While 2010 marked the end to a very fascinating decade, the year itself did have its own shares of ups and downs. Looking back at some of the biggest 2010 stories, you’d see the economy and stock market carried over some momentum from last year’s recovery effort, and the recession was declared officially over. On the other hand, unemployment still hovered around 10 percent, the housing market failed to bounce back and Americans are slowly starting to spend again.
There were also major cultural events that didn’t really a direct personal finance impact on 2010, but did take hold of the nation’s attention. You may remember the NBC late night fiasco where Jay Leno and Conan O’Brien tussled over The Tonight Show. There was Avatar, which led to a flood of 3-D movies. The Apple iPad was introduced, and Larry King abdicated his throne on CNN.
Those were all fun things that happened in 2010, but here’s a year in review of the most intriguing story lines that actually affected your household and money this year:
1. Deepwater Horizon Oil Spill
On the surface, the BP oil spill doesn’t seem like it’d affect your finances, but if you really drill (pun) into that logic a little deeper, you’d see the catastrophic damage to the surrounding area really translates to higher costs for taxpayers, consumers and local residents. Aside from the higher gas prices, there is also a wider economic impact. Most people aren’t aware of the many indirect ways the BP oil spill affects their finances.
2. Bush Tax Cuts Extended
There was a lot of hubbub this year about the expiration of the Bush tax cuts in 2010, culminating in an extension through the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 that was recently signed into law by President Barack Obama. The extension was part of a compromise to get an extension of unemployment benefits, too. This is supposed to be a good thing, according to economists, but cutting it so close to the deadline does make you wonder how the Bush tax cuts affected your end-of-year planning.
3. Deficit Spending Continues
If you thought the government was going to slow down it’s stimulus initiatives after heavy investments in 2009, guess again. The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act alone is estimated to cost over $850 billion. In January, the President unveiled a $3.8 trillion budget that was supposed to help the nation reduce its debt. Oh well.
4. Credit Card Laws Took Effect
The CARD Act of 2009 changed the entire credit card industry and its impact on consumers, but most of the credit card laws actually went into effect this year. There was some initial debate on whether or not the new credit card regulations even helped as rates skyrocketed because financial institutions looked for new ways to increase revenue. In fact, credit card rates reached a nine-year high this year.
5. Health Care Reform
Did you forget about this already? Health care reform was a huge topic during the first half of 2010 but has taken a backseat to other more recent issues like unemployment benefits and Bush tax cuts extensions. That doesn’t mean that the fight is over, however. The Congressional Budget Office estimates the the national deficit would be cut by $143 billion over the next decade through these new rules. However, Republicans plan to repeal the so called “Obamacare” and even take the health care fight through 2012.
6. Wall Street Came Back
No, we don’t mean Gordon Gekko. Financial firms are quickly making a comeback after being held largely responsible for the financial meltdown of two years ago. Despite Wall Street reforms sweeping the industry, most firms are still handing out big bonuses this year and pay is expected to increase. At least the U.S. got a piece of the profit pie–the government actually made a profit off the TARP funds and bank bailouts. You have to wonder, though, if the taxpayers are getting a cut of that in any way.
7. Retirement Got a Little Harder
Last year, retirement account savings grew 32 percent, but it looks like that was only so people could cash out their 401(k)s this year. Given that 43 percent of U.S. workers have less than $10,000 in retirement savings, this is not a good sign. On top of that,there was no Social Security cost of living increase for the second consecutive year and actually dipped into the red for the first time in 30 years.
8. Housing Market Still on Clearance Sale
Foreclosures hit a record number this year and the issue was further complicated when a freeze on home repossessions was enforced because of invalid filings. Yet despite all the economic turmoil, most Americans still want a house. If you’re one of those lucky enough to be able to buy a home now, you can take advantage of record low mortgage rates and falling prices. Home values dropped over $1.7 trillion in 2010. Lucky for buyers, housing prices should continue to drop in 2011.
9. Gold Was Golden
Though investors still didn’t trust the stock market, many of them jumped on gold as a flight to safety. That flight led to skyrocketing prices to record highs. Investing in gold became a hotly contested topic as bulls and bears debated over the advantages and disadvantages of the precious metal. But stocks may be making a comeback as investors start looking at the impact of government stimulus efforts on the overall market. As long as there aren’t anymore “Fat-Fingered Traders” or “Flash Crashes” like the one that caused the Dow to plunge 1,000 points in an instant, investors may test the waters again.
10. Economy Continues to Recover
While the economy seemed to stabilize in 2010 and the recession was said to have officially ended, many experts remained skeptical. High unemployment and the threat of a double dip recession lingered on most people’s minds, but an active stock market and growing consumer optimism, 2010 was able to carry over some of the momentum from the 2009 economic growth.
It’s impossible to tell where the next year will take us, but any 2011 predictions have to include some type of economic recovery and bounce back in the housing market and employment rates. One good early indication is that Americans are looking to increase their personal savings and more employers are planning to reinstate 401(k) matches in 2011. Regardless of whether you’re looking to save money or buy a house next year, things are already looking better for your personal finances.
What are your New Year’s resolutions and goals for 2011?
2010 was really hectic esp being in bad debts hop 2011 wil be better,if only i act positive sometimes i wish i could win a lottery
I hope the 2011 review will be much much better.