economy

August 2 could determine the fate of Northern Colorado’s economy

Northern Colorado’s economy has slowly been struggling to recover along with the economy across the nation. Each day has been a struggle for individuals and businesses across the area and every little victory is appreciated. Any kind of step backwards could cause undue financial distress for Colorado residents already barely making ends meet.

Residents of Colorado anxiously await the result of the federal government’s debt crisis discussions with a deadline date set for next Tuesday, August 2, 2011. According to experts, a failure by Congress and the Obama administration to come to an agreement could cause just the kind of setback residents will not be able to face.

Should the United States go into default, it will have an effect on so many areas that could have serious financial impact on Colorado businesses and individuals including: credit card interest rates, Social Security payments, federal employee’s paychecks, bonds, adjustable rate mortgages and so much more.

A few days of an impasse may not be unrecoverable, but the experts suggest that if it goes on very much longer, whatever progress the economy has made will be quickly forgotten. The Colorado economy could see the start of a whole new recession.

The negative effects of a failure to agree can be guessed at, predictions can be made and estimates can be calculated, but no one really knows how far the ripple effect will go. While some people may be able to fight for a few months, most have already tapped their financial reserves.

Source: Coloradoan, “How debt crisis could impact Northern Colorado’s delicate economy,” Pat Ferrier, 28 July 2011

5 Rising Costs on Everyday Goods Affecting Consumers in 2011: Part 2

In our last post we mentioned the first two items out of the top five rising costs that will affect consumer spending in the New Year as families look to save money, reduce their debt or even avoid having to file for bankruptcy. In this post, we continue with the remaining three.

3. Taxes:

As budget is a sensitive point in many households, it is definitely a focus in state and federal discussions as well and taxes on products like cigarettes and even bottled water are one of the easiest ways to generate added revenue.

4. Service Costs:

Airlines, banks, telecommunication companies and other service providers have been struggling in the economy as well. The cost of a barrel of crude oil has increased by approximately eight dollars and as it costs more to fuel your car, it costs airlines a lot more to fuel their jets. The major commercial airlines raised the cost of a single ticket at a record rate this past Monday, and even Southwest Airlines, the corporation who boasts having the lowest fares was forced to follow in their competitors’ footsteps only a day later.

New government regulations and restrictions on things like overdraft fees have forced banks to restructure their operating procedures and business plans in order to generate revenue lost as a result of the legislative changes. One solution has been to raise general fees on checking accounts or ATM withdrawals that affect a larger percentage of their customers.

5. Jobs and Jobs:

Although jobs are not a normally thought of rising cost, they affect a consumer’s ability to spend. The unemployment rate continues to waiver at a high level making consumers uneasy about spending their money in the event that something happens with their job. It is not a far stretch to say that consumer confidence is at a significant low.

Source: MarketWatch “7 reasons why consumers won’t spur a recovery” Jennifer Waters 1/19/11

5 Rising Costs on Everyday Goods Affecting Consumers in 2011: Part 1

Economic recovery is a topic on a lot of people’s minds these days whether they are government officials, lawmakers or average citizens living in the country. Consumers are often turned to as a way to help assist the recovery; when consumers are spending, business are thriving, etc. However, as many households struggle to reduce their debt and save money or in some instances even simply avoid bankruptcy, the costs of everyday goods are making their goals more difficult.

Although experts say inflation remains in check, the costs of smaller items and services are on the rise and will continue that trend into 2011. Of those rising costs, there are 5 major ones that will affect the everyday budgeting of most families in America.

1. The Cost of Food:

According to the Consumer Price Index, grocery store goods rose 1.5 percent in price last year and restaurant costs jumped approximately 1.7 percent. As commodity prices rise, the major food producers pass those costs along to consumers. Many major producers last year decreased the amount of discounts offered and instead increased their prices. If you choose to go out to eat in 2011, according to a Nation Restaurant News survey, 60 percent of your restaurant choices will cost a little more than last year.

Throw in with the cost of food, the cost of several smaller grocery related products affected by other escalated prices. The cost of raw cotton will make the price per unit of things like coffee filters, books or clothes made out of it rise as businesses struggle to make a profit.

2. Energy Prices:

As you fill up your car this year, do not be surprised if you notice a continued incremental increase. In fact, overall energy prices rose 7.7 percent last year and experts say it is not going to stop.

Check back in the next posting for the remaining three items on the list.

Source: MarketWatch “7 reasons why consumers won’t spur a recovery” Jennifer Waters 1/19/11

Debt Collection Agency Seeks Protection from Creditors

No one is immune to the effects of an economic downturn, and even debt collection agencies that are assumed to be busier than ever these days have been forced to lay off employees or shut down operations entirely. The collection agency Hudson and Keyse, LLC of Painesville, Ohio was forced to fire its approximately 40 remaining employees and effectively close its doors on the first of this month.

In what could be described as an ironic turn of events, the once successful debt collection firm was forced to file for Chapter 7 bankruptcy protection nearly two years ago after being in business for over two decades. The once profitable company was home to over 150 employees in 2008 but now owes over $63 million to more than 200 creditors of their own. The company is in severe financial trouble and unable to pay their million dollar debt with the assets they now own totaling merely $288,000.

CEO Mark Finston attributed a large portion of the financial decline to “inappropriate management” within the company itself. Inside Accounts Receivable Management, a reliable source of industry news, reported that the company had purchased debt at nearly double its market value.

Hudson and Keyse, LLC owes money not only to creditors like Vion Holdings of Atlanta, but to many former employees as well. The company was unable to pay thousands of dollars worth of back wages to a handful of people who were let go from their positions at the firm. While the future of the economy is unknown, it is clear that Hudson and Keyse, LLC will not be the last business to file for bankruptcy or seek alternative solutions to their financial difficulties.

Source: BankruptcyHome.com “Debt collection firm files for Chapter 7 bankruptcy” Eric Sanderson 9/20/10