Lehman Post Mortem: How are YOU Doing a Year Later?

(MoneyWatch)  With all the hoopla around the one-year anniversary of Lehman Brothers' plunge into bankruptcy (we need a Miss Manners consult to determine the correct gift to honor such an event), what has really changed in the lives of ordinary Americans? The CBS MoneyWatch.com Team talked to a bunch of people to find out.


Here are some major ways to measure how you are doing a year later:

JOBS: The most direct outcome of the financial meltdown and recession has been the impact on jobs. Consider this: a year ago, before Lehman went bust, the nation's unemployment rate stood at 6.2% and today, that number is 9.7%, likely on it's way above 10%. Nearly 7 million people have lost jobs since the beginning of the recession, but the bulk of lay-offs occurred in the aftermath of Lehman.

HOUSING: Adding to the misery of job losses, house prices are down significantly, although the good news is that mortgage rates are actually lower today (nearly 5% for a 30-year mortgage today) versus 5.75% a year ago and the nifty $8,000 first time home buyer credit is available until December 1, 2009.

STOCK MARKET: The market is down pretty dramatically, but we are well off the March lows.

• Dow Jones Industrial Average 9/12/08 (last trading day before Lehman bankruptcy filing): 11,421.99
• Dow Jones Industrial Average 9/14/09: 9626.80 (52-week low: 3/09/09: 6440.08)

As a result of the widespread investor angst, there has been a shift to more conservative investments over the past year, with a smaller portion of contributions going into equities than in previous years. Fidelity Investments reported that as of June 30, 2009, about 68% of 401(k) contribution dollars in the first half went to equities. That number has hovered around 75% for the past few years and topped out at over 80% in 2000.

The percentage of active participants who decided to stop contributing during the second quarter was 1.3%, down from 2.2% in the past two quarters and in line with the longer-term historical trend of about 1%.

SAVINGS: While Americans may not be investing quite as much, they are definitely spending less and saving more today than they were a year ago. (Part of the reason people are saving more is that it's still pretty hard to borrow, unless you have good credit.) In July, the personal saving rate was 4.2%, compared to the 1.3% savings rate last September.
In the 1960s, Americans typically saved 7.5%-10%; in the 1970s, the rate ticked up to 8.0%-12%, but by the mid 1980s, all hell broke lose. Between 1987-1993, Americans saved 6%-8%; between 1994 and 2000, the rate dropped to 4%-6% and in the millennium, the rate plummeted to 0-2%, until we actually went negative in 2006.

REGULATORY: A few measures have gotten through, including: credit card reform; an FDIC insurance increase to $250K; and the government guaranteed money market mutual funds, but that ends this Friday.

All in all, it's been quite a year--let's hope we don't ever have to live through one of those again!