The Bureau of Labor Statistics has recently released its latest unemployment numbers (for January 2010) and the picture they paint is not especially rosy. Here’s a look at some of the figures released and what they mean for the nation’s economy.

Overall Unemployment Rate Down to 9.7 Percent

Unemployment nationwide dipped from 10.0 percent in December to 9.7 percent in January—a year ago, though, the unemployment rate was only 7.7 percent. State by state, the numbers look like this:

• Increases occurred in 31 states and the District of Columbia. Number-wise, the largest gains happened in California, Illinois, New York, Washington and Minnesota; by percentage points, the states with the biggest numbers were D.C., Alaska, Washington, Minnesota and Utah.
• Decreases occurred in 18 states. By raw numbers, the biggest losses happened in Missouri, Ohio, Kentucky, New Jersey, Florida and Nevada. By percentage points, Kentucky saw the greatest losses, followed by Missouri, Nevada, Alabama, Kansas, Mississippi and Ohio.
• No changes occurred in non-farm employment in only one state.

While these numbers may seem like a spot of good news, it’s important to note that, compared with figures from January 2009, 48 states have seen increases in unemployment rates, while only two states and the District of Columbia have seen increases.

Unemployment by Region

The BLS notes that unemployment figures varied by region of the country:

• The Pacific saw the highest rate of unemployment nationally in January, at 11.7 percent.
• The East North Central region came in second, reporting an 11.3 percent jobless rate.
• The West North Central area reported the lowest national rate of unemployment, at 7.2 percent.
• The West South Central region noted the second-lowest unemployment figures, at 8.0 percent.
• The South Atlantic region saw an unemployment rate of 10.3 percent.

While these numbers generally suggest that the employment situation has improved from a month ago, they still point to the serious nature of the Great Recession and the influence it has had and will continue to have on the national economic landscape. Unemployment, especially when paired with a medical emergency or divorce, is one of the leading causes of personal bankruptcy.

For a more detailed examination of these numbers, visit the BLS website.

Recent reports from the Center for Responsible Lending suggest some mainstream American banks have been engaging in predatory lending practices similar to payday loans—and that the Office of the Comptroller of the Currency (OCC), meant to regulate such practices, has done nothing to stop these actions.

Short-Term Loans at the Bank

As you may already know, payday loans are short-term, high interest loans offered to borrowers who may have difficulty getting loans from more traditional sources (like banks). But did you know that, according to the CRL:

• Banks once partnered with payday lenders: Before 2000, some national banks reportedly worked with payday lenders to help them avoid interest rate caps. But the OCC issued a set of guidelines that advised against partnering with such lenders because of the risks involved for all parties.
• Some banks now offer payday loans themselves: Wells Fargo and U.S. Bank both offer products that mimic payday loans. Called “direct deposit advance” or similar, these programs allow customers to borrow money for very short periods of time (usually a month or less) for a very high interest rate.
• The cycle of debt may feed itself: At some locations, banks reportedly encourage customers to use “direct deposit advance” loans to protect themselves from overdrawing an account (which could lead to an abusive overdraft loan). In essence, then, banks are encouraging customers to pay one high-interest credit source with another.

If this description worries you, you’re not alone. But the problem gets worse.

No Action from the OCC

The CRL notes that, though the regulators at the OCC recognized that some of the short-term loans offered by the banking industry were problematic for borrowers, they have yet to take action to prevent or correct the problems.

In its report on the matter, the CRL identifies these major problems with OCC-regulated banks:

• Automatic enrollment for consumers in the costliest overdraft-protection program
• Acceptance of (and fee assessment on) debit purchases that overdraw an account when such transactions could simply be denied
• Manipulation of debit transactions to maximize the overdraft fees chargeable
• Assessment of “sustained overdraft fees” when consumers fail to pay fees soon enough
• Assessment of multiple fees in a 24-hour period
• Disproportionate assessment of fees (i.e. for more than the amount transacted).

Remember that abusive loans hide behind a lot of benign-sounding names. If you’re not sure about the terms of your debit card or bank account, take the time to ask questions and review your paperwork.

Additional Resources

National Bank Regulator Enabled Overdraft Abuses (PDF)

Mainstream Banks Making Payday Loans (PDF)

Capital One has announced that its losses from credit cards in the U.S. has eased up in the month of February, according to BusinessWeek. This news accompanies additional reports suggesting that consumer stress levels are easing.

Capital One Charge-Off Rate Drops

In a filing with the Securities and Exchange Commission, Capital One reported that its net charge-offs dropped from 10.41 percent in January to 10.19 percent in February. The February net charge-offs totaled just under $494 million.

A charge-off is a credit card balance that has been delinquent for 180 days, which creates the assumption that the debt will go unpaid or may result in bankruptcy.

The fall in charge-off rates is a good sign for an increase in consumers’ ability to make their payments on time.

Shift in Trend

The credit card industry has seen record charge-offs in the last year, as consumers have a hard time paying off their debts in the face of widespread unemployment and economic woes.

The overall charge-off rate across the credit card industry peaked at 10.1 percent last year. In the third quarter of 2006, by way of comparison, the charge-off rate was 3.87 percent.

Charge-off rates are different from delinquency rates. Delinquency rates are an indicator of future charge-off rates. Credit card bills that are delinquent by 30 days, for example, indicate the number of charge-offs that might occur in the future.

At Capital One, the number of credit card payments that are 30 days delinquent went down as well, from 5.8 percent in January to 5.51 percent in February.

A Good Sign for Consumer Stress Levels

Reuters is reporting that the slip or the hold in credit card delinquency rates across several credit card companies could be a sign that consumer stress levels are decreasing as more people are able to pay off their bills.

Capital One is among five credit card companies that reported to the SEC about the February numbers, also including Bank of America, Discover Financial Services, JP Morgan Chase and American Express.

At the other institutions, charge-off rates have been mixed in reports. JPMorgan and Capital One reported drops, while the others reported rises in charge-off rates.

So far, government efforts to ease the pain of the foreclosure crisis have proven largely unsuccessful. According to data from First American Core Logic, a whopping 11.3 million homes in the United States are underwater. In other words, millions of Americans owe more on their mortgage loans than their houses are currently worth.

Because mortgage modifications have not been able to help as many homeowners as the Obama administration initially hoped, the latest plan takes a different approach at addressing the problem: short sales.

What Is a Short Sale?

In brief, a short sale occurs when a homeowner who is behind on payments and otherwise in danger of default and foreclosure sells his house for the highest price he can get. The money goes to the lending bank, usually meaning that company takes a loss.

But, because of the complex nature of many mortgages currently active today, the process is complicated by:

• Multiple mortgages: Many borrowers currently underwater on their home loans have two or even three active mortgage loans. Even if one lender agrees to a short sale, the others may not, making the process more difficult.
• Skeptical lenders: Some lenders are unwilling to commit to a short sale, both because foreclosures are often more lucrative and because it’s difficult for a homeowner to “prove” that she cannot afford future payments.
• Subjective assessments: In order for a short sale to work, the fair market value of a house must be determined, which can be done by averaging the assessments of several real estate agents. But such assessments are by their very nature subjective—reason enough for a lender to be skeptical about the process.

The Government’s Plan

To counteract the shortcomings of a short sale, the Obama Administration has reportedly introduced several incentives for homeowners and lenders alike to agree to this option:

• For the banks: The bank holding the primary mortgage would receive $1,000 from the government for agreeing to a short sale (this is the same amount banks receive for accepting any modification). Banks holding a second mortgage would receive the same sum.
• For the homeowners: People forced out of their homes by too-large loans would receive a “relocation assistance” fund of $1,500. Further, a short sale would be less damaging to credit ratings than a foreclosure.
• For the neighborhoods: Because the cash incentives would theoretically lower rates of home abandonment, entire communities could benefit from this program.
• For investors: Short sales would offer a chance to collect slightly more money than other options.

Additional Resources

Report from First American Core Logic (PDF)

Dreams Foreclosed (PDF)

If your primary source of income is from a minimum-wage job, chances are you’ve faced some financial obstacles in the past (and will in the future). The truth is, it can be difficult to live on minimum wage alone – but it can be done.

This post from TheSimpleDollar.com offers some pointers for those living on a tight budget and trying to keep out of debt. Here are some of them:

• Live in the right place: Small towns, rural areas and reasonably inexpensive cities tend to have several advantages over suburban communities and bigger cities. Perhaps most importantly, you can probably get around without a car (either by foot, on bike or with the help of public transit).
• Ditch your car: This may sound redundant after the previous tip, but it bears repeating. Maintaining a car is a great way to burn through cash, so if you can live somewhere where a car isn’t needed, you’ll put yourself in a good position to save money.
• Embrace free offers: Learn to take advantage of the free offerings your town has: libraries, outdoor concerts, parks, community or church dinners, etc.
• Keep on budget: Set yourself a budget and stick to it. You will have to spend some money, but by reassessing your needs and wants, you can likely minimize that amount.
• Ask for help: If you currently hold several debts and are having difficulty paying them, consider calling your lenders and asking for an alternative payment plan. Many lenders are willing to work with you if you take initiative before you fall behind on payments. If you have family or friends nearby, consider reaching out to them in pinch times.
• Look for chances to make more money: Between newspapers (available online for free at your library) and help wanted posters around the community, you may be able to find opportunities to work odd jobs for cash. Sign up whenever possible.
• Limit your stuff: The more possessions you own, the more housing you need to pay for to store them. Try selling items you can do without and stop buying things you don’t really need.
• Start saving: If you don’t already have a savings account, set one up, preferably one that allows you to bank online, so you can make regular deposits. While living on very little money can be challenging, it doesn’t have to last forever if you plan ahead.

Any other tips for getting by on limited income? Share them below!

Additional Resources

Frugal Living on a College Budget (PDF)

We all know that the current economic situation means we have to be on top of our games if we want to land or keep a job—and even more so if we’re looking for promotions, raises or increased benefits. The good news is that this might be easier than it seems.

Learn from Domino’s: Improve Publicly

This msnbc.com article discusses how Domino’s pizza revamped its recipe and seriously increased its profit by acknowledging and improving its shortcomings.

What can you learn from that strategy?

• Listen to your critics. While some people will naysay no matter what, others will offer you honest feedback—and it might not all be positive. If you’ve heard one criticism of your performance or work strategies over and over, it’s time to do some serious thinking about how you can fix that issue.
• Make a plan for change. If you have a problem with organization, for example, rather than accepting that you are disorganized and it will hold you back, develop a new strategy for sorting your papers and files. Ask organized friends and coworkers for tips and help.
• Publicize your efforts. Part of the reason why Domino’s saw a serious bump in profits after changing its recipe was because the company advertised what it was doing. Let your boss and your coworkers know about your plan and ask for feedback. This shows that you’re taking initiative to make yourself a better employee.
• Ask for feedback. During your next employee review, ask specifically about how you’ve improved in the area you were working on. Subtly emphasizing your continued efforts will reinforce your value and commitment to your boss or supervisor.

Follow Up on Helpful Leads

In this post from WalletPop.com, the author looks at the “let’s stay in touch” phenomenon.

It seems that, even when employment opportunities are scarce, many interviewees fail to follow up on certain job leads. Why? Common answers include these:

• I don’t want to impose myself. Have you ever been given a phone number or email address of someone who “could use your skills” or “might have an opening for you?” According to experts, you should always contact these people. While it may feel like you’re burdening someone much busier than yourself, chances are that person can help you in some way.
• She’s just being polite. If an interviewer or someone who claims to have a job lead suggests that you “stay in touch,” don’t assume that person is just flapping her gums. Follow up the initial conversation with an email – even if it’s just to thank her for her time. This will remind her to take the steps to help you she proposed.
• He’ll get back to me if he was serious. Waiting around for an interviewer or a prospective job lead to contact you is a huge mistake. You are your main priority, but you aren’t anyone else’s. Plus, people with full-time jobs are busy and may mean to get to you but keep putting it off. Take the step of making contact to ensure you get the help you’ve been offered.

General Motors bought the luxurious Cadillac brand all the way back in 1909. According to Bloomberg, now, in an era when bankruptcy of all kinds are rampant and the new GM operates in the shadow of a $50 billion bankruptcy backed by the U.S. government, Cadillac is attempting to edge away from the stigma of GM’s financial woes.

What’s in a Name?

The subtleties of marketing and presentation can have a major impact on the way a company and its products are perceived.

To distance itself from GM, Cadillac will alter some of the little things, by removing the GM name from its dealerships and from Cadillac marketing campaigns. Email addresses that used to feature @gm.com will now read @cadillac.com, and Cadillac will no longer participate in GMs national promotional campaigns like the Red Tag Event.

A spokesman for Cadillac confirmed that the strategy to separate itself from GM was the result of GM’s recent restructuring process.

A Change in Strategy

Only a few years ago, Cadillac began applying a silver GM badge to all of its vehicles, affirming its relationship to the parent company. At the time, the company cited their own studies that revealed the positive associations that customers had with the GM brand name.

GM’s bankruptcy and restructuring, however, have changed the way that consumers see GM and its brand, according to Cadillac officials. There is now, Cadillac reps told Bloomberg, a negative connotation with GM “because of the bankruptcy.”

Pointing out Luxury

Some Cadillac dealers were upset that they were lumped in with the rest of the GM brands during the yearly Red Tag Sale.

As Cadillac dealers, we didn’t like being lumped in with the other GM brands, said general manager of Suburban Cadillac in Ann Arbor and Troy, Michigan, told Bloomberg, especially when they threw us into the Red Tag sale. We felt it cheapened the brand.

Cadillac will like increase its promotion of leasing options, which are more popular with luxury buyers, rather than focusing on the discounts and rebates used in the Red Tag Sale strategy.

Starting a Trend

Cadillac is the first of the GM units to distance itself from the GM brand, but it’s not likely to be the last. GM marketing chief Susan Docherty told Bloomberg that Chevrolet, Buick and GMC are also beginning to play down their affiliations with GM. This includes removing GM signage at dealerships that sell other non-GM brands, and continuing research into how customers perceive GM.