Drop in homeownership likely to continue
Companies squeeze a lot more work out of smaller staffs
| In Japan, prices deflate again. Is that a win/win? We trim, blend, and append four 2009 articles from: (1) MarketWatch, Aug 4, on personal incomes by Rex Nutting (Washington bureau chief of MarketWatch); (2) USA Today, Aug 6, on home ownership by Haya El Nasser; (3) USA Today, Aug 12, on workload by Paul Davidson; and (4) BBC, Aug 11, on Japanese prices. |
by Rex Nutting, by Haya El Nasser, by Paul Davidson, and by BBC
- Personal incomes fall 1.3%
Personal incomes of US residents fell 1.3% in June, reversing the 1.3% gain in May that was due to a one-time stimulus payment to Social Security recipients.
Compensation of workers fell 0.3% in June, the eighth straight decline.
Incomes excluding transfer payments fell 0.8% in June and are down 6.7% since the recession began.
Real disposable incomes -- adjusted for inflation and after taxes -- fell 1.8% in June after a 1.5% gain in May. Disposable incomes are down 1% compared with a year earlier.
Personal incomes are down 1.7% since the recession began 19 months ago. Compensation has fallen 2.8%.
The recession has been deeper than previously reported. GDP is down 3.9% from its peak, the largest economic contraction in the post-World War II era.
Meanwhile, consumer spending rose 0.4%. After adjusting for inflation, real consumer spending dropped 0.1% in June, the third decline in the past four months. Real consumer spending is down 2% since the recession began.
Consumer prices increased 0.5% in June, the most in a year. Energy prices rose 8.3%.
JJS: Of course, less income translates into less ability to afford housing.
- Drop in homeownership likely to continue
Homeownership has long been viewed a key to building stable communities and middle-class families.
The percentage of households that owned or were buying homes hit a peak of almost 70% in 2004 and 2005. By the second quarter of this year, that slipped to 67.4%. Now, a University of Utah analysis projects it'll drop to about 63.5% by 2020 -- the lowest since 1985.
About 57% of the 30.3 million housing units added from 2005 to 2020 will be rentals.
Renting also may be more appealing because:
• Households are smaller. The youngest of 79 million Baby Boomers will turn 56 by 2020 and many will be empty nesters who favor small homes. The 20-something millennial generation is at a peak age for renting.
•It's tougher to buy. The subprime mortgage crisis is tightening credit availability.
•Some are new to the USA. Most recent immigrants rent.
JJS: With nowhere else to turn, employees feel forced to do more for less.
- Companies squeeze a lot more work out of smaller staffs
In a shrinking economy, companies have shed millions of jobs and trimmed hours of existing employees. The assertive cuts have buoyed productivity. Non-farm productivity rose at a 6.4% annual rate in the second quarter, the biggest gain since 2003 Q3. Economists expected a 5.5% jump. The productivity number shows that companies are wringing more out of each employee.
Since the recession's start in December 2007, productivity rose at an average annualized rate of 3.1% the first three quarters of 2008 and 1.6% in the first quarter of 2009. That's bad news for the jobless but should better position employers to hire again when demand returns, economists say. (Editor Notes: When demand returns from those with money since the unemployed or broke or poor can’t generate much demand.)
By comparison, productivity declined 1.3% in the first three quarters of the early 1980s recession and 0.1% during the 1990-91 slump. Employers also quickly shed workers as the economy stumbled in the 2001 recession. Productivity grew at an average 4.5% clip the last three quarters of 2001.
JJS: More output from less input is supposed, economists say, to cut prices Yet prices inflate in America and for other reasons deflate in Japan.
- Japanese prices in record decline
Japanese consumer prices fell by a record 1.7% in the year to June, driven down by falling fuel costs.
"A deflationary spiral isn't likely right now, as what we're seeing in the [consumer price index] is the reversal of the spike in energy prices last year," said David Cohen at Action Economics in Singapore.
The price of oil hit a record level of about $147 a barrel in July 2008 but fell back to almost $30 at the start of the year. It now stands at about $71 a barrel.
JJS: Deflation -- prices falling -- is typically presented as bad for you. But is it? By analogy, if you’re overweight and lose weight, that’s good. If you’re at healthiest weight and lose weight, that’s bad. So, can falling prices be good sometimes, bad sometimes? If food, fuel, clothes, cars, computers, and homes cost you less, and your income holds steady, why worry? And your income could hold steady -- even if your wages withered -- if you were receiving a share of the commonwealth, a Citizens Dividend. This extra income from society’s surplus, coupled with de-taxing our efforts, is something geonomics could deliver.
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Jeffery J. Smith runs the Forum on Geonomics.
|
Also see: Rescue the economy or rescue ourselves?
Mainly because six years of land bubble gone
Getting a raise for losing money? Come again? |
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