An unemployment rate in the double digits isn't surprising, but it arrived earlier than most economists were expecting.

I know this because I put the finishing touches on MONEY’s outlook for the 2010 job market less than a week before last Friday's unemployment report came out — the report announcing that the jobless rate had surged from 9.8% to 10.2% in October. Economists I had been talking to only days earlier hadn't forecast a rate that high. And it wasn't just the people I spoke to who had low-balled the number: In mid-October, the Blue Chip Economic Indicators newsletter, which captures the consensus forecast of more than 48 economists, reported that the jobless rate was expected to peak at 10.1% in the first quarter of 2010. More

I recently wrote a short piece for Money magazine on surprising bills you can haggle over, which included specific negotiating strategies. But one of my sources chided me for not going far enough with the advice on how to lower medical bills with doctors and hospitals. “Medical debt has its own rules and almost no one is expected to pay list prices,” says Andrew Cohen of the Access Project, a national health-care research and advocacy group. “People have every right to negotiate medical bills, whether they have insurance or not. But negotiating is just one step.”

With the ranks of uninsured and underinsured rising and health costs fast outpacing inflation, I thought it was worthwhile to go deeper into advice on how to lower your medical costs upfront. More

The pace of job losses has been slowing since the spring, a sign that a rebound for the job market may be underway.  We’ll get another read on the state of the jobs market Friday when the Department of Labor releases its latest unemployment report.  The report is expected to show that U.S. employers cut about 230,000 jobs in August, the smallest decline in a year, according to a Bloomberg News survey.

But even as job losses abate, the prospects for people who are still employed and hoping to get a decent raise remains dim. According to a report released by the Conference Board on Tuesday, the median pay raise for salaried workers this year is 2.5%, down from the original 3.5% employers forecast before the recession hit and 2.7% in 2008. In 2010, budgets for salary increases are expected to increase by just 3%, the smallest projected rise in 25 years. The Conference Board expects inflation to increase by 2% in 2010, leaving workers with an effective 1% bump in pay next year.

It’s no wonder that two-thirds of American workers say they are unhappy with their compensation, blaming pay cuts, lack of bonuses or stagnant salaries, according to the latest Adecco USA Workplace Insights survey coming out Wednesday.

You probably feel like griping too, but this isn’t the time to be a sour puss at work. With such small budgets for pay raises, companies are scrambling to figure out how to divvy up dwindling compensation dollars. Your boss is likely using her scarce salary resources to prevent high performing employees from becoming disengaged or leaving as soon as a better opportunity opens up.  How you can you be a standout performer when times are still tough? Here’s an article I did earlier this  year on that subject and one from the Wall Street Journal on how to get a raise at work during difficult times.

Have you gotten a raise this year? Do you expect to get one next year? Does the prospect getting no raise or a small one affect your performance at work?

- Donna Rosato

The first phase of a new law cracking down on the credit card industry went into effect last week.  Card issuers must now give consumers more notice when card terms are changed and an option to reject interest rate increases.

By next February, the most substantive changes in the new law will be in place, including banning card companies from raising interest rates on existing balances unless the borrower is more than 60 days late.

But there’s another key date to mark on your calendar:  May 22, 2010.

That’s when you'll see results of a study on an especially creepy practice by credit card companies, commissioned by a little noticed provision in the legislation. Credit card companies collect data on consumer spending from the millions of card transactions processed every day. Some of them analyze this data and use it to determine how credit-worthy you are.

The card companies believe that sudden changes in spending behavior and certain purchases may signal that you’re headed for financial distress. So, they use spending information to determine whether to make changes to the terms of your card, such as raising your interest rate or reducing your credit limit. What's unknown right now is what kind of spending can trigger changes, and how big of a factor it plays in determining who is a credit risk. But according to CreditCards.com, sudden cash advances, using your card at a second-hand clothing store, gambling at a casino or for bail bond services are the kind of spending that can raise a red flag. 

Of course, the card companies use the information for other purposes too, including marketing other bank products to you and to detect fraudulent activity on your card.

A fascinating piece by Charles Duhigg in the New York Times Magazine last year revealed that card issuers also use information on your spending patterns to customize communications strategies and develop psychological approaches to get card holders to cough up payments when they fall behind.

Thanks to the study mandated by the new credit card law, we’ll get a better idea about which companies engage in so-called psychographic behavior analysis and how they use that information. The Federal Reserve, the Federal Trade Commission and other banking regulators must deliver their report to Congress detailing whether credit card issuers engaged in this practice between May 2006 and May 2009 and whether that tracking negatively affected minority and low-income card users. Based on those findings, the Fed will also make recommendations on changes to existing credit card rules or laws to curb card company practices they deem harmful to consumers.

Of course, card issues may decide to halt the practice while they know they're being studied, at least while regulators are collecting the data. And it’ll take another law to eliminate the practice altogether.

Do you think it’s ok for credit card companies to track your spending patterns to look for risky behavior? Or does this all smack of too much Big Brother to you?

- Donna Rosato

Finally, some happy news for credit card holders. Late last week, Bank of America announced it will no longer require customers who sign up for their credit cards, bank accounts and certain loans to give away their right to sue in a dispute.

Bank of America’s decision is the biggest yet in a growing movement away from mandatory arbitration clauses, which force consumers who have a problem with a service provider into private arbitration forums to settle disputes. These forced arbitration clauses have become ubiquitous in consumer contracts, from cell phones and credit cards to nursing home agreements and employment contracts. Consumers have a lousy track record of winning in these private arbitration forums.

BofA’s change follows news in July that the National Arbitration Forum is halting hearing mandatory consumer arbitration cases (thanks to a lawsuit it settled with the Minnesota Attorney General that the NAF hid its ties to the debt-collection industry). The American Arbitration Association also announced it will halt debt collection arbitration cases until it overhauls its guidelines. In July, JP Morgan Chase also said it would no longer submit consumer disputes regarding credit cards to arbitration. According to USA Today, other credit card issuers, including American Express, are weighing similar moves.

While consumer advocates say the changes are a victory for credit card users, it doesn’t help customers of thousands of other banks, cell phone companies, and other service providers who are still forcing people into private arbitration to settle disputes. Still, the moves should give a boost to a bill pending in Congress called the Fairness Arbitration Act, which would eliminate mandatory arbitration clauses in most consumer contracts. This is an issue on the president's radar screen, too: In June, Obama called for an end to forced consumer arbitration as part of his financial market reforms.

Tell us: Have you ever had a dispute with a service provider that went to arbitration? How did you fare?

The employment picture is improving. Housing demand is rising. The stock market is rallying and the Dow is up nearly 50% since March. Newsweek even declared the recession over in a recent cover story. So, maybe it isn't a surprise that consumers appear to be returning to their free-spending ways even before the Great Recession is officially declared kaput. According to the Commerce Department’s latest reports, Americans’ personal savings rate (as a percentage of disposable income) fell to 4.6% in June, compared with 6.2% in May. And the May savings rate was revised lower from 6.9% originally.

Of course, you can’t make too much of one month’s data. And we're still saving more than we did before the economic crisis hit. But if the economy continues improving, it will test the staying power of our new-found frugal money values. Have Americans have really become a nation of savers? Or were we only motivated to be thrifty when we thought we were facing another Great Depression?

To get a sense of what's happening, look at why the savings rate dropped off in recent months. One reason the savings rate dropped in June is that federal stimulus checks arrived in May. That likely goosed the savings rate in May and made the comparison with June unfavorable.  Meanwhile, personal spending rose slightly more than expected.  The cash for clunkers program likely will give consumer spending a boost again when July numbers are reported. It’s too early to tell if these are long term trends at play. But, in the short term, if American consumers continue to spend more, that could give the nascent economic recovery the kind of monetary boost it needs to gain steam. More troubling (if you think Americans need to be saving more and not spending so much) is that personal incomes also fell sharply in June for the fourth straight month. Wage and salary cuts simply make it hard to sock away money, no matter how motivated you might be.

Tell us what you're doing.  Are you still saving more money than you did before the recession? Has the improvement in the economy made you feel more confident about spending more and saving less? Or has your savings rate fallen for reasons beyond your control?

Maybe you’re just glad you’ve got a job. But if you’re wondering about the chances you’ll get a raise this year too, a new survey out Tuesday may shed some light.

WorldatWork, an association of HR executives, published its first-ever list of the top metro areas for getting a raise in 2009.  The survey ranked metro areas on both the size of raises (which are pretty meager across the board) and the percentage of employers giving raises. It also considered the percentage of employees being awarded raises in 2009.  The Washington, DC metro area came in number one, with an average raise of 2.3% and 77% of area employers giving raises.  The raises are based on the average pay increase for middle performers, so if you’re a top performer, you may be able to negotiate a bigger bump up if you're feeling bold enough to ask.

This map shows that, like jobs, the robustness of raises can be local too. While the overall unemployment rate is 9.7%, there are 216 metro areas where the local jobless rate is lower and nine metro areas where the unemployment rate is below 5%, giving local workers there more leverage when it comes to wages. Of course, whether you get a raise also depends on what kind of work you do and what industry you’re in, as well as your performance. But knowing what most employers are planning in your area may bolster your case for an increase in your pay this year.

The pay increase survey was part of WorldatWork's mid-year update of its annual salary budget projections, with more than 2600 respondents representing 16 million U.S. employees.  What's happening at your company? Do you think you'll get a raise this year? If so, how much are you expecting? Let us know. And look for the next read on the jobless picture this Friday, when the Bureau of Labor Statistics reports July unemployment numbers.

When the Obama administration proposed a new government agency solely devoted to protecting consumers who buy financial products, government officials knew they’d be facing opposition from Wall Street, banks and the financial services industry. But who knew that some of their most vocal opponents would come from the government itself?

That opposition became crystal clear when Federal Reserve Chairman Ben Bernanke, Federal Deposit Insurance Corporation Chief Sheila Bair and several other regulators showed up on Capitol Hill last Friday. Testifying before the House Financial Services Committee, they seemed more interested in protecting the powers of their own agencies than in making changes to the financial system.

First up at Friday's hearings, Treasury Secretary Tim Geithner reiterated the need for a Consumer Financial Protection Agency, saying the economic crisis shows that the current financial system “failed in its most basic responsibility” to supply credit and protect consumers. "I think it's very hard to look at that system and say that it did anything close to an adequate job of what it was designed to do," Geithner told the committee. Hard to disagree with that assessment, considering the record number of home foreclosures, bad mortgage loans and rising credit card defaults in the past year.

The proposed CFPA would take over consumer protection powers currently spread throughout several government agencies, including the Fed, the FDIC, the Office of Thrift Supervision and the Office of the Comptroller of the Currency. That doesn't sit too well with the chiefs in charge of those organizations. Following Geithner’s testimony, Bernanke said consumer protection responsibilities should stay with the central bank, arguing that the Fed’s bank supervisory powers go hand in hand with consumer protection. John Bowman, acting director of the OTS, and John Dugan, head of the OCC, both said enforcement of consumer protection should remain within their agencies. While FDIC chair Sheila Bair endorsed the creation of the CFPA and said that the CFPA should be able to write new enforcement rules, Bair said that federal banking regulators such as the FDIC should retain authority to supervise insured institutions.

Geithner's response: "With great respect to the Chairman and other supervisors who are reluctant to do this, they are doing what they should, which is defend the traditional prerogatives of their agencies. I think frankly all arguments should be viewed through that prism."

It’s been a tough going for the CFPA this summer. House Financial Services Committee Chairman Barney Frank (D-Mass.) delayed plans to mark up the bill  to create the new agency until after Congress returns from its summer recess in September. Frank said he believes the CFPA bill has enough support to win approval but agreed to slow down to give the opposition a chance to weigh in. Meanwhile, Republicans have proposed an alternative that would strip the Fed of its regulatory role and abolish the OCC and the OTS. In their place would be a single regulator for depository institutions, which would include an office focused on consumer protections. Unlike the administration's plan, the GOP-envisioned regulator would have no authority over nonbank institutions, such as mortgage brokers.

All this has moved the CFPA off the fast-track that Barney Frank talked about just a few weeks ago and gives industry lobbyists more time to work on defeating the proposal for a consumer financial watchdog.

This is a critical time for the Obama Administration’s proposed Consumer Financial Protection Agency, a centerpiece of its financial market reforms.

The CFPA, officially proposed in June, is under fierce attack by the financial services industry, the U.S. Chamber of Commerce and a growing number of business groups. Those forces scored a few points Tuesday when House Financial Services Committee chairman Barney Frank announced that his committee is delaying consideration of the CFPA until September. Frank originally aimed to have the committee approve the legislation by early August.

Though some lobbyists proclaim to be backing the administration’s plans for financial reform, they’re adamantly against an agency that will have consumer financial interests as its sole focus. Steve Bartlett, head of the Financial Services Roundtable, told The New York Times that his group has a dual goal: to support comprehensive reform and to kill the CFPA.

The need for the CFPA also took a hit from Federal Reserve chief Ben Bernanke, who weighed in testifying before the Senate Banking Committee Wednesday, arguing that the Fed should keep its consumer protection powers instead of transferring them to the CFPA. Bernanke also suggested that Congress beef up the Fed's consumer protection role.

Consumer groups are fighting back and recruiting their own allies from the financial services world to support the CFPA. On Wednesday, Rep. Frank joined Americans for Financial Reform for a press conference on Capitol Hill to make the economic case for the new agency. Bennett Freeman, an executive at Calvert Investments, and Tim Duncan, founder of Story Street Wealth Management, were on hand to support the call for the CFPA.

Meanwhile, Elizabeth Warren, who originated the idea for a consumer financial product safety commission two years ago and is expected to become its chief — if and when the agency is created — posted a YouTube video Monday to bring her case for the CFPA directly to the public. She also testified before Congress on the need for the agency earlier this month. And on Monday, Warren published an article in Baseline Scenario debunking three myths about the proposed agency.

Where do you stand on the need for a consumer financial watchdog? Do you think the Obama administration is doing enough to make sure its proposed CFPA becomes a reality? Or is it a misguided effort?

Exactly what will Obama’s financial-industry consumer guardian police? The answer became clearer last week when the administration sent Congress a proposed law detailing its vision for the Consumer Financial Protection Agency.

Obama's plan for establishing the CFPA contains a few surprises regarding its authority. While the Securities and Exchange Commission will continue regulating investment products, the administration says the CFPA will oversee “financial products and services." That’s a pretty broad term, and when the agency proposal was first unveiled in mid-June, most observers took that to mean mortgages and credit cards, the two financial products that have caused the most trouble for consumers and the banking system in the past few years.

But the new 152-page blueprint lays out exactly what the Treasury considers a financial product or service, and it goes well beyond home loans and credit cards.  According to the proposal, the CFPA will oversee any financial activity that comes in connection with extending credit or servicing loans, which includes everything from overdraft protection on bank deposit accounts to stored-value cards.

But most noteworthy, say consumer advocates, is the inclusion of some notoriously overpriced insurance products associated with loans: credit insurance, mortgage payment insurance and title insurance. (Property and casualty insurance are explicitly excluded from the CFPA’s jurisdiction). “There are some serious signs of abuse in the sale of these insurance products, which have low loss ratios, high profit margins and big markups,” says Travis Plunkett, legislative director for the Consumer Federation of America, who testified before the House Financial Services Committee two weeks ago and urged Congress to include loan insurance products under the CFPA.

Credit insurance is sold with a variety of loan products, promising to cover your loan payments if you get laid off or become disabled. Similarly, mortgage payment insurance is designed to cover your home loan payments if you become disabled or die. But premiums for these products are expensive, and you’re typically already covered if you’ve got life or disability insurance.

Unlike credit or mortgage payment insurance, title insurance isn’t optional, and it protects the lender (not you) from any losses associated with ownership issues connected to title on your property. (Note that mortgage payment insurance isn't the same thing as private mortgage insurance, which lenders typically require when a down payment is less than 20%, and which protects lenders in the event of a mortgage default.) Title insurance prices vary widely, and while consumers are free to shop around, most rely on recommendations from real estate agents and lawyers, whose firms frequently get a cut of the premiums. Read this piece from my colleague Stephen Gandel about overpriced title insurance.

The bottom line: Insurance is complicated, and while there are many good reasons to buy insurance — for your health, your life, if you’ve got dependents, or your car — the addition of these insurance products to the CFPA will make it easier to determine which policies you can live without.

For an elderly person with few assets, a reverse mortgage can be a lifesaver: It enables cash-poor retirees to tap equity in their house for living expenses, home repairs or health care needs. If you’re 62 or older, reverse mortgages allow you to borrow against the value of your home and not repay the loan until you sell the house, move out or die. If the amount owed is more than the value of the house, the lender eats the difference. If it's less, you (or your heirs) keep what's left over after paying off the loan. In the meantime, the loan provides income, which you can take as a lump sum, monthly payout or line of credit drawn on as needed.

But make no mistake: Reverse mortgages, which come with high fees and hefty interest charges, are a costly option and often sold by aggressive salespeople who push inappropriate financial products on vulnerable seniors. That’s why Senator Claire McCaskill (D-Mo.) held hearings Monday in St. Louis on reverse mortgages. A year and a half ago, Sen. McCaskill began investigating problems associated with reverse mortgages, including predatory lending, aggressive marketing and the potential risks to the federal government — which insures 90% of reverse mortgage loans. Comptroller of the Currency John Dugan earlier this month said reverse mortgages bear a striking similarity to the risky sub-prime mortgages that got so many Americans in financial hot water. The Federal Housing Administration estimates it may lose $800 million from insuring these loans in the next fiscal year.

Yet the number of people getting reverse mortgages keeps rising. Even as home values are falling (leaving seniors with less equity to tap), more than 112,000 reverse mortgage loans were made in 2008, up from about 22,000 in 2003, according to the National Reverse Mortgage Lenders Association. Monthly reverse mortgage loan volume is setting records too, with nearly 9,000 reverse mortgages made in May.

My colleague Walter Updegrave wrote about the problems with reverse mortgages last year, spelling out how greedy salespeople not only persuade seniors to take out high-commission reverse mortgages, but also convince them to spend the proceeds on high-priced financial products such annuities, boosting their commissions even more.

Retiree advocates at AARP say that predatory lenders are also attempting to get seniors to use proceeds of their reverse mortgage to buy expensive long-term-care insurance. But in most cases, it makes more sense for seniors to use the payout for actual long-term care, not a hard-to-use insurance policy.

If you are considering taking out a reverse mortgage or have a parent or family member who is, don’t fall for a pitch from a salesman who cares more about a lucrative commission than determining whether a reverse mortgage makes sense for you. To learn more about reverse mortgages, check out resources at AARP and HUD.

Do you know anyone who is considering a reverse mortgage or has had a negative experience taking out a reverse mortgage? Tell us about that experience.

Whether or not the 401(k) is the nation's best-designed retirement savings vehicle, for most people, it’s the only retirement plan they’ve got. Unfortunately, the most compelling feature about the 401(k) — the matching contribution from your employer — is disappearing fast. To save money, one-quarter of U.S. employers have eliminated matching contributions to employee 401(k) retirement plans since September, according to a recent survey of senior finance and HR executives by CFO Research Services and Charles Schwab.

Just how much does a company save by eliminating that benefit? Hewitt Associates ran the numbers in an April survey. For a company doing the typical match (50 cents for every dollar an employee contributes up to 6% of pay), the cost savings is about $1500 per worker.  That can add up to a lot — anywhere from $2 million for a small company to $25 million for a large firm, Hewitt says.

This isn’t a new play. In past downturns, companies have been quick to cut their 401(k) matching contribution and have later restored the benefit when the economy improves. But that move takes a big toll on workers’ bottom lines at a time when they can least afford to take another hit to their retirement savings. Even a short-term halt in that contribution can have a long-lasting negative effect on your retirement savings. That’s because once the match is suspended, many employees reduce their own 401(k) contributions or even stop contributing to their plan entirely. As a result, employees' retirement savings shrink by thousands of dollars. For example, younger workers earning $50,000 a year who contribute 6% of their salary will have $16,000 less for retirement than what they would have had if their employer hadn't suspended their match for one year. That loss jumps to $48,000 if employees stops contributing during that year as well. While they may eventually start saving in their 401(k) again, Hewitt finds even a hiatus in savings of just a few years can deplete retirement savings by hundreds of thousands of dollars. For example, a younger worker earning $50,000 a year who stops contributing 6% of his or her salary for five years can have up to $150,000 less for retirement.

Clearly, just because your employer no longer kicks in to your retirement plan doesn’t mean you should stop too. Remember, your 401(k) is still a pretty good deal even without a company match. You get a big tax advantage by putting pre-tax dollars away for retirement, which lowers your current taxable income. And you don’t pay taxes on the gains in your plan until you begin withdrawing the money at retirement, which effectively gives you a higher after-tax rate of return than if you were in a taxable investment account. Sure, you can get similar tax advantages with a Roth or deductible IRA but you can only sock away $5,000 a year with those. With a 401(k), you can save up to $16,500 pre-tax in 2009. You can’t discount the convenience of having your retirement investments taken directly out of your paycheck either.

As for your employer, Hewitt suggests some other actions for companies to take to cut costs before slashing their company matches, including shopping around for funds with the lowest expenses and getting rid of costly printed materials which duplicate information found on company  websites. For a thoughtful take on how 401(k) plans can be improved, read this piece by my colleague Penelope Wang.

There’s no doubt that Treasury Secretary Tim Geithner is a busy man these days. But he’s not too busy to get his own coffee.

Tim buys joe.

At 8:30 a.m. Monday — a half hour before he was scheduled to speak at the Time Warner Economic Summit — Geithner pulled up in a dark blue SUV around the corner from the Time Warner Center in midtown Manhattan. From inside a Starbucks across the way, I watched Geithner pop out of the back seat and walk briskly across 60th Street into the Starbucks, followed by two men (presumably his security detail). The line was at least ten people deep. But Geithner stood by himself in the queue with everyone else and focused on his BlackBerry until it was his turn to order and pay. If anyone recognized the Treasury Secretary, they didn’t make a fuss.

I wasn’t nosy enough to find out what Geithner likes for his morning caffeine fix, but when he showed up to be interviewed by Time magazine’s managing editor, Richard Stengel, Geithner was still clutching his cup o’ joe. The caffeine must have helped Geithner stay sharp as Stengel tried to get him to reveal details of the financial market reorganization plan that President Obama is unveiling on Wednesday. Saying he didn’t want to pre-empt the President’s speech on Wednesday or his own testimony before Congress on Thursday, Geithner wouldn’t discuss any details of the proposed changes, even though reports are already leaking out about reforms the administration would like to make.

But Geithner did say that the reorganization will focus on the core issues that lead to the financial markets meltdown, namely lack of oversight and basic gaps in consumer protections. When Stengel asked how the changes might better protect consumers, Geithner likened the financial market changes to the kind of reforms we saw a few weeks ago when Congress passed a major credit card bill eliminating some of the most egregious practices of card issuers. “Consumer credit was the focus of lots of bad practices — not just poor underwriting and poor disclosure but a fair amount of predatory behavior," said Geithner, "and we want to change that.”  Whether or not you believe that Geithner and the Obama administration's plans will really help consumers, it's heartening to hear it from a Treasury chief down-to-earth enough to get his own coffee.

- Donna Rosato

Supreme Court nominee Sonia Sotomayor

When you’re nominated to the Supreme Court, your life becomes an open book, and details of every public move or transaction you’ve made are scrutinized, including the state of your personal finances. Last week, Supreme Court nominee Sonia Sotomayor submitted a 172-page document (with another 129 pages of supporting information) in response to a Senate Judiciary Committee questionnaire. Two pages contained details on Sotomayor’s financial holdings and net worth.

It’s a modest accounting. Though she earns nearly $200,000 a year as a federal judge and from teaching, after 17 years on the federal bench, Sotomayor has just $32,000 in savings, nearly $16,000 in credit card debt and another $15,000 in outstanding dental bills. Most of Sotomayor’s net worth is in real estate. Her apartment in Greenwich Village is worth $997,500 (with a $381,775 mortgage) and she owns one-third of a condo with an estimated $20,000 value. She also lists $108,000 worth of autos and other personal property, leaving her with a net worth of about $740,000. There is no mention of other savings or investments, so it doesn’t appear that Sotomayor has much saved for retirement.

So, where is all her money going? She’s divorced and has no children, but according to the White House, Sotomayor has been generous with her income, helping her 82-year old mother as well as family and friends financially. Federal judges do have one advantage over most working stiffs, which may have allowed Sotomayor to be more generous with her money and not worry about saving: Once appointed, federal judges are like tenured professors and can continue working as a judge at full salary as long as they want. When Sotomayor does retire, she can count on a generous federal pension based on her salary and years of service.

Sotomayor doesn’t have overwhelming debt, and perhaps she purposely stayed away from investing in securities to avoid financial conflicts in her position as a judge.  Still, it does raise the question of whether she should have more saved. Harvard economics professor Gregory Mankiw says his “grandmother would have been shocked and appalled to see someone who makes so much save so little.” Mankiw, who has written about consumers as “savers” or “spenders”, said Sotomayor is firmly in the spender category after reading Sotomayor’s financial disclosure report for 2007, which showed that Sotomayor’s main financial holdings were a Citibank savings and checking account with less than $115,000.

What do you think Sotomayor’s personal finances say about her? Do you think someone with a decent six-figure salary should be saving more? Do you ever help out family and friends instead of saving more for your own retirement? Tells us what you think.

- Donna Rosato

The big economic news this week is the May unemployment report, which comes out Friday morning and is expected to show that the jobless rate topped 9% for the first time in a quarter century. Bad news indeed but employment is a lagging indicator of how the economy is doing and even as the unemployment rate climbs toward double digits, the pace of job losses is slowing markedly.

For a better sense of what lies in our economic future, check out two other economic reports and an employment survey of large companies out Monday.  These paint a more telling and sobering picture of the future as it affects you and me.  First, there’s the news that frugality continues to reign. In April, consumers once again cut back spending, with consumer expenditures down 0.1%.  That’s the second straight month that consumer spending dropped after a burst of buying in January and February as shoppers took advantage of deeply discounted goods. Meanwhile, personal income was up 0.5% in April but that was largely due to tax cuts and stimulus payments from the government. Which is why it’s no surprise that Americans’ personal saving rate soared to 5.7% in April, the highest level since 1995, according to the Commerce Department.  People are worried about losing their jobs, so they’re socking away more money.

All that’s well and good – people are spending less and saving more.  But even if you don’t lose your job and the economy continues to improve (which the stock market certainly seems to be anticipating after hitting its highest point since January today), a more worrisome trend is what’s happening with wages.  Wages and salaries remain flat and for many people, lower. That’s because in this recession, companies not only are cutting staff, they’re slashing salaries too. According to a survey by outplacement (that’s a nicer word for companies that specialize in helping people who have been laid off find jobs) consultants Challenger Gray & Christmas, more than half of human resource executives surveyed in May said their companies instituted salary cuts or freezes to cut costs, up from 27% in January. While salary cuts and furloughs are preferable to outright job cuts, the trend has major implications for what kind of economic recovery we can expect.  If people who hang onto their jobs or get laid off and get a new one can’t count on their earnings growing, they’re going to keep being thrifty. And without a real rebound in consumer spending, it’s unlikely we’ll have a strong economic recovery. Have you had your salary cut? Or been furloughed? Have you cut back your spending? Tell us what’s happening with you.

- Donna Rosato