We've Learned Surprisingly Little from the Financial Crisis
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With your money briefing, I'm Charlie Turner in New York for The Wall Street Journal. The recession in 2008 pummeled the nation's economy and caused great financial hardship to millions of people. But what lessons were learned from the financial crisis? Probably less than you might think. J.R. Whelan will have our interview on this topic with Dan Egan of Betterment. First, here are some money headlines. Be ready to pay more to lease your next car. The Wall Street Journal says leasing a new car is getting more expensive as rising interest rates and lower projected resale values prompt automakers to charge more and scale back promotions that had made leasing a popular alternative to owning a car in recent years.
Lease customers returning to dealerships to trade in their vehicles for newer models are finding that bargains available a few years ago have largely disappeared. The higher lease costs come as new car prices are trending higher. Investors are bracing for continued gains in natural gas prices this winter, a development that could pinch U.S. consumers who use the fuel for home heating. A sudden change in weather forecasts has pushed natural gas futures to four-year highs this week. On Wednesday, prices rallied 18 percent to 483 per million British thermal units.
What surprising gap in public knowledge about the 2008 financial crisis does the episode highlight?
The rapid surge has rattled investors and traders as the market goes into the winter heating season with fewer supplies and storage than any other year since 2005. The Wall Street Journal's hurt on the street says that so far there is little evidence that tariffs will ruin Christmas. The Labor Department says inflation picked up last month, but the core inflation, leaving out energy and food prices, remained relatively tame at 2.1 percent year over year. That's a bit of a surprise considering that the U.S. in late September slapped a 10 percent tariff on about $200 billion in Chinese goods, around $70 billion of which are consumer goods. Digging into the inflation report, there are scant signs that those higher costs are getting passed on to consumers.
Apparel is among those products subjected to the tariff, but apparel prices were up just 1 tenth percent in October from September and were down 4 tenths percent from a year earlier. Bicycles are on the tariff list, but prices in the sporting goods category that includes bicycles fell 1.7 percent from the previous month. It may, however, be just a matter of time before tariffs assert themselves in inflation data. Next, J.R.
What current money headlines and consumer impacts are summarized at the start?
Whalen talks with Dan Egan of Betterment about a surprising survey on what was learned from the 2008 financial crisis. This is your Money Briefing from The Wall Street Journal.
It's been 10 years since the recession devastated the U.S. economy, and for many, it left financial scars that have yet to fully heal. But what lessons were learned from the recession? Maybe less than you think. Dan Egan is director of behavioral finance and investments at Betterment, the online financial advisor company, and he joins us to discuss. So, Dan, about 80% of people surveyed regarding the recession say they don't understand what caused the recession. That's a little troubling considering what the impact was. And when you consider it could happen again, and it will be ideal to see it coming next time.
I think there's two elements to it, though, that we need to understand. The 2008 crisis was unusual in that it was both a financial crash but also an economic crash. And we have financial crashes pretty commonly. They come around every sort of 7 to 10 years. And while markets go down and people lose some of their savings, it's a bad thing, they don't actually really hurt the economy that badly. The 2008-2009 financial crisis really rippled through the entire economy as we all delevered, as house prices were worth less. And that's trickled on for years in terms of inflation. people who graduated into weak labor markets and haven't been able to start saving as much, in terms of people who had to actually get out of jobs, and that prevented them from saving for retirement.
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