Wednesday, November 22, 2017

Thanksgiving Spending

Between buying the turkey and stuffing, travel costs, and finding just the right bottle of wine, Thanksgiving is getting to be an expensive holiday. A new survey from LendEDU finds that the average American will spend a total of $165.14 this year on Thanksgiving expenses.

Travel makes up a sizable part of that, but it’s not the majority. The site, which surveyed 1,000 people about their expected costs, says travel expenses make up $67.59 of that amount, with the rest going for food, wine, and other expenses.

The real winners at this time of the year are the nation’s turkey farmers. LendEDU calculates there are 254 million turkeys raised in the U.S. each year, with a total value of $4.85 billion - and 36 million of those turkeys are eaten at Thanksgiving.

Tuesday, November 21, 2017

Good News for Borrowers

Americans’ access to credit continues to improve, according to a new Federal Reserve Bank of New York survey. The so-called survey of consumer expectations found that respondents who were too discouraged to apply for credit over the past 12 months declined to 4.9 percent in October, reaching its lowest level since the survey began in 2013.

The survey, done every four months, focuses on mortgages and refinancing, credit cards and limit increases, and auto loans. The most recent one found a rise in those applying for and accessing credit for such things, and a drop in rejections. 

The New York Fed also updated its gauge of so-called financial fragility. While the average probability of respondents needing $2,000 for an unexpected expense in the next month rose to 33 percent, from 32 percent previously, the probability of being able to come up with the funds also rose to nearly 70 percent, from 67 percent.

Monday, November 20, 2017

From a Century Ago

The largest stock in America is now Apple, with nearly $900 billion in market capitalization. The MarketWatch web site recently ran a list of the biggest stocks of 100 years ago; here's what the market looked like in 2017:
  1. U.S. Steel, $46.4 billion
  2. AT&T, $14.1 billion
  3. Standard Oil of New Jersey, $10.7 billion
  4. Bethlehem Steel, $7.1 billion
  5. Armour, $5.8 billion
  6. Swift, $5.7 billion
  7. International Harvester, $4.9 billion
  8. duPont, $4.9 billion
  9. Midvale Steel, $4.8 billion
  10. U.S. Rubber, $4.6 billion

Friday, November 17, 2017

The High Cost of Working

Employees have some pretty major priorities when it comes to objectives outside their work, and after saving for retirement, the ones that top the list are work-life balance and becoming fit and healthy. That's the good news, says the Global Employee Benefits Watch 2017/18 study from Thomsons Online Benefits.

The bad news is that the survey reveals most employees—64 percent—feel that their employer and workplace are having a negative or very negative impact on their wellbeing. Survey respondents also said that they want employers’ support for their broader needs beyond salary and retirement plans, such as buying a home or financial management.

But they’re not feeling all that supported by employers. Some 63 percent said that one of their life’s goals is getting fit and staying healthy, but only 30 percent said their employer was helping that effort through a benefits program.

Thursday, November 16, 2017

Two Ways for Auto Loans

One area of the credit arena that continues to grow is vehicle lending. Auto loans have grown for 26 straight quarters, a New York Federal Reserve report out Tuesday showed, even though delinquency rates are also up.

Banks and traditional lenders have been largely limiting their borrowing to higher-rated customers, even as the U.S. job picture remains upbeat. But their nonbank competition—mostly the financial arms of the auto manufacturers themselves or lenders that operate from a “captive” position as part of the dealerships—have taken a different tack.

Almost 10 percent of subprime car loans made by nonbank lenders were more than 90 days past due in the third quarter, the highest rate in more than seven years, according to the New York Fed’s quarterly report. That’s more than double the 4.4 percent delinquency rate for subprime loans made by traditional banks, a number that’s largely improved since the end of the financial crisis.

Wednesday, November 15, 2017

The Disappearing GE

The behemoths of the stock market are now the high-tech FAANG stocks, so what's happened to the old warhorses? Ten years ago, General Electric was the second largest company in the S&P 500 behind only Exxon Mobil. It’s still larger than 93 percent of the stocks in the S&P 500, but it ranks 33rd at this point.

General Electric still has a market cap of $153.6 billion, but in the past ten years, the company has lost $240.7 billion in value. Meanwhile, over the same ten years, three of the four largest stocks right now have each added more than $500 billion.  Facebook has also added $500 billion in market cap, given that it wasn’t even public ten years ago and it now has a market cap of $521 billion.

Had someone told you in 2007 that the S&P 500 would be up 80 percent ten years from now, you would have certainly expected GE to be leading the way and adding to its market cap. Instead, this old warhorse has lost $240 billion.

Tuesday, November 14, 2017

Inside the Retail Bust

One of the biggest economic stories of this yaer continues to be the retail bust. Through the third quarter of this year, 6,752 locations were scheduled to shutter in the U.S., excluding grocery stores and restaurants, according to the International Council of Shopping Centers. That's more than double the 2016 total and is close to surpassing the all-time high of 6,900 in 2008, during the depths of the financial crisis.

Apparel chains have by far taken the biggest hit, with 2,500 locations closing. Department stores were hammered, too, with Macy’s Inc., Sears Holdings Corp. and J.C. Penney Co. downsizing. In all, about 550 department stores closed, equating to 43 million square feet, or about half the nation's total.

Making matters more difficult is the explosive amount of risky debt owed by retail coming due over the next five years. Just $100 million of high-yield retail borrowings were set to mature this year, but that will increase to $1.9 billion in 2018, according to Fitch Ratings. And from 2019 to 2025, it will balloon to an annual average of almost $5 billion.