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Latest News About Personal Finance

Amazon Is Planning to Open Cashierless Supermarkets Next Year

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Amazon.com is preparing to open Amazon Go supermarkets and pop-up stores, an expansion of the company’s cashierless ambitions that includes the possibility of licensing the technology to other retailers. Bloomberg reports:

The new store formats and licensing initiative could launch as soon as the first quarter of 2020, according to a person familiar with the project. Amazon is testing a supermarket equipped with Go technology in a 10,400-square-foot retail space in Seattle’s Capitol Hill neighborhood.

The Go expansion is the e-commerce giant’s latest attempt to compete in the $900 billion U.S. grocery industry and perhaps other areas of retail, as well. The company already operates the Whole Foods Market chain and last week confirmed plans to launch a separate supermarket brand, starting with a location in the upscale Woodland Hills neighborhood of Los Angeles. Those stores will have human cashiers. The previously unreported plan to expand Go revives Amazon’s original vision of creating full-size grocery stores without checkout lines.

Amazon opened the first Go convenience store at its Seattle headquarters almost two years ago and now operates 21 locations around the U.S. It’s not clear how much money the company has lavished on the project, but some of the 1,000 or so people working on it were recently told their cumulative salaries have totaled more than $1 billion since the project got underway in 2012, the person said.

Study: Quality Of Friendships, Not Quantity, Linked to Well-Being

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Everyone knows that having friends boosts well-being. In fact previous research has even suggested that having numerous friends reduces the risk of medical conditions like heart disease. However, a new study finds that not all friendships are created equal. Researchers from the University of Leeds conclude that well-being is more closely related to how people feel about their friends than their overall number of friends. Study Finds reports:

According to the survey results, older adults had fewer friends on average than younger adults, but the number of acquaintances participants called “close friends” wasn’t related to age. Younger adults did, however, report more general acquaintances because of social media networking sites. These sites, like Facebook, facilitate larger and more impersonal friend groups, the researchers theorize.

Only the reported number of close friendships was found to be significantly associated with social satisfaction and well-being. This finding even stayed consistent after accounting for the number of family members, neighbors, or acquaintances each participant reported.

Workers Continue to Struggle Despite ‘Strong’ Jobs Reports

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There’s plenty of anecdotal evidence that America’s workers are being left behind. But now a group of researchers and economists have identified a key part of the problem — the kinds of jobs increasingly available to America’s workforce. And what they’ve found, as illustrated in a new U.S. Private Sector Job Quality Index (JQI), is troubling. The Hill reports:

Since 1990, the United States has been creating an overabundance of low-quality service jobs. In fact, 63 percent of the production and nonsupervisory jobs created over the past 30 years have been in low-wage and low-hour positions. That’s a marked contrast from the start of the 1990s, when almost half of these jobs (47 percent) were high-wage.

For more than a year, economists from Cornell University, the Coalition for a Prosperous America, the University of Missouri, Kansas City and the Global Institute for Sustainable Prosperity have been sifting through private sector jobs data to develop the JQI. And they’ve found that, in the past three decades, the U.S. economy has become increasingly dependent on jobs that offer fewer hours of work and at lower relative wages.

What exactly do these low-hour, low-wage positions look like? They could be one of the almost 15 million nonmanagement jobs in leisure and hospitality. These offer an average of 24.6 hours of work per week at $14.65 an hour. That’s $360 a week.  Or they could be one of 13.5 million retail jobs offering 30.3 hours a week at $16.73 an hour. That’s $506 weekly.  

There are now roughly 105 million production and nonsupervisory jobs in the U.S. That’s 83 percent of all private sector jobs. And more than half of them — 58 million — pay less than the average weekly U.S. wage of $793. Many of these jobs don’t offer health care or other benefits. These are the best jobs that many Americans can find and the most hours they can get. 

White House Unveils Rules Requiring Online Disclosure of Hospital Prices

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The Trump administration on Friday unveiled new rules to require increased disclosure of health care prices, in a move officials said would drive down costs by increasing competition. The Hill reports: 

One regulation would require hospitals to provide a consumer-friendly online page where prices are listed for 300 common procedures like X-rays and lab tests. A second regulation would require insurers to provide an online tool where people could compare their out-of-pocket costs at different medical providers before receiving treatment. 

Officials billed the announcement as a major step in President Trump’s health care agenda. The move is controversial with the health care industry, as both hospitals and insurers have objected to having to disclose the information…

President Trump said in remarks at the White House on Friday that the move is “another major victory in our mission to deliver great health care at a price you can afford.”

“I don’t know if the hospitals are going to like me very much anymore but that’s okay,” he said, later adding, “after many, many years we finally have transparency.”

Indeed, hours after the announcement, the American Hospital Association, along with other provider groups, announced it would sue to stop the rule. 

Down Hits 28,000 for the First Time Ever

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The Dow Jones Industrial Average rallied to record levels on Friday, reaching 28,000 for the first time ever, after White House economic advisor Larry Kudlow said China and the U.S. were getting close to reaching a trade deal. CNBC reports: 

The 30-stock average closed 222.93 points higher, or 0.7% at 28,004.89. It took the Dow just over four months to go from 27,000 for the first time to 28,000…

The S&P 500 and Nasdaq Composite made new all-time highs as well, climbing 0.8% to 3,120.46 and 0.7% to 8,540.83, respectively.

Wall Street also wrapped up another week of gains.

The Dow notched its fourth week of consecutive gains, rising 1.2% in that time. The S&P 500 advanced 0.9% for the week, posting its sixth straight weekly gain. That’s the longest streak for the S&P 500 since 2017, when it climbed for eight straight weeks. The Nasdaq rose for a seventh consecutive week, advancing 0.8%.

Stocks 10-Year Run Becomes Best Bull Market Ever: Up 468%

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The longest bull market in history is also the best ever. The current market boom, which started March 9, 2009, has enjoyed a whopping 468% gain for the S&P 500 through the first day of November, making this record-long bull run also the best-performing one since World War II, according to The Leuthold Group. CNBC reports: 

The S&P 500, which eked out a record closing high Thursday, has soared 472% in this epic run.

The bull market from 1949 to 1956 scored a 454% gain for the S&P 500, the second-biggest return in recent history, the firm said. The explosive bull run in the 1990s saw the S&P 500 rally 391%, while the bull market of 2002–2007 pulled off a 121% gain for the benchmark, according to The Leuthold Group.

More than 10 years off the financial crisis bottom, the market still hasn’t lost its momentum as it currently sits at its all-time high lifted by renewed hopes for a U.S.-China trade resolution.

Federal Deficit Hits $134 Billion in One Month

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The federal deficit reached $134 billion in October, the first month of fiscal 2020, according to data the Treasury Department released Wednesday. The Hill reports: 

That figure is about 34 percent higher than last October, a sign of a steadily increasing gap between federal spending and revenue.

As a candidate, President Trump had promised to wipe out the nation’s deficit during his time in office, but deficits have only grown since his inauguration.

The Treasury estimated that the deficit for the 2020 fiscal year would surpass $1 trillion for the first time since 2012. The figure came in just below that milestone in fiscal 2019, hitting $984 billion.

Google to Offer Checking Accounts to Consumers

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Google will soon offer checking accounts to consumers, becoming the latest Silicon Valley heavyweight to push into finance. The project, code-named Cache, is expected to launch next year with accounts run by Citigroup Inc. and a credit union at Stanford University, a tiny lender in Google’s backyard. The Wall Street Journal reports: 

Big tech companies see financial services as a way to get closer to users and glean valuable data. Apple Inc. introduced a credit card this summer. Amazon.com Inc. has talked to banks about offering checking accounts. Facebook Inc. is working on a digital currency it hopes will upend global payments…

Google is setting its sights fairly low. Checking accounts are a commoditized product, and people don’t switch very often. But they contain a treasure trove of information, including how much money people make, where they shop and what bills they pay.

The company will have to convince a public that is increasingly wary of how tech companies are using personal data that it can be trusted with people’s finances. Federal regulators are examining whether the user information Google gets from its search engine, home speakers, email service and other apps gives the company an unfair advantage over competitors, the Journal has reported.

Mr. Sengupta said Google wanted to bring value to consumers, banks and merchants, with services that could include loyalty programs, but it wouldn’t sell checking-account users’ financial data. The company said it doesn’t use Google Pay data for advertising purposes and doesn’t share that data with advertisers.

Fifty-eight percent of people recently surveyed by consulting firm McKinsey & Co. said they would trust financial products from Google. That was better than Apple and Facebook but worse than Amazon.

“If we can help more people do more stuff in a digital way online, it’s good for the internet and good for us,” Mr. Sengupta said.

Facebook Unites Payment Service Across Apps With Facebook Pay

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Facebook Inc said on Tuesday it was launching Facebook Pay, a unified payment service through which users across its platforms including WhatsApp and Instagram can make payments without exiting the app. Reuters reports: 

The social network said the service would allow users to send money or make a payment with security options such as PIN or biometrics on their smartphones.

Chief Executive Officer Mark Zuckerberg said earlier this year the company is planning to unify the messaging infrastructure across its platforms.

He said the company would encrypt conversations on more of its messaging services and make them compatible as direct messaging was likely to dwarf discussion on the traditional, open platform of Facebook’s news feed in a few years.

Facebook said the new service will collect user information such as payment method, date, billing and contact details when a transaction is made and that it would use the data to show targeted advertisements to users.

Some of the World’s Richest Brace for a Major Stock Sell-Off

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Wealthy people around the globe are hunkering down for a potentially turbulent 2020, according to UBS Global Wealth Management. Bloomberg reports:

A majority of rich investors expect a significant drop in markets before the end of next year, and 25% of their average assets are currently in cash, according to a survey of more than 3,400 global respondents. The U.S.-China trade conflict is their top geopolitical concern, while the upcoming American presidential election is seen as another significant threat to portfolios.

“The rapidly changing geopolitical environment is the biggest concern for investors around the world,” said Paula Polito, client strategy officer at UBS GWM, in a statement. “They see global interconnectivity and reverberations of change impacting their portfolios more than traditional business fundamentals, a marked change from the past.”

Nearly four-fifths of respondents say volatility is likely to increase, and 55% think there will be a significant market sell-off before the end of 2020, according to the report which was conducted between August and October and polled those with at least $1 million in investable assets. Sixty percent are considering increasing their cash levels further, while 62% plan to increase diversification across asset classes.

Study: Many Can’t Afford to Take Vacations This Season

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It will be a long winter for millions of Americans who won’t be able to head to the ski slopes or sunnier climes for a vacation. Some 33 million Americans, many of them millennials, are financially tapped out and will stay home this winter, according to a new WalletHub survey. New York Post reports: 

“It should be no surprise that 33 million Americans say they can’t afford to travel this winter,” said WalletHub CEO Odysseas Papadimitriou. “Even though unemployment is near record lows and the stock market is near record highs, there are a lot of things weighing on consumers financially right now.”

Papadimitriou said many cardholders are “racking up credit card debt at a pace reminiscent of the run-up to the Great Recession” — a time when millions of cardholders, many suddenly unemployed, couldn’t pay their card bills.

And, he added, “Student debt clearly is a problem.”
Indeed, some hoping to travel this holiday season are still paying last year’s debts, according to another study, conducted by NerdWallet.

“One in 12 Americans who put 2018 holiday travel expenses on a credit card are still paying for them,” said Kimberly Palmer, a personal finance expert with NerdWallet.

Capsule Living: A Cheap Option for Young People Flocking to LA

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Kay Wilson packed up her life in a hurry and moved to Los Angeles… only to find that what she paid in Pennsylvania for a nice studio apartment would only get her a 2.9-square-meter box in California. Her new home is a capsule, inspired by the famous hotels in Japan. AFP reports: 

Each room contains up to six capsules, which Wilson describes as “cozy.” They contain a single bed, a bar for hanging clothes, a few compartments for storing shoes and other items and an air vent.

By most standards, the accommodation is still not cheap — $750 per month plus taxes. That works out at around $800, which is slightly more than the 26-year-old was paying in Bethlehem, around 70 miles outside Philadelphia.

“I couldn’t afford a studio by myself. Not at all,” she told AFP. “It’s $1,300 or more.”

Jeremiah Adler, founder of UP(st)ART, said each capsule costs roughly half the rent of a studio in Los Angeles — the US entertainment capital, and one of its most expensive cities.

A $45,000 Loan for a $27,000 Ride: More Borrowers Are Going Underwater on Car Loans

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John Schricker took out a loan to buy a car in 2017. Then he took out another. And then another. In two years, the 40-year-old electrician signed up for four auto loans, each time trading in the previous car and rolling the unpaid balance into the next loan. He recently bought a $27,000 Jeep Cherokee with a $45,000 loan from Ally Financial Inc. The Wall Street Journal reports: 

Consumers, salespeople and lenders are treating cars a lot like houses during the last financial crisis: by piling on debt to such a degree that it often exceeds the car’s value. This phenomenon—referred to as negative equity, or being underwater—can leave car owners trapped.

Some 33% of people who traded in cars to buy new ones in the first nine months of 2019 had negative equity, compared with 28% five years ago and 19% a decade ago, according to car-shopping site Edmunds. Those borrowers owed about $5,000 on average after they traded in their cars, before taking on new loans. Five years ago the average was about $4,000.

Rising car prices have exacerbated an affordability gap that is increasingly getting filled with auto debt. Easy lending standards are perpetuating the cycle, with lenders routinely making car loans with low or no down payments that can last seven years or longer.

Dow, S&P 500 End at Record Highs

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The Dow and S&P 500 closed at fresh records Thursday even after reports emerged of “fierce internal opposition” in Washington over a new agreement with Beijing to cancel tariffs in stages. MarketWatch reports: 

The Dow Jones Industrial Average rose 182.24 points, or 0.66%, to a record 27,674.80, while the S&P 500 index gained 8.4 points, or 0.27%, to an all-time high of 3,085.18. The Nasdaq Composite index added 23.89 points, or 0.28%, to 8,434.52, its second-highest close in history, according to Dow Jones Market Data.

Major U.S. stock indexes have been setting new records in recent sessions, with investors encouraged by reports of progress on an interim trade deal between the U.S. and China…

In U.S. economic data, the Labor Department estimated that 211,000 Americans filed new unemployment claims in the week ended Nov. 2, a one month-low and below the 215,000 predicted by economists polled by MarketWatch.

Man Underpaid His Property Taxes By $8.41. The County Seized His Property, Sold It—and Kept the Profits

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An 83-year-old retired engineer in Michigan underpaid his property taxes by $8.41. In response, Oakland County seized his property, auctioned it off to settle the debt, and pocketed nearly $24,500 in excess revenue from the sale. A state law allows counties to effectively steal homes over unpaid taxes and keep the excess revenue for their own budgets. Reason reports: 

Uri Rafaeli, who lost his property and all the equity associated with it, is just one of thousands of people to be victimized by Michigan’s uniquely aggressive property tax statute. The law, passed in 1999 in an attempt to accelerate the rehabilitation of abandoned properties, empowers county treasurers to act as debt collectors. In the process, it creates a perverse incentive by allowing treasurers’ offices to retain excess revenue raised by seizing and selling properties with delinquent taxes—even when the amount owed is miniscule, and even when the homes aren’t abandoned or blighted at all. 

Organizations representing property owners like Rafaeli say the practice is unconstitutional, inequitable, and unreasonably harsh. They call it “home equity theft”—a process that’s a close relative to the civil asset forfeiture laws that have been used by police departments to similarly deprive innocent Americans of their property without due process. They are now asking the state Supreme Court to restrict the practice. 

“Michigan is currently stealing from people across the state,” says Christina Martin, an attorney with the Pacific Legal Foundation, a nonprofit law firm now representing Rafaeli and other homeowners in a class-action lawsuit that will go before the Michigan Supreme Court in early November.

“Counties have been authorized to take not just what they are owed, but to take people’s life savings.”