Americans Feeling Better Financially in Polls
The National Foundation for Credit Counseling conducted a December poll that found that 56% of respondents feel that they will be in a better place financially by the end of 2014. Reasons for this include the slowly falling unemployment rate and steady GDP growth as well as very low inflation rates. Household net worth is at an all time high as home prices continue to improve. Another positive sign is that household debt obligations continue to shrink as people spend less and pay down more of their debt. A study from Allizan Life found that bad financial habits are on the wane. Fewer people said they were “spending too much money on things not needed” or “not saving any money”.
However, larger forces in the economy could still derail the shaky recovery the US is experiencing.
Mortgage Tax Break Expires
The tax break begun in 2007 gave relief from taxes owed on reductions banks gave homeowners on their mortgage debt and short sales. The tax break was aimed at helping the over 6 million US homeowners are still underwater in their mortgages. It was allowed to expire at the end of 2013 because lawmakers went home with extending it. An retroactive extension could still be passed. There is legislation in the House and the Senate waiting to be taken up that would extend the tax break until 2015.
Long Term Jobless Lose Benefits
Benefits for 1.3 million Americans that have been out of work for more than six months expired at the end of December and it is unsure whether these benefits will be reinstated by Congress. Families facing the loss of UI (unemployment insurance) face a steep decline on household income, which could have long term ripple effects on the economy. There are proposed extensions set to be voted on in Congress as soon as January 6, 2014.
Things are generally looking up for the US economy and Americans and while that is a happy note to ring the New Year in on, we aren’t on the steadiest of footing just yet.