All eyes and ears have been fixed on the economy for quite some time now. Many think that Barack Obama will turn things right around as soon as he takes office. However, even he is not so sure. But, despite the economic signs of 2008, 2009 is expected to be a much better year. Here’s why.

Decreasing Oil Prices

Do you remember when oil hit $147 per barrel? It wasn’t that long ago. Currently, oil is only about $45 per barrel. Global demand for oil has dropped significantly. Gas prices are currently $1.61 per gallon around the country. Some experts think that the price of a gallon of fuel will soon drop to only $1 per gallon. Oil prices weren’t nearly this low at the beginning of 2008. It is a great sign that gas prices have dropped so significantly.

Mortgage Rates

Mortgage rates are falling as fast, if not faster, than energy prices. The Federal Reserve has pledged to purchase millions of dollars in mortgage securities. Thus, mortgage rates continue to fall. The average rate for a new mortgage loan is now only 5.26%. Economic prosperity is in the forecast for 2009 thanks to falling mortgage rates.

The Federal Reserve

The Federal Reserve has been working tirelessly to get this country’s finances back on track. The Federal Reserve has pledged to do anything to “strengthen the economy.” Short term interest rates have already been pushed close to 0%. The actions of the Federal Reserve have gone a long way in preserving and restoring the United States’ economic situation.

Barack Obama’s Stimulus Plan

The Obama administration plans on spending between $750 billion and $1 trillion over the course of the next two years. Most of this money will be spent on rebuilding American infrastructure. This would include everything from green technology to transportation and beyond. Millions of jobs will also be created. Barack Obama’s revised stimulus package is credited with helping to get the economy back on track.

Deep Fundamentals

America is still considered to be a leader when it comes to fundamental strength. Innovation, a flexible labor market and higher education are ranked among the highest of America’s strengths.

When it comes down to it, America is in better shape than everyone thinks. We are certainly doing better than we were back in the 70′s. America has overcome many challenges in 2008 and is expected to do so again in 2009.

On Thursday, the Federal Reserve Board approved the final set of rules that will help protect consumers from unfair credit card pratices and improve disclosure associated with revolving credit accounts. The new rules are set to take effect July 1, 2010. The new credit card rules are primarily aimed at preventing arbitrary rate increases and providing consumers with adequate time to pay bills.

“The revised rules represent the most comprehensive and sweeping reforms ever adopted by the Board for credit card accounts,” said Federal Reserve Chairman Ben S. Bernanke.  “These protections will allow consumers to access credit on terms that are fair and more easily understood.”

In addition to arbitrary rate increases and providing adequate time to make payments, the new rules will also:

• Forbid banks from imposing interest charges using the “two-cycle” billing method.
• Prohibit the use of payment allocation methods that unfairly maximize interest charges.
• Address subprime credit cards by limiting the fees that reduce the amount of available credit.

The Board received over 60,000 comments from consumers and considered information gathered from consumer testing to finalize the rules on unfair credit card practices.

The Board will also be implentmenting revised rules to Regulation Z (Truth In Lending Act) for credit card and other types of revolving credit accounts. The new changes are designed to make sure that information is provided in a timely manner and in an easily understandable form. The final rules will require changes be made to the timing, format and content requirements in which consumers receive credit card applications, solicitations and disclosures.

“Our intent is to increase transparency and fairness in how credit card and deposit accounts operate, thereby enhancing competition and empowering consumers to better manage their accounts and avoid unnecessary costs,” said Federal Reserve Governor Randall S. Kroszner.  “The rules represent a significant step forward in consumer protection.  By ensuring fairness and making credit terms easier to understand, these safeguards should allow more consumers to benefit from using credit.”

For full details and to read the Federal Reserve’s full press release, click here.

Consumers around the country have found themselves strapped for cash these days. The credit crisis hasn’t made it much easier, until now.

New regulations are going to be presented by the federal government in the upcoming weeks. These regulations will restrict any and all credit card practices that are seen as unfair or deceptive. Credit card regulation proposals have included a number of different restrictions. These restrictions include prohibiting:

• - Increasing interest rates on an outstanding balance (except under limited circumstances)
• - Applying payments to the minimum payment to maximize interest charges
• - Requiring a reasonable amount of time for consumers to make payments

Consumers have played a big part in getting the feds to listen. Thousands and thousands of comments have been posted on the Federal Reserve’s website. These consumers have begged and begged the government to place tighter restrictions on credit card practices.

The credit card industry, as a whole, is extremely skeptical about the new regulations. It is concerned that each regulation will prohibit its ability to manage risk. This could cause credit card companies to be forced to raise interest rates and decrease the amount of available credit. Meredith Whitney, a well-known credit analyst recently predicted that the rules would decrease credit lines to 40 percent.

She said, “With so many Americans relying on their credit cards as a major source of liquidity, it would be equivalent to a major pay cut.”

The major problem right now is that the rules and regulations have not been finalized. However, the industry predicts that the Federal government will act aggressively.

Ken Clayton, the managing director of the American Bankers Association‘s card policy council, said, “What you’re going to see is an unprecedented change in the way consumers deal with their card companies. In light on the current economic uncertainties, it’s important that all of us understand the full impact of these regulations on consumers and the economy before we can understand [whether they are] successful.”

Credit card companies have protested several of the possible regulations. For instance, credit card issuers do not agree that there should be regulations put in place that would prohibit increasing the interest rate on outstanding balances. Past proposals would allow exceptions to the rule (namely, when a minimum payment is not received until 30 days past the due date. However, the industry argues that 30-days for a delinquency is already too long.

The fact of the matter is that nothing is certain yet. The Feds are feverishly working on the regulations and should be releasing those regulations soon. As a consumer, you can sit back and take a deep breath knowing that your end of the bargain is about to be loosened.

Finally, some good news for the consumer. The federal government announced several new programs that will unfreeze the consumer debt market. These programs will also allow mortgages to be more easily accessible and cheaper.

The Federal Reserve and the Treasury Department recently announced the new plans to help consumers. These programs will provide billions of dollars in government support in order to stabilize the U.S. financial system.

The program will lend up to $200 billion to people who hold securities that are backed by auto loans, credit cards and student loans. The Feds hope that this program will provide greater demand for each of these securities. As the demand for these securities increases, interest rates should go down and the amount of loans available will increase.

The $700 billion bailout plan will support this $20 billion in credit protection. Officials also announced that the government will also buy $600 billion in mortgage-backed assets. The purchase of these assets will be a completely separate attempt to deal with the financial crisis. Over $100 billion direct mortgage obligations will be purchased from mortgage giants like Fannie Mae and Freddie Mac. Another $500 billion will be bought in mortgage-backed securities. These securities consist of several pools of mortgages that are sold to investors as a bundled package.

The housing crisis has bled into the credit card arena. There have been an increased amount of defaults on sub-prime mortgages because money was handed to borrowers with weak credit histories. Banks around the country have lost billions of dollars because of these losses. These losses have caused these financial institutions to stop lending, almost altogether.

The new Federal program has been established to encourage financial institutions to start lending again. Government aid will help banks and credit card companies get started again. The credit thaw for consumers is about to begin.

Federal Reserve Chairman Ben Bernanke.

It has been sometime since we heard what Alan Greenspan had to say about the economy. That is because he isn’t the Federal Reserve Chairman anymore. Since 2006, Ben Bernanke has been the Federal Reserve Chairman. We haven’t really heard a lot from Bernanke…until now. The American economy continues to spiral downward. Millions of people around the country are in too much debt, either mortgage debt or other forms of debt. The situation on Wall Street continues to get worse.

The financial crisis that our country is experiencing right now could completely hinder more U.S. business growth. Ben Bernanke has pledged to “act as needed” to stabilize the unstable economy. Unfortunately, the Federal Reserve is having to fight the biggest financial battle since the Great Depression. Recently, Bernanke and his team at the Federal Reserve, have undergone intense questioning on Capitol Hill. The questioning is about whether or not the Bush administration’s plan will work. The Bush administration has suggested a $700 billion bailout plan.

This plan has already seen a massive amount of scrutiny. It seems as though the whole country is becoming more and more frantic about how to get our economy back up and rolling. The majority of Americans don’t seem to be listening to the Feds’ reassuring words. Is that because they don’t seem to be all that reassuring? The Federal Reserve and Ben Bernanke keep saying that the Fed will do everything in its power to provide relief to the weakening economy.

Ben Bernanke doesn’t seem as calm and collected anymore either. Do we have reason to be concerned? Absolutely. Our entire economy is falling out from underneath us. Because the economy is slowing down at an increased rate, we can expect more inflation for the rest of this year and next year. However, Bernanke is all for the Bush administration’s bailout plan. He continues to warn Congress about the consequences that our country will face if we don’t enact the bailout plan.

Bernanke says that if the bailout plan isn’t put into force, nobody will be able to borrow money. He says that this “scenario could result in the world’s largest economy grinding to a virtual halt.” Bernanke goes on to explain the caution in which lenders have begun to use. This cautious behavior can completely stop business growth.

Gas prices continue to be a factor in our economy. Although gas prices have dropped since the all time high of $147.27 per barrel, oil prices still continue to fluctuate. Since last week, oil prices have increased approximately $15. The dramatic fluctuation of oil prices leads to the problem of not being able to predict the future price of gasoline.

The Feds continue to meet to see if they should drop interest rates even lower. The Federal interest rates remains at 2 percent. However, the Feds have alluded to the fact that they will lower it further if times get really desperate.

Everyone needs to do what they can to help stimulate the economy. We need to be constantly watching Wall Street and the effects that it has on our economy. Now is the perfect time to be prepared.