Mind Over Money » NEWS

Jobs are out there if you look at the signs

Nancy Anderson — Fri, 17 Aug 2012 14:51:27 +0000

It happened again! How could we add 163,000 jobs and then see our unemployment rate go up to 8.3 percent?

There are three pieces of jobs data that tell us about the condition of the labor market. Two are reported monthly, and one is reported weekly.

The weekly number tells us how many new claims for unemployment checks occurred in the last week. The figure is reported every Thursday morning. Because it is a weekly number, it can vary and is not given as much weight as monthly numbers. Instead, we look at trends on this data. Currently, anything below 400,000 claims per week is a good sign, and we look for a rolling average that is steadily declining. In order to really have an impact on total unemployment, the number needs to be significantly below 400,000, though. We’ve been staying in the 350,000 to 375,000 range.

The two monthly numbers are reported on the first Friday of each new month. One reports the percentage of unemployed and is most often cited in the news. It is calculated by calling 60,000 households and surveying residents about their job situation and searches. Because it is dependent on household responses, it can be a bit fuzzy, and it doesn’t count people who have simply given up on job searches.

The second piece of data is collected by surveying around 140,000 businesses to find out numbers of jobs added and lost during the month. It measures actual job creation, and Wall Street gives more credence to this figure. Anything above 150,000 is a good sign, and last month’s figure of 163,000 was applauded by investors. Know that we need significantly above 150,000 in order to really make a dent in overall unemployment.

Both sets of monthly data are adjusted for seasonal variations. Occasionally, the two numbers diverge as they did last month, but this is usually temporary. Look for them to come back into agreement next month.

No single piece of data tells the whole story, but when it comes to employment, the only figure that really counts is the one on your paycheck. When I see help wanted signs and a commercial from Ingall’s Shipbuilding advertising jobs, I’m thinking, “Now that’s a number I can take to the bank!”

Nancy Lottridge Anderson, Ph.D., CFA, is president of New Perspectives Inc. in Ridgeland — (601) 991-3158. She is also an assistant professor of finance at Mississippi College. Her e-mail address is nanderson@newper.com, and her website is www.newper.com.

Jones’ passing met with nice thoughts about a fun Monkee

Nancy Anderson — Mon, 12 Mar 2012 21:54:11 +0000

Nancy Anderson, columnist

Davy Jones died.

I know that may not mean much to you, but he was an integral part of my growing up years. It was the Monkees. It was the transition to the 70s, and I was just a kid watching each Saturday morning as that zany foursome sang and schticked their way through a skimpy plot line. Of course, I had a crush on Davy.

When I heard of his death, my first response was “Ahhh…” and then a great sadness settled over me. After that, I just began smiling as I thought of those songs and my sweet memories of the teen heartthrob. Davy didn’t do much after the Monkees. That is, he stayed out of the limelight and lived a normal life — no big scandals, no bad boy behavior.

The Monkees didn’t change the world or add anything monumental to their “art.” They were just four fun and happy fellows who experienced a brief 15 minutes of fame. They didn’t even get rich off this gig, but they left a mark on one impressionable young girl.

And I thought of my own normal life. Each day I go about my business , hoping I am leaving a trail behind of warm feelings. Do I deal fairly with my customers? Do I conduct my business in such a way that matches my stated values? Are my students better off for having walked into my classroom? Do the people who disagree with me still feel respected when we part ways?

Unlike Davy, when I pass, it won’t make the news. Only family and friends will take note, but I hope for an “Ahhh…” followed by smiles. How terrible if the response were, “Good riddance!”

Great accomplishments and great wealth account for nothing when all is said and done. I’ll measure my success by the sweet, sad smiles I leave behind.

So, goodbye Davy Jones. You’ll always be my favorite Monkee. And I’ll keep striving for your same sweet ending. Just call me a daydream believer.

>> Nancy Lottridge Anderson, Ph.D., CFA, is president of New Perspectives Inc. in Ridgeland — (601) 991-3158. She is also an assistant professor of finance at Mississippi College. Her e-mail address is nanderson@newper.com, and her website is www.newper.com.

Doing my best to help the struggling global economy

Nancy Anderson — Thu, 15 Dec 2011 19:34:48 +0000

The retail season started with a bang, as traditional retailers added 6.6 percent to their sales from last year. Online retailers are picking up steam that is fueled not just by improvements in economic trends. More and more, we are shopping from our computers. While the big shopping day for traditional retailers is Friday, the big day for online shopping is Wednesday, from 8 to 5. Yeah, we’re shopping at work! Online retailers saw an increase in sales over Thanksgiving of 24.3 percent. Expectations are that their sales will increase by about a third for the entire season.
But I thought we were in a recession, and the world was coming to an end at any minute. Maybe that’s why our credit card balances are creeping up. After all, if the world is coming to an end, just put that new dress on the card. The day of reckoning will never arrive!
Consumer spending drives our economy. It comprises about 70 percent of the GDP. We don’t spend when we are scared, and there have been a lot of frightening things out there in the last few years. Lately, though, the fear hasn’t had a basis. That is starting to show in our current Christmas season.
Consumer confidence is still weak but is gaining with each passing month. We’re following through on that improvement in attitudes by heading to the shopping malls. A good retail season in 2011 will make for a good 2012. Spending follows gains in consumer confidence. Business confidence follows spending. Hiring follows business confidence. The stock market follows hiring. And round and round we go.
So, watch for the final numbers on Christmas, 2011. They will tell us what to expect in 2012.
Gotta go! I’m watching my bid on Ebay, and I have to order a few gifts before the free shipping coupon expires on another site. Did I mention I’m on a first name basis with my UPS man? Hey, I’m just trying to help the economy!

No law needed for language of business

Nancy Anderson — Fri, 09 Dec 2011 16:40:40 +0000

Thanksgiving week found us traveling through the Arizona desert. My dad had been wanting to take a trip to the Grand Canyon. At 83, he needed our help to make the journey. We had never seen the canyon, so this seemed like a good family trip.

We flew into Phoenix and rented a car for the drive up north. Arizona is about twice the size of Mississippi, population wise. Two-thirds of that population live in the Phoenix area. Needless to say, the places in between are populated by cacti and a few cows, not much else.

Arizona is at the forefront of the immigration debate. It shares a border with Mexico and, at one time, was actually part of the other country. Nowadays, retirees and old Arizona families find themselves inundated by people who have crossed the border for a better life. While a little more than 16 percent of the U.S. population is Hispanic, that percentage is about 30 percent in Arizona. Here in Mississippi, our Hispanic population has doubled to 2 percent. We rank number 40 in this area.

Here in Mississippi, I see signs in both English and Spanish. I saw the same in Arizona. The bilingual signs are so common that it doesn’t even register with me anymore. And while I heard a lot of Spanish around me, I wasn’t required to speak this foreign tongue at any point on the trip. Every person we encountered spoke in perfect English to us (except the German lady in the park who thought my over-friendly husband was rude).

So, why are we so concerned about protecting the status of our language? English is the language of business. Even my international students who travel from China to Clinton, Miss., are here to improve their English skills. Thank goodness I don’t have to learn Mandarin to get ahead. But they have to learn English to do the same.

Every immigrant knows the importance of mastering the English language. Those who don’t will not improve their lot. Passing a law making English the official language of Mississippi will not change that. And the very people who are intent on such a law are the same ones crying foul if the government tries to dictate anything to them.

So keep those bilingual signs posted. They help our Hispanic neighbors to transition to English. And keep that official English law off the books. It’s not necessary. Besides, our legislature has more important things to do.

Keeping an eye on our public servants — The integrity of our financial markets depends on disclosure and fairness

Nancy Anderson — Tue, 22 Nov 2011 21:10:42 +0000

As a Chartered Financial Analyst, I am bound by the CFA Code of Ethics. As a registered financial advisor, I operate under federal law that recognizes me as a fiduciary. Both sets of rules require me to behave better than my local congressman.
The integrity of our financial markets depends on disclosure and fairness. All investors must be assured of a level playing field, or else the whole thing falls apart.
While insider trading is clearly defined in the law, many people have no clue what it is. Trading on ANY information that has not been made public is insider trading. It doesn’t matter if you got the information from the CEO or from the janitor. If you make hay off an inside tip, you could find yourself in jail.
In the South, such tips are often seen, simply, as friendly advice. There are stories of Mississippi executives calling buddies and letting them in on big announcements. No one understands that they could be breaking the law. Just a couple folks gossiping over the fence. Who cares if you make a few extra bucks off the information?
Congress is exempt from the same laws that I have to operate under. They are not required to put their constituents first. And by their own sets of records, they are profiting grandly from trading on inside information.
There is a move to stop this activity. It’s called the STOCK law. Surprise, surprise. It can’t seem to get enough votes to pass. Even if it passed, would this stop these guys from making a few extra dollars on the side? Probably not. Insider trading is difficult to prove. What did they know? When did they know it? And did they make money off the knowledge? It’s a tough case.
Instead, I propose requiring the people in the know to invest in pooled funds or blind trusts. And they must go long and stay long regardless of a meeting with the Fed declaring the end of the world. Finally, they should be required to have professional financial advisors calling the shots, people who have a lot at stake if they break the law.
For now, I’m planning to send a copy of the CFA Code of Ethics to each of our congressmen. At least, now they know we’re watching!

Get retirement plan ready or die early

Nancy Anderson — Sun, 06 Jun 2010 06:01:22 +0000

The idea of retirement, much less a plan to cover it, is a modern one. In most countries, Grandma just moves in with you when she can’t support herself anymore. General Motors started the first private retirement plan in 1950 in the United States. It was a defined benefit plan, also known as a pension. Since then, U.S. employees have come to expect some type of retirement plan within their benefit package.

The State of Mississippi offers two types of plans. One is the old pension plan that pays guaranteed monthly payments to retirees based on their years of service and average salary. Around here, it is affectionately known as PERS. About 170,000 people actively contribute to this plan through mandatory payroll deductions. The system is currently supporting about 80,000 retirees.

Pension plans are becoming rare. Because they require employers to set aside money and invest it to prepare for the guaranteed payments, the risk is borne by the employer. Private retirement plans are governed by a federal law called ERISA. These plans are contractual, and employers are required to assure the security of the plan through proper funding and sound investing.

These requirements have led many employers to move to defined contribution plans. They are the 401(k)s, 403(b)s, etc. that place all the risks for retirement on the shoulders of employees. Contributions are voluntary. Investment choice is up to individual employees. Besides offering a vehicle for retirement saving and negotiating with providers, employers are off the hook.

I have met with many soon-to-be-retiring state employees through the years and have been impressed with their retirement benefits. With a state pension, Social Security and potential payments from Deferred Compensation, many end up bringing home more in retirement than when they were working. Newer employees aren’t as lucky.

PERS is funded by contributions from the state and contributions from the employee. Employee contributions amount to 7.25 percent of their salaries. If you work for the state, this comes off the top. If your salary is $36,000 per year, $217.50 is taken out of your paycheck each month and goes into your PERS account.

Many state employees complain of low wages and the burden of this forced contribution, but the pay-off in retirement seems to ease the pain. In addition to a nice pension, an extra check arrives in the mail each year. The cost of living adjustment accounts for inflationary pressure. At some point, COLA payments are compounded, making this a nice annual bonus for any retiree.

The State of Mississippi also offers a defined contribution plan. This is called Deferred Compensation and allows for additional retirement savings. There are no guaranteed payments in retirement for Deferred Compensation. It’s simply a 401(k) plan, just like what most of us in the private sector have. It’s a great way to save and keeps your money out of the reach of the IRS.

Add in decent healthcare benefits, generous sick leave, vacation time and several holidays, and you have a pretty good employment deal. You won’t get rich being a state or municipal employee, but you’ll have a stable job with good benefits and the promise of a secure retirement.

Like many employers faced with the commitments on the old pension plans, the State of Mississippi is facing some tough choices. The current budget crunch is colliding with an aging population, throwing a wrench in the state retirement system. As life spans increase, the monthly commitment to former state employees grows. Employer contributions have been increased over the years to account for this change, but Mississippi’s budget is getting stretched because of the system. Add in a cantankerous stock market, and you have a funding problem.

Gov. Barbour just approved a measure to increase the mandatory employee contribution to 9 percent. Now, that $36,000 salary will be reduced by $270 each month to help with funding. For state employees, this is a blow. That extra $60 per month reduces an already low salary and results in an adjustment to their family budgets. In addition, state employees are now being asked to contribution to health insurance coverage. It’s a double whammy.

State plans aren’t under ERISA but are governed by guidelines specific to each state. Mississippi legislators are taking seriously the promise to retirees by making sure funding is adjusted. No one likes to pay more, but I commend the governor for insisting on the increase in employee contributions. In return, the state is agreeing to increase their contribution rate from 12 percent to 13.56 percent. Employees have also been given some “soft” benefits to help them swallow this pill. Ultimately, a secure system is to everyone’s benefit.

The opportunity to hang on to a pension plan is a valuable one. Few private sector employees have this option. For those of us dependent on the new 401(k)s and such, it’s time to take a serious look at those plans. Average contribution rates are in the 4-5 percent range. Unless we want to spend our retirement pinching pennies, this is NOT going to cut it. In addition, many employers have stopped matching contributions, and the stock market has dealt critical blows to many of our accounts. Government plans with all their problems still look like sweet deals compared to what the rest of us are facing.

State employees are being forced to ante up more money for their plans. The rest of us need to follow suit by increasing our retirement contributions. We also need to look at how our money is being invested. We may need to get more aggressive as we try to make up for the last few years in the stock market. The modern retirement plans of the 1950s are making way for the new 401(k)s of this century. Unless you believe your children and grandchildren will step up to the plate, I suggest you get serious about your retirement plan. If you don’t, plan to die early!

Nancy Lottridge Anderson, Ph.D., CFA, is president of New Perspectives Inc. in Ridgeland, (601) 991-3158. She is also an assistant professor of finance at Mississippi College. Her e-mail address is nanderson@newper.com, and her website is www.newper.com.