Quote of the Month:
"The dominant pattern of this recession...is that all four regions are behaving similarly."
| Forecasts & Statistics |
| Product Trends |
| Industry Trends |
| Issue Archive |
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| Corporate Leaders Wary About Coming Months |
| To say that the economic outlook for 2002 is unsettled would be an understatement. Almost every forecaster agrees that the most critical factor for determining the growth trajectory over the next year is consumer confidence. |
| No Region Has Escaped the Downturn |
| The economic malaise is fairly well distributed across all regions of the U.S. The economic forecasting firm Economy.com reports that "the dominant factor underlying the regional pattern of this recession, and which differentiates this cycle from previous recessions over the past three decades, is that all four regions are behaving similarly." |
| Household Debt Service Burden Rises |
| Last month the Division of Research and Statistics of the Federal Reserve Board revised several statistical tables as a result of earlier revisions of the National Income and Product Accounts. Among these tables was the Fed's measure of consumers' debt burden. |
| Bankruptcy Update |
| Personal bankruptcy filings continue to move inexorably toward a new annual record. As of October 20, 2001, personal bankruptcy filings totaled 1,184,628 thus far this year, as compared to 981,387 for the same 42-week period in 2000. |
| Credit Card Chargeoffs Rise |
| The year-over-year deterioration in credit card performance continues to worsen. According to Standard and Poor's Credit Card Quality Indexes, the chargeoff rate on its pool of $365 billion in credit card receivables in August was 6.5 percent, up 140 basis points from a year earlier. |
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| Providian Rocked by Soaring Losses |
| The subprime credit card lender Providian Financial Corp. stunned industry analysts by announcing third quarter earnings that were much lower than previously estimated, despite strong loan growth. |
| A New Role for Smart Cards |
| In relation to their popularity in Europe and Asia, smart cards have not made much headway in the United States. However, the tragedy in New York has kindled interest in a different version of the smart card. The computer-chip card is now being seriously considered as an identity card. |
| Expansion in Wired and Wireless Households |
| Marketers of many products may be facing a sea-change in technological savvy and capabilities of their customers. Researchers at Jupiter Media Metrix report that the percent of U.S. households who access the Internet via a high-speed connection will quadruple within 5 years. |
| College Students Can Spend and Save |
| This past April, Citibank and several other top U.S. companies launched the Upromise savings program targeted at college students, as well as parents and relatives. Under the program, one percent of all eligible purchases made on Citi's Upromise Platinum Select MasterCard were paid into the student's college contribution account with Upromise. |
| A Suggestion for Christmas |
| If your children have everything, FAO Schwartz has an ideal "toy" for them. For just $20,000 you can buy a "customized stand-alone home ATM" according to CardTrak. |
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| Finance Companies' Consumer and Mortgage Credit |
| Focusing on short-term changes sometimes overlooks long-term trends. The latest G.20 release of the Federal Reserve Board reveals some significant trends in the investment by finance companies in consumer credit, real estate credit and business credit during the period from 1996 through August 2001. |
| Captive Finance Companies Gain |
| In the aftermath of the tragedy in New York, many consumers hesitated to buy new cars. According to CNW Marketing/Research, floor traffic at auto dealers fell dramatically. |
| Fears Hinder Online Shopping |
| With all their debit and credit cards, why don't consumers use them more for online shopping? Ipso-Reid recently conducted an international survey of consumers in 16 countries regarding their attitudes and practices in using credit or debit cards to shop online. |
| Credit "Counseling" |
| In recent years, we have been deluged with advertisements on television and radio by firms offering to counsel consumers who are over-indebted and seek to reduce their monthly payments, as well as the amounts owed. Some charge only a "voluntary" payment and explain to clients and in their advertising that their generosity arises because they are "nonprofit" agencies. |
| Changes in the American Household |
| Data from the recent census reveal a significant change in the American household in the past ten years. . . . While the proportion of family households has dropped from 70 percent to 68 percent over the past decade, the share of non-family households has grown from 30 percent to 32 percent. |
| New Homes Construction Stable: Refinancing Up |
| With the economic outlook somewhat gloomy, it is somewhat surprising to learn that privately-owned single-family housing starts in September, 2001 were at a seasonally-adjusted annual rate of 1,268,000, up slightly from 1,196,000 a year ago. The explanation, of course, resides in the lowest mortgage interest rates in a generation. |
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| Visa and MasterCard Lose Appeals |
| Visa USA and MasterCard International have not fared well in recent litigation. On October 9, 2001 Judge Barbara S. Jones of the U.S. District Court in Manhattan ruled that the two card associations could not prohibit their member banks from issuing cards of rival companies, most notably Discover and American Express. |
| Proposed Disclosures on Home Mortgages |
| For many years some mortgage lenders have paid mortgage brokers a "yield-spread fee" for persuading homebuyers to accept a higher interest rate on their mortgage loans. In essence, the borrower pays a higher interest rate on the mortgage loan in return for possibly lowering the initial closing costs, and the broker receives payment from the lender for producing a higher rate on the mortgage. |