Today’s POV blog

In a quick review of three key indicators — borrowing, spending, and working — the word for the holidays seems to be “proceed with caution.”

This week the US Federal Reserve unanimously agreed to keep near zero the cost of borrowing money for an extended period.

According to TradingEconomics.com, the United States unemployment rate stands at 9.80 percent. (The labor force is defined as the number of people employed plus the number unemployed but seeking work. The non-labor force includes those who are not looking for work, those who are institutionalized, and those serving in the military.)

In the national employment report compiled by ADP, non-farm private employment was reduced by another 203,000 from September to October 2009. However, October was the seventh consecutive month in which the decline in employment was less than in the previous month.

ADP projects that despite recent indications that overall economic activity is stabilizing, employment, which usually trails overall economic activity, is likely to decline for at least a few more months.

In light of high unemployment rates, Gallup is reporting that Americans are planning to spend about $740 on gifts this year, down from $801 in 2008. 33% today, versus 35% a year ago, say they will spend less, while over half plan to spend about the same amount and 9% will spend more.

Though total sales are expected to be lower this holiday season, U.S. online sales are expected to rise eight percent and reach $44.7 billion. Big-box retailers such as Walmart and Amazon – those able to support discounts – are likely to see the best results.

With a difficult job market, dwindling savings, threatened retirement accounts, and worries over our Social Security system, short-term career advancements for the younger generation and earnings potential are at risk as an entire class of financially vulnerable 60-somethings are staying at work longer to hedge their dwindling bets.

You probably know a YUPPIE (young upwardly mobile professional), and maybe a couple of DINKYs (dual-income, no kids — yet), and perhaps even a SCUPPIE (socially conscious upwardly mobile person), but economic shifts have created a couple new acronyms: TYTR (too young to retire) and the TOTH (too old to be hired) that may be upsetting the delicate balance.

It’s more than just a case of the well trained staying in their jobs longer; there is evidence of change in the entire employment lifecycle.

When cash-strapped companies are looking for jobs to cut, often the younger generation is the first to go. Hired last, they may have the bigger payrolls and at a time when companies need desperately to get the biggest bang for their buck, they hang onto the best-trained, most-skilled workers. When push comes to shove out the door, this means the older workforce.

According to the US Bureau of Labor Statistics the unemployment rate for July 2009 through September 2009, for key age groups are as follows:

• Ages 25 to 34: July 10.0%, August 10.4%, September 10.6%
• Ages 35 to 44:  July 7.9%, August 8.1%, September 8.8%
• Ages 45 to 54: July 7.4%, August 7.7%, September 8.0%
• Ages 55 years and over: July 6.7%, August 6.8%, September 6.8%

Notice the trend: the older the employee, the lower the unemployment rate. Is this supporting evidence? Well, that’s arguable — like most discussions surrounding the unemployment rate.

It’s certain that these are short-term issues and that at some point, the older employee will go back to becoming the eager retiree and the younger employee will again become the up-and-coming executive. The key for all of us is to parlay this point in time to our benefit either through continuing education for the young, or better savings, investments, and planning for the middle-aged.