3 Things That Will Happen to Your Wallet in the Next Year

http://www.alternet.org/economy/3-things-will-happen-your-wallet-next-year



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1. You might have an easier time finding a job.

The labor market is tightening and we should expect that trend to continue. Unemployment is now at 6.2 percent, down from a 26-year high in late 2009. Job openings recently hit a 13-year high of 4.7 million. The number of workers hired inched up to 4.8 million, while 2.53 million felt comfortable enough with their employment options to quit in June, the highest level in 6 years. And jobless claims are averaging a tad under 300,000, about the lowest level since the halcyon days of the housing bubble. This is all good and will eventually lead to wage growth. But to date, according to a recent Bloomberg News report, only households in the top 20 percent have seen gains. Plus, we don’t know how much growth there will actually be. Nor do we really know what industries will benefit.

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2. Things are going to get a little more expensive.

Even if you do see a little more money in your paycheck, what if that money doesn’t go quite as far as it used to? That could happen if the Fed makes certain moves.

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3. It will be harder for you to get a loan for a car.

Very likely, banks will tighten lending standards as rate hikes and signs of poor lending hit the bottom line. As an example, in the past couple of years, more people wanted to buy cars because banks were loosening credit standards. The banks wanted to create loans that they could package up into auto asset backed securities as they did during the housing bubble with mortgage loans and mortgage backed-securities.

Just as we saw with housing last cycle, lenders are sub-priming the market, preying on lower credit buyers and putting them into higher rate loans worth more than the price of the vehicle. The New York Times did a must-read exposé on this market. What they found was fraud — like what we saw in mortgages during the housing bubble. So, this is a disaster waiting to happen. And I believe it will happen when the Fed hikes rates because signs that auto demand is slowing and that delinquencies are rising have just started to accumulate.