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Five Things You Need to Know: Payroll Point/Counterpoint, Housing Pinch, Fiscal Literacy, Fiscul Litterasee, Talking About My Generation


What you need to know (and what it means)!


Minyanville's Five Things You Need to Know to stay ahead of the pack on Wall Street:

1. Payroll Point/Counterpoint

The closely-watched Payroll Employment figures for August were released this morning. They were "in-line" with expectations. Below is Minyanville's Payroll Point/Counterpoint.

  • Point: U.S. nonfarm payrolls grew by 128,000 jobs in August.
  • Counterpoint: 120,000 of those jobs will be featured on the next episode of the Discovery Channel's "Dirty Jobs" series.
  • Point: The unemployment rate inched lower to 4.7% in August from 4.8% in July.
  • Counterpoint: Lemonade stand employment spikes during national heat wave.
  • Point: Average hourly earnings rose by 2 cents, or 0.1%, to $16.79.
  • Counterpoint: Rub those 2 cents together and pray for Powerball!
  • Point: Seasonally adjusted payrolls in June and July were revised higher by a cumulative 18,000.
  • Counterpoint: 18,000 paid extras fill stadium seats for post-production filming of Gridiron Gang.
  • Point: Average weekly earnings increased to $567.50.
    Counterpoint: Average weekly bar tabs fall to $567.50 as consumers cut back.
  • Point: The average workweek slipped by 6 minutes to 33.8 hours.
  • Counterpoint: Snooze bar usage inexplicably jumped in August.

2. Housing Pinch

The cooling housing market is starting to pinch the nation's banks, which are more exposed to real estate than ever, the Wall Street Journal reported.

  • According to the WSJ, banks have begun to warn investors that the housing slowdown is starting to hurt their business.
  • Among those pushing the warning button are:
    - FirstFed Financial Corp. (FED): securities filing Monday said mortgage originations down 47%.
    - First Horizon National Corp. (FHN): Said Tuesday expects mortgage originations to fall by $1 billion in the third quarter.
  • Sure, most banks are able to reduce real estate exposure by selling some of their loans in the secondary market, but according to the WSJ real estate (mortgages, home equity loans) account for a record 33.5% of the U.S. banking industry's $9.298 trillion in assets.
  • Real estate notwithstanding, financial institutions are facing a number of problematic issues, the article notes, including a tough interest-rate environment, increased competition and a saturated credit-card market.
  • Also, as we noted in Five Things here, some banks are even being forced to cut fees (Banking Fees: the revenue-smoothing miracle drug) to gain (or simply to retain) market share.
  • So, how bad is it?
    - I made an ATM deposit last week and instead of a receipt I got a 30-year fixed mortgage!
    - I noticed on my last bank statement that savings account interest rate payments were being credited to my account in square feet!
    - Walking past a Citibank branch in Midtown last week a bank teller ran out and tackled me in the street and stuffed a home equity line of credit in my pocket. And I don't even own a house!
  • Thank you, I'll be here all week.

3. What is this... how you say... ah, yes, pension?

An interesting commentary piece from Floyd Norris in the New York Times this morning wags a finger at Baby Boomers, the generation that may in the future be known as the group that took it all and left us to pay the bills and take on the risks they refused to accept for themselves.

  • Now we're not going to get into the whole generational finger-pointing game. Not while our boomer parents are reading. Ok, yes we are (See Number 5, below).
  • Instead we want to take a look at the state of financial education.
  • First stop? Dupont (DD). The double D this week decided that workers who start in 2007 and beyond will not get pensions... and current pensions will accrue at a third of the old rate.
  • Norris notes that what was "jarring" about the DD announcement is not so much that it happened (many companies have recently cut back pension promises) but that employees should be happy about it.
  • "The planned changes reinforce our commitment to help employees provide for a secure retirement," said James C. Borel, a DuPont senior vice president.
  • "If those new employees are really enthusiastic about a program that DuPont estimates will save it - and take away from employees - around $46 million a year, after taxes, then the state of economic education in this country is worse than you may have thought."
  • Worse than we thought? Hahaha. Yeah, right.
  • The only way it could be worse than we thought is if, say, nearly half of high school seniors surveyed thought that US Government Savings Bonds had a higher growth rate than stocks over any 18-year period. Oh, wait. See Number 4.

4. Fiscul Litterasee

Back in April, a survey by the Jump$tart Coalition for Personal Financial Literacy surveyed 5775 high-school students on personal finance. The results? Grim.

  • First the good news.
  • The survey saw increased participation, suggesting there is increased awareness among educators of the importance of fiscal literacy.
  • The average score for the 2005-06 survey was 52.4 percent, up marginally from 52.3 percent in the 2003-04 survey.
  • Now the bad news: A number of important financial concepts are not well understood by high school seniors, the survey found.
  • The proportion of students who reported having taken an entire course in money management or personal finance was 16.7 percent, up from 14.6 percent in 2002 but down from a high of 20.1 percent in 2004.
  • In addition to the incorrect view of the growth of US Government Savings Bonds versus stocks, a disturbing number of those surveyed did not understand very basic financial concepts.
  • Minyanville has learned that 8% of those surveyed thought having a credit card is the same thing as having a job.
  • At least 14% believed the Federal Reserve is a Native American casino in upstate New York.
  • 12% claimed they knew for a fact their grandparents have the majority of their retirement savings in Gold Bond Medicated Powder.

5. Talking About My Generation

We said we weren't going to get into the whole generational finger-pointing game but changed our minds after running out of topics for Five Things.

  • Floyd Norris this morning wrote a column in the NYT pointing a finger at the Baby Boomers for shirking their financial responsibilities and leaving the rest of us to clean up their economic mess.
  • Who exactly is the "rest of us" though? Are we Generation X? Generation Y?
  • What do these generation names really mean? What characterizes a Baby Boomer from a Generation Xer?
  • Let's take a look at some key generational demographics:
    Baby Boomers: People born during the period of increased birth rates following World War II.
    Baby Busters: People born just after the Boomers but not scheduled to receive any social security payments.
    Generation X: People born following the peak of the post-World War II baby boom and charged with purchasing all remaining Baby Boomer vinyl LPs.
    Generation Y: People born immediately after "Generation X" and who now largely act as their employers.
    Boomerangers: Anyone born after 1977 who owns a tie-dyed t-shirt and a collection of "tobacco pipe" screens.
    Crazy Kids: People born more than five years after you.
    Selfish Bastards: People born more than 10 years before you.
    Twixters: That 38-year old dude who works in the bookstore part-time while promoting indie rock bands on the weekends.
    Millenials: Actors and extras in Star Trek: The Next Generation television series.
    Generation Z: Future Earth-bound slave colony inhabitants born post 1999.
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