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Quoted – Lower energy prices leads to cheaper cost of living; inflation still in check

May 20, 2010 by 2 Comments
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The cost of living fell slightly in April, led by lower energy prices, a sign that inflation is still in check. But prices rose in the Midwest

The U.S. Bureau of Labor Statistics reported Wednesday a 0.1 percent decrease in the Consumer Price Index on a seasonally adjusted basis. The index for energy dropped 1.4 percent while food prices were essentially flat, up 0.2 percent. The core index remained stable.

“As long as unemployment continues to be stubborn, I think the Fed is going to stay on the sidelines for a while,” said Wai, who predicts flat interest rates for the year.

http://news.medill.northwestern.edu/chicago/news.aspx?id=164844

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Quoted – 5 questions to ask before getting a credit card with an annual fee

April 29, 2010 by 20 Comments
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There’s no doubt about it: More credit card issuers are adding or increasing annual fees. But there are still plenty of no-fee options, so before you sign up for a new card with an annual fee, make sure the benefits are worth the costs.

Spurred by the Credit CARD Act and new Federal Reserve Board regulations that limit the types of fees that credit card issuers can impose, card issuers are looking to increase revenues by adding or raising annual and other fees. In fact, 35 percent of all credit card offers mailed to consumers in the last quarter of 2009 carried an annual fee, the highest percentage in the past decade, according to Synovate Mail Monitor, a direct mail tracker.

5. Have you done your research to get the best deal? If you’re looking for a new card and considering paying an annual fee, your due diligence should include comparing rewards cards that have a fee with those that don’t and calling customer service to get more information if there is something you don’t understand. Many credit cards don’t offer a lot of specific information about redeeming rewards on their websites and in mailings, so make sure you know what you’re getting into before you get a new card.

If you already have a rewards card, check periodically to make sure the benefits you originally got the card for still exist, says Scott Testa, a professor of business administration at Cabrini College in Philadelphia. “Credit card companies generally are not in the business to advertise what they’re taking away from you,” he says.

And make sure to call your card issuer and ask them to waive the fee every year, Testa adds. “You’ve got nothing to lose,” he says. “The worst case, they say no.”

http://www.creditcards.com/credit-card-news/help/5-key-questions-credit-card-annual-fee-6000.php

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Quoted – Consumer pay a little more in March, inflation not yet problem

April 15, 2010 by 5 Comments
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Consumer pay a little more in March, inflation not yet problem

Prices paid by consumers in March rose slightly, a sign that inflation has not yet become a serious problem for the U.S. economy.

The Consumer Price Index rose 0.1 percent on a seasonally adjusted basis last month, according to a Wednesday report by the U.S. Bureau of Labor Statistics.

“I think the Fed should keep interest rates low,” said Scott Testa, professor of business administration at Cabrini College. “I think to raise interest rates now would be a little premature.”

However, others think the Fed’s current policy on interest rates will be unsustainable in the future.

http://news.medill.northwestern.edu/chicago/news.aspx?id=162995

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Quoted – Consumer credit unexpectedly declines to 3-month low

April 11, 2010 by 5 Comments
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Consumer credit unexpectedly declines to 3-month low

Borrowing by U.S. consumers decreased in February, more than economists anticipated, a sign consumers are still reluctant to take on debt without continued improvement in the job market.

Consumer credit, encompassing credit card debt and non-revolving loans, decreased $11.5 billion, or 5.5 percent at an annual rate, the Federal Reserve said Wednesday.  Economists polled by Bloomberg LP estimated a decrease of only $700 million.

The February measure is just another indication that consumer spending, which accounts for roughly 70 percent of economic activity, will continue to stay put until households begin to feel more optimistic about the labor market.

Scott Testa, professor of business administration at Cabrini College in Philadelphia, Pa., said that despite the encouraging news on the job front, job security is still hampering consumer spending. “People are much more frugal when they know they are going to lose their jobs, or they are already out of work,” said Testa, who pointed to the importance of credit to the success of the U.S. economy. “We are a nation of credit cards, we love buying,” said Testa. “Unfortunately that puts us in a position where we have high debt levels.”

http://news.medill.northwestern.edu/chicago/news.aspx?id=162693

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Quoted – Consumer credit contracts at slower pace – Medill Reports

February 6, 2010 by 11 Comments
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Consumer credit contracts at slower pace

December’s consumer credit figure, released by the Federal Reserve Board Friday, declined by $1.8 billion to $2.46 trillion from about $2.47 trillion in November, a drop of 0.07 percent. This follows a 0.5 percent drop of $13.8 billion in October. The drop in December was well under the $10 billion contraction estimated by economists in a survey by Bloomberg LP.

“I think things are starting to loosen,” said business professor Scott Testa about the nation’s overall credit market. But Testa, of Pennsylvania’s Cabrini College, cautioned that an improvement of credit would be slow.

“It’s not stuff that happens overnight,” he said.

Revolving credit, which includes credit card financing, continued to slide, falling another $8.5 billion to $866 billion from $875 billion in November, a drop of almost 1 percent. This follows a 1.6 percent drop of $13.8 billion from October.

“It’s all about the jobs,” Testa said of the drop, emphasizing that the figure reflects the weak job market, consumer spending and the remaining but decreased fear banks have about lending.

“It’s an indication that banks are nervous about extending credit,” he said.

http://news.medill.northwestern.edu/chicago/news.aspx?id=155826

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