Buzzword: Recalibration

What it means. Calibration is typically associated with things like measuring instruments and electronics gear, which need to be tweaked for optimal performance. And President Barack Obama got into the calibration game after he reviewed his initial response to the July 2009 arrest of Harvard professor Henry Louis Gates Jr., saying, "I could have calibrated those words differently." When it comes to the U.S. economy and consumers, the key phrase these days is recalibration.

"We're in a state of recalibration," says Edward Farrell, a director of the Consumer Reports National Research Center, which produces the monthly Consumer Reports Index, the latest installment of which came out this week. His observation came after several months of uninspiring consumer sentiment in the CRI, a monthly telephone poll of a nationally representative sample of American adults.

Why the buzz? While green shoots might hint at a stabilizing economy, a full recovery hasn't arrived yet, and during this time of recalibration, American consumers have adjusted to that new economic by changing how they spend. "We've seen a loss of confidence by consumers in the old rules, for example, that they'll have more money in their house 10 years from now or that their 401(k) will help carry them through retirement," says Farrell.

Paco Underhill, retail consultant and author of Why We Buy: The Science of Shopping, agrees. "We are never going back to the we way were," he says. "Americans have had a considerable financial shock. Virtually everybody has traded down, and conspicuous consumption is now viewed as bad manners."

None of this bodes well for holiday sales. But neither Farrell nor Underhill is predicting a bloodbath from now through Black Friday and beyond. "A rally might actually be under way for retail heading into the holidays, with personal electronics leading the charge," says Farrell. He notes that according to the latest CRI, a quarter of consumers plan to buy personal electronics this month, up 5 percentage points from October.

Underhill anticipates healthy sales for comfort gifts, such as food baskets, fine wines, and beauty products. "I think this holiday season will be better than many retail pundits are predicting because people want to show compassion in troubled times." For his own gifts, Underhill says, "When people ask me what I want, I tell them one pair of black cashmere socks. They are warm, they are eminently practical, and I wouldn't buy them for myself because they're expensive. But for $20, it's the ultimate answer of what to get an aging male."

Farrell would like to see continued stability in the Consumer Reports Sentiment Index, which captures respondents' attitudes regarding their financial situation. "Yes, we want people to spend and save responsibly," he says. "But we also need there to be a feeling of optimism."

Without that, instead of talking about recalibration we could be discussing a lost decade. Also check out our growing roster of Buzzwords.—Daniel DiClerico | e-mail | Twitter | Forums | Facebook

Essential information: Follow all the news related to holiday shopping by following Tightwad Tod on our Money blog.

By the Numbers: Federal funding for weatherization eclipses cash for clunkers for appliances money

$4,728,750,000

Money allocated to the U.S. Department of Energy's Weatherization Assistance Program under the 2009 Recovery Act. To date, the program has doled out about half of its multibillion-dollar funding for a variety of weatherization projects, such as properly insulating an attic.

New York tops the WAP recipient list with $394,686,513, followed by Texas ($326,975,732), Pennsylvania ($252,793,062), Michigan (243,398,975), and Illinois ($242,526,619).

The nearly $5 billion is a boatload of money, but if spent wisely it could go a long way toward saving millions of Americans money and helping the environment. A recent report from Harvard University's Joint Center for Housing Studies estimates that residential energy use would decline by 22.5 percent if the roughly 120 million homes built before 2000 were made as efficient as those built since then.

Perhaps that potential significant impact explains why federal weatherization money so far exceeds that given to the $300 million State Energy Efficient Appliance Rebate Program, also known as cash for clunkers for appliances. Visit the Energy Star Web site for information on special offers and rebates for appliances, heating and cooling equipment, water heaters, and the like, and find out how much money your state has available for rebates, weatherization programs, and more.

You'll find more information on other federal and state energy-efficiency programs on the Database of State Incentives for Renewable Energy Web site.—Gian Trotta | e-mail | Twitter | Forums | Facebook

Essential information: Our Energy Saving & Green Living guide can help you cut your carbon footprint and save money. Follow our overall advice for using less energy at home, and remember that some projects might qualify for federal tax credits.

By the Numbers: Home-buyer tax credit gets new life

2 million

Estimated number of Americans who will take advantage of the federal government's home-buyer tax credit this year, according to projections from the National Association of Realtors. The Internal Revenue Service has reported that 1.4 million families have already taken advantage of the credit, which took effect in January 2009.

The home-buyer tax credit was scheduled to expire at the end of this month but received a one-time reprieve last Friday when President Barack Obama signed the Worker, Homeownership, and Business Assistance Act of 2009.

The credit had been limited to first-time buyers and those who hadn't owned a home in the past three years. Under the updated version of the credit, first-time buyers who purchase a home or have one under contract by April 30, 2010, can qualify for a credit of up to $8,000. And a credit of up to $6,500 is available to people who have lived in a home for at least five years and buy a new home or have it under contact by April 30, 2010. (Members of the uniformed services who have been stationed overseas can qualify for a similar credit until May 2011.) The maximum price for a qualifying home is $800,000.

The updated credit now covers individuals with a modified adjusted gross income (MAGI) between $125,000 and $145,000, up from $75,000 to $95,000; for joint tax filers, the qualifying MAGI is $225,000 to $245,000, up from $150,000 to $170,000.

The new version of the credit also contains measures designed to prevent fraud, a topic we covered last month.—Daniel DiClerico | e-mail | Twitter | Forums | Facebook

Essential information: Learn the details of buying a foreclosed home and get a thorough inspection of any property you're considering. Once you've moved in, refer to our Kitchen-Planning Guide and Home Improvement Guide interactive.

CBS' 60 Minutes looks at vulnerability of U.S. smart grid

Last year, we told you about how vulnerable a smart grid could be to cyber-attacks. Last night on CBS, 60 Minutes ran a report by correspondent Steve Kroft called "Sabotaging the System," which looked at the country's vulnerability to cyber-attacks.

"If I were an attacker and I wanted to do strategic damage to the United States, I would either take the cold of winter or the heat of summer, I probably would sack electric power on the U.S. East Cost, maybe the West Coast, and attempt to cause a cascading effect. All of those things are in the art of the possible from a sophisticated attacker," Mike McConnell, a retired Navy admiral, told 60 Minutes.

Watch the 60 Minutes report. And if you're worried about Internet security, check out our Guide to Online Security. e-mail | Twitter | Forums | Facebook

Essential information: If you're concerned about losing power at home during an emergency—be it caused by hackers or by Mother Nature—check our our report on and ratings of backup generators (ratings available to subscribers). e-mail | Twitter | Forums | Facebook

Congress proposes extension and expansion of home-buyer tax credit

Legislation to extend and expand the federal home-buyer tax credit, which is scheduled to expire on November 30, passed by a 98-0 vote in the U.S. Senate on Wednesday. The U.S. House of Representatives could vote on the measure as early as today.

Under the proposed legislation, first-time home buyers or those who haven't owned a home in the last three years would continue to receive the $8,000 tax credit that's been in place since January 2009. The tax credit has been a major boon to existing home sales, spurring five gains in the past six months, according to the National Association of Realtors.

In an effort to stimulate even wider sales, the legislation would also extend a $6,500 credit to buyers who have owned their current home for at least five years. Both credits would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000. The credit would be available for principal (read: not vacation) homes that cost $800,000 or less, and to qualify, buyers would have to sign a purchase agreement by April 30, 2010, and close on the home by June 30, 2010.

"Tax credits like this only work by creating the sense of urgency to take advantage of them," said Senator Johnny Isakson, the Georgia Republican who's former real-estate executive. "This is the last extension of the home-buyer tax credit, and I urge all Americans, whether they're first-time buyers who've always dreamed of having a home of their own or someone who's been gridlocked in the failure of our move-up market, to take advantage of this opportunity."

As we reported in "Questionable Claims for $8,000 First-Time Home-Buyer Tax Credit Spawn IRS Investigations," allegations of fraud related to the credit have arisen. (Bloomberg reported the other day that about 1.2 million home buyers have claimed $8.5 billion in tax credits in 2009 year, according to the U.S. Department of Treasury.) The new legislation includes antifraud language that would give the Internal Revenue Service greater oversight during the processing of returns.—Daniel DiClerico | e-mail | Twitter | Forums | Facebook

Essential information: Get all the details about buying a foreclosed home and avoiding foreclosure-related scams. Be sure to get a thorough inspection of any property you're considering. If you'll be fixing up your new home, refer to our Kitchen-Planning Guide and Home Improvement Guide interactive.

Shale gas holds promise, but drilling for it is controversial

As we covered in Buzzword: Shale gas, this natural gas contained within fine-grained, sedimentary rock is a topic of much interest for the energy industry. There are vast reserves of shale gas nationwide, and energy companies are working hard and fast to tap these natural-gas sources through what's called water fracturing, also known as hydraulic fracturing or hydrofracking. (The graphic below details how hydrofracking works. It was created by Al Granberg and is being used courtesy of ProPublica: Journalism in the Public Interest, a site that features lots of coverage of shale gas and gas drilling.)

As you might expect, there's more to shale gas than the promise of abundant supplies of natural gas and lower prices for consumers. There's also concern that the process used to tap into the shale-gas reserves presents serious environmental and health risks.

Today's New York Times features an interesting story, "Gas Company Won't Drill in New York Watershed," on the decision by Chesapeake Energy not to drill for natural gas in upstate New York after the Oklahoma City-based corporation's plans met with strong opposition. If you're interested in the topic of shale gas, give it a read.—Steven H. Saltzman | e-mail | Twitter | Forums | Facebook

Essential information: If you haven't already, get your heating system tuned up. And to save money on your utility bills, install a programmable thermostat, read our buyer's guides to furnaces (more details here), solar water heaters, and pellet stoves, and follow our overall advice for using less energy at home.

Want to start a debate? Bring up the subject of drying laundry on clotheslines

Health-care reform is an important and hotly debated national issue these days. While certainly not as pressing as health care, the subject of hanging laundry out to dry is something many people seem just as passionate about.

Consider the comments to our June 2009 post "Are Clotheslines Making a Comeback? 'Right-to-Dry Movement' Promotes Their Use" and those in response to The New York Times' recent engaging online debate "Rethinking Laundry in the 21st Century."

Right-to-dry-ers tout clotheslines and the like as tried-and-true energy savers that leave laundry smelling great. Some folks are skeptical about the practice, wondering whether line drying will leave their clothes feeling crunchy and questioning the added time it might take to dry their laundry. Those opposed to clotheslines feel they muck up their neighborhoods.

According to the U.S. Department of Energy, the average American household uses about 11,000 kilowatt hours of electricity annually, with the typical electric clothes dryer consuming about 900 kWh—around what the average washing machine uses and slightly less than a typical refrigerator does.

If you're not ready to dry your laundry on a clothesline or on racks, follow these steps to cut back on dryer-related energy use:
• Use an automatic cycle for drying. This cycle will call on the dryer's moisture sensor, which automatically turns off the machine when the laundry is done. The sensor will work even if you select the less or more dry option.
• Remove the lint from the filter after every load. Built-up lint can reduce air circulation and make your dryer run longer. What's more, lint can clog the dryer vent, where it poses a significant fire hazard.
• Dry lightweight laundry in one load and heavier items, like towels and jeans, in another.—Kimberly Janeway | e-mail | Twitter | Forums | Facebook

Essential information: Give us your thoughts on clotheslines and line drying by posting a comment below. And if you're in the market for new laundry or other appliances, read about the U.S. Department of Energy's $300 million State Energy Efficient Appliance Rebate Program, otherwise known as cash for clunkers for appliances.

By the Numbers: S&P/Case-Shiller U.S. National Home Price Index continues upward trend

146.00

Current level of the 20-City Composite Home Price Index, part of the Standard & Poor's/Case-Shiller U.S. National Home Price Index, which tracks residential prices in housing markets nationwide. The August 2009 level marks four consecutive months of improved readings and is up 1.2 percent from July, although it is still down 11.3 percent from it was a year ago. The index is calculated monthly and published with a two-month lag.

"While many of the markets remain down versus this time last year, the relative rate of decline has shown some real improvement," said David M. Blitzer, chairman of the Index Committee at Standard & Poor's, in today's press release. "California, in particular, has seen some real positive prints in recent months." The price index in San Francisco climbed 2.8 percent from July to August, behind only Minneapolis, which saw an increase of 3.2 percent. Charlotte, Cleveland, and Las Vegas were the only three markets whose price index fell from July to August.

The rise in the 20-City Composite Home Price Index comes at a time when the overall economy is expected to show 3.5 percent growth in the third quarter. But, said Blitzer, "We do want to remind people of the upcoming expiration of the federal first-time buyer's tax credit in November and anticipated higher unemployment rates through year end. Both may have a dampening effect on home prices."—Daniel DiClerico | e-mail | Twitter | Forums | Facebook

Essential information: Learn how to buy a foreclosed home and be sure to get a thorough inspection of any property you're considering. After you've moved in, refer to our Kitchen-Planning Guide and Home Improvement Guide interactive.

Buzzword: Pop-up store

What it means. "A store that opens in an empty retail location and then deliberately closes after a few weeks or months," writes Paul McFedries, of Word Spy: The Word Lover's Guide to New Words. McFedries cites a couple of references to pop-up stores in recent articles in the Los Angeles Times and the Chicago Tribune and indicates the earliest citation is from 2004, although jeans giant Levi's is credited with having pioneered the pop-up concept in 1999 with temporary digs in New York City.

Why the buzz? While pop-up stores are nothing new, you'll likely see more of them thanks to the proliferation of vacant retail locations brought on by the recession. Michigan-based Halloween USA, for example, currently has more than 250 pop-up stores nationwide. Expect to see more pop-up shops between now and the end-of-year holidays.

Many major chains, including the Gap, Target, and Toys "R" Us, have signed short-term leases in empty spaces, hoping their pop-up emporiums will generate buzz about a new product or be a cost-effective way to venture into a new market. "It's something that's just getting bigger and bigger every day," Marshal Cohen, chief industry analyst at market research firm NPD Group, told the Los Angeles Times.

The pop-up model has even gone green. BoHo Bodega (shown), which was located on the border of the Lower Manhattan neighborhoods of SoHo and NoLita during its recent October 21-25 run, called itself the "world's first eco-educational pop up shop." The store, done as a partnership with the Council on the Environment of NYC, sold eco-friendly versions of household products, food, and beverages. The items were marked down considerably in the hope that once shoppers go green, they won't go back.

Pop-up stores are often able to offer their merchandise at discount because of their generally low overhead. So if one appears in your neighborhood, it might be worth popping in.—Daniel DiClerico | e-mail | Twitter | Forums | Facebook

Essential information: Seen any cool pop-up stores in your area? Let us know by leaving a comment below. And with the $300 million State Energy Efficient Appliance Rebate Program expected to go live later this year, maybe some manufacturers or retailers will open up cash for clunkers for appliances pop-up stores.

Photo courtesy of Makemakes.com

A tale of two Super Bowl ads: GE's smart grid and Cash4Gold

The broadcast for last February's Super Bowl XLIII, in which the Pittsburgh Steelers edged the Arizona Cardinals, featured the usual roster of ads vying for your attention and Twitter posts if not your money.

Among the more notable spots were this one for Cash4Gold, in which Ed McMahon and MC Hammer urged people to trade in their precious jewelry for cold, hard cash and this one for GE's efforts related to the smart grid, in which an animated scarecrow sings an updated rendition of The Wizard of Oz tune "If I Only Had a Brain" (shown).

The intervening months have not been kind to Cash4Gold, as you can read in the coverage by our colleagues at the Consumerist.

The smart grid has fared significantly better. About $4.5 billion in federal stimulus money from the American Recovery and Reinvestment Act of 2009 is being doled out by the U.S. Department of Energy to help utilities turn the existing power grid into a smart network. This modernization is designed to enable two-way communication between utilities and consumers.provide safer, more-efficient management of the electric grid, and save you money.

Based on what I heard during an Edison Electric Institute event last week in New York City, it seems as if the stimulus influx for the smart grid has the country's biggest power companies in good spirits.

"We've been talking about the smart grid for years," said Thomas R. Kuhn, EEI president and event moderator. "It's finally coming to fruition." He added that 58 million smart meters will be installed in U.S. homes within the next 10 years. Pacific Gas & Electric, for instance, says it has deployed smart meters for nearly 4 million of its 15 million customers in California and installs 13,000 every day.

During the event, Andrew Tang, senior director of PG&E's Smart Energy Web, talked about the "changing relationship between consumers and their electric bill" that smart meters catalyze. For example, instead of paying a flat rate for electricity, customers pay a time-of-use rate, with peak hours occurring from midday to early evening. Customers can also buy an energy orb (shown), a plug-in device that changes colors to indicate real-time changes in the price of electricity. A simple visual signal like this results in energy reductions ranging from 22 to 37 percent, according to Tang. And more-sophisticated technologies are on the way, including comprehensive in-home displays and programmable communicating thermostats, which are supposed to automatically adjust temperatures based on pricing signals they receive from the utility.