Mike Ginsberg: A Mixed Bag of Treats for ARM Professionals

Mike Ginsberg

As we turn our focus toward year-end matters, holiday shopping and New Year celebrations, there are 4 important areas to keep an eye on as we forecast 2013 results.

The job market is showing signs of improvement.

The outlook for workers finding jobs is looking better for next year.  Here are some compelling reasons why:

1. The damage from the catastrophic super-storm Sandy that hit the east coast will have to be repaired, meaning construction jobs in the NE region, demand increases in lumber yards, transportation services getting supplies into that region and increases in ancillary industries that support needs in that region.

Speaking of Storm Sandy, most collection professionals felt the negative impact on recoveries that came about by not calling upon debtors into that region.  While that’s the right thing to do, this should subside after the holidays.

2. Home building is improving as values increased nationally in 2012. This means more construction and contractors needed.  Retailers focused on these markets will also need to staff up.

3. More than 250,000 government workers lost their jobs in 2011. This has been reversed in 2012 as some 20,000 government jobs have been filled this year. Continued concerns about the debt and deficit levels at numerous states around the country will keep this improvement slowed but at least not at a negative level.

4. Consumers are starting to spend more. Did anyone dare step into Target on Black Friday? An improved job outlook coupled with a better housing market is having a positive impact on consumer confidence. Many Americans used the past few years to pay down debts and borrowed less because banks were overly cautious lenders. Consumer demand has been built up as a result, which means more spending and more job creation to keep up with the increased demands.

5. Companies that held off hiring in 2012 because of continued fiscal uncertainty are starting to invest back into expansion efforts. This should improve the job market in 2013.

The jobs market is, by no means, out of the woods yet. Millions of Americans have been unemployed for months, making it even harder for them to find jobs suitable to their skills. Employers have added an average of 157,000 jobs a month in 2012 through October, more than any year since 2006 but they need to do much better to combat current unemployment rates. Also, storm Sandy will impact November’s results but, like recasting for one-time expenses when it comes time to sell a business, catastrophic events are not everlasting and the numbers need to be fairly adjusted to reflect accurate results.

I suggest that collection professionals budget for a modest improvement in liquidation results next year.  Of course, this depends in large part upon whether Capitol Hill gets its act together and avoids the double whammy of tax increases and spending cuts known as the “fiscal cliff”.

Elizabeth Warren is tapped for the Senate Banking Committee

Warren may not have been appointed the head position at the CFPB but her impact will be felt by ARM professionals as she will likely be appointed to serve on the Senate Banking Committee. She remains one of the harshest critics of the financial sector, including non-bank financial service providers like debt collection agencies and debt buyers.

Auto Market positioned for growth

We expect to see a spike in auto deficiencies as US auto sales showed dramatic improvement over recent months.  Auto sales increased 15% in November and the annualized rate is now at its highest level in 4 years.  And signs pointed to sustained market growth in 2013 in this market segment.

Student Loans Again in the Spotlight

A bill has emerged that would require employers to withhold student loan payments from employee’s paychecks.  the IRS would manage recovery efforts. US Representative Tom Petri (R-Wis.) stated he may introduce this bill. Speculative? Absolutely! Will this happen? Potentially, but not in the short term. The wheels of change don’t typically turn quickly when it comes to the Federal Government. It is hard to imagine that ED will give up a successful program when you consider the results that third party collectors have realized over the past 30 years after you factor in the compensation paid for services.