MORE SENIORS ARE BEING BURIED BY HOUSING DEBT

Original Story: usatoday.com

WASHINGTON (AP) — Al and Saundra Karp have found an unconventional way to raise money and help save their Miami-area home from foreclosure: They're lining up gigs for their family jazz band.

They enjoy performing. But it isn't exactly how Al, an 86-year-old Korean War vet, or Saundra, 76, had expected to spend their retirement.

Of all the financial threats facing Americans of retirement age — outliving savings, falling for scams, paying for long-term care — housing isn't supposed to be one. A Rochester estate planning attorney represents clients in the preparation of wills, codicils, and trusts. But after a home-price collapse, the worst recession since the 1930s and some calamitous decisions to turn homes into cash machines, millions of them are straining to make house payments.

The consequences can be severe. Retirees who use retirement money to pay housing costs can face disaster if their health deteriorates or their savings run short. They're more likely to need help from the government, charities or their children. Or they must keep working deep into retirement.

"It's a big problem coming off the housing bubble," says Cary Sternberg, who advises seniors on housing issues in The Villages, a Florida retirement community. "A growing number of seniors are struggling with what to do about their home and their mortgage and their retirement."

The Baby Boom generation was already facing a retirement crunch: Over the past two decades, employers have largely eliminated traditional pensions, forcing workers to manage their retirement savings. Many Boomers didn't save enough, invested badly or raided their retirement accounts.

In Las Vegas, Janet Snyder, struggling with a financial burden left by her late husband, is bracing for what happens if her lender proceeds with plans to evict her from her home in July.

"I'll live on the streets, I guess," she says ruefully, contemplating homelessness at age 74.

The Consumer Financial Protection Bureau's Office for Older Americans says 30% of homeowners 65 and older (6.5 million people) were paying a mortgage in 2013, up from 22% in 2001. Federal Reserve numbers show the share of people 75 and older carrying home loans jumped from 8% in 2001 to 21% in 2011. A Denver banking lawyer represents both lenders and borrowers in a diverse array of financing transactions.

What's more, the median mortgage held by Americans 65 and older has more than doubled since 2001 — to $88,000 from $43,400, the financial protection bureau says.

In markets hit hardest by the housing bust, a substantial share of older Americans are stuck with mortgages that exceed their home's value. In Atlanta, it's 23% of homeowners 50 and older, according to the real-estate research firm Zillow. In Las Vegas, it's 26%.

In the worst cases, hundreds of thousands of older Americans have lost homes to foreclosure. A 2012 study by the AARP found that 1.5 million Americans 50 and older lost homes between 2007 and 2011. The numbers are probably higher now, says Lori Trawinski, a director at the AARP's Public Policy Institute. And among homeowners 50 and older, foreclosure rates are highest for those 75 and up.

Foreclosures help explain why homeownership among those 50 to 64 dropped 5 percentage points to 75% from 2005 to 2013, according to Harvard University's Joint Center for Housing Studies.

In mid-2010, Tod Lindner lost his oceanfront home in California's Marin County. He ran into trouble after the finance company that employed him was acquired and the new owners refused to pay him fees he thought he was owed and which he was counting on.

Lindner had bought the house for $330,000 in the late 1980s. But he'd refinanced to pull out money to invest, swelling the mortgage to $680,000. Lindner tried to work out a modified mortgage, but his bank foreclosed instead. He and his wife sought bankruptcy protection, rented an apartment and slashed their spending.

"At age 70, I just started working for another company" in banking, Lindner says. "My plan would have been to retire."

Seniors fell into housing trouble in varying ways. Some lost jobs in the recession or its aftermath. Some overpaid for homes during the housing boom, thinking they could cash in later.

Prices crashed instead.

Some made unwise decisions to refinance mortgages and pull cash out to meet unexpected costs, help their children or go on spending sprees.

Ralph Kanz, 60, and Martha Lowe, 56, of Oakland bought too much house at the wrong time: They paid $487,000 for a home in Oakland, California, in 2005.

At the time, Lowe was making $51,000 at an environmental consultant. Kanz was experimenting in commercial fishing and earning around $10,000. Drawing on an inheritance, they made a down payment of $137,000 and took on a $350,000 mortgage.

They say they shouldn't have qualified for a loan that big. They alleged in an unsuccessful lawsuit against two mortgage firms and a title company that "someone" without their knowledge had inflated Lowe's income on the loan application to get the mortgage approved. (A court ruled in 2013 that "a reasonably prudent person" should have spotted "the alleged wrongdoing" in the application in 2005.) A Texarkana banking lawyer is following this story closely.

Worse, the couple took on a dangerous mortgage: They had to pay only interest for 10 years. They would then be hit with bigger payments, including the principal, for the next 20. The bigger payments are set to begin in June.

In the meantime, Lowe contracted a rare disease and went on disability. They still hope to renegotiate the mortgage.

West Virginia natives Jim, 67, and LaRue Carnes, 63, moved to Sacramento, California, in 1978 and bought a house for $54,000. For 33 years, Jim worked as a newspaper reporter and editor. They refinanced their mortgage several times and pulled money out of the house and took on higher mortgage payments.

"Foolishly, like so many Americans, we used the house as a bank," LaRue says.

In 2011, Jim was laid off, and the Carnes fell behind on mortgage payments. Three times, they dipped into their retirement savings to fend off foreclosure. Eventually, with a $25,000 grant from a state program, Keep Your Home California, they negotiated a new mortgage they could afford.

Still, they're still straining to meet the lower payments. Once a month, they eat a free breakfast at a church, bringing home bagels and fruit. They "never thought we would be partaking of such," LaRue says.

They've haven't gone on a vacation in years. When they want to see a movie — Jim is an entertainment writer — they attend discounted matinees.

Some retirees ran into trouble with reverse mortgages. These are loans against the equity in a home that provide cash but come due once the homeowners die or sell the house.

Problems can arise when only one spouse signs a reverse mortgage — in order to qualify for a bigger loan — and dies relatively soon. The lender can then demand repayment in full — and foreclose if it doesn't collect.

Janet Snyder, who gets by on a $1,215 monthly Social Security check, says she didn't even know that her husband, Theodore, had taken out a $225,000 reverse mortgage on their Las Vegas town house. When he died in 2010 at age 77, the bank wanted its money back and "would not talk to me," Janet says. To prepare for retirement, a Rochester estate planning lawyer assists clients in developing wealth management plans.

She's working with Christine Miller of the Legal Aid Center of Southern Nevada to try to keep her home. But unless they engineer a delay, "I have to move out by July 24," she says.

"I'm 74 years old… I don't know where I'm going to go from here."

When seniors seek to renegotiate mortgages they can't afford, lenders often refuse. One reason is that the elderly typically have less time to repay. And many are "just not going to have enough income to qualify for a new plan," says Brian Korte, a foreclosure lawyer in West Palm Beach, Florida.

Al and Saundra Karp bought their three-bedroom home in North Miami Beach, Florida, for $77,000 in 1980. Over the years, they refinanced, partly to pay down credit-card debt, and their mortgage swelled to $288,000.

Al, 86, kept working as a tax accountant into his late 70s. But Alzheimer's disease forced him into retirement.

The couple is getting by on about $2,500 a month in Social Security and Veterans Administration benefits, plus food stamps and help from their two sons. They stopped paying the mortgage and are fighting foreclosure in court. And they've failed to persuade the bank to modify their mortgage and lower the $1,900 monthly payments.

To ease the stress and earn some cash, they perform old musical standards as the Karp Family — Saundra on vocals, Al on sax, son Larry on keyboards.

"I'm trying desperately to stay here," Saundra says. As for Al: "He thinks the mortgage is paid. He hasn't got a clue."

10 Big Companies Risking Bankruptcy

Story First Appeared on Business Insider -

Following is a list of ten of the U.S. companies which GMI Ratings (a governance research firm) has identified as having a high likelihood of insolvency in the next twelve months.

This list is by no means comprehensive, nor are these the companies at greatest risk. Rather, they present potential solvency issues that have not yet been identified by the marketplace.

Analysis using GMI Ratings’ Bankruptcy Risk Model places the probability of insolvency of the listed companies in a range from 6.5 percent to 23.3 percent, or a one in four chance. Another dozen companies tested with similar results, but were removed from the list because they are late filers and probabilities of bankruptcy could not be determined without more recent data.

The likelihood of insolvency during the next one-year period is a function of a company’s exposure in four areas:

•  Macro-economic events (i.e., the state of the overall economy). The U.S. may still be in the throes of recession, with added alarm over the debt crises in Europe, and the pace of recovery is lethargic.
•  Micro-economic events (i.e., the state of the industry). The home building industry has suffered greatly in the past four years. Airlines are at the mercy of fluctuating oil prices.  Bookstores and paper products are fighting to overcome reduced demand. Other industries may find themselves disproportionately affected.
•  Specific product events, such as product failure.
•  The company’s ability to finance continuing operations.

All these factors are intertwined, and impact each company in varying degrees.

(All bankruptcy risks were calculated by GMI Ratings.)
            ----------------------------------------------------------------------------------------------------
#10 Targacept, Inc.
Bankruptcy risk: 6.5%
Market cap ($MM): $140
Founded: 1997
Industry: Biotechnology

Targacept is in Biotechnology, a highly competitive industry dependent on successful product launches.  Product failure can be a disaster.
            ----------------------------------------------------------------------------------------------------
#9 KB Home
Bankruptcy risk: 7.7%
Market cap ($MM): $592
Founded: 1957
Industry: Home-Building

KB Home is in home building. The market is convinced that this industry is turning around. That may be true, but the rate of change may not be sufficient to support the very large debt levels associated with KB Home over the next 12 months.
            ----------------------------------------------------------------------------------------------------
#8 Pacific Sunwear of California, Inc.
Bankruptcy risk: 7.9%
Market cap ($MM): $112
Founded: 1980
Industry: Retail - Apparel / Accessories

The Retail Apparel industry is constantly faced with winners and losers. It is highly dependent on second-guessing the latest fad. Pacific Sunwear (PacSun) seems to be on the wrong side of the marketplace. New product introduction may save them but that, in itself, is associated with substantial risk.
            ----------------------------------------------------------------------------------------------------
#7 Central European Distribution Corp
Bankruptcy risk: 7.9%
Market cap ($MM): $228
Founded: 1990
Industry: Beverages - Distillers / Wineries

Central European Distribution Corporation is also in a highly competitive business. The company’s management has proven time and time again that its business decisions are inept. There are many questions surrounding the quality of their accounting.
            ----------------------------------------------------------------------------------------------------
#6 Coldwater Creek Inc.
Bankruptcy risk: 8.9%
Market cap ($MM): $79
Founded: 1984
Industry: Retail - Apparel / Accessories

Like Pacific Sunwear, Coldwater Creek is an apparel company that seems to be on the wrong side of the marketplace. Introducing new products may save them, but that's still a very risky venture.
            ----------------------------------------------------------------------------------------------------
#5 Republic Airways Holdings Inc.
Bankruptcy risk: 10.8%
Market cap ($MM): $268
Founded: 1973
Industry: Airlines

Debt-laden airline Republic Airways is very dependent on the price of jet fuel, which tracks the cost of oil.  There are accounting questions here as well.
            ----------------------------------------------------------------------------------------------------
#4 Beazer Homes USA, Inc.
Bankruptcy risk: 11.0%
Market cap ($MM): $263
Founded: 1985
Industry: Home-building

Companies in the home-building industry, like Beazer Homes USA, have been suffering in this economy. Although many people believe that the home-building market is turning around, the rate of change may not be sufficient to support the very large debt levels associated with Beazer over the next 12 months.
            ----------------------------------------------------------------------------------------------------
#3 Complete Genomics, Inc.
Bankruptcy risk: 13.3%
Market cap ($MM): $64
Founded: 2006
Industry: Biotechnology

Biotechnology is a highly competitive industry dependent on successful product launches. For companies like Complete Genomics, product failure can mean financial disaster.
            ----------------------------------------------------------------------------------------------------
#2 Globalstar, Inc.
Bankruptcy risk: 15.7%
Market cap ($MM): $106
Founded: 1991
Industry: Wireless Telecommunications Services

Many years ago, Globalstar chose a technology that is no longer mainstream.  They become more marginalized as a business with the passage of time.
            ----------------------------------------------------------------------------------------------------
#1 MEMC Electronic Materials, Inc.
Bankruptcy risk: 23.3%
Market cap ($MM): $388
Founded: 1959
Industry: Semiconductors

MEMC has substantially shifted its focus to the solar power industry and away from semi-conductor subcontracting. The risk of success is extremely high, not only for MEMC but for any company that makes such a dramatic change in its core business.

Economic Slowdown Breeding Ground for Recession

Story first appeared in Bloomberg Businessweek.

The U.S. economy looks set to deliver a repeat performance in 2012: for the third straight year, it may suffer a swoon yet not slip into a recession.

Researchers don’t think the slowdown will be any more consequential than the past two years. There are positives out there in the economy, we should avoid another recession.

Household balance sheets are in better shape, with indebtedness down about $100 billion in the first quarter, according to the New York Fed. Banks are more profitable: earnings have risen for 11 straight quarters, based on data compiled by the Federal Deposit Insurance Corp. Even the housing market is reviving, with starts through the first four months of this year 24 percent higher than the comparable 2011 period.

Stocks plunged on Friday on news that American employers last month added the fewest workers to their payrolls in a year while the jobless rate rose. Treasuries gained, sending yields to record lows, as investors sought refuge from rising financial strains in Europe and slowing growth in the U.S. and China. German and U.K. yields fell to all-time lows after the Spanish Economy Minister said the future of the euro is at stake.

Following the jobs report, the chief U.S. economist at JPMorgan Chase & Co. in New York, lowered his forecast for third-quarter economic growth to 2 percent from 3 percent. He sees the economy expanding 2.5 percent this quarter.

The chief executive officer of Decision Economics in New York, bumped up his odds of a recession next year to 15 percent from 10 percent.

Romney Versus Obama
Mitt Romney, the presumptive Republican nominee in November’s presidential election, seized on the jobs figures to attack Barack Obama. “It is now clear to everyone that President Obama’s policies have failed to achieve their goals,” he said in a statement.

The administration, seeking to blunt the political impact, highlighted private payroll gains over the past 27 months while promoting measures Obama has proposed to boost hiring.

The decline in jobs growth to 69,000 last month from a high this year of 275,000 in January was reminiscent of the labor- market cooling that occurred in both 2010 and 2011. Then as now, employers turned skittish as Europe’s sovereign-debt woes worsened.

Repeating the pattern of the last two years, the Fed Chairman and his fellow central bankers are likely to respond to the job-market weakness by announcing further steps to stimulate growth. The moves could come when the Fed meets on June 19-20 to decide monetary strategy.

More Pressure

Policy makers elsewhere face even more pressure to come up with ways to boost their economies. The European Central Bank may cut its benchmark interest rate from 1 percent as soon as this week, the chief economist at Berenberg Bank in London said in a June 1 report. China will respond with a 2 trillion yuan ($314 billion) fiscal stimulus this year and next, according to a senior managing director of New York-based ISI Group.

The U.S. is in “better shape” to weather the global economic tremors than it was in the past, and in comparison with other countries today, provided the euro region’s currency compact doesn’t collapse completely. He sees U.S. growth picking up to 2.5 to 3 percent in the second half of this year as consumer spending expands, encouraging employers to take on more workers.

Household Demand

Household purchases rose 0.3 percent in April, the Commerce Department reported on June 1. That followed a 2.7 percent annualized increase in the first quarter, the most since the final three months of 2010.

Demand is holding up at store chains. Retailers’ same-store sales topped analysts’ estimates in May. Sales at Minneapolis- based Target Corp. (TGT), the second-largest U.S. discount retailer, climbed 4.4 percent. Framingham, Massachusetts-based TJX Cos., the owner of T.J. Maxx and Marshalls, posted an 8 percent increase, reports showed last week.

While automobile sales slipped in May from April, they were still up 17 percent from a year earlier, according to Ward’s Automotive Group.

Consumers are benefitting from easier credit terms as financial institutions seek to put the money they’ve earned to work. U.S. banks “eased standards on credit card, auto and other consumer loans,” according to the Fed’s quarterly survey of senior loan officers, released on April 30.

Gasoline Prices

Investor nervousness over the world economy has pluses and minuses for U.S. households. On the negative side, it has pushed down stock prices, reducing household net worth. On the positive side, it has helped bring down gasoline prices and mortgage rates.

The average price of regular unleaded gasoline fell to $3.61 a gallon on May 31 from a 2012 high of $3.94 on April 5, according to AAA, the nation’s largest motoring group, as oil demand ebbed with the slowing world economy.

Economists feel that we’re benefitting from a global drop-off in commodity prices.

Rates for 30-year U.S. mortgages fell to a record as concern about Europe’s financial crisis drove investors to the safety of the government bonds that guide borrowing costs. The average rate for a 30-year mortgage dropped to 3.75 percent in the week ended May 31 from 3.78 percent, according to Freddie Mac, the McLean, Virginia-based mortgage financier.

Homebuilder Confidence

The drop in loan rates is aiding housing, the trigger for the worst recession since the Great Depression. Confidence among U.S. homebuilders jumped to a five-year high in May, the National Association of Home Builders/Wells Fargo index showed.

Toll Brothers Inc. is among builders benefiting from the revival in demand. Second-quarter profit at the Horsham, Pennsylvania-based company exceeded analysts’ estimates as orders surged 47 percent from a year earlier.

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Chinese Economy Puts Damper on US Exports

Story first appeared in USA Today.

The slowing economies of China and other emerging nations are stunting foreign demand for U.S. goods, jeopardizing one of the Obama administration's most ambitious economic initiatives.

In his 2010 State of the Union address, President Obama set a goal to double U.S. exports in five years — from $1.58 trillion in 2009 to $3.15 trillion by the end of 2014. With the world coming out of recession then, exports rebounded strongly at first — soaring 16.7% in 2010 and nearly 15% last year to $2.1 trillion, putting the U.S. ahead of schedule in meeting its goal.

A growing number of economists and trade experts say that performance is unlikely to be matched this year — or next — with much of Europe in a mild recession and two of the world's largest emerging economies, China and India, decelerating from a torrid pace of double-digit annual expansion.

The doubling of U.S. exports was an aspiration when it was disclosed, and now it seems an increasingly difficult objective to meet.

Exports are a key driver of the American economy, accounting for more than half its expansion last year. For every $1 billion of U.S. goods or services sold overseas, about 7,000 American jobs are created.

Driving exports is just one component of growing an even healthier economy. With 95% of the world's consumers outside the U.S., it would be a wasted opportunity not to promote our goods and services overseas.

Yet U.S. export growth could slow to 5% this year, and then climb to 7.5% or 8% for the next two years. To meet its goal, the U.S. needs about twice that growth rate — an average annual rise of 14.4% in exports — for each of the next three years.

U.S. exports to China, the largest export market outside of North America, have already decelerated from as high as 30% year-over-year growth rates in early 2011 to the single digits at the end of the year. They grew at a slower pace last year than U.S. exports to the rest of the globe as the world's second-largest economy grappled with high inflation and the threat of a housing bubble. U.S. exports of agricultural products, computer electronics and primary metals also fell sharply to China last year, after adjusting for price increases, according to an analysis by Brookings Institution, a Washington, D.C., think tank.

As China's growing demand for goods from elsewhere in the world slips as well, that could weigh on other countries' economies, and in turn, their desire for U.S. goods. China's voracious appetite for commodities such as iron and soy has fueled economic growth in countries including Australia, Chile and Brazil.

A Chinese slowdown would ripple through trade chains and put a squeeze on U.S. exporters, whether they ship directly to China or to other destinations. China has also lowered its 2012 economic growth target below 8% for the first time since 2005. Emerging nations such as India, Brazil and South Africa— which, along with China, are among the priority markets identified by the Obama administration because of their rising demand for U.S. goods — are also paring back expectations for expansion. And the developed world is grappling with a fresh recession in Europe, a slow Japanese recovery from last year's nuclear meltdown and sluggish growth elsewhere.

Mexico and Canada remain the U.S.' largest single export destinations, while the countries within the European Union account for roughly one-fifth of U.S. exports. Yet demand for American goods is rising fastest in emerging economies. Overall, 43% of U.S. exports now go to developing countries, compared with 32% a decade ago and 36% just five years ago, according to the International Monetary Fund.
The problem is, while the U.S. needs fast-growing emerging markets in order to meet its export target, there's little that the Obama administration can do to drive such growth in these markets.

With the outlook for the world economy constantly changing, it's understandable that there will be challenges ahead in meeting the ambitious goals. However, by striving to meet this goal, we're still helping U.S. companies to increase their presence overseas, export more products, and create more jobs here at home. Factory Audits and Qualifications Control is also needed to make sure that these exported products are of appropriate quality.

It's too early, to declare the export initiative to be successful or unsuccessful.

China's cooling growth chills U.S.

China's slowing growth is already starting to be felt across the U.S.

In Oregon, goods exported to China — the state's largest market — fell about a fifth last year. State exports of electronics, agricultural products and primary metals to the country also plunged, mirroring the national trend. Other states, from Nevada to Montana and Idaho, also saw merchandise exports to China drop in 2011.

Even so, the swelling middle class in China — as well as in other emerging markets in Asia and Latin America— holds huge opportunities for Oregon companies.

Portland is among a small group of cities forging ties with government officials and the corporate sector in fast-growing emerging markets such as China, Brazil, Vietnam and the Philippines. Portland's thinking is that, the more diversified the companies and the city, the less likely they are to lose employment.

That's also the hope for Portland shipbuilder Vigor Industrial, which has set its sights on Brazil, Chile and South Africa.

To capitalize on the boom in oil exploration, Vigor aims to export 200-foot-long vessels to Brazil that ferry people and equipment to offshore drilling platforms. It's already exporting to Chile filters that remove impurities from methane gas, which fuels generators used to make electricity. The company made the filters for a client and has looked at exporting them to South Africa as well. It also hopes to export ferries to Canada.

Had export relationships been established prior to the worldwide recession, the shipbuilding division may have done better.  The need for Manufacturing Engineering Services and Logistics Services also could have been established to ensure that product exported was at a premium.

But as growth cools again in the global economy, so could demand for Vigor's vessels.

Trade disputes cause worry

Even in a roaring global economy, it can be highly challenging to sell American goods in emerging markets such as China.

For instance, the growing number of trade disputes between the U.S. and China over poultry, solar cells and other products is a source of uncertainty. The fear is that escalating tensions could ignite a trade war that hurts manufacturers in both countries.

The U.S. buys nearly four times more from China than it sells — $399 billion compared with $104 billion in 2011 — yet exports from the U.S. to China have been rising at a faster pace than the other way around.

Market access also remains a key issue for U.S. companies doing business in China, as do Logistics Services to aid in moving the exported product..

And Chinese companies are coming into their own, competing with American firms for business in emerging and developing markets.

But perhaps the biggest obstacle for U.S. companies trying to tap into China's ballooning middle class is that the economy's growth remains skewed toward investment rather than consumption of goods.


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Impacts on Society from the Recession

Story first appeared in USA TODAY.

The dismal economy is having a profound effect on the American way of life, from delaying marriage and divorce to reducing car ownership and private school enrollment, according to new Census data.

Lingering bad times may alter expectations and lifestyles for years to come, some demographers say.
It's going to have a long-term impact and to say it's going to end is optimistic.
The Census Bureau's 2010 American Community Survey sent detailed annual questionnaires to 4.4 million people and was conducted separately from the 2010 Census.
What could become the new normal:
•Marrying later. The median age of first marriage has crept up to 28.7 for men and 26.7 for women, up from 27.5 and 25.9 respectively in 2006.
At the same time, fewer people are taking a trip to the altar, period. If the marriage rate had stayed the same as in 2006, there would have been about 4 million more married people in 2010.
•Fewer babies. There were 200,000 fewer births to women ages 20 to 34 in 2010 than just two years before even though the number of women in this prime age for having children grew by more than 1 million.
The recession is the likely cause. Economic recessions often reduce fertility because women delay … in uncertain times.
•Breaking up is harder to do. Divorces, which have been sliding for 25 years as people wait longer or choose to live together before tying the knot, continue to drop. There were about 65,000 fewer divorces in 2010 than in 2008, a 7% drop. This is not good news for a Raleigh Divorce Lawyer.
Part of that is the long-term trend, but some are convinced that some couples are delaying divorce because they can't afford to set up separate houses.
•Crowded living. After decades of steady increases, the share of solo households has stayed flat at just above 27% since 2006.
Unemployment and foreclosures are forcing more people to double up. Households that shared their homes with other relatives climbed from 6.7% in 2006 to 7.2% in 2010. Those sharing space with non-relatives have increased, too: 5.8% from 5.4%.
•Nobody's home. The home vacancy rate, a direct consequence of the housing collapse and record foreclosures, rose again in 2010 to 13.1% compared with 12.6% in 2009 and 11.6% in 2006.
•Driving solo. When people are not working, they don't carpool. The share of people ages 16 to 64 who worked dropped significantly in all but one of the 50 largest metropolitan areas (New Orleans). That has helped push the share of people driving to work alone from 76% in 2006 to 76.6% in 2010. Ride-sharing is down a full percentage point, to 9.7%.
The share of households without a car rose again to 9.1% vs. 8.8% in 2006. Households with two or more cars dropped from 58% to 57.1%.
•Going public. Private school enrollment is declining from 13.6% in 2006 to 12.8%.
The scary thing is that we're seeing the impact unfold in the younger age groups. Many college graduates are employed in jobs paying close to minimum wage with no benefits. These people are not going to be buying houses and they're certainly postponing marriage. We're just in the middle of a big transition.

Recession affecting every Aspect of American Life

USA Today

 

The nation's financial crisis is altering Americans' way of life from the home and the workplace to the highway and the altar, according to 2009 Census data released Tuesday.

Median household income — the level where half make more and half make less — fell 2.9% from $51,726 in 2008 to $50,221 last year, the second consecutive annual drop, according to the American Community Survey, far-reaching demographic data separate from the 2010 Census.

"The recession has affected every aspect of American life," says Mark Mather, a demographer at the Population Reference Bureau. "It doesn't matter if you're lower income or higher income, highly educated or just have a high school degree."

People are cautious because they don't know when the economy will improve, says Robert Lang, an urban sociologist at the University of Nevada-Las Vegas. "They're risk-averse," he says. "It's a short-term crisis but it's changing long-term expectations. Just like the Great Depression haunted the postwar years, this recession is so deep, its impact may alter the first several decades of this century."

The data show the impact of the recession that began in December 2007 — the National Bureau of Economic Research says it officially ended in June 2009 — and the housing bust that began earlier:

• Fewer people are moving. The share of people who haven't changed homes in the previous year climbed from 83.2% in 2006 to 84.6% in 2009.

• Delaying marriage. For the first time since the government began tracking the data, the share of women 18 and older who are married fell below 50%. "The recession has accelerated the trend," Mather says. "A lot of these young adults are choosing to live together rather than get married. It's kind of an adaptive response to the lack of jobs and economic uncertainty."

The share of adults ages 25 to 34 who have never married has jumped from 34.5% in 2000 to 46.3% in 2009, his analysis shows.

• Cars and home offices. The share of homes that have more than one car dropped, but the proportion of workers who worked from home jumped from 3.9% in 2006 to 4.3% last year. "The recession is altering behavior," Lang says. "It's the downsizing of America."

• Demand for higher education. The percentage of people holding a bachelor's degree or higher edged up to 27.9% in 2009, another potential effect of the recession. "You finish your bachelor's degree and there's no job available," Mather says. "More people are going for master's or some kind of professional degree."

Recession's Effects hit Majority in U.S.

USA Today

 

The worst economic slowdown since the Great Depression hurt more than half of Americans, especially younger people, minorities and those with a high school education or less, a Pew Research Center survey found.

"For a narrow majority of Americans, 55%, the Great Recession brought a mix of hardships, usually in combination: a spell of unemployment, missed mortgage or rent payments, shrinking paychecks and shattered household budgets," according to the survey released Friday. "But for the other 45% of the country, the recession was largely free of such difficulties."

The survey, taken May 11-31, reflects the responses of 2,967 people to eight questions designed to measure economic hardships experienced during the recession. The margin of error was plus or minus 2.2 percentage points.

Demographics largely distinguished people who "lost ground," including those who lost jobs, had trouble paying rent or had to borrow money from family or friends to pay bills, the survey found. Whites, older adults, the better educated and the more affluent were significantly less likely to report that they made major lifestyle changes because of the economy.

Almost half of all white respondents surveyed "held their own" during the recession compared with 33% of blacks and 29% of Hispanics. Additionally, older adults were "more sheltered" than younger people as about seven in 10 people age 65 and older "held their own," the survey said.

Only 47% of people in the eastern U.S. lost ground during the recession compared with almost 60% of the population feeling financial stresses in the Midwest, South and West, the survey said. The recession adversely affected a smaller proportion of suburban and rural residents than those in cities.

Almost two-thirds of those who fared worse withdrew money from savings and retirement funds, while 43% were jobless at some point during the recession, the survey found.

The half that better weathered the slump reported few instances of declining family income, a need to withdraw money from savings and retirement to pay bills or of deteriorating finances, the survey found. Less than 1% said they were unemployed.

The recession most affected peoples' spending habits, according to the survey. Slightly more than half of those who faced no major struggles during the recession reported their single biggest adjustment was in spending, compared with 33% of those who lost ground.

About half the people in both groups reported declining home values. About 80% of those surveyed said they believe "buying a home is the best investment that the average person can make."

Tracking Economic Recession And Recovery In America

Gov Monitor

Inflation-adjusted gross domestic product (GDP) grew at a rapid 5.9 percent annual rate in the last quarter of 2009, the fastest economic growth rate since the third quarter of 2003.

But that growth may simply be due to inventory replenishment and, if so, is unlikely to persist. Consumer spending rose in January, but house prices fell.

The unemployment rate remained steady at 9.7 percent in February, but long-term unemployment (unemployment of six months or more) hit a record high.

The nation lost 36,000 jobs in January, slightly more than it lost in December but many fewer than it lost in previous months. Even if recent modest job losses prefigure a return to new hiring, the kinds of large, sustained job gains that would be needed to bring the unemployment rate down seem unlikely in the near future.

The MetroMonitor, an interactive barometer of the health of America’s metropolitan economies, looks “beneath the hood” of national economic statistics to portray the diverse metropolitan landscape of recession and recovery across the country. It aims to enhance understanding of the local underpinnings of national economic trends, and to promote public- and private-sector responses to the downturn that take into account metropolitan areas’ distinct strengths and weaknesses.

This edition of the Monitor examines indicators through the fourth quarter of 2009 (ending in December) in the areas of employment, unemployment, output, home prices, and foreclosure rates for the nation’s 100 largest metropolitan areas.

It finds that:
The economic recovery spread steadily during 2009, with all of the 100 largest metropolitan areas registering growth in output during the fourth quarter of the year. The number of metropolitan areas that had a quarter-to-quarter gain in output rose from 19 in the second quarter of 2009 to 89 in the third quarter to 100 in the final quarter. With only two exceptions, once output began to increase it continued to increase in subsequent quarters. (In Baton Rouge and Portland (OR), output grew in the second quarter of the year, fell in the third quarter, and then grew again in the last quarter.)

Employment recovery has been much less widespread and less consistent than output recovery. The number of metropolitan areas that had quarter-to-quarter employment growth rose from six in the second quarter of 2009 to 14 in the third quarter to only 20 (Albuquerque, Austin, Charleston, Fresno, Harrisburg, Jackson, Louisville, New Orleans, Ogden, Oklahoma City, Oxnard, Phoenix, Poughkeepsie, Provo, Raleigh, Rochester, St. Louis, Toledo, Virginia Beach, and Washington) in the last quarter. Job growth in one quarter was no guarantee of continued job growth in subsequent quarters. Of the six metropolitan areas that gained jobs in the second quarter, all lost jobs in the fourth quarter, although four gained jobs in the third quarter. Of the 14 that gained jobs in the third quarter, only four continued to do so in the fourth quarter.

A substantial minority of metropolitan areas had made a complete output recovery by the fourth quarter of 2009 but only one had made a complete jobs recovery. Twenty-eight metropolitan areas had recovered their pre-recession levels of output in the fourth quarter, including Washington, DC, which never lost output during the last five years. However, only McAllen had regained its pre-recession employment level (as well as its pre-recession output level).

Sixty-three of the 100 largest metro areas lost a greater share of jobs eight quarters after the start of the Great Recession (the fourth quarter of 2007) than they did during the first eight quarters after the start of any of the previous three national recessions. Eight quarters after the start of the national recession, the 100 largest metropolitan areas combined had lost 4.6 percent of the jobs they had at the start of the Great Recession that began in 2007, compared to 1.9 percent for the 2001 recession, and 1.8 percent for the 1990–1991 recession. However, in the 1981–1982 recession, the 100 largest metropolitan areas had grown 0.1 percent in the first eight quarters after the start of the national recession. In general, the metropolitan areas that ranked lowest on the Monitor’s overall index (i.e., those that suffered most during the Great Recession and subsequent recovery) were also ones in which the jobs recovery was weaker after the Great Recession than after all three previous recessions. Those that ranked the highest were also ones in which the current recovery was stronger than after one or two of the previous three recessions/recoveries.

Housing markets remained weak, with house prices falling in all of the 100 largest metropolitan areas between the last quarter of 2008 and the last quarter of 2009. In contrast, 49 metropolitan areas showed house price gains between the third quarter of 2008 and the third quarter of 2009. Foreclosures continued to grow in most metropolitan areas in the fourth quarter; 56 metropolitan areas had increases in the number of real estate-owned (REO) properties during that quarter, although the 100 largest metropolitan areas combined registered a slight decline in their REO rate. The fact that economic recovery was beginning to occur despite continued weakness in housing markets suggests that continued economic recovery may not hinge on a real estate recovery.

While the nation as a whole had almost no job growth during the last decade, 17 metropolitan areas had double-digit job growth and 34 lost jobs during that time. The 17 metropolitan areas with double-digit job growth from the fourth quarter of 1999 to the fourth quarter of 2009 were all located in the South or West: Austin, Bakersfield, Boise, Cape Coral, Charleston, Houston, Lakeland, Las Vegas, McAllen, Ogden, Orlando, Phoenix, Provo, Raleigh, Riverside, San Antonio, and Washington. Notably, several of these metropolitan areas suffered severe job losses during the Great Recession as a result of the collapse of their housing markets such as Raleigh real estate, but those losses made only a modest dent in the enormous job gains that occurred in these areas earlier in the decade. The 34 metropolitan areas that lost jobs during the decade were located mostly in the Northeast and Great Lakes regions. They included not only metropolitan areas suffering from the continued loss of manufacturing jobs but also the high technology centers of San Jose and San Francisco.

Because of the Great Recession combined with pre-recession employment trends, 26 metropolitan areas lost 10 or more years of job growth, while 17 lost three or fewer years of job growth. In 26 metropolitan areas, employment in the fourth quarter of 2009 was at a level that had not been seen for 10 or more years. These areas were generally ones that rank low on our overall index, and many of them had been losing jobs even before the Great Recession began. At the extreme, Detroit, Youngstown, Dayton, and Cleveland had employment levels in the fourth quarter of 2009 that they had not had in more than 20 years. In contrast, there were 17 metropolitan areas where employment in the fourth quarter of 2009 was at a level last seen only three or fewer years ago. In these areas, which rank high on our overall index, the Great Recession made a relatively small dent in a high pre-recession job growth rate. In the metropolitan areas that suffered the most from the collapse of their housing markets (and that, therefore, were among the places that ranked lowest on our overall index), the Great Recession resulted in a loss of four to eight years of job growth. In Las Vegas, for example, employment in the fourth quarter of 2009 had dropped back to the same level it was at in the fourth quarter of 2004.

Overall, the economic indicators for the nation’s 100 largest metropolitan areas reinforce the national story of a weak, tentative, and jobless recovery.

However, vast differences in performance continued to separate the metropolitan areas that the recession hit the hardest from those less affected.

And when the Great Recession and its recovery are compared with previous recessions and recoveries, or when their impacts are considered in tandem with long-term job trends of the last decade, the contrasts between metropolitan areas are similar.

The World Economy: Pulling Apart

The Economist

The world's big economies were all hit by the recession. Now the field is spreading.

A YEAR ago almost every economy in the world was being walloped. The degree of pain varied. In rich countries output plunged; in China and some other emerging economies growth slowed sharply. But the slump was as striking for its synchronicity as its severity.

The opposite seems true of the recovery. China’s rebound began earliest and has been the most spectacular (see article). America’s economy began growing in the middle of 2009 and seems to have accelerated sharply in the final months of the year. Initial GDP estimates for the fourth quarter are due on January 29th, and many analysts expect annualised GDP growth to have shot up to 5.5% or more. News from the euro zone and Japan is rather gloomier. Germany emerged from recession before America, but its number-crunchers recently suggested that growth fell back to zero in the fourth quarter. The Japanese recovery also seems to be fading.

Shifting growth patterns could have big consequences for asset prices. Sustained strength in emerging economies, for instance, could push up commodity prices further, while a rapid rebound in America’s economy relative to Europe’s could strengthen the dollar more against the euro. So a lot rides on what is driving the divergence, and whether it lasts.

In America soaring GDP growth is likely to be a one-quarter wonder, driven by a rebuilding of firms’ shrivelled inventories. Output growth will slow in 2010—the question is by how much. Optimists argue that every deep post-war recession has been followed by a vigorous recovery and that growth will be well above its trend rate in 2010. But a gloomier outcome seems all too plausible. There are few signs of job growth. Much household-debt reduction still lies ahead. And there is the risk of a correction in stockmarkets.

But even a sluggish American recovery will outpace other big rich economies. The euro zone faces two different but equally painful problems. Former bubble economies such as Spain and Ireland are suffering a painful hangover. Germany, like Japan, is bedevilled by chronically weak domestic demand. Consumers are reluctant to spend and, so far, buoyant export growth has not incited firms to invest, despite hopes to the contrary.

The degree to which America outperforms the others will depend, in large part, on whether, and how, different countries tighten monetary and fiscal policy. There is a lot of talk about fiscal discipline within the euro zone, not least because financial markets are punishing Europe’s peripheral economies for their profligacy. Greece this month announced an unprecedented fiscal squeeze over the next three years. But Greece makes up only 3% of euro-area GDP, and rapid fiscal consolidation is much less likely in the big economies. The junior partner in Germany’s coalition government is pushing for tax cuts in 2011; France is railing loudly against the idea of cutting its deficit any time soon.

America’s budget outlook is rather more uncertain, especially in the light of the Republicans’ unexpected Senate victory in Massachusetts. The current stimulus package will stop boosting GDP growth by midyear. Thanks to the requirement that they balance their budgets, states are furiously cutting spending. Although the House of Representatives has passed an additional $150 billion-worth of job-boosting stimulus, the Senate has not yet done so. And if Congress does nothing, the Bush-era tax cuts expire at the end of the year. That seems unlikely, but political gridlock could cause America’s fiscal boost to fade unexpectedly sharply.

Policy decisions will also influence the relative strength of the recoveries in the emerging economies versus the rich world. Though China’s private demand strengthened a lot in the second half of 2009, growth is still largely driven by a government-directed lending boom. China’s short-term prospects thus depend on how quickly the government damps down the lending frenzy. Fears of tighter credit in China weighed on stockmarkets this week but the signs still point to very gradual tightening—and scant dampening of growth—in China and the rest of the emerging world.

Powerful structural factors will continue to reinforce the relative strength of the emerging world. Jonathan Anderson of UBS points out that even if you exclude China and India, emerging economies grew some four percentage points faster than rich economies during the recession, about the same growth gap that existed before the crisis. Some emerging economies, especially those that relied on foreign debt finance, will face prolonged problems. The World Bank argues in a new report that tighter financial conditions, thanks to tougher regulation and higher risk aversion, could reduce developing countries’ trend growth by 0.2-0.7 percentage points over the next five to seven years. Even so, the hit to potential growth in the rich world is likely to be bigger.

Persistent relative strength in emerging economies, especially China, suggests that commodity prices will stay stable or firm. It also means their currencies should rise against the dollar, though the pace will depend, more than anything, on China’s decisions about the yuan. Within the rich world, the growing transatlantic growth divide has helped buoy the dollar versus the euro: it is up by more than 5% from its lows in November. Will that rally continue? The answer depends as much on the likely policy mix as today’s growth differentials. Other things being equal, tighter fiscal policy suggests loose monetary policy for longer and a weaker currency. So relative fiscal discipline in America would push the dollar down, and vice versa.

A multi-speed recovery could also affect imbalances between countries’ current-account surpluses and deficits. America’s current-account deficit and China’s current-account surplus have both halved from their peaks as a result of the crisis, to around 3% and 6% of GDP respectively. Whether that reduction continues depends first on oil prices and second on the pattern of global demand. Imbalances will only stay low as the global economy recovers if surplus economies, especially China but also countries like Germany and Japan, rely on domestic demand while the big borrowers, especially America, cut their budget deficits and save more. Economies are now growing at different rates. They must also grow in different ways.

Recession Fuels Shift From Private To Public Schools

USA Today

Matt Dinnerstein and his wife Angela Allyn talk to two of their kids, Maya, 16, and Alec, 12, at home before school. Public schools are "going to get their tax dollars whether or not you as a parent are upset. If you're in a private school and you yank your kid out, that's a lot of money walking out the (private school's) door," says Allyn in regards to how schools treat parents.

When the family budget started feeling the recession's pinch last year, Angela Allyn and her photographer husband, Matt Dinnerstein, pulled their three kids out of Chicago-area private schools and enrolled them in Evanston, Ill., public schools.

It has been a challenging transition: Maya, 16, now a high school sophomore, "doesn't like crowds — and her high school is as big as a small college," her mother says. Though Maya is learning a lot in the "amazing" science program, she's also hoping to leave the crowds behind by doubling up on coursework, graduating by the end of junior year "and then going and doing interesting things," Allyn says. Her younger children face their own challenges, from bullying to sheer boredom.

The transition also has been an education for Maya's parents, who say they had "no choice" in the struggling economy but to switch to public schools.

They're saving about $20,000 a year in tuition, but like many former private-school families, they're coming face-to-face with larger class sizes and the public school bureaucracy as they push to get services for their children.

"We ask a lot of questions — we follow up on things," says Allyn, a former professional dancer who's the cultural arts coordinator for the city of Evanston. "We contact the school board. ... We'll challenge teachers, we'll challenge coordinators. My kids are mortified because they don't want to be singled out."

It's too early to tell whether the recession has had a profound effect on public schools' educational mission. But parents and educators across the nation say it's already bringing subtle changes to the culture of many public schools as some families seek the personal attention they received from private schools.

Private-school parents typically find that the structure of public schools takes some getting used to. In most states, funding for public schools is calculated on a per-student basis, based on average student counts during the first few weeks of the school year. If a student drops out after 40 days, the funding that student generated stays with the school — even if he or she does not return to that campus.

Private schools, on the other hand, risk losing tuition payments once a student leaves.

"Private schools tend to treat you more like a customer than the public schools," Allyn says. Public schools are "going to get their tax dollars whether or not you as a parent are upset. If you're in a private school and you yank your kid out, that's a lot of money walking out the (private school's) door."

Enrollment figures for the current school year won't be available until next year, but the U.S. Department of Education's latest estimate finds that from 2006 to 2009, public school enrollment grew by nearly a half-million students, or about 1%, while private school enrollment dropped by about 146,000, or 2.5%.

Government projections find that private schools could lose an additional 28,000 students this year, while public schools should gain 246,000.

Actually, the trend could be worse, says Thomas Toch of the Association of Independent Schools of Greater Washington. Private schools "have weathered the first year of the downturn pretty well by providing more financial aid to families — and in a few cases, significantly more financial aid," he says.

"Whether or not that model is sustainable is unclear."

A boost for public schools?

Stories about how the troubled economy is hurting public schools are plentiful these days: Many schools are cutting teaching positions and programs. The Los Angeles Unified School District, the USA's second-largest, laid off 2,000 teachers last spring and may need to lay off 5,000 more employees — including 1,500 teachers — next fall.

But could the recession benefit public schools in the end by bringing in a new clientele?

"In a way, it's a good thing for public schools," says New York University education professor Pedro Noguera. "I would say it's a good time for public schools to pitch the value they bring to middle-class parents."

He's starting to see the effects on the public system in New York City as affluent parents in parts of Brooklyn switch their children from private to public schools and in the process push the public schools to improve.

"College-educated parents are not going to subject their kids to second-class education," he says. So their influx "absolutely has a huge impact," whether it's by volunteering in classrooms or campaigning for more funding.

Most years, public schools rarely see more than a few new students as families come and go. Last fall at Thomas Johnson Elementary-Middle School in Baltimore, 60 new students showed up — about half of those from private schools, including a nearby Catholic school that closed in the spring because of dwindling enrollment.

James Dendinger, Johnson's principal, scrambled to accommodate them all, adding more lockers and an extra fourth-grade class, among other moves.

He also noticed that many families who in previous years would have started their kids in private schools' pre-kindergarten or kindergarten programs were applying to Johnson. Interest in those slots was so intense that he had to freeze new admissions from outside the neighborhood.

Since then, Dendinger has seen participation in Johnson's parent-teacher organization (PTO) grow — the group staged the school's first "fall festival" in five years as a fundraiser. "They're getting very involved," Dendinger says of the new parents.

Among the new students: first-grader Miles Donovan, who attended preschool at the recently shuttered Catholic Community school. At first, Miles' mother, jazz pianist Sandy Asirvatham, says she and her husband were stunned by the difference.

"I had to get past certain 'public school' things," she says, such as "big, big" classes unlike the tiny ones at Catholic Community.

"To see 27 5-year-olds in my son's kindergarten last year was quite shocking at first," she says. But she acknowledges that Miles has flourished.

"The energy of that room, as crazy as it could be sometimes, is something he really enjoyed," she says. So far, first grade has been "an incredible social learning experience for him that, in the small, rarefied environment of a private school, he might not have gotten."

Knowing the front office

Several parents at Johnson and surrounding schools in the Federal Hill section of Baltimore — once a blue-collar bastion that now attracts young professional families — say they sense a "critical mass" of families that's beginning to change the character of neighborhood schools.

At nearby Francis Scott Key Elementary-Middle School, Tiffany Harlow says her children — 11-year-old Mia and 5-year-old James — weren't the only ones who had to adjust to a different way of doing things after switching from private school.

Harlow remembers walking into the office at Catholic Community knowing the entire staff. "Now, when I go to this school, there's a lot of people — I might have never seen this person before."

Since signing her kids up at Key last fall, Harlow helped arrange several fundraisers and social events. As a lunchroom volunteer, she pushes kids to recycle those little foil juice boxes.

"There are a lot more parents who have the time, energy and skills to be involved," Asirvatham says. "They have the know-how to shake things up and get things done." And they tend to have a lot less patience when things don't go their way.

Miles Donovan attended kindergarten at another area public school, which invited students to take entrance exams for a gifted program. It accepted only 15 students per grade. Parents complained when their kids didn't get a slot, so the program was expanded to accommodate more kids — and other parents complained because it got too big.

A few families stuck with the program, others pulled out — and a few left the school altogether, Asirvatham says.

"You come with a certain sense of, 'This is my school, it should be working for me,' " she says of parents whose kids have been in private schools. "I've heard parents say, 'That principal is my employee. I pay her salary.' "

It's only natural that Dallas private school parents would think that way, says Jeanne Allen, president of the Washington, D.C.-based Center for Education Reform, which advocates for parental choice in education. "In a private school, you don't want to lose customers."

Allen has a few friends and colleagues who have moved their kids to public schools — and like conscientious private-school parents, they "know everything about the curriculum and what's expected of their child," she says. "They investigated how the teachers grade and how you best approach them, whether they like parents or are a little bit scared. They go out of their way to understand all of the offerings in a way that your public-school parent traditionally doesn't."

Allyn, in Evanston, Ill., agrees.

"Those of us who have seen other options are not as likely to accept the P.R.," she says. "They'll tell me, 'It can't be done, it can't be done,' and I don't understand why it can't be done, because the private schools managed to do it."

She says friends are still talking about how to get their kids into public schools with programs that suit their kids' needs and interests — much as they talked about private schools in years past. A few have gotten "so frustrated with their public school experience" — dealing with standardized testing and school bureaucracies — that they're considering home schooling.

Noguera says schools must take the opportunity to keep these families in the fold.

"Public schools play such an important role for our democracy as the only institution that serves all children," he says. "If you lose the people who have the power of choice because they have the resources and the information and the time to make a difference, it becomes a system that only serves people who have no other option. And that's a problem."