This is The Wall Street Digest Hotline Update for Tuesday, August 19, 2008, at 6:00 p.m. EST.
The last of the short-term market cycles are bottoming today. Hopefully, the sun will come out tomorrow. At the closing bell, the Dow plunged almost 131 points, closing at 11,348, while the Nasdaq fell 32 points, closing at 2,384. The S&P 500 closed almost 12 points lower at 1,266. Oil closed $1.66 higher at $114.53 per barrel, and gold closed $11.10 higher at $816.80 an ounce.
Stock prices fell today after inflation exceeded forecasts. Producer prices climbed the most since 1981. U.S. home builders broke ground on the fewest homes in 17 years. Work began on 30 percent fewer homes. July building permits, a sign of future construction, were down 18 percent in comparison to July 2007 building permits.
I will be adding new positions to our portfolio as new market leadership evolves. Biotechnology, medical equipment, and medical delivery are the current leaders. I would continue to avoid the money center banks, the brokerage and financial sectors, and the commodity area.
With slowing economic growth, home prices will continue to fall. I don't see a housing bottom until late 2009, at the earliest. The Fed must supply greater liquidity to the banking system. And Congress, sooner or later, will pass a deep tax cut to accelerate economic growth.
Stay close to our Tuesday/Friday Hotline Updates. I will continue to adjust our portfolio as needed.
The next Hotline Update will be on Friday, August 22, 2008, at 6:00 p.m. EST.
Friday, August 22, 2008
Builders' stocks rise as home sales fall
Updated 2/29/2008 9:46 AM
By Matt Krantz, USA TODAY
The news from the housing market keeps getting worse, but you wouldn't know it by looking at home-builders' stocks.
Shares of home builders gained Wednesday, continuing a head-turning performance this year. Even housing pessimists can't overlook a recent run that has:
•Pushed the Standard & Poor's (MHP) home-building index up 24.6% this year, making it the top-performing industry in 2008.
HOUSING NEWS: Sales and prices of new homes continue descent
•Created huge individual winners. Three of the five best gainers in the S&P 500 this year are home builders: Pulte, (PHM) at No. 1, is up 51%; D.R. Horton, (DHI) at No. 3, has gained 30%; and No. 5 KB Home (KBH) is up 26%.
Defied bad news. Wednesday, for instance, the government reported sales of new single-family homes in the country fell to a 13-year low. Meanwhile, Toll Bros., (TOL) a builder of high-end homes, reported a quarterly loss of $96 million on 23% lower revenue.
But that didn't faze the stocks. Toll shares rose 71 cents, or 3.1%, to $23.83. The iShares Dow Jones U.S. Home Construction exchange-traded fund, which tracks the industry, rose 1.4%, while the broad S&P 500 index fell 0.1% to 1380.
Housing has been one of Wall Street's concerns.
If the recovery in building stocks proves more than a short-term rally off depressed levels, analysts say it could bolster confidence in the broad market.
"It seems investors are starting to look ahead to see things will pick up (in housing) in the second half" of 2008, says Paul Hickey, co-founder of Bespoke Investment Group.
The optimists are betting the Federal Reserve's five-consecutive cuts to short-term interest rates since last September, and hints more may be on the way, will help the housing market stabilize, Hickey says.
Wednesday, regulators also authorized Fannie Mae (FNM) and Freddie Mac, (FRE) the biggest funders of mortgages, to buy more home loans.
But while some investors desperately want home-building stocks to bounce back, there are plenty of skeptics who say it's a mirage.
The 1,400% run-up in home-building stocks from 2000 to 2005 and subsequent 80% crash was nearly identical to the rise in dot-com stocks from 1995 to 2000 before the bubble burst, says James Stack of InvesTech Research.
Technology stocks rallied many times before finally bottoming in 2002, which Stack also expects with home-builders' shares. That's not to mention the big stockpile of unsold homes. "I'm skeptical we've hit bottom," he says.
In addition, it's unlikely for a former bubble industry, this time housing, to lead the market for a sustainable period this soon, says Bryan Sadoff of Sadoff Investment Management.
And that's why investors such as Ronald Muhlenkamp, portfolio manager of Muhlenkamp & Co., (MUHLX) still don't trust the rally. "We're waiting and seeing," he says.
Wednesday, August 20, 2008
Crude prices crank open prosperity spigot in Texas town
By Betsy Blaney and Alicia A. Caldwell, The Associated Press
KERMIT, Texas — Around the country, Americans are tightening their belts, scrapping vacation plans, eating more dinners at home, getting rid of their SUVs and watching "for sale" signs linger on front lawns. But in oil-and-gas-rich West Texas, folks are living large — again.
Most homes sell quickly and command premium prices. Hotel rooms are in scant supply. Gas guzzlers are rolling off auto dealers' lots. Jobs are plentiful in the oil and gas fields and the businesses that serve them.
Drillers and energy companies are reaping a bonanza from the run-up in oil that pushed the price past $140 a barrel this summer. This oil town of just over 5,100 people about 45 miles west of Odessa is awash in prosperity, and it's the same story across the rest of the Permian Basin, where about 20% of U.S. oil is produced.
So far, the boom has brought in hundreds of millions dollars to the region and more than 26,000 new jobs. In Midland and Odessa, the backbone of the region, the unemployment rates are the lowest in Texas, at just over 3.1% and 3.7% for July. That compares with 4.7% statewide and a U.S. average of 5.7%. "Help wanted" signs hang outside many restaurants, which frequently must turn away diners or close off sections when the crush of customers overwhelms the staff.
"There's just not enough people to work in the restaurants. The pay is so much better" in the oil fields, said Roy Gillean, owner of the Barn Door Steakhouse in Odessa and head of the Permian Basin chapter of the Texas Restaurant Association.
While plummeting home prices and record-high foreclosures have hit neighborhoods across the USA, this region is seeing the opposite. In Midland County, homes typically stay on the market for only a month, and prices are up 16.5% from last year.
Jed Heard, owner of a Cadillac dealership in Midland, said it's not unusual for someone to plunk down $65,000 in cash for a sport-utility vehicle.
The dealership said it set a sales record last year, and July's numbers are 18% ahead of July 2007.
Boom times are not new here. Neither are busts, and many people in and out of the oil business — home builders and developers among them — know the good times may not last.
Vida Simpson, a 59-year-old Kermit-area native, recalled earlier oil heydays, when the town had several grocery stores, two movie theaters and a slew of other shops. But the mother of two grown children also remembered the bust and the demise of her family furniture store. And she recalled the unfortunate young people who took oil-field jobs instead of going to college.
"I'm just fearful that they don't get caught up on a trap, like they did before," Simpson said.
Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
KERMIT, Texas — Around the country, Americans are tightening their belts, scrapping vacation plans, eating more dinners at home, getting rid of their SUVs and watching "for sale" signs linger on front lawns. But in oil-and-gas-rich West Texas, folks are living large — again.
Most homes sell quickly and command premium prices. Hotel rooms are in scant supply. Gas guzzlers are rolling off auto dealers' lots. Jobs are plentiful in the oil and gas fields and the businesses that serve them.
Drillers and energy companies are reaping a bonanza from the run-up in oil that pushed the price past $140 a barrel this summer. This oil town of just over 5,100 people about 45 miles west of Odessa is awash in prosperity, and it's the same story across the rest of the Permian Basin, where about 20% of U.S. oil is produced.
So far, the boom has brought in hundreds of millions dollars to the region and more than 26,000 new jobs. In Midland and Odessa, the backbone of the region, the unemployment rates are the lowest in Texas, at just over 3.1% and 3.7% for July. That compares with 4.7% statewide and a U.S. average of 5.7%. "Help wanted" signs hang outside many restaurants, which frequently must turn away diners or close off sections when the crush of customers overwhelms the staff.
"There's just not enough people to work in the restaurants. The pay is so much better" in the oil fields, said Roy Gillean, owner of the Barn Door Steakhouse in Odessa and head of the Permian Basin chapter of the Texas Restaurant Association.
While plummeting home prices and record-high foreclosures have hit neighborhoods across the USA, this region is seeing the opposite. In Midland County, homes typically stay on the market for only a month, and prices are up 16.5% from last year.
Jed Heard, owner of a Cadillac dealership in Midland, said it's not unusual for someone to plunk down $65,000 in cash for a sport-utility vehicle.
The dealership said it set a sales record last year, and July's numbers are 18% ahead of July 2007.
Boom times are not new here. Neither are busts, and many people in and out of the oil business — home builders and developers among them — know the good times may not last.
Vida Simpson, a 59-year-old Kermit-area native, recalled earlier oil heydays, when the town had several grocery stores, two movie theaters and a slew of other shops. But the mother of two grown children also remembered the bust and the demise of her family furniture store. And she recalled the unfortunate young people who took oil-field jobs instead of going to college.
"I'm just fearful that they don't get caught up on a trap, like they did before," Simpson said.
Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Foreclosures boost Bay Area home sales
MEDIAN PRICE IN VALLEY DIVES 19.7% FROM LAST YEAR
By Sue McAllister
Mercury News
Article Launched: 08/20/2008 01:30:34 AM PDT
Bargain-hunting home buyers scooping up foreclosure properties deserve credit for some rare good news about the battered Bay Area housing market: Home sales in the region were better last month than they were a year ago, the first time that's happened since 2005.
But in Santa Clara County, where the foreclosure problem is less severe, home sales were down 13 percent compared with July 2007, according to a report Tuesday from MDA DataQuick. That decline was less pronounced than in recent months.
Median prices, meanwhile, took a dive throughout the nine-county Bay Area, partly as a result of surging sales of low-priced homes. Of the previously owned homes sold in the nine-county region in July, one-third had been foreclosed upon in the past year.
"The good news about this is we're able to put first-time home buyers into all these REOs," said Joe Brown, president of realty brokerage Coldwell Banker Silicon Valley. "REO" means the property is "real estate owned" by a bank that has foreclosed upon it.
Around the Bay Area, the median price of the previously owned houses that changed hands in July tumbled 34 percent from a year earlier, to $485,000. In Santa Clara County, the median price slid to $646,500, 19.7 percent less than the July 2007 figure of $805,500. Condo prices in the county declined 16.5 percent to $430,000.
Certainly, one reason for the sharp price drops is that many homes have lost value. But a drastic change in "market mix" has exacerbated the plunge.
"All the cheap stuff out there is getting scooped up by people," said John Karevoll of DataQuick. Generally speaking, "the expensive stuff is on hold."
In July 2007, the opposite was true. Easy financing for no-money-down buyers had already dried up, so most sales that occurred were of more expensive homes, which drove the median price up. So the gap between median prices in summer 2007 and today is that much wider.
Software architect Yang Tang, a Santa Clara County resident who is relocating to San Francisco for a new job, just bought a one-bedroom condo in the Mission District after four months of looking with his agent, Hsin Feng of Coldwell Banker in Cupertino.
'Waiting game'
He's paying about $450,000 for the 700-square-foot home, which was previously foreclosed upon. As recently as April, "I think the same kind of places would have been right around $600,000 for one-bedroom, one-bath loft condos," he said. "It was a waiting game for those to come down to my price range."
Homeowners may wince at the recent slump in median prices, but the regional increase in sales - led by Contra Costa and Solano counties - should lift their spirits a bit. A total of 7,586 new and resale houses and condos changed hands in the Bay Area last month, up about 6 percent from June, and up 2.2 percent from 7,178 sales in July 2007. As buyers help reduce the supply of homes for sale, prices can begin to stabilize.
In parts of Santa Clara County hardest hit by foreclosures, sales have accelerated this summer as prices have fallen.
In September, for example, sales were so slow and for-sale homes so plentiful that it would have taken more than two years to sell all the houses on the market in Central, South and East San Jose. Now, given the sales pace and inventory over the past several weeks, it would take less than five months.
In Gilroy and Morgan Hill, there was a year's worth of houses for sale in mid-March, but today the supply is down to five months as well.
'Improved market'
"It's a dramatically improved market in those areas," said Richard Calhoun, who tracks the inventory trends using data from the multiple listing service.
Intero agent Paul B. Newman said multiple listing data shows that in South San Jose, for example, only 18 houses closed escrow in April, but the number rose to 47 closed sales in July.
"Values have dropped to a point where investors are coming in and buying those properties because they can get positive cash flow now," Newman said. That means the monthly rent for the properties is more than the investor-owner will spend on mortgage and tax expenses.
Coldwell Banker's Brown said it's hard to forecast fall's real estate market.
"Traditionally, we have a little bump after Labor Day, but we've had a bump in summertime, and we have these REOs coming online every day," he said. Brown said the "eternal optimist" in him wants to believe the surge in sales will continue through autumn.
Then again, he said, "there are so many moving parts, the dollar, the price of oil. We do not have the liquidity issue solved" - meaning mortgages are not always easy to obtain - "and yet we're having these sales. That points to some pent-up demand."
Contact Sue McAllister at smcallister@mercurynews.com or (408) 920-5833.
By Sue McAllister
Mercury News
Article Launched: 08/20/2008 01:30:34 AM PDT
Bargain-hunting home buyers scooping up foreclosure properties deserve credit for some rare good news about the battered Bay Area housing market: Home sales in the region were better last month than they were a year ago, the first time that's happened since 2005.
But in Santa Clara County, where the foreclosure problem is less severe, home sales were down 13 percent compared with July 2007, according to a report Tuesday from MDA DataQuick. That decline was less pronounced than in recent months.
Median prices, meanwhile, took a dive throughout the nine-county Bay Area, partly as a result of surging sales of low-priced homes. Of the previously owned homes sold in the nine-county region in July, one-third had been foreclosed upon in the past year.
"The good news about this is we're able to put first-time home buyers into all these REOs," said Joe Brown, president of realty brokerage Coldwell Banker Silicon Valley. "REO" means the property is "real estate owned" by a bank that has foreclosed upon it.
Around the Bay Area, the median price of the previously owned houses that changed hands in July tumbled 34 percent from a year earlier, to $485,000. In Santa Clara County, the median price slid to $646,500, 19.7 percent less than the July 2007 figure of $805,500. Condo prices in the county declined 16.5 percent to $430,000.
Certainly, one reason for the sharp price drops is that many homes have lost value. But a drastic change in "market mix" has exacerbated the plunge.
"All the cheap stuff out there is getting scooped up by people," said John Karevoll of DataQuick. Generally speaking, "the expensive stuff is on hold."
In July 2007, the opposite was true. Easy financing for no-money-down buyers had already dried up, so most sales that occurred were of more expensive homes, which drove the median price up. So the gap between median prices in summer 2007 and today is that much wider.
Software architect Yang Tang, a Santa Clara County resident who is relocating to San Francisco for a new job, just bought a one-bedroom condo in the Mission District after four months of looking with his agent, Hsin Feng of Coldwell Banker in Cupertino.
'Waiting game'
He's paying about $450,000 for the 700-square-foot home, which was previously foreclosed upon. As recently as April, "I think the same kind of places would have been right around $600,000 for one-bedroom, one-bath loft condos," he said. "It was a waiting game for those to come down to my price range."
Homeowners may wince at the recent slump in median prices, but the regional increase in sales - led by Contra Costa and Solano counties - should lift their spirits a bit. A total of 7,586 new and resale houses and condos changed hands in the Bay Area last month, up about 6 percent from June, and up 2.2 percent from 7,178 sales in July 2007. As buyers help reduce the supply of homes for sale, prices can begin to stabilize.
In parts of Santa Clara County hardest hit by foreclosures, sales have accelerated this summer as prices have fallen.
In September, for example, sales were so slow and for-sale homes so plentiful that it would have taken more than two years to sell all the houses on the market in Central, South and East San Jose. Now, given the sales pace and inventory over the past several weeks, it would take less than five months.
In Gilroy and Morgan Hill, there was a year's worth of houses for sale in mid-March, but today the supply is down to five months as well.
'Improved market'
"It's a dramatically improved market in those areas," said Richard Calhoun, who tracks the inventory trends using data from the multiple listing service.
Intero agent Paul B. Newman said multiple listing data shows that in South San Jose, for example, only 18 houses closed escrow in April, but the number rose to 47 closed sales in July.
"Values have dropped to a point where investors are coming in and buying those properties because they can get positive cash flow now," Newman said. That means the monthly rent for the properties is more than the investor-owner will spend on mortgage and tax expenses.
Coldwell Banker's Brown said it's hard to forecast fall's real estate market.
"Traditionally, we have a little bump after Labor Day, but we've had a bump in summertime, and we have these REOs coming online every day," he said. Brown said the "eternal optimist" in him wants to believe the surge in sales will continue through autumn.
Then again, he said, "there are so many moving parts, the dollar, the price of oil. We do not have the liquidity issue solved" - meaning mortgages are not always easy to obtain - "and yet we're having these sales. That points to some pent-up demand."
Contact Sue McAllister at smcallister@mercurynews.com or (408) 920-5833.
Monday, August 18, 2008
Despite declines, Silicon Valley still has most costly U.S. housing, survey says
STRONG JOB GROWTH SUPPORTS PRICE LEVELS IN SAN JOSE AREA
By Sue McAllister
Mercury News
Article Launched: 08/14/2008 03:49:41 PM PDT
Don't let those "price reduced" signs get you thinking that homeownership in Silicon Valley is a bargain: The San Jose metro area is still the nation's most expensive housing market, according to a national survey released Thursday.
True, the median price of houses sold in the San Jose metro area in the second quarter fell nearly 13 percent compared with a year earlier. But despite the decline, the median price of $755,000 was the highest of any metropolitan area in the country, a report from the National Association of Realtors said.
"The price decline in San Jose, relatively speaking by California standards, is more modest than in Southern California or Sacramento, because of the much stronger job growth," said Lawrence Yun, chief economist for the Realtors trade group.
The San Francisco metro area had the nation's second-most-expensive prices, with a median of $636,000, down 19 percent from the second quarter of 2007. Foreclosures in the eastern part of that metro area helped drag down the median price significantly; the metro area includes San Francisco, Marin, San Mateo, Alameda and Contra Costa counties. The San Jose metro area includes Santa Clara and San Benito counties.
The Sacramento-Roseville metro area earned the unwelcome distinction of having the country's most severe home price depreciation in the second quarter. Median prices fell nearly 36 percent from a year earlier, hitting $229,500. Riverside-San Bernardino posted a 33 percent decline, and the Los Angeles and Anaheim areas had decreases of more than 20 percent.
While most California home values deteriorated in the April-to-June period, median prices actually rose in nearly one-quarter of the metro areas represented in the Realtors report. Among those with biggest increases were Yakima, Wash., where an 8.9 percent gain brought the median price to $162,300. In Binghamton, N.Y., prices climbed 8.7 percent to $120,900.
In the states with the steepest price declines, buyers are coming back to the market, Yun said. There were 26 percent more sales in California in the second quarter than in the first, and 25 percent more in Nevada, for example.
To read the report and data tables, visit www.realtor.org.
Contact Sue McAllister at smcallister@mercurynews.com or (408) 920-5833.
By Sue McAllister
Mercury News
Article Launched: 08/14/2008 03:49:41 PM PDT
Don't let those "price reduced" signs get you thinking that homeownership in Silicon Valley is a bargain: The San Jose metro area is still the nation's most expensive housing market, according to a national survey released Thursday.
True, the median price of houses sold in the San Jose metro area in the second quarter fell nearly 13 percent compared with a year earlier. But despite the decline, the median price of $755,000 was the highest of any metropolitan area in the country, a report from the National Association of Realtors said.
"The price decline in San Jose, relatively speaking by California standards, is more modest than in Southern California or Sacramento, because of the much stronger job growth," said Lawrence Yun, chief economist for the Realtors trade group.
The San Francisco metro area had the nation's second-most-expensive prices, with a median of $636,000, down 19 percent from the second quarter of 2007. Foreclosures in the eastern part of that metro area helped drag down the median price significantly; the metro area includes San Francisco, Marin, San Mateo, Alameda and Contra Costa counties. The San Jose metro area includes Santa Clara and San Benito counties.
The Sacramento-Roseville metro area earned the unwelcome distinction of having the country's most severe home price depreciation in the second quarter. Median prices fell nearly 36 percent from a year earlier, hitting $229,500. Riverside-San Bernardino posted a 33 percent decline, and the Los Angeles and Anaheim areas had decreases of more than 20 percent.
While most California home values deteriorated in the April-to-June period, median prices actually rose in nearly one-quarter of the metro areas represented in the Realtors report. Among those with biggest increases were Yakima, Wash., where an 8.9 percent gain brought the median price to $162,300. In Binghamton, N.Y., prices climbed 8.7 percent to $120,900.
In the states with the steepest price declines, buyers are coming back to the market, Yun said. There were 26 percent more sales in California in the second quarter than in the first, and 25 percent more in Nevada, for example.
To read the report and data tables, visit www.realtor.org.
Contact Sue McAllister at smcallister@mercurynews.com or (408) 920-5833.
Wednesday, August 13, 2008
In a Generation, Minorities May Be the U.S. Majority
By SAM ROBERTS
Published: August 13, 2008
Ethnic and racial minorities will comprise a majority of the nation’s population in a little more than a generation, according to new Census Bureau projections, a transformation that is occurring faster than anticipated just a few years ago.
The census calculates that by 2042, Americans who identify themselves as Hispanic, black, Asian, American Indian, Native Hawaiian and Pacific Islander will together outnumber non-Hispanic whites. Four years ago, officials had projected the shift would come in 2050.
The main reason for the accelerating change is significantly higher birthrates among immigrants. Another factor is the influx of foreigners, rising from about 1.3 million annually today to more than 2 million a year by midcentury, according to projections based on current immigration policies.
“No other country has experienced such rapid racial and ethnic change,” said Mark Mather, a demographer with the Population Reference Bureau, a research organization in Washington.
The latest figures, which are being released on Thursday, are predicated on current and historical trends, which can be thrown awry by several variables, including prospective overhauls of immigration policies and sudden increases in refugees.
A decade ago, census demographers estimated that the nation’s population, which topped 300 million in 2006, would not surpass 400 million until sometime after midcentury. Now, they are projecting that the population will top 400 million in 2039 and reach 439 million in 2050.
So-called minorities, the Census Bureau projects, will constitute a majority of the nation’s children under 18 by 2023 and of working-age Americans by 2039.
For the first time, both the number and the proportion of non-Hispanic whites, who now account for 66 percent of the population, will decline, starting around 2030. By 2050, their share will dip to 46 percent.
Higher mortality rates among older native-born white Americans and higher birthrates rates among immigrants and their children are already driving ethnic and racial disparities.
“A momentum is built into this as a result of past immigration,” said Jeffrey S. Passel, senior demographer at the Pew Hispanic Center. “In the 1970s, ’80s and ’90s, there were more Hispanic immigrants than births. This decade, there are more births than immigrants. Almost regardless of what you assume about future immigration, the country will be more Hispanic and Asian.”
With the Census Bureau forecasting even more immigrants, other demographers estimate that the proportion of foreign-born Americans, now about 12 percent, could surpass the 1910 historic high of nearly 15 percent by about 2025 and may approach 20 percent in 2050.
According to the new forecast, by 2050, the number of Hispanic people will nearly triple, to 133 million from 47 million, to account for 30 percent of Americans, compared with 15 percent today.
People who say they are Asian, with their ranks soaring to 41 million from 16 million, will make up more than 9 percent of the population, up from 5 percent.
More than three times as many people are expected to identify themselves as multiracial — 16 million, accounting for nearly 4 percent of the population.
The population of people who define themselves a black is projected to rise to 66 million from 41 million, but increase its overall share by barely two percentage points, to 15 percent.
“What’s happening now in terms of increasing diversity probably is unprecedented,” said Campbell Gibson, a retired census demographer.
Several states, including California and Texas, have already reached the point where members of minorities are in the majority.
“Within the conventional definition of race, of white, black, Asian, minority vs. non-minority, this is a big change,” said David G. Waddington, chief of the Census Bureau’s population projections branch.
All the projections are subject to changing cultural definitions. The share of Americans who identify themselves as white, regardless of their ethnicity, will remain largely unchanged, declining from less than 80 percent in 2010 to about 76 percent when the majority-minority benchmark is reached in 2042.
“The way people report race 20 or 30 years from now may be very different,” Dr. Waddington pointed out.
The Census Bureau’s projections are likely to fuel debates over immigration policy, overpopulation and the changing electorate, and recall earlier eras when the Irish, the Italians and Eastern European Jews were not universally considered as whites. As recently as the 1960s, Hispanic people were not counted separately by the census and Asian Indians were classified as white.
William H. Frey, a demographer with the Brookings Institution, said that by the 2028 presidential election, racial and ethnic minorities will constitute a majority of adults between the ages of 18 and 29 for the first time.
Two years later, when all the baby boomers will have turned 65, nearly 20 percent of Americans, compared with fewer than 13 percent today, will be over 65. By 2050, about 89 million Americans will be in that group, more than double the number today.
“In 2020, the burdens of seniors to the white working-aged population become larger than the burdens of children,” Dr. Frey said.
The changes projected by the census point toward a nation in which the older population will be whiter (deaths will outnumber births among whites, beginning in the 2020s) and where black Americans will still have slightly higher rates of infant mortality and lower life expectancy.
Steven A. Camarota, research director for the Center for Immigration Studies, which favors limits on immigration, expressed concern about congestion and other issues related to population growth driven by the foreign-born.
Gregory Rodriguez, a senior fellow at the New America Foundation, a public policy institute, argued that while “assimilation became a dirty word in the 1960s and ’70s,” America has always been evolving and becoming enriched by new cultures, whether from Europe or from South America and Asia.
Indeed, Dr. Gibson, the retired census demographer, once estimated that in 1492 about 96 percent of the inhabitants of what is now the United States were American Indian and the rest of Polynesian origin. Well before the English landed in Jamestown, the Spanish became America’s first minority.
When the first census was conducted in 1790, about 64 percent of the people counted were white, a bit more than half of whom were of English origin. By 1900, about 9 in 10 Americans were non-Hispanic white, mostly of European ancestry.
The share of Americans who can trace their roots to immigrants directly from Europe has been shrinking. The federal Office of Management and Budget now defines whites as descendants of “the original peoples of Europe, North Africa or the Middle East.” Hispanic or Latino people, according to the same government agency, are of “Mexican, Puerto Rican, Cuban, Central or South American or other Spanish culture.”
“We may be using the same words 50 years from now,” said Mr. Passel, of the Pew Center, “but I feel confident in saying they’ll mean something different.”
Published: August 13, 2008
Ethnic and racial minorities will comprise a majority of the nation’s population in a little more than a generation, according to new Census Bureau projections, a transformation that is occurring faster than anticipated just a few years ago.
The census calculates that by 2042, Americans who identify themselves as Hispanic, black, Asian, American Indian, Native Hawaiian and Pacific Islander will together outnumber non-Hispanic whites. Four years ago, officials had projected the shift would come in 2050.
The main reason for the accelerating change is significantly higher birthrates among immigrants. Another factor is the influx of foreigners, rising from about 1.3 million annually today to more than 2 million a year by midcentury, according to projections based on current immigration policies.
“No other country has experienced such rapid racial and ethnic change,” said Mark Mather, a demographer with the Population Reference Bureau, a research organization in Washington.
The latest figures, which are being released on Thursday, are predicated on current and historical trends, which can be thrown awry by several variables, including prospective overhauls of immigration policies and sudden increases in refugees.
A decade ago, census demographers estimated that the nation’s population, which topped 300 million in 2006, would not surpass 400 million until sometime after midcentury. Now, they are projecting that the population will top 400 million in 2039 and reach 439 million in 2050.
So-called minorities, the Census Bureau projects, will constitute a majority of the nation’s children under 18 by 2023 and of working-age Americans by 2039.
For the first time, both the number and the proportion of non-Hispanic whites, who now account for 66 percent of the population, will decline, starting around 2030. By 2050, their share will dip to 46 percent.
Higher mortality rates among older native-born white Americans and higher birthrates rates among immigrants and their children are already driving ethnic and racial disparities.
“A momentum is built into this as a result of past immigration,” said Jeffrey S. Passel, senior demographer at the Pew Hispanic Center. “In the 1970s, ’80s and ’90s, there were more Hispanic immigrants than births. This decade, there are more births than immigrants. Almost regardless of what you assume about future immigration, the country will be more Hispanic and Asian.”
With the Census Bureau forecasting even more immigrants, other demographers estimate that the proportion of foreign-born Americans, now about 12 percent, could surpass the 1910 historic high of nearly 15 percent by about 2025 and may approach 20 percent in 2050.
According to the new forecast, by 2050, the number of Hispanic people will nearly triple, to 133 million from 47 million, to account for 30 percent of Americans, compared with 15 percent today.
People who say they are Asian, with their ranks soaring to 41 million from 16 million, will make up more than 9 percent of the population, up from 5 percent.
More than three times as many people are expected to identify themselves as multiracial — 16 million, accounting for nearly 4 percent of the population.
The population of people who define themselves a black is projected to rise to 66 million from 41 million, but increase its overall share by barely two percentage points, to 15 percent.
“What’s happening now in terms of increasing diversity probably is unprecedented,” said Campbell Gibson, a retired census demographer.
Several states, including California and Texas, have already reached the point where members of minorities are in the majority.
“Within the conventional definition of race, of white, black, Asian, minority vs. non-minority, this is a big change,” said David G. Waddington, chief of the Census Bureau’s population projections branch.
All the projections are subject to changing cultural definitions. The share of Americans who identify themselves as white, regardless of their ethnicity, will remain largely unchanged, declining from less than 80 percent in 2010 to about 76 percent when the majority-minority benchmark is reached in 2042.
“The way people report race 20 or 30 years from now may be very different,” Dr. Waddington pointed out.
The Census Bureau’s projections are likely to fuel debates over immigration policy, overpopulation and the changing electorate, and recall earlier eras when the Irish, the Italians and Eastern European Jews were not universally considered as whites. As recently as the 1960s, Hispanic people were not counted separately by the census and Asian Indians were classified as white.
William H. Frey, a demographer with the Brookings Institution, said that by the 2028 presidential election, racial and ethnic minorities will constitute a majority of adults between the ages of 18 and 29 for the first time.
Two years later, when all the baby boomers will have turned 65, nearly 20 percent of Americans, compared with fewer than 13 percent today, will be over 65. By 2050, about 89 million Americans will be in that group, more than double the number today.
“In 2020, the burdens of seniors to the white working-aged population become larger than the burdens of children,” Dr. Frey said.
The changes projected by the census point toward a nation in which the older population will be whiter (deaths will outnumber births among whites, beginning in the 2020s) and where black Americans will still have slightly higher rates of infant mortality and lower life expectancy.
Steven A. Camarota, research director for the Center for Immigration Studies, which favors limits on immigration, expressed concern about congestion and other issues related to population growth driven by the foreign-born.
Gregory Rodriguez, a senior fellow at the New America Foundation, a public policy institute, argued that while “assimilation became a dirty word in the 1960s and ’70s,” America has always been evolving and becoming enriched by new cultures, whether from Europe or from South America and Asia.
Indeed, Dr. Gibson, the retired census demographer, once estimated that in 1492 about 96 percent of the inhabitants of what is now the United States were American Indian and the rest of Polynesian origin. Well before the English landed in Jamestown, the Spanish became America’s first minority.
When the first census was conducted in 1790, about 64 percent of the people counted were white, a bit more than half of whom were of English origin. By 1900, about 9 in 10 Americans were non-Hispanic white, mostly of European ancestry.
The share of Americans who can trace their roots to immigrants directly from Europe has been shrinking. The federal Office of Management and Budget now defines whites as descendants of “the original peoples of Europe, North Africa or the Middle East.” Hispanic or Latino people, according to the same government agency, are of “Mexican, Puerto Rican, Cuban, Central or South American or other Spanish culture.”
“We may be using the same words 50 years from now,” said Mr. Passel, of the Pew Center, “but I feel confident in saying they’ll mean something different.”
Wednesday, August 6, 2008
Hundreds of banks will fail, Roubini tells Barron's
Sun Aug 3, 2008 3:52pm EDT
NEW YORK, Aug 3 (Reuters) - The United States is in the second inning of a recession that will last for at least 18 months and help kill off hundreds of banks, influential economist and New York University Professor Nouriel Roubini told Barron's in Sunday's edition.
Taxpayers will pay a big price for helping bail out the rest of the financial services industry as well, Roubini said -- at least $1 trillion and more likely $2 trillion.
The banks will become insolvent because of mounting losses as a result of the housing bust and because they have only written down their subprime loans so far, he said. Still in front of them are their consumer-credit losses, for which they lack the reserves, Barron's reported.
He also said there are hundreds of millions of dollars outstanding in home-equity loans that could be worth zero, too.
U.S. consumers, meanwhile, are "shopped out" and saving less, while the Federal Reserve's performance in handling the crisis has been poor, Roubini said, because it failed to see that the problem extended beyond subprime mortgage debt.
Now, Roubini told Barron's, the government is overregulating, bailing out troubled participants and intervening in every market.
"The regulators should investigate themselves for bailing out Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz), the creditors of Bear Stearns and the financial system with new lending facilities. They have swapped U.S. Treasury bonds for toxic securities," he told Barron's. "It is privatizing the gains and profits, and socializing the losses as usual. This is socialism for Wall Street and the rich."
He said that sometimes it is necessary to use public money to rescue institutions, but in a way that does not bail out the people who made the mistakes. "In each one of these episodes, the government bailed out the shareholders, the bondholders, and to some degree, management," Roubini told Barron's.
As for the banks that will go bankrupt, they will include community banks that finance homes, stores, downtown areas, commercial real estate and other mainstays of U.S. towns and cities, Roubini said.
"Of three dozen or so medium-sized regional banks, a good third are in distress," he told Barron's, saying half of the group could go bankrupt. Some big banks could wind up insolvent, he added, but said they might be deemed too big to fail.
Nouriel stressed that he is "quite bullish" about the state of the global economy and that he is positive about the medium and long term.
(Reporting by Robert MacMillan, editing by Martin Golan)
NEW YORK, Aug 3 (Reuters) - The United States is in the second inning of a recession that will last for at least 18 months and help kill off hundreds of banks, influential economist and New York University Professor Nouriel Roubini told Barron's in Sunday's edition.
Taxpayers will pay a big price for helping bail out the rest of the financial services industry as well, Roubini said -- at least $1 trillion and more likely $2 trillion.
The banks will become insolvent because of mounting losses as a result of the housing bust and because they have only written down their subprime loans so far, he said. Still in front of them are their consumer-credit losses, for which they lack the reserves, Barron's reported.
He also said there are hundreds of millions of dollars outstanding in home-equity loans that could be worth zero, too.
U.S. consumers, meanwhile, are "shopped out" and saving less, while the Federal Reserve's performance in handling the crisis has been poor, Roubini said, because it failed to see that the problem extended beyond subprime mortgage debt.
Now, Roubini told Barron's, the government is overregulating, bailing out troubled participants and intervening in every market.
"The regulators should investigate themselves for bailing out Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz), the creditors of Bear Stearns and the financial system with new lending facilities. They have swapped U.S. Treasury bonds for toxic securities," he told Barron's. "It is privatizing the gains and profits, and socializing the losses as usual. This is socialism for Wall Street and the rich."
He said that sometimes it is necessary to use public money to rescue institutions, but in a way that does not bail out the people who made the mistakes. "In each one of these episodes, the government bailed out the shareholders, the bondholders, and to some degree, management," Roubini told Barron's.
As for the banks that will go bankrupt, they will include community banks that finance homes, stores, downtown areas, commercial real estate and other mainstays of U.S. towns and cities, Roubini said.
"Of three dozen or so medium-sized regional banks, a good third are in distress," he told Barron's, saying half of the group could go bankrupt. Some big banks could wind up insolvent, he added, but said they might be deemed too big to fail.
Nouriel stressed that he is "quite bullish" about the state of the global economy and that he is positive about the medium and long term.
(Reporting by Robert MacMillan, editing by Martin Golan)
Tuesday, August 5, 2008
Wall Street Digest Hotline Update
This is The Wall Street Digest Hotline Update for Friday, August 1, 2008, at 6:00 p.m. EST.
Oil prices were up slightly today, while stock prices were down slightly. At the closing bell, the Dow lost 51 points, closing at 11,326, while the Nasdaq fell 14 points, closing at 2,310. The S&P 500 closed 7 points lower at 1,260. Oil closed $1.02 higher at $125.10 per barrel, and gold closed $5.20 lower at $917.50 an ounce.
This week's unemployment report indicated that 51,000 jobs disappeared in July, inching the unemployment rate higher to 5.7 percent.
The price of oil continues to weigh on the market. GM announced a $15.5 billion quarterly loss, along with a 32.4 percent sales decline in July. Ford sales were down 21.5 percent; and Toyota was down 18.7 percent. Chrysler was also down 34.2 percent in July.
With slowing economic growth, home prices will continue to fall. 2.5 million homes will face foreclosure over the next twelve months. I don't see a housing bottom until late 2009, at the earliest.
Keep in mind that market bottoms in August and September are rare. I will continue to trim positions from our portfolio as needed. Biotechnology is the new market leader. Stay close to our Tuesday/Friday Hotline Updates.
The next Hotline Update will be on Tuesday, August 5, 2008, at 6:00 p.m. EST.
Oil prices were up slightly today, while stock prices were down slightly. At the closing bell, the Dow lost 51 points, closing at 11,326, while the Nasdaq fell 14 points, closing at 2,310. The S&P 500 closed 7 points lower at 1,260. Oil closed $1.02 higher at $125.10 per barrel, and gold closed $5.20 lower at $917.50 an ounce.
This week's unemployment report indicated that 51,000 jobs disappeared in July, inching the unemployment rate higher to 5.7 percent.
The price of oil continues to weigh on the market. GM announced a $15.5 billion quarterly loss, along with a 32.4 percent sales decline in July. Ford sales were down 21.5 percent; and Toyota was down 18.7 percent. Chrysler was also down 34.2 percent in July.
With slowing economic growth, home prices will continue to fall. 2.5 million homes will face foreclosure over the next twelve months. I don't see a housing bottom until late 2009, at the earliest.
Keep in mind that market bottoms in August and September are rare. I will continue to trim positions from our portfolio as needed. Biotechnology is the new market leader. Stay close to our Tuesday/Friday Hotline Updates.
The next Hotline Update will be on Tuesday, August 5, 2008, at 6:00 p.m. EST.
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