Money on The Mind

Since the market and housing crash of 2008, it is easy to understand why money is always on the mind. It seems like every time that you flip on the news, or jump on the Internet, there are mixed reports on the economy.

What should the average person think about their financial situation and the current economy? The truthful answer is “who knows.” There are so many “experts” providing conflicting figures, it is hard to judge where the country, and where people stand.

The only thing that you can honestly do is look at the facts and figures on both sides of the issue. Only then can you make an educated guess on where everything stands.

Unemployment

Unemployment is currently sitting at 8.2 percent in the country. Economists believe that this is still high, but not as detrimental to the economy as rates that are nine percent or higher. Figures for new unemployment claims were released on May 3, 2012 and they show a steep decline in the number of new claims. This was very good news, especially since the previous four weeks all came in at a higher than expected number.

However, the true unemployment rate is actually closer to 23 percent. The Bureau of Labor and Statistics actually “adjust” the unemployment figures to make it so low. Anyone who is considered long-time unemployed, that is they have not had employment for over a year, are removed from the figures.

This adjustment takes the 23 percent figure and drops it to 15 percent. Then, in an effort to make the numbers more appealing, seasonal workers and the under employed are removed from the figures. Once this occurs, they have an acceptable figure to present to the public.

It is easy to see why the government keeps telling everyone that unemployment has dropped considerably, yet everyone you seem to know is struggling to find work or keep their job.

Foreclosures

Foreclosures have plagued the nation since 2008, causing a housing meltdown. Home values, on average, have dropped 36 percent across the country, with some areas such as Las Vegas and Miami seeing home values falling by over 60 percent.
When areas are filled with foreclosures, urban plight sets in. Vacant homes are a perfect breeding ground for crime and vermin, causing homes in the vicinity to lose even more value.

Foreclosures stalled during the fall of 2012 and throughout 2011 due to the robo-signing scandal. However, a $26 billion settlement just occurred between the banks and the government, opening up the way for foreclosures to take place once more. It is anticipated that over 1.5 million homes will go through foreclosure before the end of 2012.

This flood of low-cost properties into the housing market will cause home values to drop once more.

However, on the brighter side of the picture, once this wave of foreclosures pass, the bottom of the market should be reached and home prices should begin to rise. Ther amount of new foreclosures entering the market should drop considerably, due to new loan modification programs that have begun to allow home owners to stay current on their loans.

Gas Prices

In 2008, at the beginning of this financial meltdown, gas prices were below $2.00 a gallon. Over the last four years, per gallon price has steadily increased to the point that some areas are already paying over $4.oo per gallon.
While over the last few weeks there has been a steady drop in prices, most areas are still paying above the $3.75 mark per gallon.

So what is driving up prices?

Unrest in the Middle East always affects prices. With tensions high between Iran and Israel, speculators are causing barrel price to fluctuate. Spring and fall will also bring about an increase in gas prices as the refineries convert from summer to winter fuel.

Domestic policies concerning oil and gas are also causing gas prices to rise. The U.S. government has quadrupled their strategic reserve in the last three years, causing demand and prices to rise.

It is unlikely that the United States will ever see gas prices as low as they were in 2008 ever again.

Student Loan Debt

In April of 2012, student loan debt actually surpassed the $1 trillion mark, making it the number one debt in the country. College tuition increases at a rate of six percent or more each year, creating a larger burden on the students and their parents.
Federally backed student loans cannot be dismissed in a bankruptcy, nor can they simply go into collections. If a loan is not paid, the government aggressively pursues collections, going as far as to seize tax returns to cover the debts. Many people find that they will willingly fall behind on other obligations to ensure that their loans are paid to avoid government action.

New statistics released by the government are showing that a four year degree will cost, on average, $50,000. The same report also shows that a person who only achieves a four year degree may have a hard time finding a job when they leave college.

Credit Cards

Credit cards have been the destroyer and the savior of the economy since the recession began. Many people have used their credit cards to live off of until they found new employment. Others have used their credit cards to supplement their incomes while they are under employed.
Some consumers have been able to pay off these debts, while others have ended in bankruptcy. There is an equal chance for either event to happen.

Since the recession began, credit card companies have had to drastically change their practices. This has occurred by force through government action, and by need through changes in their business.

Credit card companies must fully disclose all information about the accounts they offer, prior to considering the account active. In the past, you opened the account and then received the info, when it was too late to back out.

These changes have been a great improvement for the protection of the average consumer.

Credit standards have become very tight, hindering available credit for many. However, these tighter standards have also allowed credit issuing companies to keep rates lower for those who already have established accounts.

Credit card counseling and debt relief programs have boomed for the last several years. Consumers who found themselves over their heads in debt were using these programs to settle their debt and begin to rebuild their lives.

As you can see, there are so many conflicting news stories available that it is easy to understand why money is always on the mind.