Friday, April 18, 2014

New Inflation Measure for the Elderly?


Senior citizens receiving Social Security benefits are concerned about their annual cost-of-living adjustments (COLAs).  Studies indicate they are correct in asserting that the inflation measure used to calculate the COLA does not accurately reflect changes in their living expenses.

            To provide background on the issue, COLA changes for Social Security recipients are pegged to an index known as the Index for Urban Wage Earners and Clerical Workers, or CPI-W.  It is a broad measure of the typical costs incurred by wage earners.  Changes in the index are measured from the third quarter of one year to the third quarter of the succeeding year.

            The Bureau of Labor Statistics (BLS), the government agency responsible for calculating the index, has found that consumption patterns for people 62 and older are different from those of younger individuals.  Health care, for example, accounts for a larger share of expenditures for older people than for younger ones.

            This is critical since Social Security constitutes more than 50 percent of the income of two-thirds of seniors.  And for one-third of them, it accounts for 90 percent of total income.

            In view of this, BLS for several years has published periodically an experimental CPI for the elderly, CPI-E.  The index, calculated for those who are 62 and older, includes expenditures for the types of goods and services senior use most often. 
            About two years ago, BLS researchers compared the CPI-E to other measures of inflation over the period December 1982-December 2011.  The CPI-E rose at an annual rate of 3.1 percent over the 29-year period, compared with an annual rate of 2.9 percent
for the CPI-W. This is primarily because of higher medical and housing costs for seniors relative to the general population.

            The difference may seem insignificant.  But using the average monthly Social Security income of $375 in 1982, the CPI-E would have resulted in an extra $50 per month for the average recipient by December 2011.

            Recent studies seem to indicate the gap between the two measures may have closed somewhat.  This is because of lower medical and housing costs.

From the standpoint of fairness, CPI-E is the most appropriate measure of changes in the cost of living for senior citizens. And it should be implemented immediately. 

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Wayne Curtis, Ph.D., is a former superintendent of Alabama banks and Troy University business school dean.  He is retired from the board of directors of First United Security Bank.  Email him at wccurtis39@gmail.com.

 

Thursday, April 10, 2014

In the Pines Music Festival


ANNOUNCER:    WHO DOESN’T LOVE GOOD MUSIC AND GOOD FOOD!  HI I’M MARTHA LYNN DUNAGAN FOR FIRST UNITED SECURITY BANK.  COME JOIN US ON SATURDAY, MAY 3RD,  FOR THE “ IN THE PINES MUSIC FESTIVAL”, IN CHATOM, AT THE CHATOM COMMUNITY CENTER. THIS YEAR’S EVENT FEATURES FRANK FOSTER!.  PLUS GREAT LOCAL TALENT. PROCEEDS WILL BENEFIT FIRST UNITED SECURITY BANK’S GOOD FRIENDS AT THE WASHINGTON COUNTY CHAMBER OF COMMERCE. GENERAL ADMISSION GIVES YOU ACCESS TO THE MUSIC FESTIVAL AND MUCH MORE.  TO PURCHASE TICKETS ORDER ONLINE AT WASHINGTONCOUNTYAL DOTCOM OR CALL 251.847.2214.YOU CAN ALSO PURCHASE TICKETS AT YOUR NEAREST BRANCH OF FIRST UNITED SECURITY BANK. TO LEARN MORE VISIT OUR BANK’S BLOG AT FIRSTUSBANK.COM.  I’M MARTHA LYNN FOR FIRST UNITED SECURITY BANK WHERE WE’RE DELIVERING EXCELLENCE IN ALL WE DO. MEMBER FDIC, EQUAL HOUSING LENDER.

 

Unemployment Report is Mixed


The March employment report, released on April 4, points to perhaps the beginning of a slight thaw in the economy.  But the report was still mixed in terms of sustained growth.

            The good news is that the U.S. job market reached a milestone.  Nearly five years after the end of the Great Recession, private employment exceeded pre-recession levels for the first time. 

            Total employment stood at 116.1 million at the end of March, exceeding the high of 116 million in January 2008.   The total number of unemployed Americans stayed essentially unchanged at 10.5 million. The number of long-term unemployed—those without work for 27 weeks or more—was also unchanged at 3.7 million.

 Payrolls rose by 192,000—below the consensus estimate of 200,000 by economists. Employment gains occurred in a number of sectors. Professional and business services and health care added 57,000 and 19,000 jobs, respectively. Employment in mining and logging rose by 7,000. Employment grew by 30,000 in food services and drinking places.  Construction employment rose in March by 19,000.  

All of this is noteworthy.   But it ignores the “real” rate of unemployment. The rate people talk about and analyze every time the new jobs numbers come out—such as the 6.7 percent rate reported for March— is not the real unemployment rate.  The Bureau of Labor Statistics (BLS) labels it the U-3.

Experts agree it would be more appropriate to focus on the U-6, one of the government’s broader measures of unemployment.  This is the most widely defined form of unemployment of the six BLS classifications. It was 12.7 percent in March, up from 12.6 percent in February.

The real unemployment rate not only includes those unemployed under the conventional definition.  It also counts among the unemployed those who have given up looking for work out of frustration with the economy and those who are working at a part-time job but would prefer full-time work.

In addition to the real unemployment rate remaining high, a cloud continues to hover over average wages paid to workers.  Average hourly earnings were $24.30, compared with $24.31 in February.  They were, however, up 2.1 percent during the past 12 months.

The economy will not fully recover until the real unemployment rate falls and wages rise.

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Wayne Curtis, Ph.D., is a former superintendent of Alabama banks and Troy University business school dean.  He is retired from the board of directors of First United Security Bank.  Email him at wccurtis39@gmail.com.

 

Southwest Alabama Rodeo


ANNOUNCER:  GET YOUR BOOTS ON AND COME ON OUT TO THE RODEO!  HI, I’M PATRICIA PAUL FOR FIRST UNITED SECURITY BANK. JOIN US FRIDAY AND SATURDAY, MAY 9TH AND 10TH FOR THE FIRST ANNUAL SOUTHWEST ALABAMA REGIONAL RODEO! FIRST UNITED SECURITY BANK’S GOOD FRIENDS AT THE JACKSON AREA CHAMBER OF COMMERCE OUR PROUD TO ANNOUNCE THIS IS AN OFFICIAL COMPETITIVE EVENT SACTIONED BY THE PROFESSIONAL COWBOY ASSOCIATION.  THE EVENT WILL BE HELD AT THE ARENA BY JACKSON ACADEMY, ON HIGHWAY 69, BEGINNING AT 7:30 PM, WITH THE GATES OPENING AT 5:00. BRING THE ENTIRE FAMILY AND ENJOY BULL RIDING, STEER WRESTLING, TIE DOWN ROPING, BARREL RACING AND MUCH MORE! TICKETS CAN BE PURCHASED AT AREA MERCHANTS. TO LEARN MORE, CALLTHE CHAMBER AT 251-246-3251 OR VISIT OUR BANK’S BLOG AT FIRSTUSBANK DOT COM. COME OUT AND ENJOY GOOD, CLEAN FUN FOR THE WHOLE FAMILY.  I’M PATIRICA FOR FIRST UNITED SECURITY BANK, MEMBER FDIC, EQUAL HOUSING LENDER.

Thursday, April 3, 2014

Many Car Buyers Courting Danger


Many car buyers are flirting with danger.  They are doing this by choosing longer duration loans when purchasing new automobiles.

This is based on recent reports by Experian and J.D. Power and Associates.  Experian is a credit reporting agency. J.D. Power is an American-based global marketing information services firm.

            During the fourth quarter of 2013, automobile loans with terms longer than six years (73 or more months) constituted 20.1 percent of all new vehicle loans. And the trend has extended into 2014.  In February, a whopping 33.1 percent of loans were 72 months or longer in duration.

            Why would new car purchasers extend payments for such a long period?  The answer revolves around two interrelated factors.

            First, the average amount financed by buyers has risen as new car prices have increased.  The fourth quarter of 2013 witnessed the greatest amount financed—an average of $27,430—since 2008.

            And this February the transaction price was $32,319—2 percent higher than one year earlier—according to Kelley Blue Book, an automotive vehicle valuation company. The transaction price is defined as what the customer actually paid for a vehicle.

            The second factor involves the psychology of typical automobile buyers.  Most tend to look at monthly payments instead of the amount financed or the total cost including finance charges.  And many automobile dealers are helping to encourage the trend by getting buyers to focus only on the monthly payment.

Most industry analysts recommend that buyers limit the length of a car loan to 48 months with a down payment of 20 percent.  In many cases, this means purchasers may need to consider a lower-priced automobile to stay within these guidelines.

            Long-term loans may seem to make more expensive cars seem affordable, but it is merely a costly illusion.  This type of thinking leaves buyers with higher overall costs.  And toward the end of the term, they are surprised that they are “upside down” on the loan.  That is, they owe more on the automobile than its current value.

            This is a case study for why the American people need to be financially literate.  Unfortunately, many citizens do not understand the basics of personal finance.  And many learn the hard way that lack of literacy can be extremely expensive.

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Wayne Curtis, Ph.D., is a former superintendent of Alabama banks and Troy University business school dean.  He is retired from the board of directors of First United Security Bank.  Email him at wccurtis39@gmail.com.

                       

Tuesday, April 1, 2014

April is Financial Literacy Month


We observe National Financial Literacy month in April in an effort to highlight the importance of financial literacy.  As this occurs, many Americans have an inadequate understanding of the fundamentals of finance.  And this lack of knowledge—financial illiteracy--has brought with it dire consequences for many families.

            Millions of Americans cannot make the payments on their mortgages. Unfortunately, many lacked the financial capability to service a loan. 

            Credit card debt is astronomical.  The average debt per household is $7,123.  Significantly, one-third of consumers make only the minimum payment each month.

             One-fourth of households are spending more than they make.   Another 36 percent are spending what they make—breaking even.  Only forty-one percent are spending less than they make.

            More than half of U.S. households have no emergency fund to act as a cushion against unexpected financial shocks.  And the average savings per household is only $6,000. 

A better understanding of finance would help prevent this from happening.   Where can one seek financial knowledge?  Many government agencies, private firms, and nonprofit organizations offer a wide range of programs.  But some of the best are offered by financial regulators.
The Federal Reserve (www.federalreserve.gov) and the Federal Deposit Insurance Corporation (www.fdic.gov) provide an array of programs that attempt to increase consumer access to information about financial products and services.  They
also have initiatives that promote awareness of the importance of financial literacy and provide for cooperative arrangements with educational and community organizations.

            The best approach, however, is to teach young people the basics of finance and economics before they become submerged in debt as adults.  Teaching the basics can change financial practices and lead to a more financially literate public.

            Surveys indicate more needs to be done in the educational arena. The latest, conducted in 2013, found only 19 states—Alabama is one of them—require a course in personal finance.  .And just 24 states, including Alabama, require a high school course in economics. 

That this country has such a low level of financial literacy is a national disgrace.  Not only is literacy crucial for individuals, but it is also vitally important to the nation’s financial system.   To have a strong, competitive economy, our citizens must be able to manage their financial lives well.
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Wayne Curtis, Ph.D., is a former superintendent of Alabama banks and Troy University business school dean.  He is retired from the board of directors of First United Security Bank.  Email him at wccurtis39@gmail.com.



Wednesday, March 26, 2014

Veteran's Home Repair


WE SALUTE OUR VETERANS!  HI I’M PATRICIA PAUL FOR FIRST UNITED SECURITY BANK. AS A HOMEOWNER, WE ALL KNOW THAT THERE COMES A TIME WHEN REPAIRS ARE NEEDED. FIRST UNITED SECURITY BANK’S GOOD FRIENDS AT HABITAT FOR HUMANITY OF SOUTHWEST ALABAMA HAVE A PROGRAM FOR OUR VETERANS LIVING IN CLARKE AND WASHINGTON COUNTIES.  IF YOU ARE A VETERAN, OR THE SPOUSE OF A VETERAN, AND YOU OWN YOUR HOME, THEN YOU MAY QUALIFY, BASED ON YOUR HOUSEHOLD INCOME, FOR THE FEDERAL HOME LOAN BANK OF ATLANTA’S VETERAN’S REHAB PRODUCT. THIS SUBSIDY GIVES QUALIFYING VETERANS IN CLARKE AND WASHINGTON COUNTIES UP TO TWELVE THOUSAND FIVE HUNDRED DOLLARS IN HOME REPAIRS, IF THEY QUALIFY.  TO LEARN MORE CALL HABITAT OF SOUTHWEST ALABAMA AT 251.476.7171.  THAT NUMBER AGAIN IS 251.476.7171.  OR VISIT OUR BANK’S BLOG AT FIRSTUSBANK.COM. WE’RE DELIVERING EXCELLENCE IN ALL WE DO. I’M PATRICIA FOR FIRST UNITED SECURITY BANK, MEMBER FDIC, EQUAL HOUSING LENDER.