If you are like many people, you are perhaps puzzled how the government's most significant measure of inflation, the consumer price index (CPI), showed inflation slowing down in April to 0.2% (a pace of 2.4% per year) from 0.3% (a pace of 3.7% per year) in March. What about the price of food and gas? In fact, the most amusing statistic in the report is that according to the Bureau of Labor Statistics (BLS), gas prices fell 2.0% from March to April. In the same time period some saw unleaded gasoline go from $2.19 per gallon to $2.35 per gallon. So what is happening here?
The CPI numbers quoted above, as well as by most of the news media, represent seasonally adjusted (SA) numbers. Economists tend to look at most things through the lens of SA numbers. At certain times of the year, prices are expected to go up for a number of reasons. For example, the price of heating oil typically goes up in the winter as people need the commodity to heat their homes. It is for these reasons that economists typically adjust the month to month changes to try to gauge the main trend.
This is great in theory, but there is a big problem with this: seasonal trends are very hard to define. The seasonality exists alongside major trends from year to year, and the two effects are inherently difficult to separate. There are techniques that can be used to attempt to separate them (like the autoregressive integrated moving average used by the BLS), but each of these techniques do involve statistical error. This is the main reason that, in the real world away from economics textbooks, individual stock analysts and business managers avoid seasonally adjusted numbers if at all possible.
A more stable way of analyzing economic data, and data in general, is looking at year over year percent changes. When companies report quarterly earnings reports they nearly always speak in terms of year over year increases in revenue and earnings, not seasonally adjusted increases from the prior quarter. If you are comparing time period to time period, the seasonality is automatically adjusted for and one gets the true underlying trend of the business. By comparing current the year over year change to that of the prior period, one then can get a better sense of the underlying trend.
Applying this principal to the CPI, one can pull up the full press release from the BLS webpage (www.bls.gov) and look for the raw non-seasonally adjusted (NSA) numbers. For example, the unadjusted numbers for gasoline were up 20.7% from levels a year ago. In contrast, the year over year change in March was 26.0%. The report also indicates that the unadjusted percent change was 5.6% from March to April, which would probably be closer to recent experiences at the pump. So the overall message is that prices in gasoline in April were still going up, but not at as steep a rate as in March.
The most interesting analysis was on the headline CPI number. The stock market rally on the morning of the release was generally attributed by the media to the belief that inflation had been meaningfully reduced, with the annualized rate derived from the SA number down to 2.4%. However, according to the raw NSA data, not only were prices up 0.6% in absolute terms in April versus March, but the year over year growth in inflation was 3.9%. This compares to a 4.0% year over year increase in March. Considering the measurement errors in the statistic, the rate of inflation was essentially unchanged and still high in April.
This is a prime example of how economists' calculations can give a totally distorted view of the world. This is why next time you are looking at important economic numbers, examine the raw NSA numbers and take the SA numbers with a grain of salt.
Tuesday, July 8, 2008
Monday, June 9, 2008
Identity Theft and How to Prevent It
Identity theft has become a major problem in today's electronic cash and Internet shopping world. It seems that whenever banking and online security advances to keep out the baddies they go and improve the types and variety of their scams. Sometimes however it is not the breaching of electronic security but the complacency and misplaced trust of the individual that allows these criminals to get away with your money.
While the loss of the initial money taken from your bank accounts or credit cards is enough of a shock what is often even worse is the ongoing problems you may face long after the actual crime. Things such as your credit history will have a record of unpaid bills or bad credit associated with the theft that can be far harder to overcome and create ongoing problems and stress.
Obviously the best way to combat identity theft or other such scams is prevention. By being vigilant regarding transactions made on your credit cards or bank accounts, and taking the necessary action quickly you can limit your losses if you notice any fraudulent transactions. If you do notice any questionable transactions on your accounts then there are a few steps to take to limit your losses such as:
1) Notify your bank or credit card company's fraud department immediately that there are suspicious transactions on your account. You may be liable for the cost of fraudulent transactions on your account until the time you notify your bank so vigilance is the key, however many credit cards have a $50 maximum liability.
2) If necessary close your accounts and open new ones with completely new passwords etc. Request that the accounts be closed via phone initially and then in person to ensure that your request has been acted upon.
3) Contact the main credit reference agencies (such as Equifax, Transunion and Experian) and place a fraud alert on your file. This will help to prevent further fraud by the criminals who have your information.
4) Report the fraud to the police who will issue you with a crime number. This number is required to make any claims against insurance etc.
5) Contact the Federal Trade Commission (FTC) and report the details of the fraud. This helps the police to keep up with any new methods being used by criminals to commit ID theft and thus helps to stamp it out.
Apart from the steps to take if you are a victim of ID theft there are some simple measures to take to help prevent it in the first place. Simple things such as never carrying your PIN number in your wallet or purse with the card are too often forgotten giving criminals easy access to your cash should you lose your wallet. Also, never ever respond to emails requesting you to log into your bank account from a link within the email that appear to be from your bank. This type of account password harvesting is known as Phishing and catches more people that it should by gaining their account details and then clearing the account of all funds before the owner realizes it.
Identity theft and other types of fraud are all too common and will always be a danger to the electronic banking system we have today. Unfortunately that danger is the price we pay for convenience and ready access to our funds or credit. Despite these risks however if you remain vigilant and take some common sense measures to protect yourself from this type of fraud and also act quickly if you do become a victim then you can limit your losses and sometimes escape relatively unscathed. Prevention and vigilance are the keys to protect yourself from identity theft and fraud so follow these steps and you should be as safe as houses.
While the loss of the initial money taken from your bank accounts or credit cards is enough of a shock what is often even worse is the ongoing problems you may face long after the actual crime. Things such as your credit history will have a record of unpaid bills or bad credit associated with the theft that can be far harder to overcome and create ongoing problems and stress.
Obviously the best way to combat identity theft or other such scams is prevention. By being vigilant regarding transactions made on your credit cards or bank accounts, and taking the necessary action quickly you can limit your losses if you notice any fraudulent transactions. If you do notice any questionable transactions on your accounts then there are a few steps to take to limit your losses such as:
1) Notify your bank or credit card company's fraud department immediately that there are suspicious transactions on your account. You may be liable for the cost of fraudulent transactions on your account until the time you notify your bank so vigilance is the key, however many credit cards have a $50 maximum liability.
2) If necessary close your accounts and open new ones with completely new passwords etc. Request that the accounts be closed via phone initially and then in person to ensure that your request has been acted upon.
3) Contact the main credit reference agencies (such as Equifax, Transunion and Experian) and place a fraud alert on your file. This will help to prevent further fraud by the criminals who have your information.
4) Report the fraud to the police who will issue you with a crime number. This number is required to make any claims against insurance etc.
5) Contact the Federal Trade Commission (FTC) and report the details of the fraud. This helps the police to keep up with any new methods being used by criminals to commit ID theft and thus helps to stamp it out.
Apart from the steps to take if you are a victim of ID theft there are some simple measures to take to help prevent it in the first place. Simple things such as never carrying your PIN number in your wallet or purse with the card are too often forgotten giving criminals easy access to your cash should you lose your wallet. Also, never ever respond to emails requesting you to log into your bank account from a link within the email that appear to be from your bank. This type of account password harvesting is known as Phishing and catches more people that it should by gaining their account details and then clearing the account of all funds before the owner realizes it.
Identity theft and other types of fraud are all too common and will always be a danger to the electronic banking system we have today. Unfortunately that danger is the price we pay for convenience and ready access to our funds or credit. Despite these risks however if you remain vigilant and take some common sense measures to protect yourself from this type of fraud and also act quickly if you do become a victim then you can limit your losses and sometimes escape relatively unscathed. Prevention and vigilance are the keys to protect yourself from identity theft and fraud so follow these steps and you should be as safe as houses.
Wednesday, January 9, 2008
Bad Credit Checking Account: ChexSystems Myths and Facts
If you have made financial mistakes in the past, you may find it difficult or even downright impossible to open a checking account. If you find yourself in this position you may be wondering what you can do about it. After all, it can be very hard these days without a checking account to pay bills with.
Before you can start fixing the problem, it is important to understand what the real issue is. Many people think the problem lies with bad credit, but that is not the whole truth. The mistakes you may have made in the past may have resulted in a bad credit score, but the truth is that banks do not, and cannot, use your credit report when making a decision to allow you an account. Instead they have their own sort of agency that maintains a list of people who have written bad checks, and/or have unpaid fines or fees due to a bank. This company is called ChexSystems and if you have gotten on this list for any reason, you will find it very hard to open a checking account at a major financial institution.
If you are reading this article then you probably find yourself in that position. So then the question is; what can you do to acquire a checking account?
When approaching this problem you essentially have two options.
Option #1 - Work With the Bank
This is the more difficult option but is often worth the extra effort. What you need to do, essentially, is convince the bank to give you an account. This is easier than it sounds. You will need to actually visit the bank and speak with them in person. The goal here is to sell yourself and if you have a good stable job, then that will help. If you can provide direct deposit that can often push things over the edge. If that isn't enough, and you really want to deal with that bank, then you will need to provide some security to the bank. None of this is a guarantee but the lower the risk you are to the bank the better. Ask the bank if they will give you an account if you secure it with a deposit that they hold, or perhaps with a 6-month or 1 year CD.
This is the preferred option in my opinion. The advantage to this option, and why I recommend it, is because it can allow you to be more flexible. By this I mean you can quite possibly open an account at a major local bank rather than being forced into a lesser known, or inconvenient bank.
Option #2 - Non ChexSystems Bank
If option one doesn't work for you then your only other choice is to find a bank that doesn't use ChexSystems. There are banks out there, but you will need to do some research. When you are looking for a bank under this option then it is important to protect yourself. Don't be so focused on finding a bank that you get taken advantage of. Here are a few things to watch out for.
Banks Requiring a Direct Deposit
If you want to do a direct deposit, then that is your choice, but be wary of a bank requiring you to do this in order to open an account.
Extra or Unfair Fees
Sure banks charge fees, but watch out for banks that are charging extra fees just because you are in a bind. Do your research and see what sort of fees are generally charged by local banks in your area, and then when shopping a non-ChexSystems bank don't let them charge you differently.
Before you can start fixing the problem, it is important to understand what the real issue is. Many people think the problem lies with bad credit, but that is not the whole truth. The mistakes you may have made in the past may have resulted in a bad credit score, but the truth is that banks do not, and cannot, use your credit report when making a decision to allow you an account. Instead they have their own sort of agency that maintains a list of people who have written bad checks, and/or have unpaid fines or fees due to a bank. This company is called ChexSystems and if you have gotten on this list for any reason, you will find it very hard to open a checking account at a major financial institution.
If you are reading this article then you probably find yourself in that position. So then the question is; what can you do to acquire a checking account?
When approaching this problem you essentially have two options.
Option #1 - Work With the Bank
This is the more difficult option but is often worth the extra effort. What you need to do, essentially, is convince the bank to give you an account. This is easier than it sounds. You will need to actually visit the bank and speak with them in person. The goal here is to sell yourself and if you have a good stable job, then that will help. If you can provide direct deposit that can often push things over the edge. If that isn't enough, and you really want to deal with that bank, then you will need to provide some security to the bank. None of this is a guarantee but the lower the risk you are to the bank the better. Ask the bank if they will give you an account if you secure it with a deposit that they hold, or perhaps with a 6-month or 1 year CD.
This is the preferred option in my opinion. The advantage to this option, and why I recommend it, is because it can allow you to be more flexible. By this I mean you can quite possibly open an account at a major local bank rather than being forced into a lesser known, or inconvenient bank.
Option #2 - Non ChexSystems Bank
If option one doesn't work for you then your only other choice is to find a bank that doesn't use ChexSystems. There are banks out there, but you will need to do some research. When you are looking for a bank under this option then it is important to protect yourself. Don't be so focused on finding a bank that you get taken advantage of. Here are a few things to watch out for.
Banks Requiring a Direct Deposit
If you want to do a direct deposit, then that is your choice, but be wary of a bank requiring you to do this in order to open an account.
Extra or Unfair Fees
Sure banks charge fees, but watch out for banks that are charging extra fees just because you are in a bind. Do your research and see what sort of fees are generally charged by local banks in your area, and then when shopping a non-ChexSystems bank don't let them charge you differently.
Keep Your Banking Information Safe
It would seem that the computer is becoming a bigger and bigger part of our lives each and every day. There's good reason for that perception... it's true. One specific area that is becoming incredibly popular is online banking. Customers love it because it is very convenient and a great time saver. The banks love it because it automates a great many functions for them and cuts down on their overhead.
The number one concern of anyone that deals with online banking should be security. Putting your personal information over the Internet can be risky, there is no denying that. Fraud and identity theft have become huge problems in the modern age. There are any number of hackers and thieves out there in cyberspace just waiting to prey on innocent people.
Fortunately for us, the financial institutions of the world are very aware of this problem and are working aggressively to combat it. There was a time when a bank's chief security concern was whether they would be robbed or not. I think we've all seen the old movies about Bonnie & Clyde, John Dillinger and the like... to say nothing of the daring train robberies of the wild west. Now banks face a new and much deadlier challenge than ever before, and instead of wearing a mask and using a gun, the bad guys are now invisible and use keyboards.
Identity theft has now become so prevalent that thieves are rifling through garbage to attain any information that they can use to steal from their unsuspecting victims. With this said, there are some simple, common sense approaches that will go along way to securing personal bank information.
1. Do not share your passwords with anyone.
2. Keep important documents locked in a safe or safety deposit box.
3. Shred documents that you no longer need.
4. If you bank online, make sure your bank is using a secure, encrypted site (It's OK to ask what security features they employ).
5. When using an ATM make sure no one can see the codes you enter.
These are a just a few of the things that can be done to keep banking information secure and to avoid possible crimes against you. While many of these suggestions seem to be glaringly obvious, all to many times they are taken for granted or just plain ignored. It is at these times when the criminals are at their best. Individuals that grow careless and complacent are exactly what criminals look for. Don't be counted as one of the careless!
The number one concern of anyone that deals with online banking should be security. Putting your personal information over the Internet can be risky, there is no denying that. Fraud and identity theft have become huge problems in the modern age. There are any number of hackers and thieves out there in cyberspace just waiting to prey on innocent people.
Fortunately for us, the financial institutions of the world are very aware of this problem and are working aggressively to combat it. There was a time when a bank's chief security concern was whether they would be robbed or not. I think we've all seen the old movies about Bonnie & Clyde, John Dillinger and the like... to say nothing of the daring train robberies of the wild west. Now banks face a new and much deadlier challenge than ever before, and instead of wearing a mask and using a gun, the bad guys are now invisible and use keyboards.
Identity theft has now become so prevalent that thieves are rifling through garbage to attain any information that they can use to steal from their unsuspecting victims. With this said, there are some simple, common sense approaches that will go along way to securing personal bank information.
1. Do not share your passwords with anyone.
2. Keep important documents locked in a safe or safety deposit box.
3. Shred documents that you no longer need.
4. If you bank online, make sure your bank is using a secure, encrypted site (It's OK to ask what security features they employ).
5. When using an ATM make sure no one can see the codes you enter.
These are a just a few of the things that can be done to keep banking information secure and to avoid possible crimes against you. While many of these suggestions seem to be glaringly obvious, all to many times they are taken for granted or just plain ignored. It is at these times when the criminals are at their best. Individuals that grow careless and complacent are exactly what criminals look for. Don't be counted as one of the careless!
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