The Bureau of Labor Statistics came out with a report showing the unemployment rate decreasing to 7.8% in September. This puts the number of unemployed persons around 12.1 million. This is a good sign we are headed in the right direction, the pace however, is much slower than most would like.
There are serious effects of being unemployed, the most notable is an individual person or a families need to tap into savings and retirement accounts in order to pay rent/mortgages, food, bills, taxes, etc. Quite often savings accounts become depleted and debt obligations begin to rise.
According to Vice President of Rescue Capital, John Zepeda, “a vast majority of our customers seek to sell their structured settlement annuities and investment annuities because of hardships caused by being unemployed.”
Chart 1. Unemployment rate, seasonally adjusted,
September 2010 - September 2012 (source BLS)
If you are unemployed and are considering “sell my annuity” or thinking “Should I sell my annuity” then you are not alone. Many of the annuity settlement put together are designed for long term growth and income, however, needs change. If you are now unemployed and need a lump sum now and cannot wait for the annuity to be paid in installments then selling your annuity should be carefully considered.
Happy December! Friday has come once again so it is time for our favorites of the week.
- Get a job-The secret to finding hidden jobs via Daily Finance.
- Holiday Savings-Real Simple's 4 week plan for saving during the holidays.
- To-do Lists-Savvy Sugar's list of December must do's for your finances.
- Keep Safe-How to avoid cyber theft during the holiday shopping season.
- Jobs Report-CNNMoney says unemployment is down, new jobs are up!
According to a recent Gallup poll, Americans spent an average of $69/day in stores, restaurants, and gas stations as well as online. For Americans making less than $90k/year that figure was $61/day. In 2008, during the height of the recession, Americans spent on average $124/day. For individuals making less than $90k/year that figure was $104/day. These figures do not include what Americans spent on housing, groceries or transportation costs. Creditcards.com reported that the average credit card debt is $14,743. While the average interest rate is somewhere around 13%, there are some sub-prime credit cards that charge as much as 79%.
Why the dramatic decrease in spending? Experts blame flat consumer spending on lack of consumer confidence, high employment, underemployment, and high gas prices. In addition, the Japanese crisis had an effect on global supply chains thereby reducing manufacturing, i.e. jobs.
While I am sure some of the decrease was due to the global economic crisis there is a great deal of evidence to suggest that people were spending beyond their means and incurring huge amounts of debt. If your income suddenly decreases because of unemployment or underemployment, you need to look for ways to reduce expenses or obtain more income. As a result there has been a huge movement towards living more frugally, paying off debt and reducing consumption. People from all walks of life, even Hollywood stars, have been effect so it makes sense that lifestyle changes will occur.
Unfortunately there's a catch. Since people are spending less, fewer jobs are being created thereby hurting the already fragile economy. Consumers, even the ones with money, don't feel secure in spending especially with high foreclosure rates and governments shutting down. So what is the answer? How do we stimulate the economy and create more jobs?