Quote of the Month:
"As we head into a possible recession, an important concern is how well consumers are positioned to weather the storm."
| Forecasts & Statistics |
| Product Trends |
| Industry Trends |
| Issue Archive |
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| Household Debt Service Burden and Rising Delinquencies |
| As we head into a possible recession, an important concern is how well consumers are positioned to weather the storm. A useful measure is the "Household Debt Service Burden" series published by the Federal Reserve System. |
| Household Net Worth Dropped in 2000 |
| For the first time since data collection began in 1945, the net worth of the U.S. household sector fell last year, by about 2 percent. The Federal Reserve Board's Flow of Funds report revealed that at the end of December 2000, household total assets (e.g., real estate, stocks, mutual funds) minus total liabilities (e.g., home mortgages, other consumer debt) totaled $41.4 trillion, down from $42.3 trillion at the end of 1999. |
| Final Tally on Personal Bankruptcies in 2000 |
| The Administrative Office of the U.S. Courts recently released its final tabulation of personal bankruptcies filed in the U.S. during 2000. A total of 1,217,972 petitions were filed, down 5 percent from 1999. |
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| Automatic Payment Plans Grow |
| Consumers' efforts to deal with a shortage of time are evident in the growth that Visa has experienced with its automatic bill payment program. According to Cardline (Faulkner and Gray's daily online publication on card and payment products), the transactions processed by Visa's bill-paying service rose to $23.3 billion in fiscal 2000 from $4.4 billion in fiscal 1995. |
| So, Why Do Consumers Still Write Checks? |
| While some time-short consumers are turning to automatic payment systems, most still go through the time-consuming process of writing checks. The following quotation makes the point. "Although the checkless society has been predicted for decades, checks remain the most frequently used noncash payment method in the U.S., contrary to trends in a number of other countries." |
| First Union Patents a Check-Cashing Card for Non-Account Holders |
| Banks incur fraud risk when cashing payroll checks for consumers who aren't customers. First Union recently received a patent on a new card that cuts the fraud risk and lets non-account-holders cash checks quickly, without a fee. |
| Credit Card Solicitations |
| During 2000, credit card issuers mailed out a record 3.54 billion solicitations for credit cards, up 22.3 percent from last year's 2.87 billion mailings. According to the surveys of BAIGlobal, the record low response rate of 0.6 percent represented a significant decline from last year's response rate of one percent. |
| Spend Your Way to College |
| Citibank has announced a plan by which its cardholders may earn money towards their children's college tuition. In conjunction with UPromise, cardholders can earn up to $300 per year at a rate of one percent of their purchases using the Citibank card. |
| British Airways Changes Co-branded Partners |
| British Airways (BA) has a number of co-branded card programs around the world. For example, its co-branded card in the U.S. is the First USA Visa card. |
| Online Car Shopping |
| General Motors Corp. and Autobytel.com have joined in a 90-day test of what they believe is an improved system for shopping for cars and credit online. GM has asked its 7,800 dealers to participate in a $50 million joint venture beginning on May 1 that could lead to the establishment of a third-party web site such as Autobytel. |
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| Card Fraud Surges in Europe |
| The headline in European Card Review reads, "Card-related crime is the fastest-growing criminal activity in the UK-and throughout Europe; payment card systems are under unprecedented attack from well-organized and financed criminal gangs." Payment systems throughout Europe are under attack by "Russian criminals, characterized by highly technical sophistication, including access to systems designed by FAPSI, the Russian state cryptographic agency." |
| Implications of Changing Work Lives |
| Over the past two decades there have been at least two basic trends in the American workplace. First, a much higher proportion of women has entered the job market. Second, both men and women have been working longer hours. |
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| Bankruptcy Reform Clears the House and Senate |
| On March 15, 2001 the U.S. Senate voted by an overwhelming 83-15 margin to overhaul the federal bankruptcy statutes. Two weeks earlier, on March 1, the U.S. House of Representatives passed a similar bill, also by an overwhelming and bipartisan vote of 306-108. |
| Reflections on the News Media's Version of Bankruptcy Reform |
| Assuming that a final revision of the Bankruptcy Reform Act is delivered to President Bush for his signature, it is worthwhile pausing to evaluate the cries of anguish from much of the news media. A perusal of recent newspaper articles reveals several basic flaws in economic analysis. |
| The 1990s: A Decade of Declining Stigma to Bankruptcy |
| Economists David B. Gross of Lexicon and Nicholas S. Souleles of the Wharton School provide further support for bankruptcy reform. In their paper delivered to the American Economics Association's annual meeting in January of this year, they explored the reasons for the burst of bankruptcies between 1995 and 1999. |