Priority Spending
The economy has been throwing out mixed signals the past couple weeks, and that’s sending some housing market watchers into fits.
Even with a still-dire jobs picture, consumer spending has increased in the past couple months. Economist Mark Zandi of MoodysEconomy.com whipped out an envelope or two, and according to his calculations, the 5 million-plus folks defaulting on their mortgages will have freed up about $60 billion to spend elsewhere, a big enough chunk of change to account for the consumer spending increase.
That idea has sent some commentators into apoplexy, with visions dancing in their heads of brand-new big-screens hanging in soon-to-be-REO’d McMansions.
Others have been more skeptical; analyst and blogger Barry Riholtz of the Big Picture points out that there’s probably just a wee bit of overlap between the 5 million homeowners no longer paying their mortgage and the 15 million Americans out of work these days. He figures the vast majority of that $60 billion in saved mortgage payments is being spent on groceries and gas, and not Godiva and Givenchy.
Your fretful Teller doesn’t know whether it’s better to be depressed over the state of the economy and hopeful about the state of human nature, a la Riholtz, or vice-versa a la Zandi. But we do know one thing – our sweet, new flat screen looks awesome illuminated by the single bulb hanging from our dingy apartment ceiling.
Pinching Pennies With Pedroia
Salem Five Bank launched an inaugural "Children’s Savings and Spending Habits" survey recently, meant to examine the financial attitudes and behaviors of children between the ages of 7-12 and their parents. Intended, we suppose, to reveal the average first-grader’s thoughts on fiscal responsibility.
But in the unveiling of the survey this month, Salem Five was looking to add some pizzazz to the event. So, obviously, they called in the Boston Red Sox’ Dustin Pedroia to be there in case anybody, like, tries to steal second.
Actually, the press release says he read the results but mostly he probably just stood next to whoever’s at the podium, smiling and waving like a local beauty pageant winner at the ribbon-cutting for the newest Wal-Mart. Except way better paid.
All right, all right, we make fun, but really the bank’s actions make sense if you think about it. The survey apparently gauges both parents’ and childrens’ attitudes toward saving and spending behavior, to "identify the similarities and differences," according to the press release.
The goal is something laudable: letting parents know that their spending habits influence their kids very early – although we’d bet the 12-year olds pay more attention to that sort of thing than the younger kids. When we were 7, our financial acumen was solely focused on the attainment of king-sized Butterfingers and maybe some candy cigarettes if we had pennies left over … it was a simpler time.
But who knows? Kids today also often dress scandalously and/or start preparing their college applications before puberty hits, so we really can’t make predictions as to their money smarts.
And Pedroia? Well, seeing as 7-year-olds are unlikely to care about savings accounts, one thing to snap their attention at least partway into focus is the presence of a big-time baseball player. If they start to associate "bank" with "baseball," maybe they’ll be better acquainted with how to use the former to the best of their advantages.
