Category: Debt Management

Supporting the many studies that have indicated the 2009 holiday season will see consumers who stress consolidation and frugality over frivolous spending, a new survey from the National Retail Federation (NRF) has found that two-thirds of American families will be affected by the current economic situation

According to the survey, which was conducted for the NRF by BIGresearch, 65.3 percent of respondents said that the economy would be affecting their holiday plans this season in some way. Of those, 84.2 percent said that they were planning on spending less money, while 55 percent said that they would be more wary for sales and 41.7 percent said they would increase their usage of coupons.

Additionally, there were a larger percentage of respondents (70.1 percent) who said they would consolidate debt by shopping at discount stores this holiday season than by shopping on the internet (42.4 percent), at clothing stores (33.8 percent), or electronics stores (31.8 percent).

"While last holiday season was filled with chaotic confusion, adjusting to uncertainty has now become routine for many Americans," said NRF president and CEO Tracy Mullin. "This holiday season will be a bit of a dance between retailers and shoppers, with each group feeling the other out to understand how things have changed and how they must adapt."

In a previous survey, the NRF predicted that overall holiday sales would total $437.6 billion, a 1 percent drop from 2008 figures.

Even those struggling through their finances in some way, such as consumer credit counseling, need to find a way home for the holidays. Because of that, experts are urging travelers to lock their plans in now in order to avoidpaying top dollar in what looks to be a very hit-or-miss season when it comes to travel prices.

Unlike the holiday season last year, air travel for the 2009 season stands to see price hikes as the holidays approach due to 3.4 percent fewer flights taking off this season, according to Arlington, Virginia television affiliate Newchannel 8 recently reported.

According to FareCompare.com CEO Rick Seaney, the decrease in availability means that prices will not drop at the last minute like they did in 2008 and travelers should be proactive in making their travel plans as soon as possible.
"Bottom line is that holiday-travel procrastinators do so at their own peril this year, and practical travelers should be shopping now and buying before the end of October," he said, according to the Columbus Dispatch.

While a forecast for the upcoming season on Microsoft’s Bing Travel also urged consumers to plan ahead as well – saying that "the likelihood of fares continuing to increase as we near the holiday season far outweighs the likelihood of fares dropping significantly."

However, it added that there were deals to be had by consumers that outweighed those seen in 2008, noting that ticket prices for a traditional Thanksgiving holiday itinerary currently averaged $375, down $122 from last year.

For those in consumer credit counseling, every cent counts. Because of that, new savings plans rolled out by CVS and Target that rewards customers for "going green" at their retail locations this holiday season.

CVS was the first retailer to announce their plan last week, which will give their ExtraCare members $1 in savings for every four times they bring their own bags instead of requesting plastic bags.
Reward program members will be able to participate in the program by purchasing a 99-cent tag to place on their bags that are scanned after every purchase.

The program will be implemented at 7,000 of the stores nationwide initially, with the money from the tags being donated to an ecological cause, according to the Providence Journal.

Target, which is the nation’s fifth-largest retailer and sees more than 1.5 billion transactions every year, announced their own green savings plan on Monday that will go into effect at 1,700 of their stores on November 1. According to USA Today, customers who use their own bags to carry their purchases will receive a 5 cent discount for every reusable bag they utilize.

"We reward customers for doing good things," Melissa Studzinski, Target’s director of relationship marketing, told USA Today.

While those facing debt consolidation and warding off bankruptcy may be pleased by assertions from the Mortgage Bankers Association (MBA) that the economy is improving, they also must brace for the fact that it may not be felt until later in 2010.

The predictions, from the association’s chief economist Jay Brinkmann, warned consumers not tolend too much credence to economic growth that is seen in the final quarter of 2009. While growth may occur through the holiday season, the MBA predicted that it would slow in the first half of 2010.

Additionally, the MBA predicted that the unemployment rate, which currently stands at 9.8 percent, would peak at 10.2 percent by mid-2010.

"The recession is behind us but the effects of the recession will linger for some time in the form of higher unemployment, and lower levels of business investment and home construction," said Brinkmann, before adding that the economy would grow or contract depending on consumer activity.

"The large losses of consumer wealth in the form of reduced home values and stock market losses, as well as the absolute losses of income resulting from unemployment, reduced employment and the fear of unemployment have constrained consumer spending," he added.

On a more optimistic note, Brinkmann said that the implementation of the federal stimulus package and the eventual peak of unemployment would lead to the resumed growth of the economy for the second half of 2010.

A new Department of Labor survey is providing less than stellar news for those in debt collection looking for a job, as U.S. employers are ridding themselves of more employees than they’re hiring and sending jobless workers into the hardest job market in years.

The survey, which measured job openings and labor turnover for the month of August, found that a sizable disparity had become apparent when looking at employment numbers dating back to August 2008. While the data showed that there had been 50.9 million hires over the 12-month period, the total number of job "separations" was significantly higher at 56.1 million.

While the amount of job hires remained relatively stable, dropping from 4.2 million in July to 4 million in August, it also represented a decline of 1.6 million – or 28 percent – since its peak numbers seen back in July 2006.

The same could be said for the number of job openings, which at 2.4 million remained the same from July’s figures. However, the number of openings has dropped by 2.4 million – or 50 percent – from its peak numbers recorded in June 2007.

The Labor Department also found that while there had only been an average of 1.72 unemployed people for every job opening in December 2007, that number had skyrocketed to 6.05 persons per application in July.

While economists have made it no secret that the unemployment rate will likely rise well into 2010, a new survey from Bloomberg suggests that they may also be worried about what effect it may have on the economy as the country wades through the coming year on its way to recovery.

Drawing onthe 35 percent drop in car sales in August following the end of the Cash for Clunkers, the survey – which polled 57 economists between October 1 and October 8 and took their median forecasts – expressed worry that the economy would still be largely dependent on government funding in order for profits to occur in 2010.

Despite the economists’ forecasts that household spending would increase by 1.5 percent in Q1 2010 before increasing to 1.8 percent in Q2 2010, they also predicted that unemployment would exceed more conservative estimate and exceed 10 percent in Q1 2010 before averaging 9.9 percent for the year.

"You just can’t see a lot of strength on the consumer side given how battered income is from job losses and weak hourly wage growth," David Greenlaw, the chief fixed-income economist at Morgan Stanley & Co., told Bloomberg. "We’ve got a gradual recovery in the overall economy, but it’s not vigorous enough to knock down the unemployment rate by much."

The forecasts were released the same day that the Department of Commerce revealed that a weak dollar and an improving worldwide economy had resulted in a trade deficit of $30.7 billion in August, a $1.2 billion drop from July’s revised figures.

While it’s no secret that the job market is struggling as unemployment continues to climb, jobless workers who are running out of funding and looking to consolidate debt should consider a job in the health care industry, whichis currently one of the few jobs sectors experiencing growth during the recession.

"We’re helping to put Americans back to work," said Kathy Brockmann, the corporate executive recruiter at health care consulting firm Extended Care Clinical, according to the Chicago Tribune.

Brockmann added that because the firm specializes in hiring trained nurses and nursing assistants for the facilities they serve, the economic downturn has enabled them to address their shortage by filling positions with skilled laborers who would have otherwise been working elsewhere in a better economic climate.

In its most recent unemployment report, the Bureau of Labor and Statistics, employment in health care was one of the few sectors that saw an improvement with 19,000 jobs added that month and 559,000 jobs added since the beginning of the recession.

"If you’re looking to staff up and hire, there are people available with better skills and experience than we’ve ever seen in the job market, and you can get them for less money than you used to," said Michael Alter, president of SurePayroll, the Tribune reported.

While Alan Greenspan does not see an immediate end to the continued rise in unemployment seen over Q3 2009, he is optimistic that the economy grew over the same time period despite a "pretty awful" September.

Greenspan, the former chairman of the Federal Reserve, stated his optimism that the economy had expanded during Q3 2009 during an appearance on ABC’s This Week on Sunday. Noting that only 40 percent of President Obama’s $787 billion stimulus package had been utilized since its approval, Greenspan said that the economy had enough momentum for a recovery to occur, and even adjusted his previous prediction expecting a 2.5 percent increase for the quarter.

"It looks as though it’s going to be 3 percent, possibly even higher," Greenspan said, according to CNN.com.

Greenspan was not as optimistic when it came to the unemployment rate, which exceeded forecasts and grew to 9.8 percent in September. In addition to predicting that the rate would not begin to decline until it topped 10 percent, he also threw his support behind proposed legislation that would extend unemployment insurance to workers who have been out of work for a prolonged period and had to consolidate debt after exhausting their benefits.

In September, the House of Representatives voted 331-83 in favor of a bill that would extend unemployment insurance for nearly three months to jobless workers living in states with high jobless rates.

Unemployment continued to rise in September, as the Bureau of Labor and Statistics released data on Friday showing that the federal unemployment rate hit levels not seen in more than 26 years.

According to the BLS, nonfarm payroll unemployment declined by 263,000 in September. The declineexceeded estimates by economic experts who had forecast more conservative job loss figures that ranged from 175,000 to slightly more than 200,000.

Because of the larger than expected rate of job loss, the unemployment rate increased by 0.1 percentage points to hit 9.8 percent, driven primarily by losses in the construction, manufacturing, retail trade, and government sectors.

The BLS data supports what has become a chorus of warnings from Federal Reserve officials who have warned that a continued rise in unemployment will occur despite other economic improvements. While speaking to the Georgia State College School of Business in Macon, Atlanta’s Fed President Dennis Lockhart echoed the opinions of Fed Chairman Ben Bernanke in saying that unemployment rates were likely continue to rising into 2010.

"To bring people back to work, it’s going to take a while," said Lockhart, according to the Wall Street Journal. "Unemployment’s going to be frustratingly high for some period of time."

The rise in monthly unemployment figures came just days after the Department of Labor released weekly figures that showed the week of September 26 had 551,000 unemployed workers seeking debt solutions by filing initial unemployment insurance claims, an increase of 17,000 from the week prior.

With the recession pinching the wallets of consumers across the country, many have had to find alternate ways to consolidate debt and reduce their spending.

To help them stretch their dollars even further, CNNMoney.com gave consumers a few tips about bill consolidation, showing them that negotiation can work even in unlikely circumstances.

One way for consumers to reduce their bills is by negotiating with their doctors and dentists, the article advised. It is reasonable to ask for a 10 percent or 20 percent discount if paying upfront, something that the healthcare provider may often accept to avoid dealing with the insurance company.

In addition, consumers can bargain with their dry cleaner, more so if it is an independent shop than a large chain because small businesses are feeling the pinch just as much as consumers are. The best strategy in this case, the article advised, was to "use your clout as a regular" by adding up your monthly bill and asking for a 10 percent to 20 percent discount.

In addition to small businesses, those in the tourism industry were hit particularly hard by the recession, making hotels a potential bargaining opportunity. Those in frequent-stay programs will also have more leverage, the article noted.

Many businesses are having just as difficult of a time with bill consolidation and other financial woes as are many consumers, especially when it comes to cash flow. Therefore, consumers should not be afraid to stretch their dollars when they can, as companies will be happy to receive the business.