Better, but ...
Households are improving along with economy, though employment and housing are issues




CHICAGO — Just as President Barack Obama took a reassuring tone in the State of the Union address, there are reasons for optimism when it comes to our personal finances.

The stock market has come back, companies are starting to hire again and economists are increasingly upbeat about the future. But unemployment remains stuck at more than 9 percent, home prices are falling and the pace of foreclosures is accelerating.

It's hard to see a return any time soon to the level of financial comfort many enjoyed before the tough times began.

"We dug ourselves a very deep hole," says Mark Zandi, chief economist at Moody's Analytics. "I think it's going to take a full five years to recover in most areas: unemployment, wages, personal wealth and our collective psyche."

Whether you are upbeat about your financial situation likely depends on not just your job security and income level, but also on how much you have invested in the stock market. That's because its steady climb over the last two years has boosted retirement accounts and is helping to restore investor confidence.

Investors who stayed with stocks are in significantly better financial shape. But only about half of all households have money in the stock market, and many of those shifted their money into bonds. That leaves millions still scrambling.

One positive dividend from the hard times: Many have learned to be more conservative in their money habits.

It's clear the new normal involves a greater amount of consumer restraint than we've seen for nearly two decades," says Manisha Thakor, a personal finance author and founder of the Women's Financial Literacy Initiative.

Here's a look at where our personal finances stand in several key areas:

Savings
The good: The personal savings rate — the amount of disposable income unspent — stands at 5.3 percent. Although that's a far cry from the 10 percent saved in 1985, it's a vast improvement from 2006 and 2007, when the rate turned negative for the first time since the Great Depression.

The bad: Any further increase in the savings rate could stall the recovery, as consumer spending accounts for about 70 percent of the economy. It's called the "paradox of thrift": Saving money is good for individuals but can be bad for the overall economy if everyone stops spending.

The outlook: The savings rate is likely to decline as the employment and economic outlooks brighten, but not dramatically. People won't quickly revert to the carefree spending of the boom years.

Debt
The good: Debt is down. Households on average owe about $43,000. That accounts for 122 percent of disposable income, down from a peak of 135 percent in late 2007, according to the most recent data from the Federal Reserve.

Credit card debt has decreased every month since August 2008. This reflects consumers paying down balances as well as card companies tightening lending standards and cutting available credit. Auto loans are reviving, helping auto sales rise 11 percent to 11.6 million in 2010.

The bad: Tightened lending standards means it's still difficult for many people to borrow money. And auto sales are still far below the peak of 17 million units in 2005.

The outlook: Credit card issuers are expected to start mailing out more offers this year as the economy improves, according to Bill Hardekopf, CEO of LowCards.com. But consumers with average or poor credit scores will still have difficulty getting approved.

Home sales and mortgages
The good: Good news is relative in this category. The bottom finally seems near for home prices that have been falling since 2006.

In December, the decline in the median price of a pre-owned home slowed to 1 percent from a year earlier. That's down to $168,000, according to the National Association of Realtors.

The bad: Historically low mortgage rates didn't help in 2010. Sales of pre-owned homes declined to a 13-year low and new sales totaled just 321,000, down 14 percent from 2009.

Five million borrowers are at least two months behind on their mortgages. They're expected to miss more payments because of job losses as well as failure to keep up with loans that exceed the value of their homes.

The outlook: Home prices are expected to fall another 5 percent before starting a recovery in 2012. But economists say it will be years before the housing market finally recovers because of the oversupply of homes.

Foreclosures are expected to reach 1.2 million this year, exceeding last year's 1 million, according to RealtyTrac Inc. "2011 is going to be the peak," Rick Sharga, a senior vice president at the company, said earlier this month.

Retirement and investments
The good: The stock market has roared back. The Standard & Poor's 500 index is up a remarkable 92 percent since bottoming on March 9, 2009. As a result, 88 percent of 401(k) account holders now have larger balances than at the market peak, according to the Employee Benefit Research Institute — thanks partly to their continuing contributions.

The bad: Retirement security has been compromised for millions. Many pulled out of stocks only to earn minimal returns on cash investments. Still more investors approaching retirement remain below where they were three years ago. The S&P 500 is 18 percent below its peak of 1,565 on Oct. 9, 2007.

The outlook: The stock market is unlikely to keep up its recent pace. Yet, investors who haven't returned to the market may want to reassess their risk tolerance. The likelihood of rising interest rates means the returns of their bond holdings and cash accounts may decline.

For those who are nearing retirement and need to boost their financial security, there are a handful of basic options: spend less, save more, delay accessing Social Security and retirement accounts, and work longer.

Jobs
The good: After rising to 10 percent, unemployment may have hit its peak. The number of applications for jobless benefits has declined in the past four months.

The bad: The job market remains weak. The unemployment rate has been over 9 percent for 20 straight months and will probably stay near that figure for the rest of the year. The number of private-sector jobs is still more than 7 million below the peak in December 2007.

The outlook: Some economists predict that employers will add twice as many jobs this year as the 1.1 million created in 2010.

Wealth
The good: Average household wealth increased to about $425,000 in the third quarter of 2010, up 8 percent from its early 2009 bottom. That includes the value of assets such as homes and stocks, minus debts such as mortgages and credit cards.

The bad: Because so much of personal net worth is tied up in a home, that figure is still 23 percent below the peak of almost $554,000 five years ago.

The outlook: It will take greatly improved housing and job markets to put people's personal finances in tiptop shape. A dramatic increase is not imminent in either. So far, a strong stock market has restored equilibrium. But it has also widened the gap between the haves and the have-nots.

Wall Street is back, in other words, but Main Street is not there yet, suggests Diane Swonk, chief economist at Mesirow Financial Inc., a Chicago-based financial services firm.

"The recession revealed the inequalities that were papered over with debt," she says, "a fact many of us knew but were afraid to admit."

http://www.msnbc.msn.com/id/41281527/ns/business-personal_finance

Slow steady real growth.
That's just what we need.

Whatever...

Here is a fact for you...

If you pay taxes your personal part of the national debt ammounts to $127,000 ... (and it goes up from there)... (every minute)...

If you are born TODAY... Your personal part of the debt is $45,000... (and it goes up from there)... (every minute)...

AND I TOOK THESE NUMBERS SEVERAL DAYS AGO...

they are much higher today.

NOT a SINGLE news services has mentioned this... (that I could see)...

The ones that show this FACT only show the entire debt clock... Not all the ramifications of it.

Isn't it about time Congress, the Senate, and the President FACED this and quit quibbling bout who is going to SPEND what, where we are going to 'invest' next (investment is an EXPENDITURE of MONEY), or what 'freeze' might be applied to this or that pie piece of the budget.

This is not HATE speach...

it is a statement of FACT.

That's because it's not a rationale way to look at it.

Unless of course your motivation is to drum up fear in the uninformed.

Now keep in mind I do not agree with AdventureBegins on everything. I agree with him here! Obama said nothing of substance. Spending does not measure economic health. Spending is a function of economic health. You are reading the fuel flow gauge on an aircraft engine and saying everything is fine when the red "You have no oil pressure" light is shining! You know, the red light that says you are about to have an engine failure?

These are the yard sticks of a good economy, Low debt to NO DEBT, Manufacturing, Raw Employment, LOW CLAIMS ON WELFARE, TRADE (that is balanced and equitable!!!), and Interstate Commerce.

These are things that made us a great nation and are now suffering to placate everyone's desires for more government: Education, industry, conservation, and personal accountability and responsibility on both a operational and personal level from our government and leadership.

Frankly I am stunned Bank of America is still afloat. They have to be acting above the law.

Likewise futures exchange and debt selling is part of the reason our economy is in such turmoil. Instead of prices falling prices are rising on EVERYTHING AGAIN! Why? Not raw demand but speculation on futures is driving prices! We got taken over by gambling and middlemen!

Obama's speech was hollow, and a weak plea for us to tolerate his incompetence and also praising China? What the FUQUE did that have anything to do with America? Obama did not have word one on any plan that made any sense to help out the nation. He just sucked up to China! I wonder if he gave president Hu a Blowjob during his visit too?


Now it is my turn to do unto you!!!

Whatevs'...

YEP...

first i was hatefull...

Now I am fearmongering

neither of which is true.

Please then O' wise one, explain to my stupid humble self...

How SPENDING money can REDUCE the MASSIVE debt that IS present WITHIN the GOVERNMENT of my country?

My motivation has nothing to do with drumming up anything but some ACTION to put this government back to a proper size (and that will only come from our representatives).

I have been warning about this since before Reagan was President... Back then people just ignored me... Now they call me by derogatory 'labels'...

I don't have the time and all you would do is argue anyway.

Why don't you try to revise your numbers first by including corporations share.

You could show some people a Rose and their only comment would be,
It will die in a few days.

Why are you so quick to see only the bad and forget the obvious in everything?

Like here, you say each persons share. What about the corporations share?
What about the spending that will eventually lead to reducing the debt.

There's an old saying, You have to spend money to make money.

Boy doesn't that fit after the mess the previous 8 years created.

There's another one,
Invest in the future.

If we don't, if the gov doesn't, then we will have no future to leave future generations.

Pessimism breeds pessimism and ignorance breeds ignorance,
I refuse to carry either trait into my future.

So how are corporations supposed to toss in TRILLIONS of dollars to prop up Government spending? You are aware besides the bleeds in operations (capital) it takes billions of dollars to pay employees, legal costs, operational costs. Bureaucracies eat up money fast. The larger the business the more expensive it is to operate. The only big business above the law really is BANKING AND LENDING! Let us single out the real villains properly! Small corporations struggle like the rest of us "Normal" people!

You come off like a snobby elitist Shiit head. And this helps your credibility how? How about looking up where our tax dollars go. A huge percentage goes to the war but the second in line is WELFARE SPENDING! Then comes OPERATIONAL COSTS! Again Bureaucracies EAT UP MONEY! Then entitlements, subsidies, not to mention the financial bleeds of privatization!

Really I think you like the facts you like and dislike the ones that don't fit into your Utopian ideal! So we tax the rich more and for what? We kill all enterprise within our nation to feed the Bureaucratic monster who is bleeding us dry? We need to kill the monster first! How? LESS GOVERNMENT!

How simple is that?

I had a good job a few years ago. I was a machinist, but ended up laid off due to outsourcing.
I did not sit on my laurels and cry waa waa.
I looked at the options.
One was a gov program created with the NAFTA bill.
It offered to pay my tuition and books to go back to school, retraining myself in a trade that would be needed for America's future growth.
It was scary since I had been out of HS for 30 plus years, but I knew what was coming, as everyone should have.
There was more to my fear than would I be smart enough.
I am and was a grown man. I had no help paying my bills and feeding myself.
I had no daddy and momma who I could live off of our in their home.
I took jobs that teenagers do. Fast food, part time summer jobs, etc.
I cut off my cable TV, scrimped and did away with all unnecessary expenses. Rode a bicycle 5 miles one way and then spent an hour each way on a bus to get to school because I couldn't afford the gas to drive my car. (I had two cars at the time so I sold one. My truck because it was the hardest on gas.)
Anything and anyway I could to continue to pay my bills and finish school.
It was a sacrifice I knew I must do for my future.
I graduated and obtained an associate degree in Electronic Engineering Technologies with a 3.9 GPA.
Yes, it was worth it. I now have a better job than I did before. With better pay and Job security.

While everyone else cries about unemployment, I cry for them but I don't cry with them.
I invested in my future, and the job offers, while others remain unemployed, are numerous.
Everyone wants someone with my education and training. They can't find enough people to fill their needs.
Americans need to reinvest themselves if they want a brighter future, just as President Obama said America needs to reinvest in it's future.
We, You, and I can not continue to think and live in the past.
The old ways will never return.

All I'm saying is include these entities in the numbers. Unless your goal is merely to create fear and illusions.
Corporations pay taxes as well. This debt is theirs as much as it is the private citizens.

And be realistic about where this debt came form.
It is not Obama's or the Dems to bear alone.
O

This friggin blame game helps no one.
We need to work together.

And that is the ignorance that can and will only breed more ignorance.

But likewise there has to be an agreement that personal responsibility must be observed and likewise not allowing ourselves to be dragged along by partisan lines or partisan ideologies.

It it SO easy for people to ask others to give when they have something to give. the question is what have any of those who ask us to give given in return? Hollow promises that turned out to be lies.

And on top of that popular support was AGAINST Obama care in the first place. Things are bad enough states are actually considering telling the fed to go fuque themselves. How the hell can government keep asking us for more when they will not act responsibly themselves? When will the DNC actually step up and act responsible for a change? At least the GOP does have some sense of responsibility although it is shady.

No, there is a point where compromise will not do! We are at it now. We as a country allowed too much compromise. Now it is time to put a foot down!

Good questions.
Good points.

I do not put the DNC on a pedestal above anyone else..
Everyone must come together.

YET the republicans refuse to return the tax rates on the wealthy to the pre bush era and hold unemplyed people hostage untill obama caved on it. They propose we cut grandma off her social security! Yea maybe we do need to make some sacrafices and one class wont go hungry if they do sacrafice a little.

"Households on average owe about $43,000"


"That accounts for 122 percent of disposable income, down from a peak of 135 percent in late 2007"


This says it all..

We spend too much money.

The cycle of debt consumption has to stop.

If individuals continue to hold debt at 122% of their disposable income this nightmare is never going to end.

If we were not at such a ridiculous level of debt before the collapse we would have been able to manage it and we would be further along in the recovery.

Banks were happy to make sub prime mortgages. Fannie and Freddie were happy to back those mortgages.

At the end of the day neither the banks or the government held a firearm to anyones head and demanded they buy a house that was over priced and that they could never afford.

At some point there has to be some personal accountability.

You can raise your taxes on the rich from now to eternity, but how the hell is that going to stop irresponsible people from doing irresponsible things?

It is not.

There ya go again blameing the victim. People borrowed because their wages could no longer keep up with a middle class lifestyle. The houseing market crashed because so many people were defaulting and homes were going to sherrifs sales at record numbers. Realy when wages dont keep up with inflation do you go hungry or miss a payment? Lets not forget how this all started....Let me think Oh yea gas was around four or five bucks a gallon......The gloriouse Bush years.

I am very optomistic of the future of mankind.

You must actually have money to spend money (PRINTING money is a lot like believing in a money tree).

Investing money that is not actually there will only increase the debt.

Spending money will never pay off what you owe...

So now you have again changed your buzz word... First I was a hatemonger, then I was a fearmonger, now I am a pessimist.

You got it all wrong dude.

I am a realist.

However, given what appears to be a deliberate attempt to expand government to the point of being the ONLY corporation in the US... add in the massive attempt to discredit by high index emotional words ANYONE that speaks out...

I don't really expect our politicians to do more than pay lip service to what NEEEDS to be done.

Which is why I will continue trying to remove them and replace them with less selfcentered people.

What? blaming the victim? People spend beyond their means and they are the victim? Haha thats funny. I am sure the average person isn't going hungry. They are paying for luxuries they can't afford.

Let's don't ignore the facts.



This is what we have had to deal with and whichever way you look at it it isn't pretty.

Shake-n-bake fixes aren't the answer. Maybe in the short term but they would only lead to repetition of failure.
Slow real growth with responsible regulation is the only way to long term economic security.