ECONOMY
Who
is considered unemployed and how do the statistics relate to the economy?
T
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he number of unemployed people has
increased by 7.2 million to 14.7 million since the recession started in
December 2007, according to the Department of Labor. The unemployment rate for
the same period has risen by 4.6 percentage points to 9.5 percent – the
highest in more than 25 years.
Job loss or the
unemployment rate is measured by the Department of Labor using monthly surveys
conducted by the Census Bureau and/or the Bureau of Labor Statistics. The term
Òunemployed,Ó however, does not apply to everyone who does not have a job.
The Labor
Department only considers people unemployed if they do not have jobs but have
engaged in at least one active job search activity four weeks prior to the
survey and are available for work. The operative word is active. Actively
looking for a job includes contacting potential employers, employment agencies,
friends or relatives to find work.
People who
passively look for work, e.g., attending job training programs, reading posted
job openings without taking action or other activities not likely to result in
any job offers, are not considered by the Labor Department as unemployed.
Workers
expecting to be recalled from temporary layoff are counted as unemployed,
whether or not they have actively searched for any jobs. It also includes
people have quit their jobs to look for other employment, workers whose
temporary jobs have ended, people looking for their first jobs and experienced
workers looking for jobs after exiting the labor force.
The unemployment
rate is one of the important economic indicators. The loss of jobs threatens to
undermine consumer spending and represents a downside risk to the economy.
Mounting unemployment is one of the reasons rebounds the economy is likely to
be drawn out.
However, the
rate of unemployment lags behind other economic indicators. Unemployment rises
during recessions but often reaches it peak months after a recession has ended.
In the last two recoveries, the peak unemployment rate occurred about a year
and a half after the recession ended.
But there is
some good news though. Although the unemployment rate is expected to climb to
10 or 11 percent in the next few months it appears to be slowing down. In June,
the unemployment rates for the major worker groups remained stable. The number
of people who lost their jobs and those who completed temporary jobs (9.6
million) remained basically the same last month after increasing by an average
of 615,000 per month during the first five months of 2009.
TAX AND LEGAL
Tax
deductions available for car purchases
roof that a recession is not all
bad, at least for consumers shopping for a car, are new tax breaks of up to
thousands of dollars each included in the $789 billion economic stimulus
package to encourage people to buy new cars. All three incentives can be used
together for even bigger savings.
The stimulus
allows a tax deduction for the local and state sales taxes due on a brand-new
car purchased between Feb. 17 and Dec. 31, 2009. The tax credit is limited to
the fees or taxes paid on up to $49,500 of the purchase price of a qualified
new car, light truck, motor home or motorcycle. Purchases made in states
without sales tax can also qualify for the deduction through other fees or
taxes imposed by the state or local government.
The special
deduction is available regardless of whether taxpayers itemize deductions and
can be claimed only on 2009 tax returns next year. The amount of the deduction
is phased out for taxpayers whose modified adjusted gross income is between
$125,000 and $135,000 for individuals and between $250,000 and $260,000 for
couples who file jointly.
A tax credit of
up to $7,500 is provided for the purchase of a qualified hybrid or alternative
fuel vehicle. The exact amount of tax credit depends on the model of the car
and how much fuel it saves. This tax credit would start to decrease once the
manufacturer has sold 60,000 or more qualified hybrid cars. Some models no
longer qualify because of this provision.
The tax credits
can be used in conjunction with CARS (Car Allowance Rebate System) or Cash for
Clunkers, which is now in effect. This is a program designed to encourage
people to buy fuel-efficient cars from July 1 to Nov. 1, 2009. It provides a
discount voucher of $3,500 or $4,500 to replace old, inefficient automobiles.
But the program may end as soon as the $1 billion allotted for it runs out.
Unless Congress decides to extend it, the program will cover only the first
250,000 people who use it.
HEALTH AND WELL-BEING
Travel
insurance – can you leave
home without it?
S
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o you finally decided to take that
trip to the exotic place youÕve always wanted to visit. YouÕre all packed and
ready to go. You have your travel documents, your prescription meds and your
shots. Have you forgotten anything? While only about 30 percent of Americans
purchase travel insurance, according to the U.S. Travel Insurance Association,
savvy travelers consider it essential.
Different types
of travel insurance cover everything from canceled flights to lost luggage,
from stolen passports, wallets and golf equipment to natural or man-made
disasters. Depending on your situation and your destination, you may not need
all types of travel insurance every time you leave home.
Travel health
insurance is one of the most important items to consider when going abroad.
Knowing your current coverage is the first step when deciding whether you need
to purchase travel health insurance. Having health insurance does not
automatically rule out the need for travel health insurance.
Medicare and
Medicaid programs do not provide coverage for hospital or medical costs outside
the U.S. The coverage of a private policy may not extend outside the
country either. In fact, some policies will not cover you if youÕre on a
foreign-flagged vessel even if youÕre cruising in U.S. waters. If your
insurance policy does not cover you when you travel abroad, it is a good idea
to consider purchasing a short-term policy to protect yourself in case of
emergency.
Getting medical
treatment and hospital care abroad can be expensive, according to the State
Department. Many hospitals and medical facilities may not admit you if you do
not have insurance coverage or proof of available funds to pay for your care.
While most foreign hospitals will admit you, they wonÕt let you leave until you
have paid your bill. Travel insurance can help facilitate payment.
If youÕre in a
country that cannot provide the medical care you need, it may be necessary to
transfer elsewhere or even return to the U.S. Without the right travel
insurance, a medical evacuation could set you back more than $50,000.
Travel health
insurance is particularly valuable when visiting countries where you could get
sick from eating unusual foods or accidentally drinking contaminated water. If
your vacation plans include hiking, skiing, surfing or other similar
activities, travel insurance can protect you in case of accidents.
If you need
travel health insurance, make sure to research the benefits and read the fine
print. Policies may have different definitions for the same terms, standards on
length of coverage, medical exemptions, deductibles, copayment rules, refund
policies and premium costs for medical services abroad.