Amid a worsening fiscal crisis, a crumbling economy, and the destruction of over 40% of America’s wealth in just the last few years, it should be quite clear that this is no ordinary recession. In fact, with progressively dwindling job opportunities, a long-term downward trend in real estate prices, and the near doubling of participation in emergency benefits programs like food stamps and disability, one could make the argument that the United States is smack-dab in the middle of the next Great Depression.
But one won't:
"Shoppers showing signs of confidence; Increasingly confident that the economy is on the mend, US consumers are starting to spend more freely again" by Leah Burrows | Globe Correspondent, November 25, 2012
If you need proof that Americans are shopping again, look no further than the pizza boxes stacked in the break room at the DeScenza Diamonds store in Framingham.
Not so long ago, employees in this family-owned jewelry store had plenty of time to go out for lunch. But today, business is so brisk that DeScenza’s is ordering in pizza and other food for employees too busy to leave the sales floor.
“If you’re looking for good signs,” said store manager Siobhan O’Brien, “I’d say this is one.”
With the crucial holiday shopping season getting underway, the American consumer, who sat out for much of the past four years, is finally getting back in the game. Buoyed by improving job and housing markets and gaining confidence as the recovery continues its slow, steady march, consumers are spending again. Home sales are up. Auto sales are up. Retail sales are up.
If you say so, Globe.
Related:
Holiday sales a big letdown for US retailers
Worst since 2008? Then we never had a recovery!
Retailers report strong December
Uh-huh.
Also see: Boston Globe Giving You the Business
Giving you something, all right.
Yes, I recognize the odor coming from the news pages next to me.
“Consumers are starting to get their groove back,” said Mark Zandi,
chief economist at Moody’s Analytics, a forecasting firm in West
Chester, Pa. “They are more willing to take chances and spend a little
more.”
That’s good news for the US economy, which depends on consumer
spending for 70 percent of activity. The last recession hit consumers
hard, wiping out jobs, home equity, stock holdings, and income, and
leaving them burdened with debt run up in boom times. With jobs and
credit scarce, consumers spent cautiously, increasing savings, paying
down loans, and repairing household finances. As a result, the economy
recovered at a painfully slow pace.
Today, more than three years after the recession ended, the American
consumer is in much better shape.
Says who?
Personal savings are more than double
what they were in 2009, while household net worth climbed 13 percent
during the same period, according to the Federal Reserve. Meanwhile,
household debt declined to less than 11 percent of disposable income
from nearly 14 percent in early 2009.
What that means is consumers have more money to spend, and, as the economy slowly improves, more confidence to spend it....
Still, US consumers have not completely returned to prerecession
form, and many remain wary. The unemployment rate, while declining,
remains high, at just under 8 percent nationally.
Tensions in the Middle East threaten
to drive oil and gasoline prices higher, while political differences in
Washington could result in a combination of steep tax increases and
deep budget cuts — the so-called fiscal cliff — and send the economy
back into recession.
Yes, it will be the fault of anything and everything except the ponzi private central banking scheme that has destroyed the world economy.
Until recently, the average American wasn’t aware of the fiscal
cliff, said Chris Christopher, senior principal economist at IHS Global
Insight, an economic forecasting firm in Lexington. But since the
election, the issue has received tremendous media attention, and
consumers are starting to get nervous....
Related: Fed Chief Coined Term Fiscal Cliff
And now you see for who the AmeriKan media is representin'!
Ballooning student debt, affecting nearly 40 million young Americans,
is another roadblock to a complete consumer comeback, Christopher said.
Student loan debt, now approaching $1 trillion according to the Federal
Reserve Bank of New York, is weighing on these consumers as they enter
what are normally peak spending years of buying homes, cars, and other
big-ticket items....
A trillion-dollar ball, 'eh?
And you thought government was your friend, kids?
Still, many consumers said they are finally ready to stretch their shopping muscles again....
I was told in my college writing course that words like still and but were bad words for a report. When found in a newspaper they indicate a pile of s*** is being shoveled.
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Related: Brighter outlook for Mass. businesses in 2013
I was told we were doing pretty good, but.... (sigh).
"Efforts to fight foreclosure finally starting to pay off" by Jay Fitzgerald | Globe Correspondent, December 02, 2012
For years after the housing bust and subsequent recession, efforts to stem the waves of foreclosures seemed futile. But now struggling homeowners are getting some help — from an improving economy and programs that are making their mortgages more affordable.
As a result, the foreclosure crisis in the state and the nation finally appears to be ebbing....
Yeah, because the banks have taken all the properties they wanted.
A slew of other initiatives, including legal actions against lenders, have also contributed to the decline in foreclosures....
“There was no silver bullet that was going to solve everything,” said Daren Blomquist, a vice president at RealtyTrac. “Individually, the programs didn’t always work as touted. But in combination together, they worked. The government kind of waged a war of attrition, and it was a lot of things together that helped improve matters.”
The improvement, of course, didn’t come easily. Relentless and brutal market forces forced millions of painful foreclosures, auctions, short sales, and other measures — all of which have helped correct market distortions created by last decade’s housing bubble, economists agreed.
Perhaps the most important factor in moderating foreclosures has been a strengthening economy that is generating jobs, increasing confidence, and helping to boost home sales and prices, economists said. The US unemployment rate has fallen from its peak of 10 percent in 2009 to 7.9 percent in October, while the Massachusetts jobless rate fell to 6.6 percent last month from its peak of 8.7 percent in late 2009, according to the US Labor Department....
It's "fallen" but it has been rising the last few months (sigh).
Hey, it's just a little distortion and obfuscation, right? Why am I making such a fuss, huh?
But Timothy M. Warren, Warren Group’s chief executive, said he expects prices to possibly start rising in coming quarters. US home prices, meanwhile, have increased every quarter so far this year, according to the Federal Housing Finance Agency.
Despite positive trends, economists and industry specialists warn that the housing recovery is still fragile and could easily head south again if the US economy falters. Sluggish job growth, the financial crisis in Europe, and political deadlock in Washington over taxes and spending are among the major concerns.
RealtyTrac’s Blomquist said he’s keeping an eye on the number of US homes that are still “underwater,” meaning the amount owed on the mortgage is greater than the value of the property. The number of underwater homes in the United States was 12.5 million in the third quarter, up from 12 million during the same period in 2011, he said.
Often, people who owe more on their mortgages than their homes are worth just walk away from loan obligations, throwing more properties into foreclosure. “The underwater loans are a big potential problem,” said Blomquist.
But other economists say there are enough positive signs — including slowly rising home prices, decreasing inventories of homes on the market, increasing construction starts, and falling delinquency rates — to think the foreclosure situation will continue to improve into next year....
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Time to make a withdrawal:
"Private banks cater to wealthy" by Todd Wallack | Globe Staff, December 02, 2012
Nick Hofer works for Boston Private Bank & Trust, a bank that caters largely to the wealthy by offering individual attention, personal service, and amenities such as invitations to exclusive lectures and receptions. As low interest rates and rising regulation make it harder for banks to make money from run-of-the-mill products like basic checking accounts, many financial institutions have tried to expand “private banking” units that serve millionaires and can generate significant profits by helping clients manage their fortunes.
Related: Interesting Bank Post
US banks’ profits are best in six years
That's right, their "best profits since 2006."
Yeah, the banks are really struggling.
“It’s very rapidly growing and highly profitable,” said C. Steven Crosby, head of US private banking and wealth management practice at PricewaterhouseCoopers, also known as PWC. He estimated the global private banking industry has been growing by roughly 20 percent a year — despite sluggish economic growth recently.
Bank of America, one of the nation’s biggest banks, has outlined plans to eliminate 750 branches over the next few years and eliminate tens of thousands of jobs, but still decided to add hundreds of jobs to its private banking unit. Rival JPMorgan Chase’s private bank is also expanding, hiring 200 advisers across country this year and 25 more in Boston over the past two years.
First Republic Bank of San Francisco, another bank focused on affluent customers, added two branches in Massachusetts this year, one in Wellesley and another in Boston’s Financial District. And Boston Private, which is adding branches in San Jose and Pasadena, Calif., next year, just doubled the size of its Kendall Square office in Cambridge.
Boston is considered a particularly attractive market for private banks because of the large number of affluent households....
It's a RICH MAN'S WORLD!
The profit in private banking comes from selling wealthy clients a suite of services, much as telecommunications companies make money by bundling phone, Internet, wireless, and television into one package....
But many private banks won’t offer this kind of service to just anyone who strolls into the lobby. J.P. Morgan Private Bank, for instance, typically requires customers to have at least $5 million in investable assets....
How much are you holding, reader?
As one might imagine, private banking customers demand discretion, and private banks tend to keep a low profile.
J.P. Morgan Private Bank’s Boston office is located on the fourth floor of a building at Rowes Wharf — with no J.P. Morgan sign or ATM out front. The bank does little advertising, instead relying on referrals. Ideally, J.P. Morgan hopes to build relationships with families that last for generations, said Marc White, the regional head of the bank.
Boston Private said it also relies mainly on word of mouth to attract wealthy customers. But the exclusive customer base hasn’t insulated it from some of the problems other banks experienced, such as bad mortgage loans. The parent company, Boston Private Financial Holdings, was hit hard by the housing bust, especially by loans in California and Florida, and racked up tens of millions of dollars in losses. It wound up divesting its Florida subsidiary, Gibraltar Private Bank & Trust, and more tightly integrating operations around the country.
Boston Private Bank chief executive Mark Thompson said the bank is now on firmer footing with brighter prospects ahead. In Luxury Institute’s latest survey of customers worth at least $5 million, Boston Private ranked second among wealth managers, only trailing Brown Brothers Harriman of Boston, one of the nation’s oldest private banks....
I'll give you one guess whose wealth they looked after.
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