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The US Is Officially in a Recession — Are You Surprised?

SavvySugar — Mon, 01 Dec 2008 14:30:46 -0800

We've been throwing around the word recession in connection with the US economy for some time now — everything from recession-proof jobs to recession-proof beauty is common vocabulary. However, in a statement released just today, the National Bureau of Economic Research confirmed that the economy has been in a recession since December 2007. The last time the economy was in a recession was 2001, after the tech bubble burst. Members of the Business Cycle Dating Committee explained the requirements for a recession in a statement.

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators. A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough.

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The US Is Officially in a Recession — Are You Surprised?

Yes, I'm surprised the US has been in a recession for that long.

No, I'm not surprised the recession has been going on for a year.

I'm surprised it hasn't been longer!

Something else. I'll tell you in the comments below.

Will Cyber Monday Make Up For Black Friday?

SavvySugar — Mon, 01 Dec 2008 10:00:35 -0800

After hearing the news that a Wal-Mart employee was brutally trampled to death by discount-hungry shoppers on Black Friday, you might think eager shoppers everywhere turned out for after-Thanksgiving sales. While other retailers avoided such tragedy on the biggest shopping day of the year, they didn't draw in the same crowds and are now apprehensively facing the bad news that 2008 could end in the red.

The prospect of getting something for less might have caused some aggressive crowds, but the number of shoppers out this Black Friday didn't compare to those in recent years. Most of the people who did make it to the stores were seeking basic items over luxuries, making it clear this holiday season is more subdued in the material sense than retailers had hoped.

The Financial Times caught up with one shopper who admitted, "This year I’m cutting back. I’ll probably end up bargain-hunting on the internet." Good thing she and the rest of us cutting back have Cyber Monday sales to check out. Have you found any good online deals so far today?

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Guess How Much: End-of-Year Holiday Shopping

SavvySugar — Fri, 28 Nov 2008 11:30:16 -0800

You might have heard somewhere, make that everywhere, that it's Black Friday. It wasn't given a special name just because it's the day after Thanksgiving, and retailers have traditionally counted on the shopping holiday to push their sales into profitable territory.

It's still a relevant day, but some stores have been advertising Black Friday-type-can't-miss-sales since the beginning of November as retailers began to get increasingly nervous about consumers spending less this holiday season. Can you guess how much of a retailers' annual profit and sales is driven by holiday shopping in November and December?

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I'm Asking: Is It Now More Unacceptable to Be Flashy?

SavvySugar — Tue, 25 Nov 2008 11:30:10 -0800

Over brunch with a girlfriend this weekend, she commented that now it's not cool to be flashy about money, like throwing down $1,000 at a club for a table with bottle service or spending $500 on a sweater when someone makes a $50,000 salary.

The economy is causing people to act differently with their money and towards other people's money — it's not to say that there's no place for splurging in a rocky economy, but do you think that it's now more unacceptable to be flashy even if you have the money to spend?

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Have We Seen the Worst of the Financial Industry's Problems?

SavvySugar — Tue, 25 Nov 2008 04:30:11 -0800

Another week, another bank bailout. The most recent recipient of government aid is Citigroup, and the government's bailout package includes a $20 billion investment in the company and a $306 billion guarantee of risky assets. Monday's market close was met with cheers as investor enthusiasm sent the market soaring, reflecting a general investor bet that the worst of the financial industry's problems may be over. Do you think we've seen the worst? Source

Have We Seen the Worst of the Financial Industry's Problems?

Yes, the financial industry's crisis has hit its bottom.

Maybe, it's too soon to tell.

No, we haven't yet seen the worst of the financial industry's problems.

Something else. I'll tell you in the comments below.

5 Recession-Proof Positions For Job Hunters in a Rush

SavvySugar — Mon, 24 Nov 2008 10:00:56 -0800

The spotlight has been on recession-proof jobs as the economy continues to weaken, yet many recommended occupations, like in health care and IT, require additional education. Forbes came up with 10 recession-proof jobs, five of which may be attainable with transferable skills from your previous experience. On-the-job training can supplement a lack of exact knowledge, just be sure you have a good understanding of how your previous experience could play into a new, recession-proof career. Start the slideshow to see five jobs that could be good bets in a bad economy.

Would You Turn to a Psychic For Money or Career Advice?

SavvySugar — Mon, 24 Nov 2008 07:30:17 -0800

Business has never been better for psychics. Men and women are turning to them for cosmic advice about what to do in this chaotic economy, hoping they will get answers to help make sense of the things out of their control. The New York Times interviewed a number of psychics who indicated their clients' questions have shifted along with the economy. Rather than seeking guidance on relationships, people want insight into job interviews and their struggling businesses. One psychic said, “In this day and age, a spiritual guide is an everyday therapist — that’s what the business has become." Source

Would You Turn to a Psychic For Money or Career Advice?

Yes, I would visit a psychic to ask about money or career advice.

Maybe, but I wouldn't expect any life-changing answers.

No, I wouldn't spend money for money or career advice from a psychic.

I have visited a psychic for advice on these issues.

Something else. I'll tell you in the comments.

Oprah's Favorite Things Cost Next to Nothing

SavvySugar — Sun, 23 Nov 2008 11:00:58 -0800

If there's one Oprah show that gets the audience more riled up than any other, it's the one where she reveals her favorite gifts for the holidays. The audience goes nuts when they discover which of her favorite things they'll be receiving and everyone is on a big holiday/Oprah high. In the spirit of this economically grim season, she's doing things differently this year.

A statement from the show reveals that Oprah's favorite things this year "cost next to nothing," and she introduces one gift that doesn't cost anything. We can look forward to creative ideas from viewers suggesting how to give meaningful but inexpensive gifts, hearing about one family's free tradition, and ideas for throwing an affordable holiday party. You'll most likely be stuck at your desk when the show airs on Wednesday, so be sure to set your DVR to record it!

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Have You Noticed That Restaurants Are Less Busy?

SavvySugar — Fri, 21 Nov 2008 09:30:15 -0800

San Francisco is a foodie city with more than enough restaurants to satisfy any craving. The last few times I've made reservations at places that usually require them, I've looked around thinking that I didn't need to bother calling ahead. The one exception was when I dined at the Italian restaurant that changed its pricing scheme to offer cheaper portions of the same quality dishes. Have you noticed that restaurants aren't as busy they used to be?
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Have You Noticed That Restaurants Are Less Busy?

Yes, I've noticed restaurants aren't as busy.

Not really, but I rarely eat out.

No, I haven't noticed a slowdown in restaurant business.

Something else. I'll tell you in the comments below.

Guess How Many Americans Work in Retail

SavvySugar — Thu, 13 Nov 2008 13:30:15 -0800

The extent to which our economy relies on consumer spending has been highlighted with the way stores are suffering and already preparing for a painful holiday season. Retail companies don't just rely on us to make them profitable; many of us also rely on them to print our paychecks. Can you guess how many Americans work in the retail sector?

The 2008 Word of the Year Is . . .

SavvySugar — Wed, 12 Nov 2008 13:30:15 -0800

2008 is not yet over, yet the final votes have been cast for the word of the year. When I think of the past year, I think foreclosure, but the New Oxford American Dictionary only crowns a word that is unique and was populated in the past year. For example, these four words were runners-up to the word of the year winner.

Frugalista: Person who leads a frugal lifestyle but stays fashionable and healthy by swapping clothes, buying second-hand, growing own produce, etc.
Moofer: A mobile out-of-office worker, as in someone who works away from a fixed workplace, via BlackBerry, a laptop, or Wi-Fi. Also can be used as a verbal noun, as in moofing.
Topless meeting: A meeting in which the participants are barred from using their laptops, BlackBerries, or cellphones.
Toxic debt: Mainly sub-prime debts that are now proving so disastrous to banks. They were parceled up and sent around the global financial system like toxic waste, hence the allusion.

To see the word of the year,

Ask Savvy: How Should I Discuss Salary in a Bad Economy?

SavvySugar — Tue, 11 Nov 2008 09:30:38 -0800

Dear Savvy,

With the economy the way it is, what's the average pay cut people are being forced to take after their position is eliminated and they need a job? And what is the best way to handle an employer asking what salary you are looking for in this kind of economy?

See my answer when you

Cheaper Priced Portions Taste Just as Good

SavvySugar — Mon, 10 Nov 2008 11:30:01 -0800

This weekend I ate at one of my favorite Italian restaurants in San Francisco, where the food is predictably good and the menu selection and prices haven't changed in the four years I've been eating there. As I skimmed the menu for the familiar descriptions of my two most loved dishes, I happened to notice that something was different.

Instead of just listing one usual price, two numbers appeared side-by-side under each entree option. My rigatoni melanzane was to cost either $16 or $11, but on all of my previous experiences it was simply $16. The only dishes offered at one price point were the nightly specials, but even the appetizers were available for a lower price. The smaller, cheaper portions are the restaurant's way of adapting to diners who want to eat out but can't afford to pay the old prices, and as an independent business it can be flexible in adapting to the economic climate. I think it's a fantastic solution to keep the business alive — there may be a new pricing scheme, but as always, every table was full.

Have you seen this concept in any of the restaurants you've been to lately?

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5 Recession-Friendly Vacations

SavvySugar — Mon, 10 Nov 2008 09:30:27 -0800

Discouraging daily economic news can lead to the recession fatigue that's already on everyone's faces. All we want to do is escape, but we feel guilty putting our paychecks towards a vacation instead of in the bank. With this in mind, Time put together a list of the five best places to travel during a recession. Check them out when you start the slideshow.

Has the Economy Driven You Into the Arms of Wal-Mart?

SavvySugar — Fri, 07 Nov 2008 04:30:28 -0800

The troubled economy has been bad news for everyone but deal-driven Wal-Mart. The world's largest retailer is preparing for a booming holiday season to follow its successful Summer and Fall sales numbers. One Deutsche Bank analyst predicts it will be “a Wal-Mart Christmas,” and Ken Perkins of Retail Metrics surmises, "It’s going to be a primary destination for a lot of people who may not have gone there in recent years, but who will elect to go there for the price and the value." Source

Has the Economy Driven You Into the Arms of Wal-Mart?

Yes, I've been shopping at Wal-Mart more since the economy started to crumble.

I'm not shopping there any more than I was before.

No, I'm still not shopping at Wal-Mart.

Something else. I'll tell you in the comments below.

Do You Know Someone Who Lost a Job After Summer?

SavvySugar — Thu, 06 Nov 2008 07:15:25 -0800

I was shocked back in July when 62 percent of you said that you knew someone who had lost a job this year, because at the time I personally didn't know anyone that had suffered a job loss in 2008. The job market has worsened swiftly since the crazy events of this Fall and, unfortunately, I now know many people who have lost their jobs. The change in perspective has me wondering, do you know anyone who has been affected with job loss since September rolled around? Source

Do You Know Someone Who Lost a Job After Summer?

Yes, I know at least one person who has lost a job after Summer.

No, I don't know anyone who has lost a job after Summer.

I lost my job after Summer.

Something else. See my comments below.

Will Barack Obama Positively Impact Our Economy?

SavvySugar — Wed, 05 Nov 2008 07:15:16 -0800

The economy was a huge issue throughout the 2008 Presidential campaigns and is one of the primary concerns for President Elect Barack Obama. CNN polled voters and 62 percent of respondents said the economy is their number one concern. Do you think Obama will be able to positively impact the US economy?
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Will Barack Obama Positively Impact Our Economy?

Yes, I think he will be able to have a positive impact on the economy.

I'm not sure.

No, I'm not confident he will be able to help the economy.

Something else. I'll tell you in the comments.

How Women Have Been Cutting Back, Compared to Men

SavvySugar — Tue, 04 Nov 2008 08:30:00 -0800

Spending more wisely is the mantra of the moment, and while most everyone is doing it there are differences in the extent that men and women have been making cutbacks. Consumer Reports conducted a poll and published the results in its December issue, showing that over the last year women have been modifying their habits more drastically than men. A larger percentage of women took steps to be more economical than men in every category.

What they did	Total	Men	Women
Spent less on entertainment and eating out	56 percent	49 percent	62 percent
Reduced credit card spending	53	49	57
Planned to cut down on holiday spending	50	36	63
Put more money into savings	40	39	40

See the rest of the chart when you

Six Industries Vulnerable to Layoffs

SavvySugar — Fri, 31 Oct 2008 04:30:12 -0700

About 760,000 US workers were laid off this year and 25 percent of employers anticipate layoffs in the next 12 month period. It's suggested that the big question for some sectors isn't if, but when, layoffs will occur, and here are the industries that experts say are more vulnerable to a compromised workforce than others.

Housing: Beyond the jobs lost from the mortgage meltdown like mortgage lenders and homebuilders, jobs in commercial real-estate and at real-estate agencies could be the next to go.
Finance: Expect more layoffs as financial firms reorganize and consolidate.
Retail: The holidays look dismal for retailers and that doesn't fare well for industry employees.
Publishing: We can expect tough times ahead for newspapers and magazines that rely on advertisers.
Autos: Plummeting sales will likely lead to layoffs in manufacturing and at dealerships and suppliers.
Travel: With consumers spending less on travel, there may be layers of layoffs from airlines, rental cars, hotels, and restaurants.

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Americans Adopting Prudent Money Habits

SavvySugar — Thu, 30 Oct 2008 04:30:14 -0700

It really says something about American consumer culture when it's news that people are actually saving their money. I suppose it's better late than never, and a new study from First Command Financial Services shows that people are starting to save more and pay off their debt loads. In September, Americans put an average $901 more into short-term savings than in August — an increase of nearly 20 percent! Even more impressive, retirement savings deposits rose more than 50 percent month over month.

Have you increased the amount of money you put in to savings?

Three Ideas For Saving Money on Your Wedding

SavvySugar — Tue, 28 Oct 2008 15:30:22 -0700

Weddings haven’t halted with the economic slowdown, but couples have been reconsidering the budgets for their big day. Old tricks like hiring local music students to perform as an orchestra, opting for seasonal floral arrangements, and pouring wine but nixing the bar are becoming more common. The New York Times interviewed some budget-conscious brides and grooms that have a few other tricks up their sleeves.

One couple posted an ad on Craigslist for a photographer and offered a flat $200 fee. In just a few hours they received 70 responses and chose one that was trying to build a career as a wedding photographer. They gave her $40 extra to buy a better lens to shoot their wedding — $240 total for a photographer is inexpensive and avoids having to ask family members to be responsible for taking pictures.
A planner suggests that if the wedding needs to be indoors, consider a restaurant. Event spaces usually charge a venue fee but restaurants typically do not.
If you need to rent tables and chairs through a rental company, do your research. Some companies require higher minimums than others.

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Next Year's Paycheck Is Safe, Study Says

SavvySugar — Fri, 24 Oct 2008 15:30:05 -0700

Despite speculation that salaries in 2010 may be lower than 2000, next year's paycheck is probably safe. That is according to a recent study that shows that employers don't expect to make major changes to next year's salary budgets.

So how are our checks safe despite the dangerous economic climate and tightening of corporate budgets? Most salary budgets for next year were mapped out in April. Unfortunately, the same study found employers do plan to slim workforces, cut back on hiring, and minimize bonus payouts.

Earlier this month, the New York firm looked at 2009 salary-budget projections for 190 midsize and large US firms with a total of 2.8 million employees and average annual revenue of $5 billion. The majority — 58 percent — said they haven't changed their budget projections from April; 24 percent said they have, but plan to reduce their budgets by only one-half of a percentage point. Surprisingly, 18 percent said they expect to increase their budgets from the Spring by one-tenth of a percentage point.

Do you expect your paycheck will be reduced, stay the same, or see a healthy growth?
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Financial Crisis: 10 Things That Are Going Right

SavvySugar — Fri, 24 Oct 2008 12:00:17 -0700

Financial Crisis: 10 Things That Are Going Right The markets may be in turmoil. The economic outlook is grim. But not all the news is bad. Never in modern memory have Americans been so gloomy about their future. A record 90 percent of registered voters say the country is seriously off on the wrong track, according to the most recent ABC News poll.

News Flash: Nation Sees More Jobless Claims Than Expected

SavvySugar — Fri, 24 Oct 2008 04:00:33 -0700

The number of Americans filing new claims for jobless benefits went up by a larger than expected rate last week, according to The New York Times.

Claims for state unemployment insurance benefits increased to 478,000 in the week that ended Oct. 18, from 463,000 the previous week, the Labor Department said. Apparently it was the 26th consecutive week that claims were above three million, which the NYT touts as a "sign that the slowing economy was making it harder for workers to find jobs."

“The story is that the underlying trend is moving up pretty strongly and job losses are clearly getting worse,” said Nigel Gault, chief United States economist at Global Insight in Lexington, Mass.

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Money Tip: Focus on What You Do Have

SavvySugar — Wed, 22 Oct 2008 12:30:01 -0700

It's so easy to get caught up in the general anxiety in the air and absorb other people's financial stresses, like co-workers or friends who can't seem to get enough money worries off their chests. During a time of heightened uncertainty it's only natural to want to talk about things in hope of some empathy or reassurance, but sometimes it just adds to your stress level rather than do anything to bring it down.

Margaret Wehrenberg co-author of The Anxious Brain has useful advice for how to cope with financial stress and says, “Think about what you’ve got in the now. Today you’re OK. Focus on what you have instead of what you don’t have.” Her suggestion to "worry once and do it well" is perhaps overly optimistic, though conquering anxiety with productivity (like meeting with a financial planner or updating your resume) is always a good idea.

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Hollywood Changes to Play Along With the Economy

SavvySugar — Wed, 22 Oct 2008 04:00:15 -0700

As Wall Street tumbles, Hollywood stumbles to rewrite scripts that feature Wall Street as it used to be. That's not to say that every film or made-for-TV-movie will be a depressing commentary on current events, but investment bankers may need career changes and relocation from Wall Street. While Gossip Girl won't change a thing about its Upper East Siders, other shows are tweaking some details.

Some story lines are appealing to the public with Average Joe type characters and producers are coming up with series geared toward a budget-minded audience. Others are choosing to create stories that offer viewers a sense of escape and we can expect to see new attempts at fantasy world settings on the big screen.
In the past, troubled financial times have given way to feel good entertainment like smiley Shirley Temple, lavish film musicals ("The Wizard of Oz") and comedies where we see the upper class as "lovable fools."
Nicole Clemens of International Creative Management explains, “In bad times especially, people do not want to see on the screen what they’re living through."

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Is Your Company Having a Holiday Party This Year?

SavvySugar — Tue, 21 Oct 2008 14:00:17 -0700

The chill in the air can only mean that the holidays are just around the corner, which usually means an invitation for the annual office party would appear in your inbox any day now. Word on the street is that after a rough year that included the termination of CosmoGIRL!, Hearst Corp. has canceled its holiday party, and perhaps its decision is an indication of what other corporations will do about celebrating this year. I imagine the party scene this holiday season will look much different than what most workers are used to — if not canceled altogether, most company parties will probably be more prudent than in the past. Source

Is Your Company Having a Holiday Party This Year?

Yes, we're still having a holiday party.

I'm not sure — nobody has mentioned anything yet.

No, but my company never had holiday parties in the past.

No, my company has canceled the holiday party this year.

Something else. See my comments below.

Abundant Deals For a More Affordable Europe

SavvySugar — Mon, 20 Oct 2008 09:30:17 -0700

There's not much good news these days, so whenever there's something with a positive spin on current events it seems like a silver lining. The latest gem of optimism is that because of the global financial crisis, Europe has become more affordable for American travelers than it was over the last several years. The dollar still hasn't caught up with the euro but Americans do have more buying power now and can choose from a slew of travel deals to Europe.

Look for discounted travel packages and hotel deals that come and go quickly. James Chappell from STR Global predicts, “2009 is not going to be pretty. When things happen in the marketplace, there obviously is a lag time as people respond to what is going on.” Vacations probably aren't on the top of priority lists right now, but if you had written off traveling to Europe because of the high price tag, there could be possibilities out there that fit your travel budget.

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Suze Orman Is as Famous as Elton John?

SavvySugar — Mon, 20 Oct 2008 08:00:13 -0700

For a personal finance personality, Suze Orman sure has a spotlight on her that includes a share of haters — this weekend's Saturday Night Live certainly didn't hold back in its depiction of the money matron. The past year has given Suze the opportunity to take her career to the celebrity level: According to Davie-Brown (a company that tracks the appeal of celebrities), Suze Orman is now "on par" with celebrities like Elton John and Nicollette Sheridan. It's hard to wrap my head around the idea that Suze could be as famous as Sir Elton John, and there are a lot of people out there questioning the methods she's used to get herself to this place. Find out what people are saying about her when you

Would You Consider Moving Abroad For Work?

SavvySugar — Mon, 20 Oct 2008 06:30:41 -0700

When it seems like every possible solution leads to a dead end, the seemingly sensible conclusion could be to just start over. Many American professionals are trying their luck outside the country, having been ousted by their jobs and left with pessimistic feelings about the future of the US job market. Would you consider expatriating for career opportunities?
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Would You Consider Moving Abroad For Work?

Yes, I'd consider working abroad.

Maybe, but I'm not sure I could handle a big cultural change.

No, I wouldn't consider moving out of the country for a job.

Something else. See my comments below.

Coming Up With College Tuition in the Credit Crisis

SavvySugar — Mon, 20 Oct 2008 04:00:24 -0700

As the economy weakens and more workers are laid off, there is a growing need for financial aid from students that wouldn't have needed it before. According to The New York Times, most students won't have problems paying fall semester tuition because those arrangements were made months ago, but it's apparent the number of families needing aid is growing. Colleges are concerned there won't be enough aid money for everyone who applies and are keeping an eye on the economy, especially in terms of employment.

Seventy-five percent of student loans are in the form of federal aid and the number of these applications this year is already up 10 percent from last year. The credit crisis has forced many students, who had been borrowing on their own, to ask their parents to cosign on loans. Fidelity Investments released survey results earlier this month and found that 62 percent of parents are planning on using student loans in combination with their own contributions, while last year 53 percent said they'd be using loans to help with expenses.
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Will Your City Stay Strong in a Recession?

SavvySugar — Fri, 17 Oct 2008 04:00:44 -0700

Just as some regions and states have seen more home foreclosures than others, a recession can affect local economies differently. BusinessWeek explored this idea, and found that the most resilient cities in a recession are those with high numbers of jobs in health care, education, and government. The cities they mention may ride things out more smoothly than others but they are not completely protected, because a recessive economy impacts most everyone. Many places in California are especially recession prone; how does your city fare?

Cities that benefit from government jobs: Arlington, Virginia; Washington, DC; Chesapeake, Virginia; Baton Rouge, Louisiana; Lincoln, Nebraska; Madison, Wisconsin.
Places with university presence: Madison, WI; Durham, North Carolina; Irvine, California; Baltimore, Maryland; Boston, Massachusetts; Philadelphia, Pennsylvania; Seattle, Washington.
Cities where many residents work in health care: Buffalo, New York; Durham, NC; Lubbock, Texas; Philadelphia, PA; Pittsburgh, PA.

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2010 Salaries May Be Lower Than in 2000

SavvySugar — Wed, 15 Oct 2008 04:00:33 -0700

Unemployment has been an unfortunate effect of the credit crisis, and even those of us who haven't lost our jobs may see the state of the economy reflected in our paychecks. It's estimated that median household income may be more than 5 percent lower in 2010 than it was ten years earlier, giving way to an income slump that the US hasn't seen in a very long time.

According to the Census Bureau, today's $50,600 median pay is already a little lower than it was in 2000 when the pay was $50,400. An expanding pay slump would cut in consumer spending even more than it already has been and would make it more difficult to pay off outstanding loans.

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John McCain Unveils $52.5 Billion Economic Plan to "Fight"

SavvySugar — Tue, 14 Oct 2008 13:45:11 -0700

John McCain Unveils $52.5 Billion Economic Plan to "Fight" John McCain gave a fiery speech moments ago in Blue Bell, PA, outlining his $52.5 billion plan for the economy. In front of a cheering crowd, he outlined his plan to eliminate government taxes on unemployment benefits, a help to the 3.6 million Americans currently receiving them.

UK Bankers Seek Spiritual Guidance From Floating Church

SavvySugar — Tue, 14 Oct 2008 08:00:17 -0700

Troubled bankers in London's financial district of Canary Wharf have been seeking support from England's only floating church. As the global markets crumble and stumble St. Peter's barge offers solace and short lunch time services. The boat sailed to the wharf about two weeks ago to provide aid to bankers. The head pastor says, "It's times like this that people think about the bigger issues of life". A man interviewed in this video says the short sermons help calm and remind him that "ultimately there's an eternal perspective bigger than the current financial crisis."

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Definition: Panic of 2008

SavvySugar — Tue, 14 Oct 2008 04:00:25 -0700

The uncertain nature of the global economy will likely continue for some time, but the unraveling of investment banking and the drastic market sell-off in the following weeks has already been given a name — the Panic of 2008.

The panic in the US is playing out the effects of cheap money that encouraged consumer borrowing and subprime mortgage lending that gave home buyers access to loans they could not afford, driving the housing market into an unsustainable bubble. Financial institutions made bad bets on the housing market and ended up with worthless assets that had to be written off in quantities disproportionately large for the capital reserves maintained by these banks.

Investors were spooked by the news that banks were in trouble and began to sell off their shares in financial service investments, while banks stopped lending to each other because there was minimal collateral to back those loans. Banks began to fail and the government stepped in to bail out Freddie Mac, Fannie Mae, and AIG, and passed a historic $700 billion bank bailout. The big bailout has yet to instill investor confidence and the panicked public has continued to pull their money from the stock market, causing the Dow to perform very poorly over the last few weeks with no sign of a turn-around soon.

Source

Looking For Leadership: Candidates Tweak Economic Plans

SavvySugar — Mon, 13 Oct 2008 15:35:14 -0700

Looking For Leadership: Candidates Tweak Economic Plans Barack Obama widened his economic agenda today, announcing proposals to create new jobs, give Americans access to retirement savings without penalty, implement a 90-day freeze on foreclosures of homeowners making good-faith efforts to pay lenders aided by the bailout plan, and make loans to credit-hungry local and state governments.

Dow Moves Back up After Governments Offer Bank Aid

SavvySugar — Mon, 13 Oct 2008 14:20:22 -0700

Stocks moved back up today as investors made moves with the hope that the worst of the credit crisis has passed. The Dow Jones Industrial Average ended 936 points higher, after having risen as much as 976 points during the session, according to CNN Money. The advance was apparently the largest ever during a session on a point basis.

"We had some good news this morning from the Fed and the other central banks, but we were also oversold on an historic level and due for a big bounce," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "We basically saw a crash, and so you're going to see a big bounce off that."

Last week was the Dow's worst ever. Today's jump follows an announcement from the government that it will support the global banking system and the US Treasury's plan to buy stocks of some banks.

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Future Wall Streeters Are on Alert, But Still Hoping For the Best

SavvySugar — Mon, 13 Oct 2008 04:00:36 -0700

Students that planned to make a career in finance are still hopeful the market will bounce back up and they will find positions.

Wall Street recruiters have canceled or postponed visits to elite universities like Harvard, Princeton and Stanford, because of the state of the markets, according to the New York Times. Still, business and finance students at schools across the US said they were not panicked about their futures and were confident that the financial markets would recover.

What's the backup plan? One student from Princeton said everyone is "studying for the LSATs right now, people who a month ago had no intention of ever going to law school.” Other students say they plan to look in different sectors or several areas to improve their chances of finding a job instead of specializing in one like they might have before the turn of the market.

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Women Spend $1,500 on Dry Cleaning Each Year

SavvySugar — Sun, 12 Oct 2008 07:00:09 -0700

The economic turmoil has produced some unexpected bedfellows, and the newest of these partnerships is between freshly scented laundry detergent and a well-known retail brand. Procter & Gamble has partnered with Ann Taylor Loft to launch its Tide Total Care and Downy Total Care detergents. Upon purchase of machine washable clothes, the stores will dispense samples and coupons for the detergents, which claim to help clothes looking new for up to 30 washes.

Proctor & Gamble is confident its two detergents will help cut down on dry cleaning costs, which can become pricey over the course of one year. Kash Shaikh of Proctor & Gamble explained, “Women spend $1,500 a year on dry cleaning, and 65 percent of those clothes are actually machine washable.” A partnership between a consumer packaged goods company and a fashion retailer is atypical, but these are not typical times. Robert Luzzi, Chief marketing officer for Ann Taylor states, “The economy is fairly tough right now, and we want to deliver value for our clients."

How much do you usually spend on dry cleaning?

Source

Have You Ever Been to a Financial Advisor?

SavvySugar — Sat, 11 Oct 2008 11:00:43 -0700

The sinking Dow Jones Industrial Average has everyone in a fluster, which means more and more investors are looking for guidance from their financial advisers.Have you ever been to a financial adviser to help you manage your portfolio or make sense of your financial goals and plans? Source

Have You Ever Been to a Financial Advisor?

Yes! I've visited a financial adviser for guidance.

No! I've never visited a financial adviser.

I plan to soon!

Something else. See my comment below.

Fear May Be More Powerful Than Greed

SavvySugar — Fri, 10 Oct 2008 15:30:26 -0700

As much as we utilize logical ways to cope with the economy, our brains are wired to work a certain way. I'm no scientist, so I'll let MIT Professor Andrew W. Lo do the explaining. According to Lo, the amygdala controls fear and responds more quickly than parts of the brain that handle cognitive functions. Because of this, he suggests that fear may be a more powerful force than greed.

Simply put, Lo says, "The loss of $1,000 has a much bigger impact than the gain of a $1,000.” People are more willing to take risks when it prevents them from losing money rather than take risks to earn more. A 1970s experiment asked students if they'd choose a sure bet and win $3,000 or an 80 percent chance of winning $4,000. Then, the same group was asked the same question worded differently; would they rather lose $3,000 or accept an 80 percent chance of losing $4,000? In the first scenario, most chose the $3,000 sure bet, and in the second scenario, most went with the riskier option.

Source

Cash Is King When It Comes to Cars

SavvySugar — Thu, 09 Oct 2008 04:00:31 -0700

TeamSugar member RosaDilia just financed a new ride and put 20 percent down to secure her loan, and her comment about it not being easy (despite having a good credit score) coincided with a New York Times piece about the issue.

Since July, the average down payment has gone up by about $1,000 for non-luxury vehicles, from $4,946 in the first seven months of the year to $5,915 by the end of September. With credit scarce, many car buyers are foregoing a down payment altogether and simply paying cash for their vehicles.

Typically more than 90 percent of buyers use financing, but at the end of September, 31 percent of all non-luxury car sales were cash deals. The all but dried up credit market is debilitating to already struggling dealerships who are having trouble even getting financing for buyers with the best credit.

Source

How Money Are You: The Economic Crisis in Numbers

SavvySugar — Wed, 08 Oct 2008 12:30:25 -0700

These days, numbers are making headlines almost as much as the names of our presidential nominees, and I'm not referring to poll numbers. Recent economic events have made the American financial system a roller coaster complete with upside-down turns. Have you been able to keep the headlining numbers straight? Take the quiz!

Source

Four Tips For Coping With the Bad Economy

SavvySugar — Wed, 08 Oct 2008 09:30:20 -0700

Like a kid watching a scary movie, sorting through the daily news lately is best done with one hand covering your eyes. Whether or not you've been directly affected by the economic crisis, like having a devalued investment portfolio, facing home foreclosure, or losing a job, being surrounded by negative news can take a toll on your nerves. As Joe Nocera of The New York Times puts it, "This crisis doesn’t wear you down over time. It hits you over the head with a two-by-four. On a daily basis."

It's important to understand what you can do to help yourself when it feels like everything around you is so uncertain, but at the same time it's necessary to recognize that you don't have control over what's happening on Wall Street and beyond. Here are some ideas to keep the news from getting under your skin so much that it makes you a nervous wreck.

Get a grip on your finances: Knowing that you're doing everything you can to protect yourself will make you feel more secure.
Bow out of unproductive economic conversations: Keep up with the news and become knowledgeable about the world around you, but know the economy doesn't need to be the focus of every waking minute. If you're caught in the middle of a conversation involving predictions for the future and start feeling overwhelmed, it's OK to excuse yourself. The fact remains that no one can predict the future, and someone with a dooms day outlook will only make you more aware of that and more uneasy. The same thing goes for turning off the TV when the experts begin talking in circles.

See two more tips when you

AIG Gave Execs Lavish Retreat After $85 Billion Bailout

SavvySugar — Wed, 08 Oct 2008 04:00:33 -0700

One of the visible side effects of the financial crisis has been greater attention on executive greed. A Congressional hearing on the credit crisis is taking a deeper look at the issues, and some digging into insurance giant AIG's habits has divulged some disturbing details.

Just one week after AIG was bailed out by the federal government, its life insurance subsidiary AIG General spent $442,000 on a week long retreat for top sales executives. The retreat took place at St. Regis Resort in Monarch Beach, CA, where the group rested (they spent $200,000 on hotel rooms), wined and dined ($150,000 was spent on food), and relaxed (there were $23,000 in spa charges). Are you wondering what the retreats were like before the bailout? Me, too.

Source

Ironic Indulgence: Credit Crunch Chocolate

SavvySugar — Tue, 07 Oct 2008 15:30:29 -0700

The UK has been experiencing a credit crunch of its own, and The Chocolate Society has shown a sense of humor in its creation of a Credit Crunch line of chocolate, made exclusively for Selfridges department store. With its clever play in delivering a timely product, the company anticipates the item to be a strong seller.

The Credit Crunch offers a sweet fix, featuring a satisfying combination of Valrhona chocolate and honeycomb pieces. Selfridges reports that sales of luxury chocolates remains strong because people are seeking cheap indulgences amid a stormy economy. Ewan Venters, Selfridges's director of food and restaurants, explains: "Quality chocolate is the ultimate solution, being relatively inexpensive, instantly satisfying and really helps lift your mood. We expect our new Credit Crunch to be a big seller."

Chocoholics, are you still allowing room in your budget for your luxury chocolate of choice?

Source

Ask Savvy: Should I Apply For a Personal Loan?

SavvySugar — Tue, 07 Oct 2008 12:30:51 -0700

Dear Savvy,

I've been meaning to take a $5,000 personal loan. However, as you may know, my bank WaMu was bought by JP Morgan Chase. I'm not sure what kind of effects this would have on me or my bank. Should I hold off or go to different banks? Also, since we are in economic crisis, will it harm me in the future if I do consider going through with this?

See my answer when you

Do You Think the US Is Facing Another Depression?

SavvySugar — Tue, 07 Oct 2008 06:30:05 -0700

The CNN/Opinion Research Corp polled 1,000 people over the weekend in a survey asking if the respondents think another economic depression is likely to happen in the US. The pollsters gave respondents the following facts about the Great Depression of the 1930s before collecting their answers: Unemployment reached 25 percent, there were widespread bank failures, and millions of Americans were homeless and hungry. Of the 1,000 responses, only 13 percent believe another depression is not likely at all, 29 percent feel it's not very likely, 38 percent said it is somewhat likely, and 21 percent said a depression is very likely. In an effort to see if the respondents gave answers reflective of a larger population, I'm asking you the same question: Do you think it's likely another depression will occur in the US?Source

Do You Think the US Is Facing Another Depression?

Very likely

Somewhat likely

Not very likely

Not likely at all

This Is What a Home Foreclosure Looks Like

SavvySugar — Mon, 06 Oct 2008 15:30:18 -0700

Southern California may be known for its near-perfect weather, but there's nothing sunny about the rampant foreclosures in the region. Lisa Ling and SoCal Connected took a look at the process of getting a foreclosed home ready for the market after the family has abandoned it. She spoke with the owner of a business that removes all of a family's possessions from their home and observed what he calls a "trash out."

The business went from having three employees just a few years ago to 73 employees today, and the crews trash out about 15 homes each day. He's tried to get charities to pick up the items but they often don't take everything, requiring the crew to go back and pick up whatever the charity left behind. Crew members may take anything they want from the trash out site as long as they're able to take the items with them that day, and may have their pick of things like big screen TVs, computers, and furniture.

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