TIME Money

Americans Still Aren’t Saving for a Rainy Day

Lesson from the recession not learned

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Families in the U.S. still don’t have a substantial amount of cash tucked away for a rainy day despite the beating the economy took in the Great Recession, according to a new survey.

The Financial Security Index from Bankrate.com shows half of American families have no savings or less than three month’s worth of expenses saved for emergencies. The survey’s findings, analysts note, haven’t changed since 2011, when the company first began inquiring about the saving habits of American families.

“Americans continue to show a stunning lack of progress in accumulating sufficient emergency savings,” said Greg McBride, Bankrate’s chief financial analyst.

Analysts say the recession—during which Americans lost about $16.4 trillion in household wealth by 2011—should have been a learning experience, but the struggle of juggling household expenses has left many without extra funds to put away.

Not all Americans are failing to save. About 23% of those surveyed have savings that will last them six months or more in case of a financial emergency—the recommended stash amount. What’s more, the majority of those saving big have larger incomes, though only about 46% of those making $75,000 or more have over six months worth of expenses stored away.

The website notes that while three to six months worth of savings may sound like a lot, starting small and increasing the amount being put away over time can pay off quickly.

TIME stocks

Stocks Hit Record Highs

Dow Jones Industrial Average Approaches 17,000 Milestone
Traders work on the floor of the New York Stock Exchange (NYSE) on June 20, 2014 in New York City. Spencer Platt—Getty Images

The records cap a week of growth

Stock markets again hit record highs Friday, with the Dow Jones Industrial Average nearing 17,000 points and the S&P 500 above 1,960. Both indexes were up more than 1% in trading for the week.

Friday marked the third day in a row that the S&P 500 hit an all-time high, following gains earlier in the week. The index is up more than 6% this year. The Dow is up more than 2%.

The 17,000-mark would be an historic milestone for the Dow, which has seen a steady rise since it hit a 6,600 point nadir during the financial crisis.

TIME Economy

Bank Of America Wants Meeting With Attorney General Holder

It looks like Bank of America is looking for a deal.

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Bank of America is apparently done talking to Justice Department attorneys and wants to go straight to the top dog. CEO Brian Moynihan has asked to meet with Attorney General Eric Holder to discuss a deal on mortgage fraud litigation, Reuters reports.

This type of request is unusual as meetings are usually brokered between law enforcement officials and company lawyers. It looks as if Bank of America is following in the footsteps of JPMorgan Chase, which settled a big case for $13 billion shortly after meeting with Holder.

 

TIME Auto

10 Cars Americans Simply Don’t Want to Buy

10 Cars Americans Don't Want To Buy
A Volvo S60 at the 2013 Geneva Motor Show in Geneva, Switzerland. Harold Cunningham—Getty Images

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This post is in partnership with 24/7 Wall Street. The article below was originally published on 247wallst.com.

The American auto industry nearly collapsed during the recession as car sales plummeted and companies struggled to stay afloat. Since then, U.S. car and light truck sales have steadily increased, reaching 1.6 million in May, up 11% from the year before.

Despite the general recovery, demand for some vehicles continues to underwhelm. According to figures from TrueCar, an auto industry information and technology platform, 15 models spent an average of at least 90 days on dealers’ lots before being sold. No car took longer to turn over than the Volvo S60, at an average of 155.5 days.

Click here to see the ten cars Americans don’t want to buy

Days to turn is useful metric for gauging inventory levels, Eric Lyman, vice president of industry insights at TrueCar, explained in an interview with 24/7 Wall St. “The clock starts when the car lands at the dealership,” Lyman said. This levels the playing field, he added, because production facilities for various carmakers are located at different points across the U.S. or even in foreign countries.

According to Lyman, several factors may contribute to rising inventory levels. Some of these are temporary factors, such as the switch to a new model year. Because TrueCar data for 2014 covers cars in their 2014 model years, it makes sense that turnover rates are lower for models such as the GM’s (NYSE: GM) GMC Yukon, Chevrolet Tahoe, and Cadillac Escalade, all of which have released newly overhauled 2015 models.

In other cases, Lyman added, “high inventory is going to be [due] to a disconnect between the sales goals of the manufacturer and the retail demand for those units.” In some instances, manufacturers overestimate demand for their brands and ship too many units to their dealers. This results in high inventory and turnover levels for the brands.

Many of the brands that take the longest to sell are unpopular with customers, Lyman explained. Both Mitsubishi and Scion have car models that take the most days to turn. Both were also two of the nation’s lowest rated car brands, according to J.D. Power’s 2013 Automotive Performance, Execution and Layout Study, which measures brands’ appeal with car buyers.

Cars from Cadillac, Ford’s (NYSE: F) Lincoln, Jaguar and Volvo, all of which ranked in the bottom half of premium brands, according to the study, also made the list. Only one of the cars with the highest days to turn, the Chevrolet Tahoe, was manufactured by one of the survey’s 10 highest rated non-premium brands.

Although there are differences in how brands are perceived, Lyman added that disparities in actual quality among various brands is often relatively small. Five of the 10 cars requiring the most days to sell were made by brands with above-average scores on J.D. Power’s 2013 Initial Quality Study. Leading these brands was GMC, maker of the Yukon, which trailed only Porsche for fewest problems per 100 cars, according to the Survey. Only three models belonged to brands with scores considerably below the industry average, although one of these, Scion, was the lowest-rated brand in J.D. Power’s survey.

Based on figures provided by TrueCar, 24/7 Wall St. reviewed the car models with the highest number of days to turn. TrueCar turnover and sales data for each model reference a particular model year — figures for 2013 apply to cars in their 2013 model year, while figures for 2014 count data for 2014 model year vehicles. TrueCar also provided sales data for each of these models. Manufacturer’s suggested retail price (MSRP) data are from manufacturer’s website, and refer to the newest model year. We also relied on information from J.D. Power and Consumer Reports surveys, and the American Customer Satisfaction Index (ACSI). Safety data are from the National Highway Traffic Safety Administration (NHTSA) and the Insurance Institute for Highway Safety (IIHS). Sales figures are from The Wall Street Journal, as well as various company press releases.

These are the cars Americans don’t want to buy.

3. Cadillac Escalade
> Days to turn: 115.5
> Jan.-May unit sales: 1,498
> MSRP: $71,695

The Cadillac Escalade is one of three full-size General Motors SUVs among the 10 cars with the longest days to turn, alongside Chevrolet’s Tahoe and GMC’s Yukon. It is also the slowest selling American manufactured car, taking an average of 115.5 days to turn in the first five months of 2014. This is up from 61.2 days to turn between January and May 2013, as sales have dropped 14.7% year-over-year. However, this may not necessarily be an issue of quality. General Motors recently released a new Escalade, which may affect sales and turnover for the 2014 model year. In fact, Cadillac was one of the top-ranked makes in J.D. Power’s 2014 Vehicle Dependability Study, behind only Lexus and Mercedes-Benz. Consumers were also happy with the brand, awarding it one of the industry’s highest ACSI scores.

2. Mitsubishi Outlander
> Days to turn: 117.1
> Jan.-May unit sales: 3,788
> MSRP: $22,995

The Mitsubishi Outlander took dealers an average of 117.1 days to turn so far this year. This was actually an improvement from last year, when it took dealers nearly 128 days to turn an Outlander. Sales of the Outlander have also been strong this year, up 37% in the first five months of 2014 versus the year before. Overall, sales of Mitsubishi cars rose nearly 34% in that time. However, the carmaker still holds just a 0.5% share of the U.S. car market. Mitsubishi’s model competes in a crowded field against some of the nation’s best selling cars, such as Toyota’s RAV4, Honda’s CR-V and Ford’s Escape.

ALSO READ: Ten States with the Fastest Growing Economies

1. Volvo S60
> Days to turn: 155.5
> Jan.-May unit sales: 1,777
> MSRP: $33,300

Volvo’s S60 had the longest average days to turn of any car model sold in the U.S., taking an average of 155.5 days to turn in the first five months of 2014. This was more than twice as long as it took to turn an S60 last year. Sales of the S60 have slid as well, with just 1,777 sold this year through May, down 13% from the same period in 2013. So far this year, total Volvo sales are down roughly 10% nationwide. As a brand, Volvo has long been considered a carmaker in need of a turnaround. Ford sold it to Chinese carmaker Geely in 2010. The brand still maintains a reputation for safety, and the S60 earned a five star safety rating from the NHTSA and was an IIHS Top Safety Pick+ last year.

For the rest of the list, go to 24/7Wall St.

Read more from 24/7 Wall St.:

Volkswagen’s Sales Disaster Continues

Americans Watch Only 17 TV Channel

What to Do If You Won the $149 Million Powerball Lottery

 

 

 

TIME U.S.

This Is How Much Money Americans Are Spending Every Second

Spoiler alert: it's a whole lot

Americans love to spend. We know this. But just how much are they spending every second of every day, and on what exactly? The folks over at Retale, a location-based app that aggregates weekly retail circulars, created a real-time graphic to visualize the answers to these questions. Watch the numbers tick swiftly upward, as more and more money is spent on everything from coffee to firearms to pet food to lottery tickets to doughnuts.

Via retale.com

References are listed below the graphic. Of course, keep in mind that these numbers are ultimately an estimate. And if the graphic looks familiar, that’s because it was inspired by the popular Internet in Real-Time chart.

MONEY Federal Reserve

WATCH: Will the Fed Raise Interest Rates?

Federal Reserve watchers are waiting to see if Janet Yellen will propose an interest rate increase.

TIME Iraq

Violence in Iraq Could Raise the Price at the Pumps

The global oil market is already responding to violence in Iraq, one of the world's biggest producers, as Sunni insurgents of the Islamic State of Iraq and Syria overrun northern towns with eyes on Baghdad, but it could get much worse

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It’s not surprising that oil prices are at a three-month high, given the alarming unrest in Iraq. Oil traders do not react well to geopolitical instability, and that goes double when there’s an impending civil war in one of the world’s biggest producers of crude.

The Sunni insurgents of the Islamic State of Iraq and Syria (ISIS) overran the northern Iraqi city of Tikrit, which hosts a 300,000-barrel per day refinery, while Kurdish forces are now in control of the oil-rich city of Kirkuk after Iraqi troops abandoned their post. Repairs to the 250,000 barrel a day pipeline that runs from Kirkuk to the Turkish city of Ceyhan, offline since March due to sabotage, have been interrupted because of the fighting.

The good news, of sorts, is that Iraq’s biggest oil fields are in the far south, well away from the fighting in the north, as Robert McNally of the Rapidian Group told the Washington Post:

While not beyond [ISIS'] geographical reach, an effort to expand operations into southern Iraq would risk overextension and expose the militants to the more determined defenders of southern oil infrastructure as well as Shia militia.

It’s possible that the Iraqi government in Baghdad—potentially with American help—will beat back ISIS and retake the north. And crude will keep pumping in the south even if the war drags on. The international oil companies that have come to do business with Iraq in the wake of the U.S. invasion are used to working in unstable places. If a civil conflict could stop the global oil industry, we’d have reached peak oil a long time ago.

But even if Iraq doesn’t collapse, the unrest will take a long-term toll on the country’s ability to produce oil—and that toll will be felt by consumers in the future. Iraq has the world’s fifth-largest proven oil reserves, which means the country has a lot more crude left to pump. And because Iraq’s oil industry was artificially depressed by years of mismanagement under Saddam, international sanctions in the 1990s and the chaos of war and reconstruction, the country has a lot of room left to improve. In February, Iraq’s production hit an average of 3.6 million barrels a day—the highest level since Saddam seized power in 1979. And a 2012 report from the International Energy Agency (IEA) projected that Iraq could reach 8.3 million barrels a day of production by 2035. That would make Iraq by far the largest contributor to new oil growth, which in turn could help accommodate the still growing demand from developing nations like China.

But that sort of expansion would require tremendous amounts of investment and a steady hand from the central government. Prolonged civil war would imperil both. And if that leads to consistently higher oil prices, the global economy could be at risk too.

TIME Economy

We’ve All Got GM Problems

Insular management and lack of responsibility are hurting big firms around the world

General Motors CEO Mary Barra may have summed it up best when she described former U.S. Attorney Anton Valukas’ 325-page report on the company’s ignition-switch problems, which resulted in numerous deaths and millions of recalled vehicles, as “extremely thorough,” “brutally tough” and “deeply troubling.” It was all three and then some. But the report also illuminates a systemic problem in most big corporations as well as governments–insular management or, in the parlance of gurus, information silos.

Valukas found that GM didn’t fix its ignition-switch issues quickly or correctly because the company’s many departments and employees literally weren’t communicating with one another. The engineers who were looking into reports of cars’ stalling while moving didn’t know that engineers elsewhere in the company had designed air bags that would not deploy when cars were technically off. That meant engineers made different decisions about fixing the switch problems–decisions that ultimately led to over a dozen deaths.

But it was GM’s culture, in which silence and buck-passing were raised to a Kafkaesque art form, that kept these silos in place. Valukas’ report brings to light a number of tics that were unique to GM. There was the “GM nod,” for instance, in which everyone nods with respect to a certain course of action before leaving a meeting and then does nothing at all. And there was the “GM salute,” firmly crossed arms pointing outward toward others, signaling a steadfast refusal to take personal responsibility.

The problems of information not being readily shared and personal responsibility not being assumed are old ones. “Napoleon wanted to create a military without silos,” says Ranjay Gulati, a Harvard Business School professor who has spent 15 years studying silos. “Adam Smith spoke about the problem of labor silos. Events like 9/11 could have been prevented if there had been more sharing of information across organizational divisions.” Indeed, many of the biggest corporate debacles in recent years have been linked to information silos. The Rana Plaza disaster in Bangladesh, in which more than 1,100 garment workers were killed when a poorly built factory collapsed, was due in part to the fact that major Western retail brands didn’t know who their suppliers were or what they were doing.

Big, complex companies are typically structured so that decisionmaking is separated according to function, geography and product. That naturally creates silos. Indeed, McKinsey research shows that the most globalized firms pay an economic price for this. Examples of silos in blue-chip firms abound: Sony once had two separate divisions working on creating the same electrical plug without anyone realizing it. (It’s not just old-school companies that are at fault. I was once offered a job at a well-known tech firm where I would run around talking to C-suite executives about what they were doing and report back to other top people in the organization.)

So-called silo busting is already a hot topic in academic circles. Economists, for instance, are trying to do a better job of predicting market movements by calling on experts in areas like biology, psychology and the humanities. Major brain-science initiatives now routinely bring together researchers across many fields to share data. But in big corporations, silos are a problem that is becoming only more pressing as the world becomes more interconnected.

How can companies bust silos? according to Gulati, the best way is to create a set of core values or a core mission that everyone in the firm understands. A good example of this is IBM’s decision, under previous CEO Sam Palmisano, to create a safer and healthier society via its Smarter Planet initiative. That goal, says Gulati, helped facilitate cooperation across divisions. It’s also important for firms to consider issues from the point of view of customers rather than insiders. Consider longtime Cisco CEO John Chambers, who famously was 30 minutes late to his first board meeting because he felt it was more important to take a call from an irate customer than to meet the people who’d be deciding his salary. Another way to bring down silos: hire outsiders. Research shows that women and minorities often communicate better across divisions.

On that score, Barra is perhaps better placed than most to solve her company’s problems. During her announcement about the report, she set a communal goal for GM–”to set a new industry standard in safety”–and told employees to email her personally if they felt customers’ safety was ever in doubt. Silo busting starts at the top, and if Barra does it at GM, it could set an example for all large institutions.

TIME Economy

Sub-Saharan Africa Is the New Investment Frontier

The Victoria Island waterfront is seen from the Ikoyi neighbourhood in Lagos
Nigeria has attracted much attention from American and European multinationals, according to a new survey. Here is the Victoria Island waterfront in Lagos from June 3, 2014 Joe Penney—Reuters

Nigeria leads frontier markets in attracting attention from American and European companies, according to the latest Frontier Markets Sentiment Index

Nigeria, Africa’s largest economy, is the frontier market that attracts the most attention from American and European multinationals, according to an index commissioned by the Wall Street Journal.

Argentina, Vietnam and Saudi Arabia followed respectively.

But it was the sub-Saharan Africa countries that dominated the table, making up nine of the top 20 economies. Asia had three countries in the top tier.

The data found that one country in particular has seen multinationals’ interest wane dramatically. From 2013 to June 2014, corporate sentiment toward Ukraine dropped 12.5 points following a long period of violent protests and political instability.

The Frontier Markets Sentiment Index, developed by Frontier Strategy Group, based in Washington, D.C., provides insight into 200 multinationals’ sentiments toward markets regarded as the riskiest to invest in.

Matt Lasov, global head of advisory and analytics at Frontier Strategy Group, told the Wall Street Journal: “We collect data about which countries the companies are watching for potential future investment. Over time, that gives us a clear picture of their market priorities — which countries are they including in their future plans and which they are dropping.”

[WSJ]

TIME China

China’s Real Estate Downturn Spells Trouble for Global Economy

A sales assistant talks to visitors in front of models of apartments at a real estate exhibition in Shenyang
A sales assistant talks to visitors in front of models of apartments at a real estate exhibition in Shenyang, Liaoning province April 17, 2014. Sheng Li—Reuters

The world's largest trading nation's economic growth remains heavily dependent on property, meaning a sharp downturn in that sector would be felt across Asia and beyond

“Will the government save the market if housing prices fall?” That was the question being asked in China this week — not by stressed-out mortgage holders, but by the country’s most famous (and wealthy) property mogul, Pan Shiyi.

Pan, the chairman of giant real estate developer SOHO China, has made a series of pronouncements in recent weeks that reflect an increasingly bearish long-term outlook for China’s property sector.

At an industry forum in late May, Pan compared the nation’s real estate prospects to the Titanic. “It [the real estate industry] will soon hit the iceberg in front of it,” he declared.

Pan’s outlook may be bleak, but is borne out by statistics. According to Standard & Poor’s, residential housing prices in China will drop by 5% this year — a dramatic reversal from last year’s rise of 11.5%.

That’s bad news for China’s property holders, but potentially also a worrying sign for global investors. With Chinese economic growth heavily dependent on the real estate sector, which accounts for 20% of GDP by some estimates, a sharp slowdown in the property market would be felt far beyond China’s borders. (China is, after all, the world’s largest trading nation.)

After more than a decade of sizzling double-digit growth, the government is targeting 7% growth this year. But the potential for a real estate correction means that the actual number could be much lower.

There are already some signs that imports are being affected as consumer confidence weakens. The General Administration of Customs announced Sunday that imports in May declined 1.6% year on year — a drop that surprised industry analysts. That compared to an increase of 0.9% year on year in April.

With prices trending sharply downward, the president of the country’s largest residential real estate developer, Vanke, has declared that the “golden age” for property is over. “The period when everyone made money from property is gone,” Yu Liang was quoted as saying recently.

A conflagration of factors is driving the decrease in prices, not least repressive market policies that restrict the number of properties city dwellers can own. Markets in larger cities are also being flooded with knockdown properties being dumped by overextended investors or government officials looking to rid themselves of any undeclared assets in light of a recent and severe government crackdown on corruption.

Chinese media reported Monday that one coal-mining magnate was attempting to offload 100 apartments in a coveted location along Beijing’s Second Ring Road.

Little wonder, then, that the property mogul Pan is on the lookout for the visible hand of the government. But, for now at least, state intervention seems unlikely. In a report late last month, the Ministry of Housing and Urban-Rural Development declared that it would stay on the sidelines and “respect the adjustment role of the laws of the market in the real estate sector.”

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