consumers posts

There's no doubt that the current downturn has changed people's spending habits.

Since the peak in housing wealth, homeowners lost more than $5 trillion in equity and 15 million homeowners own homes that are now underwater (worth less than they owe). Unemployment is hovering near 10% with no clear signs of falling.

Homeowners' previous piggy bank -- home equity -- is no longer available for spending. Even if people still hold a job, many are worried that their jobs are at risk and won't spend except for necessities.

People, afraid for their future also changed their savings habits. In the first quarter of 2008, before the recession took hold people saved about 1% of disposable income. By the second quarter of 2009 the savings rate soared to 5% of disposable income. But now that we appear to be near the end of the recession the savings rate dropped back to slightly above 3% in the third quarter of 2009, as people see the end of the recession in sight.

While economists now don't believe this recession will be as deep as the Great Depression, its depth and length will certainly change people's spending and savings habits for a long time to come.

Twitter isn't perfect, and not just because we're all sick of hearing about it. The one-line updates can be maddeningly short, and too many users do a lot of reading but not much posting.

On a typical day, the average Twitter stream can look like a tedious march of news of the weird and alarmist predictions of a dire future. But after a recent trip, I discovered that it does have its uses.

Sure, there are lots of people who treat Twitter like an inane chat room, and use it to announce when they're going to bed, and what kind of pickle they're eating for lunch. But many companies use it, too, to manage vocal customers.

Every year Beloit College lists a group of analogies and cultural references to mark the differences between generations. One that should have been included in the list this year is that, as long as this group of students can remember, they've always been able to opt out of receiving marketing messages.

The ability to opt out of marketing messages may seem like an idea that has always been around but we owe one man, John Daly, for giving consumers control of how retailers contact them.

Sadly Daly, who served in the Korean War and worked as a photographer for the Washington Post, passed away on Aug. 27 due to a blood infection and heart disease. He was 80.

What happens when the nation's leading consumer electronics chain partners with the original hard drive recorder? Best Buy streaming direct to your TV.

The retailer announced a partnership with TiVo to sell hard drive recorders with Best Buy-owned or branded content. And before everyone erupts thinking that means advertisements, Best Buy has the Napster music service to broadcast and will probably stream movies soon, too.

The company does admit to using the partnership to "use TiVo to offer advice and guidance on products like HDTVs and digital cameras and provide ways to buy these products via the television remote control," reports the New York Times. Here's hoping that it's not in the form of ads, but specially-produced programs that customers can choose to view, or not.

There's the possibility of embedding TiVo technology into Best Buy-branded Insignia TVs or DVD players. It's the kind of thing techies thought TiVo would be doing all along.

All this could offset revenue lost from declining disk sales, both CD and DVD. For TiVo, it's a chance to finally get a mass audience to appreciate the brand rather than simply using whatever hard drive recorder comes from the service provider.

It's hard to believe, what with TiVo being synonymous with the technology, but sales have fallen pretty dramatically. This may just give the company that started it all a fighting chance.

Over the years General Motors dealers have been able to count on GMAC, the lending company owned in part by GM, to provide loans to car buyers at their dealerships.

Before the economy started its nosedive, GMAC-originated loans provided financing for almost half of GM car buyers. But now that the company is concerned about stability, GMAC is cutting back on who it will give loans to. In a letter dated Oct. 13, it announced to all GM dealers that it would no longer make vehicle loans for anyone with a credit score below 700, this coming on the heels of previous cuts which have already cost GM 10,000 buyers a month.

Any move to tighten up credit restrictions by a major corporation will affect parties in different ways; we are going to look at how it will affect the major players below.

• GMAC
• Consumers
• Dealers
• Banks and Credit Unions

I always had a soft spot in my heart for the humble donut. Long years after the cappuccino and croissant became the preferred breakfast of young urban professionals, I would always sneak into the little donut shop on the corner for my glazed twisty and cuppa cheap coffee. Then Starbucks came on the scene, and I never looked back.

Now venerable donut chain Dunkin' Donuts is beckoning again. The chain is offering 99-cent cafe lattes in the afternoon hours, hoping to lure cash-strapped consumers who've shirked their $4 Starbucks afternoon fix.

The lattes, which normally sell for between $2.59 and $2.79 depending on the market, will sell for 99-cents at all stores between 2 and 5 p.m., Monday through Friday. As Homer Simpson would say, "Woo-HOO!"

Who knew that the list of "necessities" for consumers would be an ever-expanding laundry list of things? Back in the day, food, clothing, and shelter were considered necessities. Things like transportation ran close behind, but if all else failed, people walked lots of places. Apparently, as our society has evolved, there are more and more things that we just can't live without.

Now included on the list of necessities: premium cable, manicures, a latte a day, and cell phones. When the economy was better and people felt that they had more discretionary income, it was natural to spend money on things like this. High-speed internet access, the latest high-tech gadgets, and premium grocery store items are probably pretty high on the list too. If you wanted it, then you must have really needed it, right?

If you can really afford to pay for these things and you want to have them, then I say go right ahead. But consumers shouldn't feel entitled to these things just because they're available. People need to first pay their rent, feed their children, and pay their bills. Extras come later.

I think that the concept of what we can "afford" in today's society has become really warped. Consumers say they can't afford groceries.... but they're saying it from their computer using a high-speed internet connection. They complain about gas prices and suggest they might not be able to afford to get to work, but they're busy talking on a cellphone. Sorry, needs and wants need to be a little better defined, and consumers have to be prepared for a little more delayed gratification if they want to really live within their means. And living within their means is the real necessity.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

The U.S. Census Bureau has published its 2008 Statistical Abstract of the United States. And it shows that times are definitely changing.

The report takes about ten months to compile, and Census Bureau employees spend their days searching for studies and statistics that give insight into how Americans spend their money.

Here are some of the more interesting statistics:

• Sales of MP3 players in 2007 were $5.9 billion, compared to just $424 million in 2003
• The number of cosmetic procedures on Americas doubled from 2000 to 2006; more than 11.4 million procedures were done in 2006
• Online sales are still only a small fraction of retail sales, at 2.5% of the $3.7 trillion total
• Dining out is the single largest leisure activity done by Americans, with 106 million adults eating in at least one restaurant during 2006