Current Events in January 2014

A recent study found that 40% of American households could get by just fine with an electric car, although electric cars currently make up only 1% of the nation's fleet. 

I read this study with interest. It basically found that most people drive only 30 to 40 miles per day -- well within the range of today's electric cars. The study reminded me of a story about a Northern Virginia man who calculated he was getting 203 miles per gallon in his Chevrolet Volt, a plug-in hybrid.

I really should get my hands on one of these things and put it through the wringer, I thought to myself. And so it was that a few weeks ago, I hustled over to the nearest Chevrolet dealer and drove home in a Volt. 

I considered several options before picking the Volt. The Toyota Prius is an obvious choice and by far the most popular hybrid. I have driven Priuses, however, and just don't like them. There's no farfigneugan, the elusive joy of driving that Volkswagen was touting a few years back. Ditto the Ford C-Max.

Range anxiety

Then there's the Nissan Leaf. It's a fine little car but, like many consumers, I am prone to range anxiety. My schedule is not consistent and sometimes I have to jump in the car and head for some event or other that wasn't on my radar until that very moment. A pure battery-powered car isn't up to that challenge.

The Tesla is out of my price range and besides, it's also battery-only, making it essentially a very expensive variant of the Leaf.

This brought me back to the Volt. It has a range of about 35 miles on the battery and another 300 or so on the gas tank, which powers a back-up engine that basically acts as a generator, providing the juice to run the electric motor when the battery is drained.

A key difference

This is a key difference. Most hybrids run on the electric motor when the battery is charged, then switch to the gas motor when the battery has given up the ghost. Some cars use both motors at times. Only the Volt, as I understand it, runs on the electric motor all the time.

So far, I haven't had much experience with the gas-powered engine, mainly because the battery has been adequate for most of my trips, just as that study predicted. I plug the car in at night and in the morning, it's charged up and ready to go. I used no gasoline in the first 10 days or so that I had the car, running my usual daily errands in 35 miles or less.

Compared to the $60 or so per week it has been costing me for gas to run daily errands in my old Porsche, that's not bad.

Do the math

Whether the Volt works out financially for you depends on your personal situation. Overnight charging is estimated to cost about $1.50 per day in most areas -- roughly $10 a week. Contrast that to $50 or $60 a week in gas consumption. 

There is a whopping $7,500 federal tax credit -- a credit, not just a deduction -- which helps to absorb some of the pain of the purchase price, currently around $35,000 for a well-equipped model. 

Some states also offer tax incentives. Others, like Virginia, where the Volt and I reside, actually penalize hybrids. The birthplace of Thomas Jefferson and other libertarians and free-thinkers imposed a $64-per-year fee on hybrids last year. Why? Well, they don't use as much gas and, therefore, don't pay as much gas tax.

I must say that this is the first time I recall being taxed for not buying something. Sort of a sales tax in reverse. But typical of the inside-out thinking that so often typifies Virginia.

Nasty weather

As luck would have it, it was snowing, raining, sleeting and otherwise being disagreeable for the first week or so I had the car, giving the Volt a chance to show what it can do in bad weather. It did just fine. Weighing in at about 3,500 pounds, with quite a bit of that weight over the powered front wheels, the thing hunkers down and powers through slush and snow quite nicely. 

When the weather finally cleared momentarily, we zapped out to a small winery in Delaplane, Va., a distance of about 40 miles, finally getting a chance to fire up the gas-powered engine. The transition occurs smoothly, the only sign being the added sound of the gas engine. When running on the battery, the car is eerily quiet, with nothing but the sound of the tires on the pavement to indicate movement.  

Our route took us into mountainous stretches of Interstate 66 but the electric motor provided plenty of acceleration, enabling us not only to keep up with the fast-moving traffic but to pass and maneuver with ease. Acceleration is excellent, especially if you switch to "Sport" mode, which tightens everything up a notch or two and makes the virtual throttle much more responsive.

Among its retinue of safety gadgets, the Volt warns you if you are closing too fast on the car in front of you -- a good thing to have in a car with this much torque. 

On New Year's Day, I had a little more spare time and took the Volt to Charlottesville, Va., and back -- a little over 200 miles. The battery ran out of juice somewhere around Sumerduck and we made the rest of the trip with the assistance of the gas engine, achieving a back-of-the-envelope 42 miles per gallon. Not bad for a trip that included 75 mph spurts and more than a few steep hills.

Shiftless

Speaking of mountains, if you're accustomed to downshifting, upshifting and so forth, the Volt and other electric cars will take a little getting used to. The transmission is "continuously variable" -- meaning no gears and, therefore, no shifting. This quickly gets to feel normal. In fact, all the shifting and engine noises in our family Volkswagen now seem odd and slightly antiquated. 

A few other observations about the car: Although it is about the same size as the Prius, the Leaf and the Ford C-Max, it feels bigger, though it handles well thanks to the low center of gravity created by the huge battery lurking down below. Also, the electronic steering, which I had expected to hate, is very precise and not mushy as I had feared it might be.

Unlike the Prius and the Leaf, the Volt looks pretty much like a regular mid-sized car. It is quite roomy inside, although legroom is somewhat lacking in the back. 

One other thing to note: The Volt is a four-passenger car -- not five. There are two bucket seats in the back and a large tunnel running between them, sort of like a transmission hump in a traditional, rear-wheel-drive car.  In the Volt, it's where the large T-shaped battery sits.

No question, there are some trade-offs. The Volt is not quite as nimble around town as some of the tinier specimens but makes up for it by being a comfortable and competent highway cruiser. We'll give it a real acid test with a trip to NYC one of these weekends and let you know how it holds up.

Good news for modern couples hoping to fly on Air Canada: after an embarrassing controversy on Twitter, Air Canada kicked off the new year by reforming its arguably sexist voucher-transfer policy.

On Dec. 30. Calgary resident Chris Turner (tweeting @theturner) wanted to transfer a flight voucher to his wife. Air Canada policy does allow for family members to exchange vouchers, so Turner expected no difficulty. But his transfer request was denied for a reason so baffling, he immediately called out the company on Twitter:

“Hey @AirCanada -- your (very helpful) phone rep tells me I can't transfer a voucher to my wife pre-flight BECAUSE SHE KEPT HER NAME. Really?”

Whoever handles Air Canada's Twitter account promptly responded:

“Hi Chris, vouchers can only be transferred to another family member before travel if they have the same family name. /cc”

This answer did not satisfy the Twitterati. An annoyed Turner quickly countered:

“@AirCanada Yup, got it. Maybe let your bosses know that those of us who are not married to June Cleaver find this deeply insulting.”

So did women who are not June Cleaver. For example, Sarah Boon (tweeting as “SnowHydro”), said this:

@AirCanada@theturner An archaic policy that suggests women must be subordinate to their husbands & take their name? #equality

Air Canada spokespeople initially made matters worse, responding to criticism by insisting that the policy is really for the customers' own benefit:

“@SnowHydro Hi Sarah, this is to prevent fraudulent activity when using vouchers. Thanks. /cc”

For that matter, the “old standard” of married women taking their husband's surnames doesn't even apply to all cultures. As one twitterer pointed out:

“In Iceland, they use patronymic/matronymic names - so everyone has a different last name. No AirCanada joy for Nordics.”

When the ThinkProgress blog picked up the story on New Year's Eve, it pointed out that “other prominent Canadian and American airlines, including West Jet, United, and U.S. Airways, allow passengers to transfer vouchers to individuals of their choosing” (rather than be limited to family members, regardless of their last name).

The story soon left the confines of Twitter and the blogoshere and was picked up by mainstream media sources; less than 18 hours after Turner's first annoyed Tweet, the Air Canada policy and Turner's difficulty with it was one of the top stories on CBC News.

By New Years Day, the Toronto Sun had also reported the story under the headline “Air Canada changes voucher transfer policy.”

One righteously annoyed complaint on the afternoon of Dec. 30 inspired a major airline company to implement a policy change by Jan. 1. That's why consumers with complaints should ignore the old proverb “patience is a virtue” in favor of another old proverb: “the squeaky wheel gets the grease.”

The genesis of the 2008 financial crisis is pretty clear. Mortgage companies eagerly made loans to homeowners without thoroughly checking whether they could really afford the payments.

When over-extended consumers began to default in large numbers it sent a devastating shock wave through the international financial industry, which had purchased trillions of dollars worth of these mortgages in the form of securities. The housing market has begun to finally recover but the economy is still feeling the effects of this meltdown.

Some economists are worried the same thing could happen with student loans, with equally-devastating results. Consider the numbers: in 2012 the Consumer Financial Protection Bureau (CFPB) reported total student loan debt in the U.S. had passed the $1 trillion mark – it's now surpassed $1.2 trillion. The CFPB expressed the concern this level of debt might not be manageable in a tight job market where debt-burdened graduates have difficulty finding employment.

Number 2 after mortgages

After mortgages, student loan debt, from both federal and private loans, now represents the biggest aggregate debt balance. A 2013 report by the Congressional Joint Economic Committee showed the steady increase in student loan debt over the last decade has been driven by an increase in both the number of student borrowers and the average debt of those borrowers.

Two-thirds of recent graduates have student loan debt, the report found. Those borrowers had an average balance of $27,200, which is 60% of the annualized average weekly earnings of young college graduates. In other words, they have little money to pay for rent, much less a mortgage.

While cash-strapped youth are a drag on the economy an equal concern is whether they can pay back the money they owe. On that score there's plenty to worry about. Federal data shows that more than 600,000 federal student loan borrowers who began a repayment program in 2010 had defaulted on their loans by 2012. Nearly half – 46% – of those students attended for-profit institutions. The latest default figures, released last September, show a rise in the default rate for the sixth straight year.

Sitting this one out

While investment banks and hedge funds rushed in to purchase mortgage back securities during the heyday of the housing bubble, they aren't the ones holding student debt. At least not as much as they were. JP Morgan Chase announced in October it was get getting out of the student loan business altogether.

Instead, it's largely the U.S. taxpayer that's on the hook. Over the last year or so the U.S. government has been buying up student loans, with the objective of encouraging lenders to stay in the student loan market. If the loans eventually go bad, it probably won't trigger a financial meltdown like the foreclosure tsunami did.

“There's just not the leverage and derivatives tied to the student loan market that was tied to the housing market, that got us into the mess we're in today,” said John Canally, investment strategist at LPL Financial, in an inview with Yahoo Finance. “From that perspective, a half-trillion dollars in student loan debt isn't the worst thing in the world.”

Rather, many economists fret on the economic drag caused by millions of young consumers – those lucky enough to find full time jobs – unable to buy a home or new car, spending their earnings to stimulate the economy.

Two Facebook users are suing, claiming that "private" messages are being scanned and used to profile the sender's activities.

“Contrary to its representations, 'private' Facebook messages are systematically intercepted by the company in an effort to learn the contents of the users’ communications,” Matthew Campbell and Michael Hurley allege in their complaint, Courthouse News Service reported.

Campbell and Hurley say Facebook wrongfully profits from the information by selling it to advertisers, marketers and data aggregators.

The suit further charges that Facebook fails to adequately inform users that their supposedly private messages are subject to scanning just as though they had been publicly posted on the social network's pages.

It alleges that Facebook violates the federal wiretap law as well as California privacy laws and seeks class action status.

First-time applications for unemployment benefits posted a second straight decline last week.

Government figures sow that in the week ending December 28, initial filings totaled 339,000 – a drop of 2,000 from 341,000 the week before. Economists surveyed by Briefing.com were projecting a total of 333,000/

Analysts say that for the first time in several weeks, there was no indication of any seasonal adjustment difficulties. Recent reports have been less clear given seasonal adjustment problems surrounding the Thanksgiving and Christmas holidays. The expectation is that the initial claims will level to return to around 330,000 when the holiday period is over.

The 4-week moving average, considered a better gauge of the labor picture because of a lack of volatility, rose 8,500 -- to 357,250.

The complete report is available on the Labor Department website.

Construction spending

Spending on construction projects continues to pick up steam.

In a separate report, the government says overall spending was up 1.0% in November at a seasonally adjusted annual rate of $934.4 billion -- 5.9% higher than a year ago.

For the first 11 months of 2013, construction spending totaled $828.4 billion -- up 5.0% for the same period the year before.

Of the November total, private construction came in at an annual rate of $659.4 billion – 2.2% more than in October. And residential construction was up 1.9% to an annual rate of $345.5 billion.

More details are available on the Census Bureau website

If you're looking for a word to describe the attitude of businesses as we enter the new year, “cautious” might be a good choice

According to CareerBuilder's annual forecast, debt issues in Washington may continue to play a part in impeding a more accelerated jobs recovery. Twenty-four percent of companies say they'll add full-time, permanent employees in 2014 -- down 2% from last year, while 23% plan to hire at a slower rate or not at all until the debt ceiling is resolved in the first quarter.

"The general sentiment shared by employers whom CareerBuilder talks to every day is that there will be a better job market in 2014," said Matt Ferguson, CEO of CareerBuilder and co-author of The Talent Equation. "What we saw in our survey was reluctance from some employers to commit to adding jobs until the outcomes of debt negotiations and other issues affecting economic expansion are clearer. As these stories play out and employers find their footing in the New Year, there is greater potential for the average monthly job creation in 2014 to exceed that of 2013."

Here are some of the highlights of the CareerBuilder survey:

Full-time, permanent hiring

While 24% of employers expect to hire full-time, permanent staff, compared with 26% last year, one in ten are still undecided about their recruitment plans. Thirteen percent plan to decrease staff levels -- 4% more than last year, while 54% anticipate no change.

Where they're hiring

Hiring for STEM (science, technology, engineering and math) occupations is expected to take center stage with more than one in four employers (26%) planning to create jobs in these areas over the next 12 months.

Looking at functions across an organization, the top two positions companies plan to hire for in the New Year -- sales and information technology -- are also where employers expect to provide the biggest salary increases.

Hiring managers plan to recruit full-time, permanent employees for:

• Sales – 30%
• Information Technology – 29%
• Customer Service – 25%
• Production – 24%
• Administrative – 22%
• Engineering – 17%
• Marketing – 17%
• Business Development – 17%
• Accounting/Finance – 15%
• Research/Development – 13%
• Human Resources – 10%

Temporary and contract hiring

Temporary workers are accounting for a larger share of the employee base within organizations. Forty-two percent of employers plan to hire temporary or contract workers in 2014, up f% from last year. Of these employers, 43% plan to transition some temporary employees into full-time, permanent members of their staff.

Five trends to watch in the new year

• Part-time hiring on the rise – Seventeen percent of employers expect to recruit part-time workers over the next 12 months, up 3% over last year. While various factors will influence this trend, 12% of all employers said that they will likely hire more part-time workers in 2014 due to the Affordable Care Act.
• More companies "onshoring" jobs – One of the most popular imports of the New Year just may be previously lost jobs. Twenty-three percent of companies who offshore jobs said they brought some of those jobs back to the U.S. in 2013; 26% plan to do so in 2014.
• Skills gap widening – Looking at a subset of human resource managers, half (51%) said they currently have positions for which they can't find qualified candidates. Forty-six percent said these positions go unfilled for three months or longer.
• Companies building the perfect employee instead of waiting for one – In light of the skills gap, nearly half (49%) of employers plan to train people who don't have experience in their industry or field and hire them in 2014, up 10% over last year. Twenty-six percent of employers are sending current employees back to school to get an advanced degree -- and picking up all or part of the cost.
• Companies looking for recruits in high schools – More companies are connecting with future generations of workers to establish a constant pipeline of job candidates. Twenty-seven percent of hiring managers have promoted careers at their firms to high school students or, in some cases, even younger; 25% plan to do so in 2014.

Small business hiring

Nearly two in five (39%) small businesses with 250 or fewer employees reported that they are still struggling to recover from the last recession. Like their larger counterparts, small businesses are also staying cautious as they assess market potential in the year ahead.

• 50 or fewer employees – 19% plan to add full-time, permanent staff in 2014, the same as last year; 9% plan to reduce headcount, up 3% from last year.
• 250 or fewer employees – 22% plan to add full-time, permanent staff in 2014, compared with 24% in 2013; 9% plan to reduce headcount; 7% did so last year.
• 500 or fewer employees – 23% plan to add full-time, permanent staff in 2014, down 1% from 2013; 10% plan to reduce headcount, up 3% from last year.

Hiring by region

While the West continues to lead the other regions in hiring plans, the Northeast was the only region that saw a year-over-year increase in the number of employers expecting to add full-time, permanent staff. The South reported the biggest year-over-year decline (-5%) in employers adding full-time, permanent headcount, while the Midwest has the largest number of employers expecting to downsize staffs.

• West – 26% plan to add full-time, permanent staff in 2014, down 2% from 2013; 11% plan to reduce headcount, 2% more than last year.
• Northeast – 24% plan to add full-time, permanent staff in 2014; 23% did so in 2013. Another 13% plan to reduce headcount, 3% more than a year ago.
• Midwest – 24% plan to add full-time, permanent staff in 2014, the same as 2013; 15 percent plan to reduce headcount, up 5% from last year.
• South – 22% plan to add full-time, permanent staff in 2014, a 5% drop from 2013; 12 percent plan to reduce headcount, a gain of 3% from the year before.

Compensation in 2014

Compensation is becoming more competitive for specialized labor with 26% of employers planning to raise starting salaries for high-skill roles in 2014.

Looking across positions within an organization, 73% of employers plan to increase compensation for existing employees -- on par with last year, while 49% will offer higher starting salaries for new employees -- up 2% from last year. Most increases will be 3% or less.

The national survey was conducted online by Harris Interactive from November 6 to December 2, 2013, and included a representative sample of 2,201 hiring managers and human resource professionals across industries and company sizes.

What a difference a month makes.

After posting a 2-point decline in November -- to 72.0, The Conference Board's Consumer Confidence Index shot up more than 6 points in December and now stands at 78.1. The Present Situation Index rose to 76.2 from 73.5, while the Expectations Index jumped to 79.4 from 71.1 last month.

The rebound in consumer confidence in December put the index close to pre-government shutdown levels (September 2013, 80.2). “Sentiment regarding current conditions increased to a 5 ½ year high (April 2008, 81.9), with consumers attributing the improvement to more favorable economic and labor market conditions,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Looking ahead, consumers expressed a greater degree of confidence in future economic and job prospects, but were moderately more pessimistic about their earning prospects. Despite the many challenges throughout 2013, consumers are in better spirits today than when the year began.”

How they see it

Consumers’ appraisal of overall current conditions improved. Those claiming business conditions are “good” edged down to 19.6% from 20.4%; however, those who think business conditions are “bad” decreased to 22.6% from 24.6%t. Appraisal of the job market was also more upbeat. Those saying jobs are “plentiful” ticked up to 12.2% from 12.0%, while those saying jobs are “hard to get” dipped 1.6% -- to 32.5%.

Consumers’ expectations, which had decreased in November, improved in December. The percentage of consumers expecting business conditions to improve over the next six months increased to 17.2% from 16.7%, and those expecting business conditions to worsen fell to 14.0% from 16.1%.

The outlook for the labor market was considerably more optimistic. Those anticipating more jobs in the months ahead jumped 4% -- to 17.1%, while those anticipating fewer jobs decreased to 19.0% from 21.4%. The proportion of consumers expecting their incomes to increase, on the other hand, was down 1.4% to 13.9%; while those expecting a their incomes to fall declined to 14.0% from 15.5%.

The monthly Consumer Confidence Survey, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was December 17.

Wal-Mart Stores of Bentonville, Ark., is recalling about 73,400 Mainstays five-piece card table and chair sets.

The chairs can collapse unexpectedly, posing a fall hazard and a risk of finger injury -- including amputation.

The retailer has received 10 reports of injuries from collapsing chairs. Injury reports include one finger amputation, three fingertip amputations, sprained or fractured fingers and one report of a sore back

This recall involves the Mainstays card table sets with a black padded metal folding table and four black padded metal folding chairs. “Made by: Dongguan Shin Din Metal & Plastic Products Co,” the company that made the chair cushions, is printed on a white label on the bottom of the chairs.

The furniture, manufactured in China and Taiwan, was sold exclusively at Walmart stores nationwide and online at www.walmart.com from May 2013, through November 2013, for about $50.

Consumers should immediately stop using the recalled card table and chair sets and return the entire set to Walmart for a full refund.

Consumers may contact Walmart at (800) 925-6278 from 7 a.m. to 9 p.m. CT Monday through Friday, from 9 a.m. to 9 p.m. CT on Saturday, and from 12 p.m. to 6 p.m. CT on Sunday.