The median price for a single-family house fell 14% to $169,000 in the first quarter from a year earlier, the National Association of Realtors reported.
The trade group said first-time home buyers accounted for half of all purchases in the quarter, and many of them zeroed in on foreclosed homes. That dragged down the median, the Realtors said.
The median price for the latest quarter is down 26% from a peak of $227,600 in the third quarter of 2005. The latest median price was down from a year earlier in 134 of the 152 metro areas included in the survey.
The biggest increase was in the Cumberland area of Maryland and West Virginia, where the median price climbed 21% to $114,900. Debbie Grimm, manager of the Long & Foster real-estate brokerage in Cumberland, Md., said the area is attracting retirees and second-home buyers, particularly from Washington and Baltimore.http://online.wsj.com/article/SB124217092693512789.html
Wednesday, May 13, 2009
Retail Sales Post April Decline
The Wall Street Journal - WASHINGTON -- U.S. retail sales fell a second month in a row during April, as job losses and uncertainty about the economy put pressure on spending.
Retail sales decreased by 0.4% compared to the prior month, the Commerce Department said Wednesday. Economists expected an increase of 0.1%.
Sales in March were revised down, decreasing 1.3% instead of 1.2% as previously reported. Sales rose in January and February, after sliding six straight months.
Separately, U.S. import prices jumped last month by their largest amount in almost one year, reflecting a third-straight increase in oil prices. However, excluding oil, prices actually fell for a ninth-straight month, an indication that the global economic recession continues to take pressure off inflation in the U.S.http://online.wsj.com/article/SB124221752934414995.html#mod=testMod
Retail sales decreased by 0.4% compared to the prior month, the Commerce Department said Wednesday. Economists expected an increase of 0.1%.
Sales in March were revised down, decreasing 1.3% instead of 1.2% as previously reported. Sales rose in January and February, after sliding six straight months.
Separately, U.S. import prices jumped last month by their largest amount in almost one year, reflecting a third-straight increase in oil prices. However, excluding oil, prices actually fell for a ninth-straight month, an indication that the global economic recession continues to take pressure off inflation in the U.S.http://online.wsj.com/article/SB124221752934414995.html#mod=testMod
Officials at GM Sell Their Shares
The Wall Street Journal - Seven General Motors officials dumped all of the stock they directly own in the auto maker as it faces scenarios that would either dilute or wipe out common shareholders.
On Monday, the same day Chief Executive Fritz Henderson said the company still could avoid seeking bankruptcy protection, six insiders, but not Mr. Henderson, disclosed selling an aggregate 204,711 shares at prices from $1.45 to $1.61 a share, or $323,657 in total.
In 4 p.m. New York Stock Exchange composite trading Tuesday, GM's shares fell 20%, or 29 cents, to $1.15, its lowest close in 76 years, on April 27, 1933.
Vice Chairman Robert A. Lutz, who moved into an advisory role last month and will retire by the end of the year, had the largest transaction, selling 81,360 shares for $130,990.
The recent sales followed a disclosure last month that an independent fiduciary, citing the possibility of a GM bankruptcy, sold all of the GM shares in two employee-benefit plans. Also last month, Maureen Kempston Darkes, the president of GM Latin America, Africa and Middle East, disposed of 18,471 shares for $33,433.
"These particular executives made the decision to sell their shares in advance of what we know is going to be happening over the next few weeks," GM spokeswoman Julie Gibson said.
GM is facing a June 1 restructuring deadline from the government and could file for Chapter 11 bankruptcy protection if it is unable to complete a debt-for-equity exchange for $27 billion in unsecured bonds.
Stephen J. Lubben, a bankruptcy-law professor at Seton Hall University School of Law in Newark, N.J., said bankruptcy is the likeliest outcome for GM and would render the shares practically worthless. Even if the exchange offer were to succeed, investors would be left with shares that won't be worth much, he said.http://online.wsj.com/article/SB124213933912010873.html
On Monday, the same day Chief Executive Fritz Henderson said the company still could avoid seeking bankruptcy protection, six insiders, but not Mr. Henderson, disclosed selling an aggregate 204,711 shares at prices from $1.45 to $1.61 a share, or $323,657 in total.
In 4 p.m. New York Stock Exchange composite trading Tuesday, GM's shares fell 20%, or 29 cents, to $1.15, its lowest close in 76 years, on April 27, 1933.
Vice Chairman Robert A. Lutz, who moved into an advisory role last month and will retire by the end of the year, had the largest transaction, selling 81,360 shares for $130,990.
The recent sales followed a disclosure last month that an independent fiduciary, citing the possibility of a GM bankruptcy, sold all of the GM shares in two employee-benefit plans. Also last month, Maureen Kempston Darkes, the president of GM Latin America, Africa and Middle East, disposed of 18,471 shares for $33,433.
"These particular executives made the decision to sell their shares in advance of what we know is going to be happening over the next few weeks," GM spokeswoman Julie Gibson said.
GM is facing a June 1 restructuring deadline from the government and could file for Chapter 11 bankruptcy protection if it is unable to complete a debt-for-equity exchange for $27 billion in unsecured bonds.
Stephen J. Lubben, a bankruptcy-law professor at Seton Hall University School of Law in Newark, N.J., said bankruptcy is the likeliest outcome for GM and would render the shares practically worthless. Even if the exchange offer were to succeed, investors would be left with shares that won't be worth much, he said.http://online.wsj.com/article/SB124213933912010873.html
Monday, May 11, 2009
Advertising Losses Put Squeeze on TV News
The New York Times - It is getting so bad for local television stations that some are turning to newspapers for help.
The bankrupt Tribune Company has merged its TV stations and daily newspapers in Miami and Hartford, and it already produces a lighthearted morning show in south Florida with the help of the newspaper’s columnists. Bob Gremillion, the executive vice president for publishing, calls it a “circling the wagons” approach.
No one would dispute that “the two industries are very challenged,” he said. “We’re combining and fighting together.”
The mergers are an example of local TV’s agonizing search for new business models as some balance sheets turn red. Starting Monday in Chicago, four stations’ news departments are combining their camera crews. In other markets, stations are adding newscasts on the cheap even as they lay off people. On the opposite extreme, a handful of stations are closing their news divisions completely.
The news for stations has been grim lately: without election advertisements to defray the losses in automotive ads, a cross section of station owners reported 20 percent to 30 percent quarterly drops in revenue last week, suggesting that the local TV business is almost as weak as its print counterpart.
“Unfortunately, there was nowhere to hide during the current storm, as declines in both local and national advertising accelerated,” Timothy E. Stautberg, the chief financial officer for the E. W. Scripps Company, which owns newspapers in 14 markets and TV stations in 10 markets, told investors last week.
About two-thirds of Americans say they regularly get news from local TV, according to the Pew Research Center. News is responsible for 40 percent to 50 percent of a station’s revenue on average, and many stations are still profitable. But owners see their audiences splintering and they see their parent networks bypassing them on the Web. What they are struggling to maintain is relevance.http://www.nytimes.com/2009/05/11/business/media/11local.html
The bankrupt Tribune Company has merged its TV stations and daily newspapers in Miami and Hartford, and it already produces a lighthearted morning show in south Florida with the help of the newspaper’s columnists. Bob Gremillion, the executive vice president for publishing, calls it a “circling the wagons” approach.
No one would dispute that “the two industries are very challenged,” he said. “We’re combining and fighting together.”
The mergers are an example of local TV’s agonizing search for new business models as some balance sheets turn red. Starting Monday in Chicago, four stations’ news departments are combining their camera crews. In other markets, stations are adding newscasts on the cheap even as they lay off people. On the opposite extreme, a handful of stations are closing their news divisions completely.
The news for stations has been grim lately: without election advertisements to defray the losses in automotive ads, a cross section of station owners reported 20 percent to 30 percent quarterly drops in revenue last week, suggesting that the local TV business is almost as weak as its print counterpart.
“Unfortunately, there was nowhere to hide during the current storm, as declines in both local and national advertising accelerated,” Timothy E. Stautberg, the chief financial officer for the E. W. Scripps Company, which owns newspapers in 14 markets and TV stations in 10 markets, told investors last week.
About two-thirds of Americans say they regularly get news from local TV, according to the Pew Research Center. News is responsible for 40 percent to 50 percent of a station’s revenue on average, and many stations are still profitable. But owners see their audiences splintering and they see their parent networks bypassing them on the Web. What they are struggling to maintain is relevance.http://www.nytimes.com/2009/05/11/business/media/11local.html
Estimate of Budget Deficit Now Tops $1.84 Trillion
WASHINGTON — The economic crisis is already taking a toll on the Obama administration’s new budget projections, adding $90 billion to its already historically high estimates of deficits for both this fiscal year and next.
The changes, reported on Monday by the Office of Management and Budget, brings the deficit for this fiscal year, which ends Sept. 30, to $1.84 trillion from a February projection of $1.75 trillion. For fiscal 2010, the new estimate is $1.26 trillion, up from $1.17 trillion.
As measured against the size of the economy, this year’s shortfall would be 12.9 percent of the overall economy, or gross domestic product. Next year’s deficit would be 8.5 percent of G.D.P. Even before the latest revisions those levels are the highest in more than 60 years, since the end of World War II. http://www.nytimes.com/2009/05/12/business/economy/12budget.html
The changes, reported on Monday by the Office of Management and Budget, brings the deficit for this fiscal year, which ends Sept. 30, to $1.84 trillion from a February projection of $1.75 trillion. For fiscal 2010, the new estimate is $1.26 trillion, up from $1.17 trillion.
As measured against the size of the economy, this year’s shortfall would be 12.9 percent of the overall economy, or gross domestic product. Next year’s deficit would be 8.5 percent of G.D.P. Even before the latest revisions those levels are the highest in more than 60 years, since the end of World War II. http://www.nytimes.com/2009/05/12/business/economy/12budget.html
Sunday, May 10, 2009
Home Prices Continue to Crumble
New data shows existing-home sales near a 12-year low, with prices down close to 15%. J.P. Morgan economist Abiel Reinhart says there's evidence of continued pressure on the sector. Kelsey Hubbard reports.
Economists React: Jobs Report Is ‘Less Bad’
The Wall Street Journal - Economists and others weigh in on the smaller-than-expected decline in U.S. payrolls and the increase in the unemployment rate. # We remain cautious on the employment front, as job losses typically continue for 3-6 months after the trough of economic output. That suggests a peak in joblessness towards the end of the fourth quarter 2009, a peak which would cap off two full years of consistent monthly payroll declines… There’s some hope at the end of the rainbow, but the economy will keep busy hunting down the leprechaun for a few more months before we get there. –Guy LeBas, Janney Montgomery Scott
# Many are interpreting the April employment report as yet another sign that the economy is “stabilizing,” but the more accurate interpretation of these signs is that the economy’s pace of contraction is slowing, which is not quite the same as stability and s still a long way from the economy actually improving. –Richard F. Moody, Forward Capital
# This is less bad than the 690,000 average in February and March, and both manufacturing and service losses slowed, but it is hardly a triumph or even a stabilization. It is terrible, as is the rise in the unemployment rate to 8.9% from 8.5%. Soaring unemployment is depressing wage gains… There’s much further to go here; seriously bad news because without wage gains people can’t deleverage unless they cut spending deeply. –Ian Shepherdson, High Frequency Economicshttp://blogs.wsj.com/economics/2009/05/08/economists-react-jobs-report-is-less-bad/?mod=rss_WSJBlog?mod=blogmod
# Many are interpreting the April employment report as yet another sign that the economy is “stabilizing,” but the more accurate interpretation of these signs is that the economy’s pace of contraction is slowing, which is not quite the same as stability and s still a long way from the economy actually improving. –Richard F. Moody, Forward Capital
# This is less bad than the 690,000 average in February and March, and both manufacturing and service losses slowed, but it is hardly a triumph or even a stabilization. It is terrible, as is the rise in the unemployment rate to 8.9% from 8.5%. Soaring unemployment is depressing wage gains… There’s much further to go here; seriously bad news because without wage gains people can’t deleverage unless they cut spending deeply. –Ian Shepherdson, High Frequency Economicshttp://blogs.wsj.com/economics/2009/05/08/economists-react-jobs-report-is-less-bad/?mod=rss_WSJBlog?mod=blogmod
Recent Grads Face Hard Knock Times
Two recent college graduates are scraping by in the toughest job market in years. They're stuck between trying to find jobs that advance their careers and landing jobs that pay the bills. WSJ's Matt Rivera reports.
Saturday, May 9, 2009
Jobless Rate Still Rising, But Not As Fast
The New York Times - The American job market remains dreadful and is still worsening, but at a slower pace than before — good news given the stomach-churning events of recent months. The government’s monthly employment report buoyed hopes that the longest, most punishing recession since the Great Depression may be relenting.
The numbers for April looked good only by comparison with recent months, with February’s net job loss revised up to 681,000, from 651,000, and March’s net losses revised up to 699,000, from 663,000. The rise in the unemployment rate, from 8.5 percent in March, was mostly because more people began seeking jobs who had not previously been looking for work
Those holding more optimistic outlooks focus on the government-led initiatives to stimulate the economy. A $787 billion spending and tax cut package is beginning to wash through the economy. The Federal Reserve and the Treasury have been pouring money into mortgage markets and other areas, bringing down the costs of borrowing..http://www.nytimes.com/2009/05/09/business/economy/09jobs.html
The numbers for April looked good only by comparison with recent months, with February’s net job loss revised up to 681,000, from 651,000, and March’s net losses revised up to 699,000, from 663,000. The rise in the unemployment rate, from 8.5 percent in March, was mostly because more people began seeking jobs who had not previously been looking for work
Those holding more optimistic outlooks focus on the government-led initiatives to stimulate the economy. A $787 billion spending and tax cut package is beginning to wash through the economy. The Federal Reserve and the Treasury have been pouring money into mortgage markets and other areas, bringing down the costs of borrowing..http://www.nytimes.com/2009/05/09/business/economy/09jobs.html
Friday, May 8, 2009
U.S. Jobless Rate Hits 8.9%, but Pace of Losses Eases
The New York Times - The United States economy lost 539,000 jobs in April, the government reported on Friday, a sign that the relentless pace of job losses was starting to level off slightly but was still nowhere near ending.
A year ago, the loss of more than half a million jobs in a single month would have seemed like a disaster for the economy. On Friday, experts were calling it an improvement.
The Bureau of Labor Statistics reported that the unemployment rate surged to 8.9 percent in April, its highest point in a generation. But some economists saw glimpses of a bottom in the latest grim accounting of job losses.http://www.nytimes.com/2009/05/09/business/economy/09jobs.html
A year ago, the loss of more than half a million jobs in a single month would have seemed like a disaster for the economy. On Friday, experts were calling it an improvement.
The Bureau of Labor Statistics reported that the unemployment rate surged to 8.9 percent in April, its highest point in a generation. But some economists saw glimpses of a bottom in the latest grim accounting of job losses.http://www.nytimes.com/2009/05/09/business/economy/09jobs.html
A Shrinking Trade Deficit, at Least for Now
The New York Times - THE American trade deficit is collapsing at the fastest rate ever, a testament to the ability of a worldwide recession to sharply reduce global economic imbalances that had grown to unprecedented size.
The United States estimated this week that the trade deficit, as a percent of gross domestic product, fell to 2.4 percent in the first quarter of this year.
That is the smallest deficit in a decade, as can be seen in the accompanying chart. It is less than half of the deficit shown in the first quarter of 2008, when the American recession was new and not yet devastating other economies.
Few countries have reported first-quarter data as yet, and the American number will be revised. But what appears to be happening is that much of the pain from the fall in American consumption is being felt in other countries, since exporters in those countries supplied the products that Americans are no longer buying.
Declining trade deficits in the United States are likely to be matched by falling trade surpluses in countries that have historically been net exporters. That is one reason Germany’s economy appears to be faltering badly and China has embarked on a huge economic stimulus program.
The shrinking trade deficit is not being caused by a rebound in American exports. They are falling as well, but not nearly as much as imports are declining.http://www.nytimes.com/2009/05/02/business/02charts.html
Thursday, May 7, 2009
Obama Budget Cuts Point To Fights Ahead
Budget cuts detailed by the Obama administration Thursday set the President up for some fights down the road, WSJ's Jonathan Weisman reports. Despite cutbacks in 121 programs, the country's forecast deficit is still over a trillion dollars.
Move by General Growth Rattles Malls' Investors
The Wall Street Journal - When General Growth Properties Inc. sought Chapter 11 protection last month, it took a step its biggest debt holders had believed was impossible: It took 166 of its malls into bankruptcy with it.
The surprised debt holders had believed the malls would be insulated from the parent's bankruptcy because of the way General Growth had structured the assets.
General Growth's action has rattled investors throughout the $700 billion market for securities backed by commercial mortgages, or CMBS. Investors in other deals had also figured their investment was insulated from a parent company's bankruptcy. Now they're worried that General Growth's move will set a precedent that could affect them.
General Growth is the single largest CMBS borrower in the U.S. The CMBS market has grown up over the past two decades to become the major source of financing for commercial real estate.
Some of General Growth's biggest lenders have filed objections to the company's approach in bankruptcy court. A hearing is scheduled Friday to consider, among other things, whether General Growth can use cash flow from the 166 malls as part of its restructuring.
"The filing for so many of these well-capitalized, performing malls is an outrage," says Richard Jones, a lawyer at Dechert LLP, which represents some secured creditors in the General Growth bankruptcy case. "The company is doing something that would damage the entire CMBS industry."
General Growth's goal in taking the malls with it into Chapter 11 was to improve its bargaining position with lenders down the line, company executives said in court papers and media conference calls. In particular, General Growth hoped to be better positioned to bargain with its creditors to extend the terms of its debt and avoid foreclosure, the executives said.
But arranging the bankruptcy petitions for the malls required some maneuvering because of how their debt was structured.
In past years, to get the malls' mortgages, General Growth had set up 166 "special purpose entities" whose sole purpose was to borrow money. SPEs are attractive to lenders because, according to legal experts, they are "bankruptcy remote," meaning their cash flows are dedicated to paying debt service. The lenders issued securities backed by the SPEs. Holders of securities expect the structure would ensure they'd be paid even if the parent company went bust.
General Growth had to get approval from the board of each SPE before the malls could file for Chapter 11, legal experts say. In the weeks before the bankruptcy filings, General Growth replaced directors -- originally selected by Corporation Service Co., which specializes in staffing such boards -- on roughly 90% of its SPE boards.http://online.wsj.com/article/SB124163910180492861.html#mod=testMod
The surprised debt holders had believed the malls would be insulated from the parent's bankruptcy because of the way General Growth had structured the assets.
General Growth's action has rattled investors throughout the $700 billion market for securities backed by commercial mortgages, or CMBS. Investors in other deals had also figured their investment was insulated from a parent company's bankruptcy. Now they're worried that General Growth's move will set a precedent that could affect them.
General Growth is the single largest CMBS borrower in the U.S. The CMBS market has grown up over the past two decades to become the major source of financing for commercial real estate.
Some of General Growth's biggest lenders have filed objections to the company's approach in bankruptcy court. A hearing is scheduled Friday to consider, among other things, whether General Growth can use cash flow from the 166 malls as part of its restructuring.
"The filing for so many of these well-capitalized, performing malls is an outrage," says Richard Jones, a lawyer at Dechert LLP, which represents some secured creditors in the General Growth bankruptcy case. "The company is doing something that would damage the entire CMBS industry."
General Growth's goal in taking the malls with it into Chapter 11 was to improve its bargaining position with lenders down the line, company executives said in court papers and media conference calls. In particular, General Growth hoped to be better positioned to bargain with its creditors to extend the terms of its debt and avoid foreclosure, the executives said.
But arranging the bankruptcy petitions for the malls required some maneuvering because of how their debt was structured.
In past years, to get the malls' mortgages, General Growth had set up 166 "special purpose entities" whose sole purpose was to borrow money. SPEs are attractive to lenders because, according to legal experts, they are "bankruptcy remote," meaning their cash flows are dedicated to paying debt service. The lenders issued securities backed by the SPEs. Holders of securities expect the structure would ensure they'd be paid even if the parent company went bust.
General Growth had to get approval from the board of each SPE before the malls could file for Chapter 11, legal experts say. In the weeks before the bankruptcy filings, General Growth replaced directors -- originally selected by Corporation Service Co., which specializes in staffing such boards -- on roughly 90% of its SPE boards.http://online.wsj.com/article/SB124163910180492861.html#mod=testMod
Economy Beers Give Brewers Lift in Downturn
The Wall Street Journal - Mark Lehr's favorite beer is Heineken, but one recent afternoon, the Chicagoan emerged from a 7-Eleven with a 12-pack of Busch that cost him $8 -- about $7 less than a dozen Heinekens.
"My funds are limited right now," said the 39-year-old house painter, noting that he has had far fewer customers during the recession.
Sales of so-called economy brews, including Busch, Miller High Life and Pabst Brewing Co.'s Pabst Blue Ribbon, are rising faster than the nation's beer sales overall, and are helping industry giants Anheuser-Busch InBev NV and MillerCoors LLC weather the economic downturn.
Anheuser, based in Leuven, Belgium, is expected to report healthy sales at its U.S. unit when it posts first-quarter results Thursday, thanks in part to its stable of low-priced brews such as Natural Light and Busch Light.
Though less profitable, these brews are helping Anheuser offset slower sales growth for its larger brands. "We feel we have brands that can meet any consumer need," said Dave Peacock, president of the company's U.S. unit.http://online.wsj.com/article/SB124165010171893491.html#articleTabs%3Darticle
Monday, May 4, 2009
Losing Its Cool at the Mall
BEEN THERE, SEEN THAT Abercrombie & Fitch has seen a reduction in shopping traffic among teenagers.
The New York Times - AT the entrance to almost every shopping mall in the country, you will find a directory that, if you are spatially coordinated, will give you an approximate lay of the land. You can gauge the distance from Abercrombie & Fitch to its younger-skewing cousin, Hollister, or its older cousin, Ruehl, and find the way to their closest competitors in the teenager and young adult category, Aéropostale and American Eagle Outfitters.
But you will be no closer to discerning what drives the modern youth from one store to the next; what differentiates one’s frayed cargo shorts from another’s; or why one of them, Abercrombie, is facing a consumer revolt, while others are paradoxically upbeat. A clue: It has to do with price.
During years of rampant consumerism, where teenagers shopped was often more closely tied to what was happening in the pages of US Weekly or InStyle than their families’ financial circumstances. Empires like Abercrombie & Fitch were built on the premise that their products, even $80 jeans and $30 T-shirts with provocative graphics, would be perceived as luxury items if they were sold in the right way. But as teenagers’ priorities rapidly shift away from brands they now perceive as too expensive, the pecking order of mall stores has changed.http://www.nytimes.com/2009/04/23/fashion/23TEENS.html
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