Financial Reflections

It’s been a wild year.  A 700 billion dollar bailout, a 50 billion dollar Ponzi scheme, the Big 3 auto makers begging and stock indexes dropping like a rock.  I decided to take a look at a how a few key numbers changed over the year to help see just where we are — and how far we’ve fallen:

Unemployment:

November 2007: 4.9%
November 2008: 6.9%
(from http://www.bls.gov - Bureau of Labor Statistics)

I personally know a few people who’ve lost their job in 2008, myself included.  Fortunately I found a new job, but at a sightly lower pay rate than I was making before.  Some other people I know haven’t found a new job yet, and for one it’s been months.

Dow Jones Industrial Average:

January 2, 2008: 13,043.96
December 29, 2008: ~8,483.93
(Source: finance.yahoo.com)

That’s right, “The Dow” lost about 35% of it’s value in a year.  The drop is more dramatic when one realizes that the Dow peaked over 14,000 in October of 2007 and was still over 10,000 as late as September of 2008.  My 401(k) is still in shock.

Federal Reserve rates:

Federal Funds Rate: That “is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight” – in short, that’s the rate banks loan each other money.  With the credit log-jam in place, the Fed thought it would shake things up a bit, but dropping the rate effectively to ZERO, in an attempt to get the money flowing again.  I’m not so sure it’s working

December 11, 2007: 4.25%
December 16, 2008: 0.00%

Discount Rate: “The discount rate is the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank’s lending facility–the discount window.” In other words, that’s the amount the Federal Reserve charges banks fo money it loans to them.  Again, a huge drop, to try and get money flowing withing banks, open up lines of credit and get the economy flowing again.

December 11, 2007: 4.75%
December 16, 2008: 0.50%
(Source: www.federalreserve.gov)

30-year Fixed Mortgage Rate:

Jan 1 2008: ~5.49%
Dec 29 2008: 5.22%
(Source: bankrate.com)

That’s the one thing that hasn’t changed too much, but with lower Fed rates, it just might in 2009.  I’m really glad to be in a fixed-rate mortgage.  Sadly, foreclosures still seem to be going strong.

What’s in store for 2009?  I’d love to say I knew it was going to get better.  Or even that I knew for sure one way or the other, but it seems really hard to think the economy is going to turn around very fast.

Update: I just found these articles on Afternoon Rally.  This is apparently the worst year on the stock market since 1931.  Also home prices havd declined at a record pace.

How was your 2008?  What’s 2009 look like?  Let me know in the comments below.