U.S. consumer confidence dropped to its lowest level in more than a decade this month due to tensions in Iraq and rising unemployment rates. A decade. Ten years. And when consumers aren't confident, they aren't spending.
Economists have cut their growth predictions for the economy for the first half of the year, estimating each consumer will spend $100 less than previously thought. The silver lining? Well, it's more pewter than silver, but the main worries of over two-thirds of the economists would disappear with a quick and favorable outcome in Iraq.
In today's Motley Fool Take:
- Quote of Note
- Ford Hits the Brakes
- Discussion Board of the Day: Ford
- Spam Costly for Business
- Shameless Plug: Credit Tip of the Day
- Overstating Online Taxes
- Quick Takes: bebe, Ameritrade, Skechers, more
- And Finally...
"I wouldn't deny that we are making progress, but I don't want to mislead you into thinking that we've got it in the bag. We stay fixated on the rule that you don't count your chickens until the cows come home." -- State Department Spokesman Richard A. Boucher, on the possible outcome of a UN Security Council vote on Iraq
Potholes. Detours. Slippery spots. Driving is never for the weak of heart, and Ford's
The country's second-largest auto maker revealed its projected Q2 production will amount to just 980,000 vehicles. That's a 17% slide from last year's assembly line throughput. And Ford's not the only one hitting the skids. Earlier this month, General Motors
You can look at the disparity between Detroit's road warriors in two ways: Either Ford still hasn't shaken the stigma of its Firestone tire fiasco, or the popularity of its beefier trucks and SUVs is waning.
Let's tackle the Firestone flap first. Don't buy it. The federal government concluded its investigation back in 2001. There was more fear and trepidation about the Ford Explorer last year than now. If anything, that should've sandbagged last year's production levels and helped prop up this year's showing.
Are Ford vehicles fading in popularity? Dealers have a glut of inventory. That alone would slam the anti-lock brakes on full-blown production. Making matters worse, car makers have resorted to large cash incentives and cheap financing to move products, and folks are still reluctant to grab the wheel and drive the deal off the lot. Can you get any lower than 0% financing? Buy a car and get a free ham?
Auto makers face the possibility of war and higher prices at the pump, along with the near certainty that the economy isn't going to improve anytime soon. That can't be good for a company with massive debt loads to service.
Don't ignore the warning in Ford's side-view mirror: The problems are closer than they appear.
What will it take to make Ford a safe driver again? New designs? Hybrids? If the Detroit Lions play in Ford Field, what's with all the bears? All this and more -- in the Ford discussion board. Only on Fool.com.
"Meet Singles in Your Area!"
"Earn a Doctor's Income in a Few Short Weeks"
"re: a business proposition for you"
"Hot Blondes Playing Trampoline Basketball!"
Such is the dreck that almost everyone with an email account receives daily. And if you believe spam volume is rising, you're right. After doubling in the last six months, approximately 40% of all email sent in the United States consists of unsolicited advertisements.
These destructive emails waste time, spread viruses, and cost individuals and businesses millions of dollars in computer hardware and software.
According to a story in The Washington Post, organizations in the United States will spend more than $10 billion combating spam this year. That's $30 for every man, woman, and child in the country. Stop the madness!
But how? Legislation is tricky because thousands of legitimate businesses send unsolicited email, and they don't want the marketing channel killed. Laws banning the use of fake email addresses and fraud already exist, but abusers are so savvy that they're all but impossible to catch. And who has time? Spam abusers are as numerous as spam itself.
AOL Time Warner
Anti-spam laws exist in 26 states (including Fool HQ's Virginia -- let us tell you, the law doesn't work), but lawmakers think only a harsh federal law could be effective. That's far from happening. Parties involved can't even agree on how to define spam. Meanwhile, legislation on the simpler issues of unsolicited postal mail and telemarketing has long been pondered.
Speaking of those blights, approximately 40% of postal mail consists of unsolicited advertisements. On the telemarketing front, the average U.S. home receives at least two unsolicited calls a day.
Thankfully, legislation to help home-loving, peace-seeking Americans is finally coming. Beginning in July, you can register on the Federal Trade Commission's national "Do Not Call" registry. (It has teeth -- "Do Not Call" violators will be fined up to $11,000 per infraction.)
If you can't wait until summer, reduce the number of calls you receive by writing to: Telephone Preference Service, Direct Marketing Assoc., P.O. Box 9014, Farmingdale, NY 11735. Provide your name, address, and phone number, and tell them you want to be on their "Do Not Call" list.
As for spam email? You probably receive spam that markets spam-blocking software (love the irony), but you're reluctant to pay. Most email programs offer free filters that can help, but they sometimes delete important email. So, where does that leave us? Using the old delete button.
Ignore banker's rules on what is an "acceptable" level of debt. Your debt-to-income ratio is the measure of how much debt you carry to how much money (after taxes) you have coming in. In the world of lending, it is acceptable to carry 25% of your income in debt. Consider this example, though:
Total credit card debt: $6,437
Total after-tax annual income: $30,000
Debt-to-income ratio: 6,437 / 30,000 = 21.4%
A 21.4% debt-to-income ratio is awfully high, in our opinion. The ideal number is zero. But, at the very least, you want to keep your debt -- including car loans -- to 15% or less of your after-tax income.
Brought to you by The Motley Fool Visa card. The card that shows everyone you can make better financial decisions!
Proponents of online taxes quote several University of Tennessee studies, which found states missed out on $13.3 billion in 2001 collections. But the Direct Marketing Association performed its own study of online taxes and released contrary results this week.
The DMA finds two basic problems with UT's analysis. First, UT researchers included certain business-to-business transactions that actually did create tax revenue for the state in its count of missed taxes. Through the "Electronic Data Interchange," a system that pre-dates the Internet, businesses purchase supplies and materials from one another through networks. Companies using this inter-state medium pay the appropriate sales and use taxes, and therefore shouldn't be lumped into the same category with business-to-consumer online sales.
The other big problem highlighted by the DMA concerns the growth assumptions used by UT to project future missed taxes. UT researchers predicted that if online sales were still tax-free, states could miss out on $55 billion in tax revenues in 2011. However, they used projections from Forrester Research, created at the height of Internet hype (in 2000) and based on the assumption that "pure play" Internet retailers would flourish. With some notable exceptions, such as Amazon.com
In contrast to UT's claim that states missed out on $13.3 billion in 2001, the DMA's study says the figure was closer to $1.9 billion. And while UT finds states could be stiffed by $55 billion in 2011, the DMA claims it's more like $4.5 billion. DMA Economist Peter A. Johnson used current data from the Commerce Department's Census Bureau to draw his conclusions.
Granted, the DMA generally takes a libertarian stance on most issues. But its findings do cast a shadow of doubt on the UT studies' validity.
Proponents of taxing all online commerce will argue that a "level playing field" doesn't exist. Companies with both offline and online presence, such as Wal-Mart
Shares of slinky-clothing retailer bebe
Billionaire financier George Soros invested an additional $2 million in luxury goods e-tailer Bluefly
A day after Charles Schwab
Hip shoe retailer Skechers
Today on Fool.com:
- For updated stories throughout the day, bookmark our ever-changing News section.
- Where to put your money now? Bonds may not be the answer. Mathew Emmert has some stocks that offer stability and income.
- Whitney Tilson applies investment thinking to the war debate.
- Gloom and Volatility: War jitters and energy prices are weighing on economists' minds.
- In paying your taxes electronically, you can file now and pay later.
- Teens Say the Darndest Things: Ways to wealth include marrying rich and not eating.
- In Fool's School: car-buying tips.
Bob Bobala, Robert Brokamp, Mathew Emmert, Jeff Fischer, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Jackie Ross, Reggie Santiago, Dayana Yochim