Archive for Economy

Gas is Going Up: Is Your Spending Going Down?

By Kembala Evans on March 19, 2012

Tomorrow is the first day of spring. But who would have thought we’d be paying $3.842 per gallon (AAA motorist reports) in winter? After all, winter is the time of year we usually pay less for gas. With gas prices so high now, what can we expect to pay this summer?

Some people are predicting $6 a gallon gas this summer. That means it could cost you $111 to fill up an 18.5 gallons gas tank. You could be spending close to $500 a month if you had to fill up every week. Ouch! I’m hoping they are as wrong about that prediction as they were about this being a brutal winter in the Midwest.

My question for you: Is the price of gas changing your personal spending?

According to a recent gallup poll – “Americans on average say gas prices of $5.30 to $5.35 per gallon are the tipping point that would make them cut back on spending in other areas or make significant changes in the way they live their lives.”

I can tell you gas does not have to reach over $5 for me to change my habits. When it hit more than $3.50 a gallon, I’d already started looking for ways to spend less on gas. Like bundling up trips, using public transit and keeping my car well maintained.

In Illinois, we have not hit over $5 a gallon just yet. This morning I took a picture of a local gas station’s sign. I know it’s not the best picture, but at least you can see the price. :D It’s $4.49 per gallon for regular gas. Don’t let the big $4.19 price fool you. That’s only the price when you get a car wash. So you have to be careful with the gas sign trickery in these parts.

I’d love to hear from you on this topic! What’s the magic number for gas that will force you to make some major changes in your spending?

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Categories: Economy, News

What Does Raising the Debt Ceiling Really Mean?

By Kembala Evans on July 31, 2011

Capitol HillAs an American it’s disheartening to see the political gridlock continue without a solution as the August 2nd deadline looms less than two days away. While negotiations continue, the fact remains — if the debt ceiling is not raised by August 2nd, there is a high probability the U.S. will default on its financial obligations for the first time in American history. That means we are just a few short days away from this important financial decision, which could jeopardize the country’s AAA credit rating, payments for the military, social security and more.

Despite all of the debating, there’s still a bit of confusion about what it means to raise the debt ceiling. In short, raising the debt ceiling gives the U.S. government the ability to pay the bills it has already incurred. For a simple example, if we chose not to raise the debt limit it would be like running up your electric bill and refusing to pay the bill.

The purpose of this post is not to be political, but to explain the facts around the debt ceiling debate. Suze Orman wrote a great piece on this yesterday, Congress’ mishandling of debt ceiling and deficit is surreal.

An excerpt from Suze Orman’s article:

As we all know, if you run up a balance on your credit card and then decide not to pay the bill, there’s a huge price to pay. Your interest rate goes up, your credit score goes down and that triggers all sorts of costly dominoes to start falling. To not raise the debt ceiling is akin to refusing to pay your credit card bill.

The debt ceiling has nothing to do with future spending. It’s simply a mechanism that allows the U.S. government to keep paying off the bills it has already run up. This is a completely separate issue from what we decide is the right pace of future spending for our country. The deficit reduction debate is about that future path. That anyone insists on linking the two is absurd. We must make good on paying off our bills.

Besides defaulting on our debt has a ripple effect beyond the AAA credit rating:

My Take:

We have a responsibility as a country to pay the bills and raising the debt ceiling allows us to keep those commitments. After all, if you want to get your financial house in order, the answer is not to stop paying the bills you’ve already racked up, but to layout a strategy to get it done. Regardless of our political opinions, I think we can all agree that the deficit did not happen overnight and there will have to be a structured and well thought out approach to help reduce it.

I hope our politicians work together to do what’s best for the country.

What’s your take on the debt ceiling?

Photo by Andrew Bossi, Flickr

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Categories: Economy, News

Unemployment Rises to 9.2%, President Obama to speak…

By Kembala Evans on July 8, 2011

Today the U.S. Bureau of Labor Statistics (BLS) reported that the unemployment rate increased from 9.1% to 9.2%.

According to the BLS employment report:

Nonfarm payroll employment was essentially unchanged in June (+18,000), and the unemployment rate was little changed at 9.2 percent, the U.S. Bureau of Labor Statistics reported today. Employment in most major private-sector industries changed little over the month. Government employment continued to trend down.

Unemployment unexpectedly rose in June, because there were only 18,000 jobs added last month.  This news missed economists expectations, since they were expecting more jobs to be added and the unemployment rate to improve to 9%.

President Obama is expected to address the jobs report today at 10:35 a.m. EST.

 

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Categories: Economy

The Domino Effect of High Gas Prices

By Kembala Evans on March 8, 2011

The Domino EffectGone are the days of cheap $1 per gallon gas. Do you even remember the time when a $20 bill could have easily filled your car’s gas tank? I sure do, but it seems like such a distant memory these days.

Across the nation, we continue to see a rise in gas prices. According to AAA, the average gas price is $3.517 per gallon. And the price of oil is hovering around $105 a barrel. Many experts predict that we will continue to see gas prices go up.

The direct impact of high gas prices is easy to see, because it costs you more money at the pump. But for an economy in recovery mode, the domino effect of high gas prices is concerning.

What do I mean by the domino effect? Well, higher gas prices could raise the prices we pay for other goods and services too.

For example, it could push transportation costs (airlines raise airfares, taxis charge fuel surcharges, public transit) up and raise the prices on consumer products — to account for higher petroleum costs. In the end, these costs are passed on to consumers and we all pay more for goods (e.g. higher food prices) and services (e.g. shipping).

As for the economy, when consumers spend more money on gas they have less money to spend on other things.

Despite this reality, gas prices continue to soar. Yesterday the U.S. Department of Energy released a new Gasoline and Diesel Fuel Price Update, which showed that we are still paying more at the pump. In fact, gas prices have gone up a staggering 28% since this time last year. And half of this increase has occurred since the beginning of this year (Jan. 2011) alone.

Back in December 2010, a former Shell president (John Hofmeister) predicted gas prices could go up to $5 per gallon by 2012. Could he be right? Stop the presses, it’s already been reported that a gas station in Orlando, Florida (near the airport) is actually charging $5.39 a gallon for regular gasoline. (more…)

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Categories: Economy, News

NBER Says – The Great Recession is Over

By Kembala Evans on September 21, 2010

Yesterday the National Bureau of Economic Research (NBER) announced that the “Great Recession” ended in June 2009. It’s the longest recession on record since the Great Depression, lasting a total of 18 months (December ’07 – June ‘09). Given this significance, the recession is commonly referred to as the “The Great Recession.”

What’s a recession anyway? The NBER defines a recession as “a period of falling economic activity spread across the economy, lasting more than a few months, normally visible in real gross domestic product (GDP), real income, employment, industrial production, and wholesale-retail sales.”

Although the recession is officially over, the economic recovery has been slow. With one of the biggest concerns being the unemployment rate, which remains a high 9.6%. The home industry is another area of concern given the low home values and high levels of foreclosures and bank repos.

Below is President Obama’s response to NBER’s announcement (recession ended in June 2009), during CNBC sponsored Town Hall meeting on jobs (September 20, 2010):

“Well, first of all, even though economists may say that the recession officially ended last year, obviously for the millions of people who are still out of work, people who have seen their home values decline, people who are struggling to pay the bills day to day, it’s still very real for them.”

“The challenge is, is that the hole was so deep that a lot of people out there are still hurting”

President Obama added, “something that took 10 years to create is going to take a little more time to solve.”

What’s your take on the recession being officially over?

  • Do you feel like the recession is over?
  • What does this news mean to YOU?
  • Will this news have a positive impact on the economy?
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Categories: Economy
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