Category: Debt Management

In the aftermath of having to consolidate debt and adjust their financial ways in the wake of the Great Recession, America’s more well-to-do population is still bracing for more economic troubles before a recovery is truly felt.

According to a survey by PNC Wealth Management, only 20 percent of "ultra-wealthy" Americans felt the nation’s economy was showing signs of improvement. Forty percent felt that an economic recovery was still at least one year away.

Additionally, the survey found that current economic conditions had
adjusted how the wealthy had adjusted their investment strategies,
with 34 percent saying they were more conservative with their money.

All of the 1,046 respondents with at least $500,000 in valuable assets also stated they had be negatively affected by the economic downturn.

"There is no doubt that the last year has taken its toll on wealthy investors," said Thomas P. Melcher, executive vice president and managing director of Hawthorn, a division of PNC Wealth Management. "Unfortunately it often takes a severe crisis and a significant loss
of capital for investors to discover their true risk tolerance."

However, showing that having more money lessened the financial blow experienced by so many during the recession, fewer respondents (68 percent) with $500,000 to $1 million in assets reported a negative effect to their finances, while 48 percent of those with $5 million or more saw money troubles.

President Barack Obama’s most recent weekly radio address outlined his hopes that renewed engagement with the East may help to spur domestic job growth and reduce the amount of unemployed workers looking to consolidate debt.

In his address, Obama detailed his recent trip to Asia in the last week as an opportunity to "open a new era of American engagement" and discuss the nation’s financial relationship as the U.S. looks to continue its economic recovery from the Great Recession.

Noting that the U.S. and Asia do a great deal of commerce that can have a pronounced effect on the U.S. job market, Obama said that an increase of 5 percent in the nation’s exports to Asian Pacific nations could add "hundreds of thousands" of jobs across the country.

"In order to keep growing, we need to spend less, save more, and get our federal deficit under control," he said. "We also need to place a greater emphasis on exports that we can build, produce, and sell to other nations – exports that can help create new jobs at home and raise living standards throughout the world."

Obama also announced plans for a White House forum featuring CEOs, small business owners, and economists to discuss further solutions to the nation’s economic rebound.

Month-by-month unemployment rates increased in 29 states and Washington D.C. in October as more workers lost their jobs and have been forced to consolidate debt, the Department of Labor’s Bureau of Labor Statistics reported on Friday.

Alaska and Wyoming saw their unemployment rates see the largest increases, with growth of 0.6 percentage points to 8.9 and 7.4 percent respectively. Arkansas and Washington D.C. followed with 0.5 percentage point increases over September’s figures to 7.6 and 11.9 percent respectively.

Additionally, 14 states reported unemployment rates of more than 10 percent, while five states – California (12.5 percent), South Carolina (12.1), Florida (11.2), Delaware (8.7), and Washington D.C. – set record highs with their October rates.

Compared from figures from October 2008, Michigan recorded the largest increase in its unemployment rate form September figures, growing 6 percentage points to hit 15.1 percent.

Michigan also had the highest statewide unemployment rate across the country, followed by Nevada at 13 percent and Rhode Island at 12.9 percent.

Nationwide, the unemployment rate rose to 10.2 percent in October, hitting its highest point since March 1983.

After a precipitous decline in 2008, travel during the 2009 Thanksgiving holiday weekend is expected to increase despite consumers’ continued efforts to consolidate debt and limit their expenses in the wake of the Great Recession.

According to a recent study conducted by AAA, Thanksgiving weekend travelers will increase by 1.4 percent from 2008’s figures with 38.4 million Americans embarking on trips of 50 miles or longer.

"Although far too many Americans remain unemployed or under other financial stress, AAA’s projected increase in Thanksgiving travel from one year ago is another hopeful sign that economic conditions are stabilizing and improving in some areas, said AAA’s director of Travel Services Glen MacDonell.

In 2008 Thanksgiving holiday travel saw a 25.2 decrease as the economic crisis in the housing and financial markets worsened. The increased travel in 2009 is likely a sign that consumer confidence in the economy is recovering.

While automobile travel will be the most popular mode of transport and will be used by 33.2 million travelers, a 2.1 percent increase from 2008, more expensive air travel continued to see a drop in usage by 6.7 percent with only 2.3 million customers.

Since 2000, the number of Americans traveling by air during the Thanksgiving holiday weekend has dropped by 62 percent.

A new type of sale being utilized stateside by some online retailers this holiday season may provide opportunities for those consolidating debt to get their holiday shopping done without breaking the bank.

According to online discount website Totsy.com, "flash sales" are a type of promotion being used by an increasing amount of U.S. retailers this year. The deals offer deep discounts that consumers only have access to if they get an exclusive invitation.

By using the sales, retailers are able to offer lower prices than they would be able to the general public, while also specifically involving groups of consumers who are interested in their product.

"The US market has recently adopted the online flash sales model that has been incredibly popular in France and throughout Europe," said Guillaume Gauthereau, co-founder and CEO of Totsy.

Gauthereau added that Vente-Privee, a French company that helped popularize the private flash-sales concept in 2001, had been so successful that it attracted 8 million members may generate $1 billion in revenue in 2009.

Consumers seem to be adamant in their desire to spend less this holiday season. According to a recent survey from Experian’s Price Grabber, 54 percent of consumers expected to reduce their spending, while only 5 percent said they planned on increasing how much they were going to spend.

While the spike in unemployment seen during the recession has led to many jobless workers who must deal with debt consolidation and other financial problems, the effects of joblessness may reach beyond only financial problems.

According to a newly released report from the National Bureau ofEconomic Research studying the short-run effect that the job loss of parent on their children’s academic achievement, a parent’s unemployment increases the probability that a child will repeat a grade by almost 15 percent.

The report also cites other studies before stating that the involuntary loss of a job can have notable consequences on the psyche and health of the adult as well.

In addition to a permanent lowering of earning by up to 25 percent documented by three studies from the 1990s, another 2009 report was referenced that showed a "substantial" increase in mortality among workers who had lost their jobs in plant closings.

In a recent New York Times Report, Fishers, Indiana resident Robert Syck said that the relationship between him and his stepson had become strained since his firing from the position of a call-center manager in March.

"It’s only been particularly in the last few months that it’s gotten really bad, to where we’re verbally chewing each other out," Syck told the Times. "A lot of that is due to the pressures of unemployment."

Consumers are becoming more cost conscious when it comes to what they eat at restaurants, enabling them to do so more, according to a new survey from AlixPartners.

According to the survey, consumers’ expected spending per meal at a restaurant has decreased by 20 percent to $11.49 when compared with data from the first quarter of 2009. The survey added that spending was expected to decrease in the next 12 months by an additional 3 percent.

The reason for the additional decline in spending, the survey added, was because of an increased frugalness from diners with a preference for cheaper eats.

"Customers have been trained to take specials for granted," said Adam Werner, a director at AlixPartners and one of the authors of the study. "They have recalibrated their spending expectations based on the now-ubiquitous $5 sandwich and the $10 meal, and restaurants that aren’t marching in the promotions parade risk being left behind."

The survey also showed that being thrifty when it came to cheaper meals had enabled many consumers to maintain, if not increase, how many meals they ordered out. Sixty-three percent of respondents said they ate out at least once a week for the past 12 months, up from the 52 percent who reported doing so in data collected during Q1 2009.

Looking for discounted meals at restaurants could be a solution for families who are in debt counseling to save money while not making significant adjustments to their condition of living.

Workers dealing with debt counseling have the best chance at getting hired in the South, while employees in the West have the greatest chance of being laid off from their job, according to a Gallup survey released last week.

The Southern region reported the highest percentage of job vacancies in October at 29 percent, a 4 percent increase from September’s figures. The East saw a 3 percent jump in the amount of jobs hiring to have the second highest rate at 27 percent.

The South also was part of a three-way tie for the lowest rate of employers with the Midwest and East at 23 percent.

The West was shown to have the least favorable employment statistics. The survey found that the region had the lowest rate of jobs that were hiring workers at 23 percent, as well as the highest rate of jobs letting peoples go at 25 percent.

Despite the less-than-stellar results in the West, the survey noted that the job situation had "improved significantly" in every region compared to conditions earlier in 2009.

"Still, this means hiring and layoffs remain no better than they were last November as the fallout of the financial crisis was still unfolding," the report read. "And job-market conditions are nowhere near where they were as the recession was getting underway in January 2008.

Consumers who are dealing with debt counseling as a result of the economic downturn received more good news implying that recession may finally be a thing of the past, as initial unemployment claims continued to decline during October.

According to the U.S. Department of Labor’s Unemployment Insurance Weekly Claims Report, initial unemployment claims decreased to 512,000 during the week ending October 31, 20,000 fewer than the initial claims recorded one week earlier.

Additionally, the report found that while the insured unemployment rate remained steady at 4.4 percent during the week ending October 24 compared to the week prior, the number of people using unemployment insurance had decreased to 5.74 million, 68,000 fewer than the week prior.

The general decrease in unemployment figures comes one week after the U.S Department of Commerce revealed that the nation’s gross domestic product had expanded by 3.5 percent in the third quarter of 2009.

Juan Morales, the managing partner of Stanton Chase International’s Miami office, said that while it was "impossible" to confirm a correlation between the GDP and job growth because of the recent recession, the two had been connected in the past.

"As you know, this is one of the worst recessions our country has ever seen," he said. "However, if you look back at other recessions, and if you look at how other countries have done, job growth usually occurs about six months after some GDP growth."

A new report has revealed that while employment figures continued to decline into the fourth quarter of 2009, conditions steadily improved in what is likely a positive sign for those worrying about their finances as they consolidate debt.

According to ADP’s National Employment Report, nonfarm private employment figures decreased by 203,000 from September to October on a seasonally adjusted basis. The decline was 24,000 less than the revised employment decrease of 227,000 found from August to September, representing the seventh straight month that the decline in employment was less than the month prior.

The report also found that the largest decline in employment had been seen in the goods-providing sector, which lost 117,000 jobs. The service-providing sector saw the second largest decline, losing 86,000 jobs while the manufacturing sector saw a drop of 65,000.

However, despite the losses, some experts have seen a reversal in some sectors that are now looking to add workers.

"Since Labor Day, we have seen a dramatic increase at the executive level in start-ups to publicly traded companies in the information technology and clean technology sectors," said Charley Polachi, a partner at Polachi Access Executive Search Firm.

He added that the increase had been more pronounced on the West Coast than the East Coast, and that similar growth had been seen in the tech market for general management and sales at the executive level as well.