U.S Savings has grown than expected

A closer look at BEA numbers shows that Americans reduced spending by 3.1% in the past year, indicating that the savings rate has risen to 6.4%

How much have Americans cut back?

On the face of it, not much. The official data from the Bureau of Economic Analysis say that in February personal spending was down 0.4%, or $40 billion, from the year before. Certainly any drop is bad news, since consumer spending rarely decreases—but $40 billion out of total spending of $10 trillion doesn't seem like enough to wreak economic havoc.

A closer look, however, shows that Americans have tightened their belts more sharply than the numbers report. The reason? Official figures for personal spending include a lot of categories, such as Medicare outlays, that are not under the control of households. They also include items, such as education spending, that should be treated as investment in the future rather than current consumption.

After removing these spending categories from the data, let's call what's left "pocketbook" spending—the money that consumers actually lay out at retailers and other businesses. By this measure, Americans have cut consumption by $200 billion, or 3.1%, over the past year. This explains why the downturn has hit Main Street hard.

Since savings are what's left from disposable income after subtracting outlays, a deeper fall in consumption means a bigger jump in the savings rate. The same analysis implies that the "pocketbook" personal savings rate has risen from near zero a year ago to around 6.4%, rather than the official 4.2%. Thus, households may have gotten a great start on repairing their balance sheets.

Let's break down the spending numbers. Over the past year, outlays on durable goods such as automobiles decreased by a deep 10.8%. Spending for nondurable goods such as clothing fell by 4.2%.

The tricky issue comes with spending on services, which seems to be up by 3.3%, or $200 billion, since February 2008. That number includes a hodgepodge of expenditures that don't correspond to what we mean by "consumer spending." For example, health-care spending, including prescription drugs, is up by $112 billion. But roughly 85% of such spending is funded by government or employer health insurance plans, neither of which directly comes out of the pockets of consumers.

Similarly, the consumer spending numbers include outlays by religious groups and nonprofit foundations, such as the Bill & Melinda Gates Foundation, which is increasing its outlays by about 15% in 2009, to $3.8 billion. The BEA estimates that religious and foundation spending have risen by about 3% from the past year, pushing up reported consumer spending.

Recession hits broadcasters..

It’s usual for big broadcasters to call upon advertisers, agency executives and affiliates to peek at their schedules for the coming season. Generally this meet will take place in the month of May. But the disastrous economy threatens to spoil the party.

The demand for commercial slots has been greatly reduced in these days due to economic recession. The 2009-10 season, which starts in September have very few slots booked. The decrease in advertising arena is primarily due to automotive, retail and financial services.

In order to rejuvenate the commercial markets the broadcasters have come up with smart ideas to boost up their trade and to increase the number of advertisements. One of such most notable idea is a decision by NBC to replace traditional fare at 10 p.m. on weeknights with a comedy talk show hosted by Jay Leno.

However estimates suggest that the on the five big broadcast networks could decline by as much as 15 percent from last spring, when they sold about $9.2 billion of commercial time ahead of the 2008-9 season.

Now it’s time for all big broadcasters to boost up their think tanks to bring out some smart ideas that benefits the organization. However the broadcasters believe that the viewership rate for all their programs has not come down due to this recession. With this satisfactory note they need to work out more revenue from economically hit advertisers.

New Action suit against Google

A class-action suit against Google in federal court in Texas has been filed by Audrey Spangenberg, an Owner of a small software company. Her reason was quite acceptable and increases concerns over Google’s search algorithms.

Audrey Googled her company name and was shocked to see all her competitors in the advertising section of the search page. Though her company came as the top result her potential competitors were placed above her results as advertisements.

Google’s algorithm places the ads relevant to the user’s search keyword. But Audrey suggest that her customers who looks for her company may turn to her competitors by this stupid algorithm of Google. Her action suit states that Google had infringed on its trademark and challenged Google’s policies on behalf of all trademark owners in the state. Legal experts said it was the first class-action suit against Google over the issue.

But Google’s acceptance of such competitive uses of trademarks has irked many other companies, including the likes of American Airlines and Geico, which have filed suits against Google and settled them. Many brand owners say the practice abuses their brands, confuses customers and increases their cost of doing business.

Experts view that Google may place their customer ads above the search results which is more obvious for a business corporations. This act of Google increases its customers and in turn earns them more profits.

Oil prices slips again..

Oil prices have been steadily decreasing since the stat of the recession. Few months back the oil price per barrel was around $150 but now it has almost halved its prices. Latest update on the oil prices is that now it is been slipped below $58 a barrel. The prime reason for this slip is attributed to the signs of economic weakness in the U.S. and Europe.

Oil recently rose above $60 a barrel on optimism that the worst of the U.S. recession was over, but dismal news this week on retail sales, unemployment and housing have traders reconsidering their outlook.

Its very similar in Europe. According to European data the prices rose a bit satisfying the investors but this week it is back to its decreasing phase as it showed the euro zone economy shrank by a massive 2.5 percent in the first quarter.
The varying oil prices definitely hits the economy of many countries. And generally traders like to stock up the oil during these times and may go for trade when the price rose. US Government indicated that stocking up of oil will not be permitted and those who disobeys may face legal actions.

Meanwhile the U.S. Energy Information Administration and the Organization of Petroleum Exporting Countries already cut demand expectations this week.

Outsourcing

Outsourcing is the key word of this millennium. You would have heard this word in almost every business corporations and it is particularly popular in IT industries. Well let me start with basics.

What is Outsourcing?

Outsourcing refers to a company those contracts with another company to provide services that might otherwise be performed by in-house employees. Basically Corporations involve in these activities to save them money and adds value to their services. Jobs such as call center services e-mail services, payroll services are generally outsourced to the corresponding companies. Those companies in turn put their best effort to satisfy the big corporations that lend them the jobs.

The basic advantage of this technique is that it allows the corporations to concentrate on their core services while the supplement services are taken care by outside experts. This definitely saves a huge amount of human resource as well as value based resource.

And there is always a hot debate over this issue:

Is Outsourcing Good or Bad?

Generally these outsourcing are done by the US corporations to the Asian companies. And hence Outsourcing is adds value to the corporation and ads worries to the US workers. Political parties are not in favor of this outsourcing. But the corporations make a huge profit by outsourcing to Asian companies rather than to an American company. The main reason for the corporations to outsource a job to an Asian company is the human resource that is abundantly available in the Asian continents. Limiting the outsourcing will definitely boost up the American economy and corporations can make a double think before outsourcing to an Asian company.

Ballmer executes Layoffs - Phase 2

Microsoft previously announced that it would cut 5,000 jobs over an 18-month-period. This statement had arrived from chief executives of the corporation in the month of January. In the wake of handing out 3,000 layoff notices Tuesday (May 5), Microsoft CEO Steve Ballmer sent an e-mail to staff explaining them the reasons for these layoffs.

Steve mentioned that these layoffs are phase 2 of those plans announced in January. And now Microsoft has successfully eliminated all the 5000 jobs as per its announcement.

A gist of Ballmer’s mail to his staff is been discussed here. He explained that the success at Microsoft has always been the direct result of the talent, hard work, and commitment of its employees and he mentions that it’s really a tough decision to eliminate their position.

But the mail also threatens its employees. Ballmer explains “With this announcement, we are mostly but not all done with the planned 5,000 job eliminations by June 2010”. So they can’t sleep till June 2010. The employees who have been eliminated will be directly informed by their respective managers about their termination.

The mail has stirred the emotions among the workers of Microsoft Corporation. But they remain helpless and everyone have their own fears of receiving a pink slip. However this is not only the case of Microsoft but of almost all leading big corporations.

Simple Tips to lead a debt free life.

Debt has now become an inevitable part of a man’s living. Everyone is well aware about the il effects of possessing debts, and yet all are incurred in some form of debts to others. A life without debt can seem a far-reaching dream in today's world of loans and credit cards and especially Americans are accruing more debt than ever before.

I too have my own debts in form of credit cards. But still I can’t stop from using it. However some of my friends are interested and asked me to put up a post regarding debt free life. It will be pleasant to hear the debt free life and yet it has become practically impossible these days.

I will recommend some of these tips to lead a debt free life.

• Work along with a credit-counseling organization and solve out all your incurring debts.


• Try to isolate yourself in making big purchases. The big purchases will definitely ends up with debts.


• Have a contended mind. Be happy and get satisfied with what you have.


• Leading a debt free life may require a change in lifestyle; try to adjust with a new life style.


• If you find any of your friends or family member leading a debt free life then feel free to get advice from her/him.

It may seem easier said than done, but you'll be patting yourself on the back later if you live these principles.

Stocks are Up and Glowing!!

I was amused to watch today’s stock quotes. Almost all stock markets were in green since morning. After several days I had a chance to watch such rare phenomenon. And of course I’m 100% sure that tomorrow many will be in red and some will be in deep red.

The major reason for the rose in stock markets may be attributed to investor worries about the outcome of the U.S. government's stress tests of the country's 19 leading banks were allayed by better than expected economic and corporate news around the world.

Concerns about the stress tests increased after the Wall Street Journal reported that federal regulators have warned Bank of America Corp. it will need to raise around $35 billion to plug a capital shortfall, way more than most expectations. The Journal cited unnamed individuals apparently familiar with the situation.

Internal sources to the press had informed that the bank executives are pre informed about these stress tests which were designed to show how a bank would perform under different financial and economic conditions.

Stocks are glowing in green due to the hopes of investors that recession may cut off soon and markets may cherish again.

Recession Easing – Financial Stability Needed

Federal Reserve chief said that there were initial signs of Recession extending to a prolonged period. But the current scenario reveals that recession is easing and the federal chief instructs to have financial stability to allow the recession to ease off soon.

He said he saw "Tentative signs that the sharp decline in economic activity may be slowing," citing data on home sales, home-building and consumer spending, including sales of new motor vehicles.

However he warns the government to look upon the financial stability and to maintain it in order to ease off the recession completely.

He mentions that Federal committee is working on policies and plans that could bring up financial stability. In order to boost the confidence of common people he quoted that “Today's economic conditions are difficult, but the foundations of our economy are strong, and we face no problems that cannot be overcome with insight, patience, and persistence.”

I’m sure that this news will be pleasing to many. After hearing lots of cries about recession now everyone wants to come out of it. And now everyone should understand that it is possible to break recession only if we stand together with confidence and perseverance.

Some tips for Investors – 1

I was looking upon some investment tips for my readers. And of course I got a lot from varied sources and most of them are just prank. But certainly I got some useful tips too. I have compiled that useful information here in this post.

Some useful tips for Investment:

1. Just don’t get lured about index stocks. They are highly oscillating and your margins of profits / loss are too high. Though you are desired to get high profits in small time you also possess great probability of claiming high losses.

2. Take an advice from an expert in picking up value stocks. Experts will always notice the shares that are rarely noticed by common man.

3. It’s always better to confine your portfolio within 15-20 stocks. Too many stocks may dilute your concentration on the current trading value.

4. Try to stay away from cyclical stocks. Cyclical stocks are those that raise some % and deteriorate back to same value in a single trading session.

5. Always be ready to take risks. High amount of risks only will yield exceptional returns.

6. Try to avoid commodity stocks too.

7. Continuous learning, constant updating is must for becoming a successful investor.

Just try these tips become a successful investor.

Recession hits Google too!!

The Internet moneymaking juggernaut Google Inc. is no exception to the international recession. Google Corporation has reported slowing of revenue growth and an increase in profit supported by sharp cost cutting policies.

However the Chief executive commented that “No company is immune” to this severe hit recession. He also claims that Google is still at the profiting end and the fall in the growth will definitely be corrected with some stringent policies.

The reason for Google’s slowing growth is attributed to most obvious reason – “The consumers are spending less and so advertisers don't need to bid as much money to place ads on Google's search page”. But the Google’s main worry is that they could not able to broaden its revenue stream beyond Web search. Now Google’s think tanks are gunning down for other opportunities to boost up their revenue. And even in web search yahoo is now giving a stiff competition and if Microsoft underwent a tie up with Yahoo then things will turn worse for Google.

Google's first-quarter reports shows revenue as $5.51 billion, down 3% from the fourth quarter but an increase of 6% over the first quarter of 2008. However the chief executive reported that the figures are better than their expectations.