The rules will mostly go into effect in nine months from when Obama signed the bill, while others will kick in as early as 90 days afterward. As the new rules kick in and banks halt the abusive practices this legislation saves consumers from, you are likely to see more practices that are not against new policies that will hurt consumers just as badly, maybe worse. This may have been harmful to the balance we once saw. The banks have to respond to these changes in a way that is financially beneficial to them.

Not every response is positive. When you change a situation someone against you is banking on (pun intended), you often do not like their response. Whether you hold credit cards in order to rack up free rewards points or a debt you hope to one day pay off, you should watch out for several things: new fees, higher interest rates, less generous rewards and fewer promotional offers. It seems a few tips cannot hurt anybody.

Watch out for new fees. The new federal credit policy prohibits over-limit fees unless the cardholder agrees to allow transactions that exceed their limits. To make up for the obvious financial loss, banks will likely introduce other fees, possibly fees the “baby boomers” paid on their first cards but now thought were past history. As an example of the fees cardholders should watch out for, expect fees for rewards programs and possibly even fees for checking your balance.

You should expect annual fees to make a comeback. A few decades ago, annual fees were standard but dropped as competition among card issuers heated up. If you are anything like this author, you looked for cards with limited fees and an annual fee could be the deal breaker. Some issuers will attach annual fees on all their credit cards, while others will tie the fee to spending thresholds, so that only big spenders get away with fewer fees. It may be necessary for you to start racking up those reward points!

Prepare for higher rates. The current industry universal default allows banks and credit agencies to increase rates if a cardholder’s credit score drops or if they make late payments on other accounts. Once the new policies are in place, credit issuers will lose this powerful risk-management tool. Without the ability to act upon perceived risk level, card issuers will just start charging higher rates to everyone. Interest rates will likely go back to the 19% to 20% range for most people. The average variable-rate credit card today charges a low risk consumer 10.79% APR. (This information comes from BankRate.com, a leading industry analyst.)

Grace periods will become a thing of the past. The new legislation requires card companies to give consumers at least 21 days to pay their bills, but it doesn’t require them to offer a grace period, which isn’t the same as the cardholder’s due date though the two usually coincide somewhat. While the due date designates the day by which a payment must be received for the cardholder to avoid a late-payment fee, the grace period is the time during which the cardholder isn’t charged interest. Card issuers may get rid of grace periods altogether so that cardholders who pay their balances off each month will start paying interest immediately after making a purchase. Issuers have for many years wanted to get rid of the grace period on convenience users. It has become a bargaining tactic you will likely not see anymore.

Expect higher introductory rates. Low or 0% introductory APR offers have attracted consumers who posted a balance-transfer or opened up a new card. For example, this author is currently using a card that has three months left of a 0% introductory APR, one of many reasons it was such a wonderful credit move. Banks were able to offer those deals thanks to all the money they made on card users who made a late payment before the offer expired, invoking the bank’s penalty rate of 20% or more. Now that banks will no longer be allowed to increase interest rates on existing balances and all promotional offers have to last for at least six months, these promotions will likely disappear. Even those with perfect credit will likely see introductory rates no less than 6%.

Also expect lackluster or non-existent reward programs. Some companies have already been lowering rewards programs. Once they see lower revenue from penalty fees and interest charges due to the new legislation, they’ll become even less rewarding. Spending thresholds will likely go up so you will have to spend more to earn airline miles, points or cash back. Your creditor may also adopt more stringent rules, such as returning your rewards balance to a lower amount, maybe even wiping it out completely, if you make a late payment.

What can you do as a cardholder? Examine credit card statements and change-in-terms letters carefully. Issuers can currently change terms at any time with 15 days’ notice, but once the new law is in effect, they will have to give 45 days’ notice. You will be notified ahead of time that rates are increasing and you will be given the option to cancel your card prior to the rate hike. Remember that the vast majority of changes in terms are to the benefit of the creditor. If they send you a notice that terms are changing, read over it and find out if there are any changes that impact you in any negative way and act accordingly. When you receive any mailing from a creditor, look over every inch of every slip of included paper. You have heard of fine print. Do not assume that the fine print will be easy to find. Frankly, assume nothing.

Consumers who carry a balance will have to shop around for lower rates, perhaps in exchange for paying an annual fee in order to avoid high interest rates. Cardholders who pay their balances in full each month should not be affected. There is only so much interest that can be charged on purchases that are seventeen days old. To compare rates on new card offers, even preapproval offers, use sites like CreditCards.com, CardRatings.com or CardTrak.com. The only way to avoid interest charges upon disappearance of grace periods would be to stop using credit cards altogether or make sure credit card payments are on time and you have plenty of available balance on your card. In fact, experts advise that you keep half of your card balance unused because future creditors will not be inclined to think you are overextending your finances or living beyond your means.

If you have a low APR offer right now, do everything right and make no mistakes. Send payments in on time and do not do anything to trigger a penalty rate such as exceeding your credit limit. If you can acquire internet access via an SSL secured website, do it. It allows convenience and reduces mistakes. This author prefers internet access to credit accounts and has never had one problem.

If you have any significant miles, points or cash back and worry that your card may scale back its program, it may be smart to redeem your rewards now while there is still such a thing as a free lunch. (My apologies, Mr. President, but you made it the best cliché to use at that moment.)

There was a lot of new technology introduced at the Consumer Electronics Show at the beginning of the year. Now is the time when that new technology has started to come out and become available to the public.

There is finally word about the Palm Pre coming out soon. The New York Times said yesterday that the phone would be coming out the first week of June. The phone, which has been hailed as the device that may very well save Palm from the brink of bankruptcy, has a new and “revolutionary” operating system called WebOS. Palm hasn’t created a new operating system in many years.

Then there is another mobile device gartering some attention: the new Acer Aspire One netbooks have new features like a multi-gesture touchpad (think iPhone like gestures for a laptop touchpad), a card reader that reads many different formats than just SD or Memory Stick Pro, and one of the largest screens for a “netbook.” At just over 11”, the A0751h is starting to cross into the ultra portable category where 12” laptops can sell for well over $1,500. However the A0751h keeps its price at around $350 MSRP.

With the introduction of new technologies, it is becoming more and more difficult to draw the line at what is a computer, what is a cell phone, and the difference between a netbook and a ultra portable laptop. Sure, when you look at a cell phone, you can see that it is a device that is subsidized by a cellular carrier, GSM phones have SIM cards…But, now there are netbooks that are being subsidized by cellular companies (that even require SIM cards for AT&T). Then there is a whole new category of MIDs (Mobile Internet Devices) that are handheld computers that are able to do most of the things that netbooks can do. Look at the picture at the top of the post…

This is a MID, but it doesn’t look too different from a HTC Tilt, or Touch Pro. These MIDs are really blurring the line between cellular device and PC and it’s not like it would be too difficult to put a cellular receiver in any of these devices to make them a cell phone.

I think that one day soon, the computer and the cell phone will be one device. Kind of like how there aren’t as many people carrying around cameras anymore since their phones’ cameras have fairly good resolution (or in the case of the Samsung Memoir for T-Mobile, it has an 8 megapixel camera attached). I wouldn’t mind having a device that did it all…camera, phone, computer. I already have a laptop I leave at home, a Palm Centro for my phone calls, a netbook for taking to school and traveling, and a digital camera…being able to have all of these devices in one place would be great.

This past Thursday, Chrysler asked a New York bankruptcy court to end its franchise agreements with 789 dealerships across the country and informed them that they would no longer be receiving stock, basically closing them. These 789 dealerships will soon be going out of business. Like any business that has just lost all life support, you will find many going out of business sales, even though these dealerships are not actually calling them such.

The dealers have just a few weeks to sell out their stock of Chrysler, Dodge and Jeep or risk losing thousands of dollars on them and their only option is to give current car buyers a serious deal. “You’ve got some very good negotiating power,” said Dave Champion, director of automobile testing for Consumer Reports magazine. “[Dealers are] really looking to shift this inventory. It’s just stacking up all around them.”

Champion said that it’s important to find out about incentives and hold backs, which are payments the dealer gets when it sells a car. “It’s not a bad idea to go in there with a low ball price…. The longer you wait, the less options you’ll have.”

Both General Motors and Chrysler say they have too many dealers for too few sales. They have wanted to get rid of less valuable showrooms so they would not exist at the detriment of more valuable dealers. The cuts would allow the stronger dealers higher profits and more money to spend on marketing, facilities and personnel, making them more competitive, also fitting in with the bankruptcy standards they must abide by in the way of effective cost cutting measures.

Fear is affecting axed dealers as they try to figure out what to do with expensive inventories that weren’t selling well even before the bankruptcy move last month. They’ve told us that the inventory is our problem,” said Keith Hollern, one of the owners of a Dodge dealer in Windber, Pa. “Want to buy one? We’re having a fire sale.”

Dealers generally borrow money to buy their inventories, then repay the loans and make a profit when the vehicles are sold. Unfortunately, Chrysler sales were down 46 percent the first quarter, so many dealers have been paying only interest for months. Even if the vehicles are sold at cost, dealers still lose thousands in interest payments.

“Chrysler doesn’t have the money to buy back the vehicles,” said company spokeswoman Kathy Graham, “but it also doesn’t want to leave dealers in a bind or see the inventory flood the market at bargain prices.” This has caused most of the dealers to sign a deal with GMAC Financial Services, Chrysler’s new finance company, to give loans to remaining dealers that Chrysler plans to keep so they can buy the 789 dealers’ unsold inventory and sell it themselves. The deal, though, doesn’t include about 4,000 2008 models still on the lots that after the summer will not sell.

Graham said those 789 dealers cut from the company will get Chrysler warranty reimbursement and sales incentives such as rebates and low-interest financing until June 9. After that, they won’t have benefits on either. That means the dealers have a high motivation to sell off their inventory before their franchise agreements end. Chrysler incentives on some vehicles can run as high as $6,000 or more. Without them, dealers who have been cut won’t be competitive with standing dealers who can comfortably offer discounts.

“They’re not giving us a lot of time,” said Michael Wolf, a Plymouth, Wisconsin Chrysler dealer whose franchise was among those that won’t be renewed. “They’re neglecting their liability of taking new inventory. They’re not taking anything back.”

“What’ll end up happening, if a dealer wants to stay in business, they’ll probably end up just selling it below cost just to get rid of it,” said Erich Merkle, an automotive industry analyst from Grand Rapids, Michigan. “You’ll probably be able to find Chrysler vehicles perhaps at under the dealer cost.”

Dale Horn, owner of a dealership in Malvern, Arkansas, who was one of the 789 that were cut, isn’t counting on any help from Chrysler to unload his inventory of 34 vehicles. “Right now, I don’t have much confidence that they will do what they say. Nobody’s called me yet saying they’re going to try to help me,” Horn said.

Waiting until the closure deadline might give buyers even greater buying power. Insiders say that inventory is beginning to dry up with word of the pending bargains. Waiting too long may be a detriment, stopping a buyer from getting their ideal car at their ideal bargain.

Pawnbrokers are businesses that offer short term financial assistance for consumers that usually may have bad credit and/or have been rejected for loans and credit cards. The person interested in getting a “loan” from the pawnbroker gives the broker something of value like a item of jewelry as collateral for a loan. The loan, which is typically shorter than 6 months, can have high interest rates. At 3-5% interest a month, pawnbroker loans are still far less than Payday loans, which in the U.S. can have interest rates in the 40-60% range.

In the United Kingdom, in the last 6 months of 2008, the pawnbroker company Albemarle and Bond’s profits increased from 24.9 million pounds to 26.5 million pounds, an increase of 19 percent. Another company, Cash Converters, also had a 120 percent increase in profits.

Some pawnbrokers, like H&T Group (who posted a 36.5% pre tax profit increase) will be increasing its number of stores from 106 to 250 over the next 5 years. From: Struggling Families turn to pawnbrokers

In the UK, the Consumer Credit Act of 1974 is the regulatory action taken against pawnbroker lending activity. The Act says that pawnbrokers have to give customers a detailed receipt as well as provide a final date of redemption and the interest rate the customer will be charged. The receipt is also needed to redeem the “item of value” from the pawnbroker.

In my opinion, while people may see the need for a short term loan, perhaps pawnbrokers shouldn’t be where they turn when they need money quickly. I think that when someone begins taking out short term loans then they fall down a “slippery slope” of debt. To me, a loan like this is like a high interest credit card where a person will go out and spend to the limit of the card then not be able to actually even make minimum balance payments on the card because they simply don’t have the money when the bill comes in.

What happens if a customer doesn’t have a source of income when the loan matures? The pawnbroker keeps their jewelry or valuable and that customer may have lost something very valuable to them because their situation didn’t change from the time they entered into the loan to the time the loan matured.

Ebay already has agreements for around 67% of Gmarket shares and made a cash offer of $24 a share for outstanding shares to Gmarket. Yahoo, who owns a 10% stake in Gmarket, said it will sell its shares to Ebay

The South Korean e-commerce company runs Internet Auction Company.

CEO John Donahoe said the deal brings together market leaders, “offering more opportunities for sellers and enhances our ability to serve complementary consumer segments.”

The deal is expected to close in the second quarter of this year.

Source

Certain monthly bills, such as telephone or cable bills, continue to rise. However, these services can be seen as an expense that in unnecessary and are often the first to go when it comes time to cut costs.

However, bills like electricity and gas are almost necessary. Over the winter, some who have seen very hard times were freezing to death. I can imagine it will be worse this year versus years in the past, this summer many people will likely have heat strokes in their own homes.

In light of the current economic crisis, some of these companies may want to consider measures to help their customers get through times when they have a hard time making ends meet.
Other than monthly bills, consumer goods are seeing a rise in prices. More and more every month, consumers have to pay more for the same amount of an item and sometimes the same price for less. In February 2009, the consumer prices index (CPI) rose 0.4 percent, the highest rise in prices since July when gas was over $4.00 a gallon and the CPI rose by 0.7 percent.

The reason the CPI rose 0.4 percent while unemployment rose to the highest levels in nearly a quarter century was due to the increase in oil prices (yet again).

College tuition is another key player in inflation. Although I don’t have any exact numbers to back it up, while I have been in college (since August 2004), I have paid an average of 10% more every year onto my already (what I think is) outrageous tuition. Here’s an interesting fact, this year tuition and admissions at my school are going up but classroom spending and faculty numbers are falling.

On the other side, while lower prices sound like a good idea, the decrease in prices can actually make a recession worse by:

• Lowering wages – When prices of items decrease, wages also decrease as employers attempt to cut costs.

• Layoffs – Employers who are not receiving the same income will begin to lay off workers as they are unable to keep them on payroll.

• Lowering home and stock prices.

As you can see, either side of the argument has its fair share of points that need to be considered. However, I feel as though raising prices, versus keeping them steady through times like these, can be seen more as “kicking them when they’re down” rather than actually helping the economy. I also find that anyone would be hard pressed to find an average consumer that knows the “other side” to rising prices. Most consumers just feel the pinch on their own wallets, and I can say that I’m really no different.

Americans’ incomes slipped further in February, dropping by 0.2 percent, the fourth drop in the past five months, as wages and salaries continued to be battered by the massive layoffs that have occurred as the recession, already the longest in a quarter century, has deepened.”

It just doesn’t seem like these two small paragraphs of information mesh well…at all. This is a “wait…what??” kind of moment. While people are earning less they are spending more? Perhaps it is because of things being more expensive…maybe it’s because they just want to see if money really can buy happiness. However, over the past few years while almost no one has saved any and a lot of people have put all their expenses on credit cards, spending is probably not the way to go.

Personally, I’m trying to cut back, I cook more and use coupons when it comes time to go to the grocery store. I actually spend a lot of time on the internet trying to find coupons and deals for things I have to buy anyway.

And it did. Today’s mortgage rates are under 5%

However, the problem is now that printing so much money will cause serious inflation.

The U.S. dollar’s value has fallen and it has caused the highest oil prices of the year.

It cost more than $1.36 to buy a euro, more than 2 cents higher than the previous day — an unusually large leap. And the British pound gained 3 cents against the dollar, which fell sharply against the Japanese yen.

The jump in oil prices was even more dramatic. The price of a barrel of crude oil went up nearly $3.50, or 7 percent, on the New York Mercantile Exchange, to its highest level since early December.

The Fed is hoping that unemployment and low consumer spending will help keep inflation down for now and the measure is actually meant to help fight deflation.

Source

In February the CPI increased back up to 0.4% for the month. The increase in the percentage came on the heels of an increase in the price of oil, which has been fluctuating between $40 and $47 a barrel for the last month and a half.

The price of oil is such a part of consumerism that it directly affects the cost of any goods or services we use or bring into our homes. So, even though hundreds of thousands of people are losing their jobs every month, because a group of oil tycoons across the world have made decisions to make themselves wealthier, everyone suffers.

As well as changing the design of packaging to be consistent across the store, the retail giant plans on introducing almost 100 new products to compete with popular national brands. It plans to start producing new flavors of fat-free ice cream and thin crust pizza as well as many other items.

There has been an increase in store brand sales since the beginning of the recession. As families try to save money, it becomes easier for them to buy a similar store brand item for (sometimes) much less than the price of a national brand.

Store brands also take advantage of national brand marketing because it is so easy for Wal-Mart to put its own items directly next to national brands and have consumers see both prices side by side.

Standard & Poor’s 500 index also fell below the benchmark 700 point level today. It hit a level today that it hasn’t seen since October 1996, over 12 years.

The drop in the market could mean that investors don’t see the bottom yet. Until they believe the bottom has been reached, investors won’t start putting their money back into the market to buy into “bargain bin” stock prices.

This is just more bad news for our unstable economy. When the indexes fall, investors get scared and that causes the rest of us to get scared. Consumers cut spending and start saving (which is good for some because they need to be saving money). However, this means that consumer confidence levels fall because no one is spending money…it’s kind of a vicious cycle.

However, with stories across the internet about consumers getting burned with the sales, we were hesitant to even pick up a DVD.

Sites like the Consumerist and even Yahoo.com have been telling stories about how customers are buying things like LCD or Plasma TV’s and the TVs are shattered and Circuit City refues to refund the money, and previous to the sale would not let the consumer open the item in the store (which I witnessed first hand, not being able to open items in the store).

This sale has been rediculous since the beginning when Circuit City was taken over by a lousy reseller.

Hopefully the store will ride off into the sunset like it should, instead of stories like this looming over its head in the demise.

This is the first year for the “best value” category for Consumer Reports, who offers such picks as best quality and best pick.

The magazine says that American automakers are making great improvements in quality over where they were just a few years ago, but still have to catch up with other foreign automakers that have been consistently good over the years.

When oil goes up, gas stations and refineries have no problem charging consumers more, but when it goes down…oh no…Now, sure gas is wayy down from last summer, but at the same time, it shouldn’t be where it is now. I had to explain to my friend why gas costs more when oil keeps falling and the explanation I gave her didn’t even make much sense to me.

Oil dropped to $34 a barrel today because of “economic fears.” Economic fears has become the leading cause of anything to happen it seems like. Hmm.