Why This May Be a Change My Mind Economy

ap new stock exchange ll 131230 16x9 608 A Tale of Two Economies

                                                            (Photo Credit: Richard Drew/AP Photo)

When will consumers change their minds about the economy?

While the stock market had a stellar year, home prices rose at the strongest rate since 2005 and auto sales hit post-recession highs, many Americans believe the United States is still in a recession.

Only 19 percent of those polled said the economy is “excellent” or “good,” while 38 percent said it is “poor,” according to a recent survey by Gallup. More than half said the economy is getting worse.

Despite such gloomy findings, however, Gallup and other pollsters say consumer confidence improved in the closing weeks of 2013. The Bloomberg consumer confidence index rose to its highest level since August. But it’s still not back to where it was before the recession.

That said, 2013 made believers out of many investors. It has been a stellar year for the stock market with solid gains for most savers’ 401(k) retirement funds. The big stock S&P 500 index rose 29 percent, its best year since 1997. The high-technology Nasdaq gained 37 percent and the Dow Jones Index added 26 percent for the year.

The housing market recovery broke new ground with average prices rising about 12 percent nationwide. New home construction rose and, in a small number of cities, home prices are now in record territory, gaining back all their losses from the housing bust.

New vehicle sales also picked up speed. The shopping website Edmunds.com expects auto sales to hit about 15.5 million this year, which is the strongest result since 2007.

The United States became the world’s leading producer of oil and natural gas this year. The rise in output and increasing energy efficiency helped lower costs for business and consumers.

While gasoline prices remained high, “we’re going to end up averaging about $3.49 nationally this year which will be about 11 cents less than last year,” senior analyst Tom Kloza of gasbuddy.com said.

The cost of energy, especially natural gas, for U.S. manufacturers is far lower than in Europe and Asia, giving the United States a competitive advantage.

Despite such gains, however, living standards for most Americans were flat. “For a lot of people, their incomes haven’t increased,” Greg McBride of bankrate.com said. “When we ask about their financial priorities, people say the top priority is just staying current or getting caught up on the bills.”

Many jobs that were lost during the recession never came back. Many discouraged workers who gave up looking for a job have not returned to the labor market.

At year-end, long-term unemployment benefits for 1.3 million Americans and their families were cut off.

While more than 2 million new jobs were created in 2013, a large share of them were low-income retail and restaurant positions. “I think consumers are very cautious and looking for those discounts,”  Jack Kleinhenz, president of the National Association for Business Economics, said.

Such caution underscores an economic divide. This year was especially good for the “haves,” but the “have-nots” have yet to see the real gains of the past two years trickle down to them.

This blog was first published on abcnews.com 


Will Gift Buyers Change Their Minds About Shopping Online?

AP amazon center tk 131216 Online Shopping Surge Causes Christmas Gift Delay

A busy Amazon distribution center, just before Christmas. AP Photo.

This year may have been the tipping point for online sales, and that’s a big reason why UPS and FedEx were overwhelmed by delivery problems just before Christmas.

Both shipping firms faced customers’ complaints about delayed gifts. UPS spokeswoman Natalie Black admits “demand was much greater than our forecast,” adding “we are sorry.” Shippers said bad weather also contributed to the delays.

This year has seen a surge in online shopping.  According to IBM Digital Analytics, online Thanksgiving weekend sales jumped about 15 percent compared to 2012, and the Christmas week increase may have been greater.

Amazon, Walmart and Kohl’s were among the retailers that missed some target delivery dates. While online sales soared, foot traffic was down at many brick and mortar stores. Amazon says its customers who did not get their goods delivered on time would get a $20 gift card.

The day after Christmas is usually the busiest of the year for returns and shoppers who buy things with gift cards. “The most common things that are returned are toys,” says Travis Preston, manager of a Super Target in Shawnee, Kan.

“You know it’s just that day and age where people want it and they want it now and they want it quickly to the point where multiple family members bought the same thing for the same child.”

Preston’s advice to shoppers with returns is that if they want to get fast service bring a receipt. “It’s one scan for our team member and we can get you in and out in a couple minutes.”

Headaches at Targets are even more intense than for most retailers. Reuters reports the hackers who stole data on up to 40 million credit and debit card accounts also obtained encrypted PINS – personal identification numbers. Target says it has no reason to believe PIN data was stolen.

The company says it is aware of “limited instances” of scam emails, where fake emails have been sent to customers. Target says it is creating a section of its website to contain copies of Target’s official communications.

Shipping stuff may get even more expensive soon. Postal regulators have approved a temporary price hike of 3 cents for a first-class stamp, to 49 cents a letter. Other rates will also rise. The Postal Service is losing billions of dollars a year.