originally appeared in USA Today:
Wall Street investors cheered the deal to avert the fiscal cliff — but some executives who invest in job-creating plants and equipment gave it a much cooler reception.
As President Obama prepared to sign a compromise bill that raised taxes half as much as he once proposed, while postponing scheduled cuts in spending, Honeywell's CEO said the move to cut the deficit wasn't enough to get him writing checks again.
That's one reason the economic outlook for early 2013 is still modest, even as the stock market celebrated the deal, pushing up the Dow Jones average more than 300 points to its highest close since December 2011.
Nothing is going to change from where I was two weeks ago, he said, a leader of the Fix the Debt coalition of chief executives lobbying Congress to kick-start negotiations on issues from corporate taxes to entitlement spending. We'll still continue with a plan that's diminished from where we were six or seven months ago.
The fiscal cliff deal is too incomplete to get businesses investing much again soon, business groups say. The package delays spending cuts that had been scheduled to take effect this week for two months.
The bill did not raise the government's borrowing limit, setting up a potentially crippling fight about raising the debt ceiling next month, Cote said. When Congress balked at raising the limit in August 2011, that contributed to a 20.7% drop in the stock market between July and October.
President of the Committee for a Responsible Federal Budget, said it's nearly inconceivable that the bill will release pent-up demand from businesses that want to buy equipment and software, and build or expand buildings.
The deal falls well short of what's needed, she said.
A slowdown in business investment was one of the biggest reasons the recovery slowed in mid-2012, according to government data, and it was highlighted by economists as proof that fear of the fiscal cliff was hurting business. Investment in equipment and software dropped 2.6% in the third quarter after rising 18.3% in the same stretch of 2011.
But some companies won't recover confidence until they know what happens to federal spending.
Until the possibility of automatic spending cuts, or sequestration, is eliminated, it's still hanging over our industry, according to a spokeswoman for Lockheed Martin, the nation's biggest defense contractor. Until it is, it stifles investment in plants, equipment, people and (research and development).
The director of tax policy for the National Federation of Independent Business said the measure's provision extending an existing tax break for investment in equipment up to $500,000 could bolster investment by smaller businesses. That's a provision business owners tell us they use, and it's a good incentive, he said.
Showing posts with label debt. Show all posts
Showing posts with label debt. Show all posts
Thursday, January 3, 2013
Monday, May 14, 2012
The Great Recession Cut Deep
Story first appeared in USA Today.
The economy may be improving but many American families are still weighed down by debt and without a safety net.
One out of five families owes more on credit cards, medical bills, student loans and other unsecured debt than they have in savings, according to a new University of Michigan report. And the number of families surveyed at the end of 2011 that have no savings at all increased to 23.4%, compared with 18.5% in 2009.
The people who were down and out, without much money, in the recession have ended up staying there or even worse.
And the mortgage crisis is not over. Among homeowners, 1.7% said that they expect to fall behind on their mortgage payments in the near future. At least that is slightly less than in 2009, when 1.9% expected to run into mortgage problems.
At a time many Americans are trying to claw their way out of debt, they have no emergency fund and little or no retirement savings. Sixty percent of workers say that the value of their savings and investments is less than $25,000, according to EBRI's 2012 Retirement Confidence Survey. And retirement confidence is at historically low levels.
American workers who went through long spells of unemployment often have had to drain down their savings. Many cashed in their retirement savings to help them keep up with their bills. And even when they finally have gotten a job they could not easily improve their finances. They still have debt to deal with before they can take care of things like saving more money or paying for their kids' college education.
Not everyone is under dire financial straits. In fact, 14.6% of American households have more than $50,000 in saving accounts and other liquid assets, such as CDs and bonds. That is up from 11.8% in 2009.
Two things that may have helped boost their savings. They may be trying to get rid of risky investments, such as stocks, and seek shelter from liquid assets such as savings accounts, CDs and bonds. And they may be cutting back on their spending.
And nearly half of families say they have no debt at all from credit cards and other unsecured loans, the same percentage as in 2009, the report says.
Unfortunately, the number of families who are underwater in debt has risen.
Now, 10% of families owe more than $30,000 in unsecured debt, up from 8.5% in 2009.
For more national and worldwide related business news, visit the Peak News Room blog.
For local and Michigan business related news, visit the Michigan Business News blog.
For healthcare and medical related news, visit the Healthcare and Medical blog.
For law related news, visit the Nation of Law blog.
For real estate and home related news, visit the Commercial and Residential Real Estate blog.
For technology and electronics related news, visit the Electronics America blog.
For organic SEO and web optimization related news, visit the SEO Done Right blog.
The economy may be improving but many American families are still weighed down by debt and without a safety net.
One out of five families owes more on credit cards, medical bills, student loans and other unsecured debt than they have in savings, according to a new University of Michigan report. And the number of families surveyed at the end of 2011 that have no savings at all increased to 23.4%, compared with 18.5% in 2009.
The people who were down and out, without much money, in the recession have ended up staying there or even worse.
And the mortgage crisis is not over. Among homeowners, 1.7% said that they expect to fall behind on their mortgage payments in the near future. At least that is slightly less than in 2009, when 1.9% expected to run into mortgage problems.
At a time many Americans are trying to claw their way out of debt, they have no emergency fund and little or no retirement savings. Sixty percent of workers say that the value of their savings and investments is less than $25,000, according to EBRI's 2012 Retirement Confidence Survey. And retirement confidence is at historically low levels.
American workers who went through long spells of unemployment often have had to drain down their savings. Many cashed in their retirement savings to help them keep up with their bills. And even when they finally have gotten a job they could not easily improve their finances. They still have debt to deal with before they can take care of things like saving more money or paying for their kids' college education.
Not everyone is under dire financial straits. In fact, 14.6% of American households have more than $50,000 in saving accounts and other liquid assets, such as CDs and bonds. That is up from 11.8% in 2009.
Two things that may have helped boost their savings. They may be trying to get rid of risky investments, such as stocks, and seek shelter from liquid assets such as savings accounts, CDs and bonds. And they may be cutting back on their spending.
And nearly half of families say they have no debt at all from credit cards and other unsecured loans, the same percentage as in 2009, the report says.
Unfortunately, the number of families who are underwater in debt has risen.
Now, 10% of families owe more than $30,000 in unsecured debt, up from 8.5% in 2009.
For more national and worldwide related business news, visit the Peak News Room blog.
For local and Michigan business related news, visit the Michigan Business News blog.
For healthcare and medical related news, visit the Healthcare and Medical blog.
For law related news, visit the Nation of Law blog.
For real estate and home related news, visit the Commercial and Residential Real Estate blog.
For technology and electronics related news, visit the Electronics America blog.
For organic SEO and web optimization related news, visit the SEO Done Right blog.
Housing Debt A Huge Burden
Story first appeared in USA Today.
Feeling like you're drowning in credit card debt, student loans and medical bills?
If you are, you're likely not alone — and that could explain why everywhere you turn you hear ads offering some quick-fix deal to cope with debt.
About one in five U.S. households owe more on credit cards, medical bills, student loans and other debts that aren't backed by collateral — so not including car loans — than they have in savings, checking accounts and other liquid assets, according to a new University of Michigan report. Some families have not been able to make substantial headway.
Average savings levels have gone up since 2008. But the U-M research showed that there had been no improvement in financial liquidity between 2009 and 2011 — except among families with more than $50,000 in savings and other liquid assets.
Families feared the worst.
In other words, families who could afford to save more money often did so because they feared the worst.
Research did not show how families built more savings, but they may have cut spending and they sold riskier assets and put that money into savings accounts.
At the same time, others who were hit hard with higher payments on adjustable-rate mortgages, declining home values and job loss had an extremely tough time rebuilding their savings.
The U-M results are consistent with other data showing that a large number of lower-middle income households have negative net worth. Families owe more than they own, and are having trouble managing their debt.
But higher-middle income and high-income households have much stronger balance sheets, and they aren't having difficulty paying their bills.
Not everyone is drowning — but even so, some may fear they're only treading water.
The U-M report showed:
• Many families fear more mortgage troubles ahead.
About 1.7% of families surveyed in 2011 said it is very likely or somewhat likely that they will fall behind on their mortgage payments in the near future.
It isn't much of an improvement compared with 2009 during the crisis when 1.9% of families had such expectations.
For some families, the concern is whether they'd have enough cash flow to cover the mortgage and housing expenses after taking a pay cut, seeing a spouse lose a job and struggle to find another or dealing with an earlier-than-expected retirement.
It's possible, Stafford said, there will be continuing troubles for mortgages in 2012 and 2013.
• Yet there is some optimism about housing.
Stafford noted that about 4.6% of those families surveyed said they're very likely or somewhat likely to fall behind on their mortgage payments in the coming 12 months. That's down significantly from 6% who expressed that fear in 2009.
• Many homeowners easily turned into renters after the crisis.
If you ended up behind on a mortgage in 2009, the U-M research showed that there was a good chance that you moved out of a house and ended up renting two years later.
Among homeowners who were behind on their mortgage in 2009, the report showed that 19.3% were renters by 2011.
By contrast, just 6.5% of homeowners were renters by 2011 among those not behind on mortgage payments in 2009.
• Nest eggs weren't quickly rebuilt after families dug into savings to pay bills.
Families with no savings or other liquid assets rose to 23% in 2011, up from 18.5% in 2009.
• Credit card debt can turn into a huge burden.
About 10% of families in 2011 had $30,000 or more in credit card debt and other non-collateralized debts. That compares with 8.5% in 2009.
High housing costs a bad sign
Who got into the most trouble?
One predictor proved to be areas where a large group of people had dedicated an extremely high share of family income — say 25% or more — toward housing.
If people made what Stafford calls an excessive commitment to housing in 2007 before the housing collapse, they faced greater difficulty once home values tumbled and the Great Recession hit.
Families continue to face difficulties because there are still a lot of underwater mortgages out there.
Any additional stress on household finances would undermine whether the mortgage is paid. Being underwater with a mortgage and other debts, clearly limits a consumer's ability to take on debt to support other types of spending.
For more national and worldwide related business news, visit the Peak News Room blog.
For real estate and home related news, visit the Commercial and Residential Real Estate blog.
For local and Michigan business related news, visit the Michigan Business News blog.
For healthcare and medical related news, visit the Healthcare and Medical blog.
For law related news, visit the Nation of Law blog.
For technology and electronics related news, visit the Electronics America blog.
For organic SEO and web optimization related news, visit the SEO Done Right blog.
Feeling like you're drowning in credit card debt, student loans and medical bills?
If you are, you're likely not alone — and that could explain why everywhere you turn you hear ads offering some quick-fix deal to cope with debt.
About one in five U.S. households owe more on credit cards, medical bills, student loans and other debts that aren't backed by collateral — so not including car loans — than they have in savings, checking accounts and other liquid assets, according to a new University of Michigan report. Some families have not been able to make substantial headway.
Average savings levels have gone up since 2008. But the U-M research showed that there had been no improvement in financial liquidity between 2009 and 2011 — except among families with more than $50,000 in savings and other liquid assets.
Families feared the worst.
In other words, families who could afford to save more money often did so because they feared the worst.
Research did not show how families built more savings, but they may have cut spending and they sold riskier assets and put that money into savings accounts.
At the same time, others who were hit hard with higher payments on adjustable-rate mortgages, declining home values and job loss had an extremely tough time rebuilding their savings.
The U-M results are consistent with other data showing that a large number of lower-middle income households have negative net worth. Families owe more than they own, and are having trouble managing their debt.
But higher-middle income and high-income households have much stronger balance sheets, and they aren't having difficulty paying their bills.
Not everyone is drowning — but even so, some may fear they're only treading water.
The U-M report showed:
• Many families fear more mortgage troubles ahead.
About 1.7% of families surveyed in 2011 said it is very likely or somewhat likely that they will fall behind on their mortgage payments in the near future.
It isn't much of an improvement compared with 2009 during the crisis when 1.9% of families had such expectations.
For some families, the concern is whether they'd have enough cash flow to cover the mortgage and housing expenses after taking a pay cut, seeing a spouse lose a job and struggle to find another or dealing with an earlier-than-expected retirement.
It's possible, Stafford said, there will be continuing troubles for mortgages in 2012 and 2013.
• Yet there is some optimism about housing.
Stafford noted that about 4.6% of those families surveyed said they're very likely or somewhat likely to fall behind on their mortgage payments in the coming 12 months. That's down significantly from 6% who expressed that fear in 2009.
• Many homeowners easily turned into renters after the crisis.
If you ended up behind on a mortgage in 2009, the U-M research showed that there was a good chance that you moved out of a house and ended up renting two years later.
Among homeowners who were behind on their mortgage in 2009, the report showed that 19.3% were renters by 2011.
By contrast, just 6.5% of homeowners were renters by 2011 among those not behind on mortgage payments in 2009.
• Nest eggs weren't quickly rebuilt after families dug into savings to pay bills.
Families with no savings or other liquid assets rose to 23% in 2011, up from 18.5% in 2009.
• Credit card debt can turn into a huge burden.
About 10% of families in 2011 had $30,000 or more in credit card debt and other non-collateralized debts. That compares with 8.5% in 2009.
High housing costs a bad sign
Who got into the most trouble?
One predictor proved to be areas where a large group of people had dedicated an extremely high share of family income — say 25% or more — toward housing.
If people made what Stafford calls an excessive commitment to housing in 2007 before the housing collapse, they faced greater difficulty once home values tumbled and the Great Recession hit.
Families continue to face difficulties because there are still a lot of underwater mortgages out there.
Any additional stress on household finances would undermine whether the mortgage is paid. Being underwater with a mortgage and other debts, clearly limits a consumer's ability to take on debt to support other types of spending.
For more national and worldwide related business news, visit the Peak News Room blog.
For real estate and home related news, visit the Commercial and Residential Real Estate blog.
For local and Michigan business related news, visit the Michigan Business News blog.
For healthcare and medical related news, visit the Healthcare and Medical blog.
For law related news, visit the Nation of Law blog.
For technology and electronics related news, visit the Electronics America blog.
For organic SEO and web optimization related news, visit the SEO Done Right blog.
Friday, April 27, 2012
Student Loan Debts Still High
Story first appeared on USA Today.
Households have whittled down the massive debt they racked up in the mid-2000s credit bubble, but apparently not enough to nudge them into a spending binge that could jump-start the recovery, some economists say.
Household debt is closely watched by economists because consumers burdened by big monthly payments for mortgage, credit card and student loan obligations are less likely to splurge on clothing, furniture and travel. And consumer spending makes up about 70% of the economy.
Many economists expect the government to report Friday that the economy grew at a moderate 2.5% to 3% annual rate in the first quarter, driven largely by exports and business investment. Consumer spending likely rose a more modest 2.1%, according to IHS Global Insight.
One reason consumer purchases have not taken off is high debt. Consumers have worked hard to pay off credit card, mortgage and other debt in recent years. Total mortgage and other consumer liabilities have fallen from a record 123% of disposable income in late 2007 to 105% in the fourth quarter, according to the Federal Reserve and IHS.
Yet the decline masks key areas of concern. Student loan debt increased $117 billion last year to a record $1 trillion, according to the Consumer Financial Protection Bureau. Many Americans are staying in school or returning to bolster their skills amid a bruising job market.
Mounting student loans are burdening young workers who are key to overall spending. Rising debt, as well as poor job prospects, have prompted many to put off marriage and live at home longer, dampening household formation and furniture purchases. More than 80% of 18-to-34-year-olds who took out college loans still have a balance, and more than a third of those owe more than $20,000, says a CouponCabin.com survey released this week.
Mortgage debt, meanwhile, has dropped more than 7% since early 2008. But consumers who owe more than their homes are worth are still burdened by high debt and have cut spending as a result, according to a report last month by the Brookings Institution.
Credit card spending picked up late last year, helping fuel strong holiday sales. But with wage growth still tepid, such purchases declined in January and February.
For more national and worldwide related business news, visit the Peak News Room blog.
For local and Michigan business related news, visit the Michigan Business News blog.
For healthcare and medical related news, visit the Healthcare and Medical blog.
For law related news, visit the Nation of Law blog.
For real estate and home related news, visit the Commercial and Residential Real Estate blog.
For technology and electronics related news, visit the Electronics America blog.
For organic SEO and web optimization related news, visit the SEO Done Right blog.
Monday, April 16, 2012
Bank Credit Card Debt Habits
Story first appeared in USA Today.
Banks are sticklers in their dealings with customers. Overdraw your bank account by even a buck, and you could get dinged with an overdraft charge. Pay a bill just minutes past 5 p.m. on the due date? Expect a hefty late fee.
But when it comes to holding themselves to exacting standards for collecting old debts from credit card customers, some major banks get all loosey-goosey.
The nation's two largest banks allegedly cut corners — using shoddy procedures and flimsy records — when moving to collect credit card debts or selling bundles of them to outside collectors known as debt buyers, according to a series in American Banker, which covers the industry.
Bank of America sold bundles of old debts "as is" to debt buyers, with the proviso that its records might be incomplete or inaccurate, that some of the debts might have been wiped out in bankruptcy or that some might even have been paid off.
Did the bank care that the buyers would set packs of debt collectors on supposedly delinquent customers despite potentially flawed records? A bank spokesman would only say the language is fairly standard in the industry … to protect the buyer and seller on changes that occur after the loans are sold.
That's probably not much comfort to customers such as a Maryland resident. After getting behind on her credit card, she paid it off in 2006 with a $1,872.70 check made out to Bank of America and sent to a debt collector. But after her "debt" was sold to a debt buyer, she spent three more years battling collection efforts. She finally hired a lawyer and counter-sued to end the harassment.
JP Morgan Chase was accused by a whistle-blower of going after delinquent customers based on similarly lax records. According to the whistle-blower, the bank sold a bundle of court judgments against credit card customers that its own lawyers had labeled "toxic waste" because the debts were so lacking in documentation, they were considered uncollectible. Chase wouldn't comment on the American Banker stories, but it said the "overwhelming majority" of credit card collections were correct.
Much of this avalanche of debt is fallout from the go-go years before the financial meltdown, when banks extended credit and granted mortgages to practically anybody with a pulse. People got in over their heads, and when the housing bubble burst and the recession hit, banks were faced with a wave of defaults.
The problems with credit card collections are reminiscent of the recent scandals in which major banks used "robo-signed" documents to push through foreclosures without proper legal review. Just weeks ago, Bank of America, JP Morgan Chase and three other financial institutions agreed to pay a $25 billion settlement.
It's unclear how widespread the abuses are with credit card collections, but the reports are yet another reason it's important to have a federal bureau protecting the interests of consumers in their dealings with financial institutions. In 2009, it took a new law to force banks to halt egregious abuses of credit card customers, who had been hit with sky-high fees and interest rate hikes for the flimsiest of reasons.
The easiest way to avoid collections is, obviously, to pay your bills. And banks have a right to collect what they're owed. But they also have a legal duty to have accurate records to back up their claims. Selling off the debts to other businesses that will chase down customers with calls, letters and lawsuits doesn't absolve banks of that responsibility.
For more national and worldwide related business news, visit the Peak News Room blog.
For healthcare and medical related news, visit the Healthcare and Medical blog.
For local and Michigan business related news, visit the Michigan Business News blog.
For law related news, visit the Nation of Law blog.
For real estate and home related news, visit the Commercial and Residential Real Estate blog.
For technology and electronics related news, visit the Electronics America blog.
For organic SEO and web optimization related news, visit the SEO Done Right blog.
Banks are sticklers in their dealings with customers. Overdraw your bank account by even a buck, and you could get dinged with an overdraft charge. Pay a bill just minutes past 5 p.m. on the due date? Expect a hefty late fee.
But when it comes to holding themselves to exacting standards for collecting old debts from credit card customers, some major banks get all loosey-goosey.
The nation's two largest banks allegedly cut corners — using shoddy procedures and flimsy records — when moving to collect credit card debts or selling bundles of them to outside collectors known as debt buyers, according to a series in American Banker, which covers the industry.
Bank of America sold bundles of old debts "as is" to debt buyers, with the proviso that its records might be incomplete or inaccurate, that some of the debts might have been wiped out in bankruptcy or that some might even have been paid off.
Did the bank care that the buyers would set packs of debt collectors on supposedly delinquent customers despite potentially flawed records? A bank spokesman would only say the language is fairly standard in the industry … to protect the buyer and seller on changes that occur after the loans are sold.
That's probably not much comfort to customers such as a Maryland resident. After getting behind on her credit card, she paid it off in 2006 with a $1,872.70 check made out to Bank of America and sent to a debt collector. But after her "debt" was sold to a debt buyer, she spent three more years battling collection efforts. She finally hired a lawyer and counter-sued to end the harassment.
JP Morgan Chase was accused by a whistle-blower of going after delinquent customers based on similarly lax records. According to the whistle-blower, the bank sold a bundle of court judgments against credit card customers that its own lawyers had labeled "toxic waste" because the debts were so lacking in documentation, they were considered uncollectible. Chase wouldn't comment on the American Banker stories, but it said the "overwhelming majority" of credit card collections were correct.
Much of this avalanche of debt is fallout from the go-go years before the financial meltdown, when banks extended credit and granted mortgages to practically anybody with a pulse. People got in over their heads, and when the housing bubble burst and the recession hit, banks were faced with a wave of defaults.
The problems with credit card collections are reminiscent of the recent scandals in which major banks used "robo-signed" documents to push through foreclosures without proper legal review. Just weeks ago, Bank of America, JP Morgan Chase and three other financial institutions agreed to pay a $25 billion settlement.
It's unclear how widespread the abuses are with credit card collections, but the reports are yet another reason it's important to have a federal bureau protecting the interests of consumers in their dealings with financial institutions. In 2009, it took a new law to force banks to halt egregious abuses of credit card customers, who had been hit with sky-high fees and interest rate hikes for the flimsiest of reasons.
The easiest way to avoid collections is, obviously, to pay your bills. And banks have a right to collect what they're owed. But they also have a legal duty to have accurate records to back up their claims. Selling off the debts to other businesses that will chase down customers with calls, letters and lawsuits doesn't absolve banks of that responsibility.
For more national and worldwide related business news, visit the Peak News Room blog.
For healthcare and medical related news, visit the Healthcare and Medical blog.
For local and Michigan business related news, visit the Michigan Business News blog.
For law related news, visit the Nation of Law blog.
For real estate and home related news, visit the Commercial and Residential Real Estate blog.
For technology and electronics related news, visit the Electronics America blog.
For organic SEO and web optimization related news, visit the SEO Done Right blog.
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