Too Many Consumers Don't Feel the Recovery

When the Great Recession began in 2007, the negative economic effects and consequences were immediate. Millions of consumers lost their jobs, homes and spending power.  Five years later, in 2012, the so-called experts declared the Great Recession was over.

However, in 2014, some seven years later, there are still too many consumers suffering from the negative impact of the Great Recession.  Although our economy is growing at an annualized rate of 4.2 percent, the good news isn't reaching the average consumer. Why not? There are three key indicators that tell the real story.

1. Wages are depressed. Since 2007, the average price of basic goods and services including clothing, food and housing has risen by 15 percent. Compare that to a 9% overall increase in wages for salaried employees during the same period. If you consider the 22% of consumers who rely solely on their minimum wage jobs for income, this group has fallen behind by nearly 12% in terms of their income purchasing power since 2007. Adding insult to injury, a recent Rutgers Poll reveals that 57% of respondents have "less or the same amount of earnings and savings today as they did five years ago." In other words, nearly 60 percent of American consumers are cash poor. This is not a good sign.

2. Consumers have lost faith in the American Dream.  Before 2007, over 70% of consumers indicated they believed it was possible to live the "American Dream" -- that is, get a quality education, find a good job, earn enough money to afford a home where they could raise their kids, and have some money left over for retirement or a rainy day fund.

Today, when asked that same question, the number of consumers who still believe in the American Dream has fallen to less than 40 percent. This statistic is alarming because it undermines the very foundation of our nation's economy. If educational opportunities, quality jobs and housing prices are out of reach for 60% of Americans, our nation is quickly becoming "the land of haves and have nots."

2. Consumers Can't Get Loans  Before 2007, borrowing money was easy, perhaps too easy. But, consumers were able to go to their banks and get an auto loan, a college loan, or money to remodel their kitchen. Today, main street banks are not lending money to most consumers because their credit scores have taken a serious hit due to the Great Recession. It's a vicious downward spiral.

While credit unions are trying to come to the rescue and help consumers borrow money, federal regulatory agencies like the National Credit Union Administration have all but frozen the ability of credit unions to enroll new members. This means that millions of American consumers, who seek the financial services of federal credit unions, can't even become members because the federal regulators won't allow federally-chartered credit unions, which they regulate, to add new members through  existing portals like associations and other legitimate groups.

It's a system that is terribly broken and antiquated for today's consumers, not to mention the emerging Millennial Generation comprised of over 75 million consumers between the ages of 14-33 years old, who rely exclusively on the Internet and "financial apps" for their banking needs. Why are federal credit unions being denied the opportunity to serve this group of consumers? It makes no sense.

These are the cold facts. They tell a much different story than what our political leaders and financial experts have been spouting for the past three years. Consider this. If you went to your doctor because you were sick, and they gave you a 50-50 chance of recovery, how would you feel?  The simple answer is "not optimistic!" Well, millions of  consumers are feeling the same way -- not optimistic!

So, here's the bad news. When the American Consumer Council recently asked its members if they were optimistic for their economic future, only 4 out of 10 responded "yes."  When 54 percent of America's consumers tell you that their financial status is "worse today than it was seven years ago," that's a clear indication that the Recovery is not over for most of us. It also calls into question the integrity of those political leaders and financial experts who have declared "good times are ahead for America." My question is, "Which America are they talking about?"

About the Author:
Thomas Hinton is president and CEO of the American Consumer Council, a non-profit consumer education organization with over 148,000 members.  Contact: tom@americanconsumercouncil.org

Consumers Call to Action: Don't Let tFederal Regulators Limit Your Financial Options

The National Credit Union Administration (NCUA) is considering bowing to pressure from the bank lobby and limiting legitimate associations like the American Consumer Council (ACC) from partnering with federally-chartered credit unions.  If this happens, it will hurt you as a consumer. Your ability to join a credit union will be severely limited.

At a time when the NCUA should be promoting credit unions to help consumer and rebuild America’s middle-class, the NCUA is unfairly attempting to restrict association members from joining credit unions. 

We need your help to stop this regulatory meddling and send a message to Washington that consumers have rights, and consumers should be able to join a credit union through their associations or non-profit organizations, if they so choose. Did you know that over 68% of all ACC members belong to a credit union? Let’s not lose that option!

The American Consumer Council is requesting that you email Gail Laster, Director of the NCUA’s Office of Consumer Protection (OCP), and ask her to "certify ACC as SEG Compliant" so that ACC members can continue to join credit unions and enjoy the many benefits credit unions offer consumers. ACC will continue to provide consumers with financial education programs and other important services. But, we need our credit union partners to do this. Credit unions have been a key partner with ACC in delivering important financial education, programs and services to our members.  

Please act today!

Below is the email address and Twitter address for Gail Laster at NCUA-OCP: Email: ocpmail@ncua.gov   -or-  Twitter: @TheNCUA  --  Phone: 703-518-6640  or  FAX: 703-518-6439

Thank you for your help on this important matter and for standing up for your right to choose your financial institution as a member of the American Consumer Council.

P.S.  Please send a copy of your email to ACC at: Info@americanconsumercouncil.org

Corporate Social Responsibility and the Minimum Wage

Perhaps, the “Father of Corporate Social Responsibility” was Henry Ford. One hundred yearsago,in1914, Henry Ford stunned the industrial world by more than doubling wages to $5 a day. As a resultof this progressive move, Henry Ford helped build America’s middle class and create today’s consumer-driven economy. He also put his Ford brand on the path to great success by endearing his company to every American family.

 

It’s now time for this generation of business leaders to follow in Henry Ford’s visionary footsteps and practice CSR by raising the minimum wage to a “living wage.”  And, what should that wage be? According to MIT’s Living Wage Calculator, it varies from city to city across our nation. But, regardless of the wage amount, the goal must be to lift people above the poverty line and expand America’s middle class so that we can experience a sustained economic recovery and ensure prosperity for the next twenty years. To calculate your city or state’s living wage, visit: http://livingwage.mit.edu/

 

Here are three living wage examples. In San Diego, the MIT Living Wage Calculator calls for $11.38 per hour or $23,671 per year. In Atlanta, it’s $10.10 per hour or $21,007. In New York City’s Queen Borough, it’s $12.75 or $26,521 per year. None of these wages are outside the boundaries of fair and reasonable compensation.

Can any prudent business leader or entrepreneur seriously argue that raising the minimum wage to a “living wage” will “break the bank?” If so, I would question that leader’s logic and standard of fairness. I would also ask them to live on $7.50 - $8.25 an hour for the next 30 days to see how it feels to struggle in the trenches of corporate America to make ends meet. I’m sure their opinions of what is “fair and reasonable” would change quickly.

If we truly believe that our nation stands for Life, Liberty and the Pursuit of Happiness, doesn’t part of that sacred covenant also ensure that minimum wage earners deserve a fighting chance to experience the American Dream? If not, then greed and arrogance will rule us.

Let’s set aside the politics and arguments of greed to come together and strengthen America’s middle class. Let’s follow Henry Ford’s lead and do the right thing. Actually, according to the American Consumer Council, raising the minimum wage makes good business sense. By boosting the minimum wage, companies will help expand the middle class and empower more consumers. This will create more spending and help to create higher corporate profits. That’s good for businesses, shareholders and investors. 

As the power shifts from the corporation to the consumer, it’s time for business leaders to stand up for consumers by ensuring a living wage for all workers. It’s time to rebuild America’s middle class.

About the Author:  Thomas Hinton is president of the American Consumer Council, a non-profit consumer education organization with over 145,000 members. He can be reached at: tom@americanconsumercouncil.org 

Why Do Leaders Lie?

This is a serious problem that has not only resulted in the unnecessary and tragic deaths of 13 people, but it calls into question the integrity of GM’s leadership. Why did they withhold this information from consumers and dealers? If the leadership at GM did not tell us the truth, they lied. It’s that simple. There’s no shades of gray when it comes to life and death issues. Sure, they can settle lawsuits and buy the silence of grieving families. But, the fact is leaders lied. It’s that simple.

When human lives are at stake and the leadership of a company knows they have a faulty problem with their product, leaders have a sacred responsibility to come forward and warn consumers. When leaders do not come forward and issue a warning to unsuspecting consumers, it is a criminal act and they should be charged, convicted and punished harshly to send a message that society will not tolerate liars whose silence or misleading statements cause deaths.

It has become all too convenient for leaders to lie. Recently, consumers were sickened by contaminated Foster Farms chicken. Their leaders did not come forward and accept responsibility until they were pressured by consumer organizations and retailers. Why? What were Foster Farms leaders afraid of?

Toyota’s leadership denied any responsibility related to its faulty accelerator problems in 2009.  Its chairman was shamed before the United States Congress and Toyota suffered major losses because of its credibility gap and deceptive practices. Ironically, despite jury convictions holding Toyota responsible for the sticky accelerator problems, the U.S. Department of Transportation issued a report stating most of the crashes were the fault of drivers who stepped on the accelerator instead of the brake. What rubbish! Tell that to the widow of the California Highway Patrol officer and his passengers who died in a fiery crash caused by the faulty Lexus accelerator. Is anyone with a brain suggesting a CHP officer doesn’t know how to tell the difference between the accelerator and the brake?  So, this is the nonsense companies and government agencies are feeding us; and, they expect us to believe them!  No wonder consumers have lost faith and trust in government and corporations.

It seems the system is full of liars who will do anything and say anything to cover their rear. But why? What’s wrong with coming clean and telling people the truth? No one is suggesting that a company needs to admit guilt. That’s why we have courts. But, certainly, when the data suggests you have a problem with a product, you need to alert your consumers. It’s the only way you will maintain their trust and earn their respect. But, corporate leaders have been taught by their shareholders and lawyers to be silent, say nothing, don’t admit to anything that could negatively impact our quarterly earnings. This is the low level to which corporate leadership has sunk. Had it been the daughter of GM’s president who was killed because her ignition switch clicked off, I wonder how fast GM’s engineers would have identified and solved the problem?

Now, GM has serious credibility problems with consumers. Let me put it in terms the bean-counters and leaders at GM can relate to. The bottom line question that GM should be worried about it this: “What parent would ever buy their teenager a GM product knowing its leadership withheld data that contributed to the death of 13 people?” The answer is no one!

Consumers Feeling So-So as 2013 Winds Down

It’s been a so-so year for American consumers as 2013 winds down. While consumers became less pessimistic in November about their economic prospects, the impact of October’s partial government shutdown, the lack of any significant accomplishments by the Congress, and the embarrassing failed launch of the ObamaCare website all contributed to a ho-hum reaction from consumers.

Bloomberg’s Christopher Wellisz (cwellisz@bloomberg.net) reports that the gap between positive and negative expectations for the economy shrank to minus 14 from a two-year low of minus 31 in October, according to data from the Bloomberg Consumer Comfort Index. That's positive news.

Thomas Hinton of the American Consumer Council, a non-profit consumer education organization, stated, “We are basically back to square one in terms of  consumer sentiment prior to the government shutdown.”  Hinton added, “It’s not surprising that consumers have low expectations for government to accomplish anything significant this year. This will not bode well for incumbents in 2014 if the lack of progress continues.”

On a positive note, the American Consumer Council expects 2013 consumer holiday spending to be near last year’s spending levels as a result of improved economic conditions, pent-up demand for necessary consumer items and an aggressive retail campaign to lure shoppers into stores before Thanksgiving. ACC also expects online holiday spending to jump by 7% over 2012 according to member survey responses.

The American Consumer Council is a non-profit consumer education organization with over 142,000 members and 44 state consumer councils. For information, visit: www.americanconsumercouncil.org

American Consumer Council Asks P&G and Dopps to Strengthen Safety Features of Tide Pods

The American Consumer Council (ACC) has called upon its members to contact The Procter & Gamble Company and Dopps, the seller and manufacturer of Tide Pods, and demand they strengthen the safety features of this product. 

According to complaints from ACC members and a recent ABC News report, to some kids, the bright colors and bite-size packaging of single-doss packets of laundry detergent look too much like candy. A large number of young children have consumed the Tide Pods and suffered serious repercussions including severe nausea, vomiting and diarrhea.

Thomas Hinton, president of the American Consumer Council, said, “While Dopps has taken several steps to address product safety concerns, it’s not enough. Too many children are still accessing this product and suffering serious physical consequences.  We’re asking P&G and Dopps to re-examine their packaging and hamper the product's ease-of-access so children cannot open it so quickly.”  

Hinton added, “It resembles a candy jar and that attracts youngsters to  eat it. P&G and Dopps need to move quickly to change the features and safety packaging of Tide Pods .”

ACC Meets Full Compliance for NCUA's Associational SEGs Requirements

The American Consumer Council (ACC) has received an independent legal opinion stating that ACC meets the National Credit Union Administration's (NCUA) "totality of circumstances" test which is required in order to be approved as an associational SEG (Select Employer Group).

The independent legal opinion was requested by a large federally-chartered credit union and rendered by the San Diego law firm of Selzter Caplan McMahon Vitek on October 1st.

In essence, the Legal Opinion states that ACC meets the seven criteria set forth in the Federal Credit Union Act, Section 109(b) that pertains to associations and the requirements necessary to affiliate with a federally-chartered credit union. 

Copies of the Legal Opinion may be obtained by contacting ACC's media office at: info@americanconsumercouncil.org