Financial thoughts

Maricopa County in Arizona added more people than any other in the nation last year, according to a U.S. Census Bureau survey released Thursday.

Maricopa, which includes Phoenix, gained 102,000 residents, of which 79,000 were minorities. Of those residents, 60,700 people are Hispanic, making up nearly 77% of newcomers, according to the census.

All told, Maricopa had a minority population of 1.6 million, or 41% of its residents.

The annual survey tracks age, sex and race across counties with 10,000 or more people.

"It’s a fast-growing state and Maricopa is in the heart of that," said Greg Harper, a demographer with the Census Bureau.

The survey - based on estimates of U.S. population for July 1, 2007 - shows that nearly one in 10 counties in America has a population of more than 50% minority residents. This year’s tally comes to 302 counties, down from 303 counties in 2006.

New Orleans on the rise

The 2007 survey is also the first to show a resurgence of people to the counties devastated by Hurricane Katrina in August 2005.

Orleans Parish - home to New Orleans - had the largest increase in black population, gaining 20,800 African-Americans.

Neighboring St. Bernard Parish was the fastest growing county in the nation, with a 97.3% increase in population, according to Harper.

"To some degree, the New Orleans area is bouncing back," Harper said. "This growth is a rebound from Katrina."

Diverse L.A. County

Los Angeles County led the nation in terms of diversity: it had the country’s largest minority population, with 7 million people or 71% of the county’s total payday loans. L.A. county was home to one in every 14 of the nation’s minority residents.

The survey showed that the county had the largest Hispanic, Asian and American Indian and Alaska native population in the nation.

The county also had the nation’s largest population of white residents, with 2.9 million people.

Oldest and youngest counties

La Paz County, Ariz., had the country’s oldest population, according to the census. With 32% of its population 65 or older, it led 24 counties with at least one-quarter of their populations 65 or older.

According to the survey, four of the 10 counties with the highest proportion of children younger than 5 were in Texas. In 26 counties, 10% or more of total population was younger than 5.

Countywide change across the nation

• Largest concentration of Hispanics: Starr County, Texas, 97.3%.
• Largest African-American population: Cook County, Ill., 1.4 million.
• Largest concentration of blacks: Claiborne County, Miss., 84.5%.
• Largest increase in Asians: Santa Clara County, Calif., 18,400.
• Largest concentration of American Indian or Alaska Native population: Shannon County, S.D., 87%.
• Largest concentration of whites: Magoffin County, Ky., 98.9%.

 

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Singapore lowered its 2008 growth forecast for a second time this year as Prime Minister Lee Hsien Loong warned of a “bumpy year ahead,'' saying a U.S. slowdown will hurt the global economy.

The Southeast Asian economy will grow between 4 percent and 5 percent in 2008, Lee said in a televised National Day message today. The government had earlier estimated an expansion of as much as 6 percent this year, after growth of 7.7 percent in 2007.

Asian manufacturers face declining demand as a housing recession and financial turmoil slow expansion in the U.S., the region's largest overseas market. Accelerating inflation and higher fuel costs have also left consumers around the world with less to spend on music players and digital cameras.

“U.S. consumers are spending less, and that is affecting the whole global economy,'' Lee said. “The difficulties will probably drag on well into next year before getting better.''

The U.S. housing slump last year sparked a credit market rout that's still rippling through the global economy. Higher interest rates are causing housing-led expansions to crumble in the U.S. and Europe, and financial institutions worldwide have posted about $492 billion of credit losses and markdowns since the start of 2007, according to data compiled by Bloomberg.

“Singapore's economy has so far been partly buffered, because we have been carried along by the vibrancy of the Asian region,'' Lee said. “But Asian economies are starting to feel the impact of America's problems, and so are we. We must therefore prepare ourselves for a bumpy year ahead.''

GDP Growth

Singapore's economy grew 1.9 percent in the second quarter from a year earlier, after expanding 6.9 percent in the first three months of 2008, according to initial government estimates on July 10. The trade ministry will release an updated second- quarter growth figure at 8 a.m. on Aug. 11.

Growth was 4.5 percent in the first half, Lee said today. That suggests the economy expanded about 2.2 percent in the second quarter from a year earlier, according to Song Seng-Wun, an economist at CIMB-GK Securities Pte no teletrack payday loans. in Singapore. Economists surveyed by Bloomberg News estimate the economy grew 2 percent last quarter.

“It's hard to be upbeat in this global environment,'' Song said. “The Singapore dollar has certainly taken a hit because of the outlook on growth.''

The island's dollar fell the most in more than four years today on concern a slowing economy will prompt the central bank to favor a weaker currency.

Formula One

Singapore's consumer prices are climbing at the fastest pace in 26 years, and averaged 7.1 percent in the first half. The central bank in July raised its 2008 inflation forecast for a third time this year to a range of 6 percent to 7 percent.

“We cannot prevent these prices from going up, when prices are rising worldwide, and we import all our energy and food,'' Lee said. Singapore's inflation averaged 2.1 percent in 2007.

The island will play host to Formula One's first night Grand Prix in September and is building two casino-resorts, all aimed at tapping an increase in global travel. The government expects to double the number of overseas visitors to 17 million annually by 2015 and triple tourism receipts to S$30 billion ($21.4 billion) by then.

“These projects will create many good jobs, and keep our momentum up despite the uncertainties ahead,'' Lee said.

He also addressed the government's concern with a declining birth rate, as more Singaporeans choose to delay getting married and having children.

“We have implemented one measure after another over the years, but we have not succeeded in reversing the trend,'' the premier said. “We have to take this very seriously. To secure our long-term future, we also need enough babies to replace ourselves.''

The island celebrates its 43rd year of independence tomorrow.

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U.S. pending sales of previously owned homes unexpectedly rose in June as buyers swept up foreclosed and lower-priced properties.

The index of pending home resales rose 5.3 percent after a revised 4.9 percent decline in May, the National Association of Realtors said today in Washington. A separate report showed claims for jobless benefits jumped last week to a six-year high.

The most foreclosures on record have forced property values down enough to stir interest among buyers, helping to stabilize the market. Still, repossessions may keep mounting as stricter lending rules make it harder for owners to refinance their mortgages, economists said.

“What we're getting is a little bit of foreclosures thrown in with voluntary home sales,'' John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina, said in an interview with Bloomberg Television. “There seems to be enough of a price decline that buyers are starting to look for bargains.''

The measure increased in all four regions of the country from May, led by a 9.3 percent gain in the South. Purchase contracts also rose 4.6 percent in the West, 3.4 percent in the Northeast and 1.3 percent in the Midwest. Compared with a year ago, contract signings remained down in all four regions.

Sales “have been consistently strong'' in cities such as Sacramento, California, Las Vegas and Ft. Myers, Florida, according to the report. The increases are also broadening to more “affordable'' markets like Columbus, Ohio, and Charleston, West Virginia, the NAR also said.

Projected Drop

Economists had projected the index would fall 1 percent after a previously reported 4.7 percent decrease in May, according to the median of 37 forecasts in a Bloomberg News survey. The June gain is the third this year.

A separate report today from the Labor Department showed initial jobless claims increased by 7,000 to 455,000, the most since March 2002.

Stocks trimmed losses in the minutes following the housing report before resuming their decline. The Standard & Poor's 500 Index fell 0.9 percent to 1,278.1 at 11:23 a.m. in New York. Shares for homebuilders gained. Treasuries maintained earlier gains with the yield on the benchmark 10-year note at 3.99 percent compared with 4.05 percent late yesterday.

Pending resales were down 12 percent from June 2007, today's housing report showed.

`Hard Bounces'

“As the housing market tries to land on the runway, there's going to be a few hard bounces,'' said Brian Bethune, an economist at Global Insight Inc. in Lexington, Massachusetts. “Maybe you could think of this as a bounce up.

“The rate of decline is decelerating,'' Bethune added. “Affordability has improved. We're starting to move towards a bottom.''

The pending resales report is considered a leading indicator because it tracks contract signings same day payday loans. Closings, which typically occur a month or two later, are tallied in a separate report from the Realtors.

The group's figures on July existing home sales are due Aug. 25. Purchases in June fell 2.6 percent to a 4.86 million annual pace, the lowest level in a decade, from a 4.99 million rate the prior month. The median home price in June was $215,100, down 6.1 percent from the same month last year.

At the June sales rate, it would take 11.1 months to sell all the houses on the market, about twice the supply that reflects a balanced market, according to the agents' group.

`Floor on Prices'

“Buyers entering the hardest-hit markets, in some cases with multiple-bid offers, may have put a floor on prices,'' Lawrence Yun, the agents' group chief economist, said in a statement. “In addition, rising commodity prices and higher construction costs have resulted in a very unusual market today with existing-home prices being less than replacement building costs in some areas.''

Other measures are still signaling sales may keep dropping. The Mortgage Bankers Association's index of applications for loans to purchase a house reached a five-year low at the end of July.

Home prices in 20 U.S. metropolitan areas fell in May by 15.8 percent from a year earlier, the most on record, the S&P/Case-Shiller home-price index showed on July 29.

A surge in bank repossessions is contributing to the drop in property values. Foreclosure filings in the second quarter jumped 121 percent from a year earlier, RealtyTrac Inc., a seller of default data, said last month. Almost 740,000 properties were in some stage of foreclosure, the most since the Irvine, California- based company began reporting in January 2005.

Perry Cautious

“As long as housing is a negative portion of the economy, and I think that could well happen and continue to happen until say the beginning of 2009, it's hard for me to get really optimistic about a pickup'' in growth, Robert Parry, former president of the Federal Reserve Bank of San Francisco, said in an Aug. 5 Bloomberg Radio interview.

Homebuilders are struggling as sales drop. D.R. Horton Inc., the largest U.S. homebuilder, this week reported its fifth straight quarterly loss. The Fort Worth, Texas-based company recorded $330.4 million in pretax expenses to write down property value and abandon scheduled land purchases.

“We're continuing to cut at all levels,'' Chief Executive Officer Donald Tomnitz said during an Aug. 5 conference call with analysts. Foreclosures continue to “cloud'' the housing market, he said.

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Japan will try to avoid selling bonds to fund extra spending, the country's newly appointed finance minister said, indicating that large-scale measures to stimulate the faltering economy are unlikely.

“Except under extraordinary circumstances, we probably won't issue deficit-covering bonds'' to fund supplementary budgets, Finance Minister Bunmei Ibuki told reporters in Tokyo today. Ibuki was appointed in a Cabinet reshuffle last week.

Prime Minister Yasuo Fukuda today asked new Economic and Fiscal Policy Minister Kaoru Yosano to come up with ways to provide relief to companies and households facing rising food and fuel costs that are jeopardizing economic growth. They didn't discuss whether an extra budget would be needed to fund the measures, Yosano said.

“I don't think the prime minister was thinking of Keynes- like policies, such as additional public works projects and large reductions in income tax, when he spoke to Yosano,'' Ibuki said, referring to economist John Maynard Keynes's theory of increasing government spending to stimulate growth.

The government needs to find ways to soften the impact of “cost-push stagflation'' on the economy, he said. Record costs of imported energy and raw materials are sapping corporate profits and household income, slowing Japan's longest postwar expansion. The world's second-largest economy probably shrank last quarter for the first time in a year, economists predict.

Last Resort

Ibuki said on Aug. 2 that the government will consider using spare money and if funding falls short, the last resort may be an extra budget. The Finance Ministry has set aside 350 billion yen ($3.2 billion) of spare funds for unforeseen events in the general budget for the year ending March 2009.

The government has little room to provide additional spending because its debt is the largest in the industrialized world. Japan tried to spend its way out of economic doldrums in the 1990s, causing borrowings to swell to the current 180 percent of gross domestic product, according to an estimate by the Organization for Economic Cooperation and Development.

“We're trying to come up with a plan in the midst of very difficult circumstances,'' Yosano said today instant payday loan.

Slower growth is reducing tax revenue and the aging of the population is swelling welfare costs. Ibuki, 70, and Yosano, 69, said on Aug. 2 that the government can't rely on faster economic growth to achieve its goal of balancing the budget by March 2012, an indication that they may support raising taxes.

Sales Tax

Yosano said in May that Japan should double the sales tax from 5 percent by 2015 to help care for one of the most rapidly aging societies. Ibuki said on Aug. 2 that whether the tax will be raised should be discussed in the next two or three years.

Increasing the tobacco tax “could be an option, but it's not sure that it would boost tax revenues,'' Ibuki said. “It would be better to review it as a health issue.''

Lawmakers from ruling and opposition parties began meeting in June to discuss raising the tobacco tax. Hidenao Nakagawa, a former secretary-general of the ruling Liberal Democratic Party, wants the government to consider tripling the retail price of a pack of cigarettes to 1,000 yen to help fund welfare costs.

Adding to Japan's budgetary woes, the government needs to find a way to fulfill its pledge to increase its contribution to the national pension program to half from the current third by the year starting April 1. The government estimates that the extra burden may cost about 2.3 trillion yen a year, equivalent to revenue earned by a 1 percentage-point sales tax increase.

Ibuki was education minister under previous Prime Minister Shinzo Abe, and until last week served as the LDP's secretary- general, the party's No. 2 position.

He worked in the Finance Ministry's budget bureau after graduating with a degree in economics from Kyoto University. He's the first former official from the ministry to serve in the finance portfolio since Kiichi Miyazawa ended his last stint in the job in 2001. The father of two also worked at the Japanese embassy in London for four years.

Ibuki declined to comment on the currency market and the effect of a stronger yen on Japan's economy.

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Bunmei Ibuki was named Japan's finance minister as Prime Minister Yasuo Fukuda turns to a former finance ministry official to help stave off a recession and reduce the world's biggest public debt.

Ibuki, 70, replaces Fukushiro Nukaga amid concern that he failed to rein in spending enough to balance the budget by 2011. Kaoru Yosano, 69, was chosen as economic and fiscal policy minister, replacing Hiroko Ota and returning to the post he held under Junichiro Koizumi from 2005 to 2006.

Fukuda probably chose Ibuki, the Liberal Democratic Party's No. 2 official, as a way to shore up support from within the party. Yosano's appointment, meanwhile, may signal that he's serious about cutting the debt and nurturing a recovery in the world's second-largest economy, said economist Masamichi Adachi.

“The message behind Yosano's appointment is that Fukuda is not giving up on fiscal consolidation,'' said Adachi, a senior economist at JPMorgan Chase & Co. in Tokyo. “Ibuki isn't a big- picture guy, he's just a powerful politician.''

Hosting last month's Group of Eight summit failed to revive Fukuda's support in the polls, prompting the Cabinet reshuffle. His public approval rating has fallen by half since he took office in September, punctured by a feisty opposition that controls the less-powerful upper house of parliament, and criticism within his own party that he lacks a vision for Japan.

Ibuki was education minister under previous Prime Minister Shinzo Abe, and until today served as the LDP's secretary general. He worked in the Finance Ministry's budget bureau after graduating with a degree in economics from Kyoto University.

First Since Miyazawa

He's the first former Finance Ministry official to serve as finance minister since Kiichi Miyazawa ended his last stint in the job in 2001. The father of two also worked at the Japanese embassy in London for four years.

Yosano is head of the LDP's fiscal policy panel, charged with finding ways to cut debt that the Organization for Economic Cooperation and Development estimates at 182 percent of gross domestic product. He favors raising taxes and cutting spending to balance the budget.

Doubling the 5 percent consumption tax by 2015 would help Japan care for one of the world's most rapidly aging societies, Yosano said in a May interview paydayloans. “We may not be able to continue our good welfare system after a couple of years,'' he said.

Decisions on taxes may become more pressing as slowing growth causes revenue to decline. Still, even with Yosano in the Cabinet, Fukuda's declining popularity and the prospect of a general election within the next 12 months means any debate on the sales tax may be delayed.

Not Realistic

“I don't think it's realistic to expect the government to seriously discuss raising taxes right before the election,'' said Seiji Shiraishi, chief economist at HSBC Securities Japan Ltd. in Tokyo. “That's not the message Fukuda wants to send.''

The last prime minister to raise the sales tax, Ryutaro Hashimoto, had to resign after the 1997 increase led the LDP to an election defeat.

The government will probably miss its goal of balancing the books by the year ending March 2012, according to a Cabinet Office report last month. The Finance Ministry this week increased its cap on general spending for next fiscal year by 1.1 percent to 47.8 trillion yen ($444 billion).

Yosano and Ibuki will inherit an economy that may already be in a recession. Exports, production, household spending and wages all declined in June. Morgan Stanley yesterday cut Japan's 2009 growth estimate to 0.2 percent and said a “deepening recession'' was possible.

The new ministers probably won't try to influence decisions by the Bank of Japan, economists said. Though the central bank is independent, some officials in the past have urged the policy board to keep interest rates low to spur growth.

“The Bank of Japan doesn't have to worry about political pressure with this Cabinet reshuffle,'' said Shiraishi at HSBC.

The bank has “normalized'' rates without hurting financial markets and should keep doing so without interference from politicians, Yosano said in an interview in October. He said last month that raising the benchmark rate from the current 0.5 percent would reward Japan's savers.

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South Korea's exports rose at the fastest pace in four years in July to a record on sales of ships and mobile phones to China, the Middle East and Latin America.

Exports, which make up more than half of gross domestic product, surged 37.1 percent from a year earlier, the Ministry of Knowledge Economy said in Gwacheon today. That's up from June's 16.6 percent increase and beat the 29.1 percent median estimate in a Bloomberg News survey of 15 economists.

The report suggests overseas shipments will drive growth in Asia's fourth-largest economy as record fuel and food costs damp consumer spending. A weaker won, coupled with demand from emerging markets, have helped exporters including Hyundai Heavy Industries Co. weather a U.S. slowdown.

“Exports are holding up better than expected,'' said Lim Ji Won, an economist at JPMorgan Chase & Co. in Seoul. “Export growth may ease in the coming months amid a global economic slowdown, but will remain steady.''

Imports climbed 47.3 percent last month from a year earlier, led by soaring oil and raw material costs, resulting in a trade deficit of $1.62 billion, the biggest shortfall in six months.

The trade balance may turn to a surplus in the coming months as it takes about 20 days for the recent drop in oil prices to flow through to import prices, the ministry said.

The won fell 0.2 percent to 1,014.45 won versus the dollar at 11:08 a.m. in Seoul. The yield on the five-year government bond dropped 6 points to 5.80 percent. The Kospi index of stocks declined 1 percent to 1,577.79.

Middle East, China

Exports to Latin America surged 37.5 percent in the first 20 days of July, sales to China jumped 26.6 percent and shipments to the Middle East advanced 51.9 percent, today's report showed. Exports to the U.S. grew 6.5 percent.

Hyundai Heavy and Samsung Heavy Industries Co., the world's two largest shipbuilders, posted record second-quarter profits as they benefited from high prices amid a global shortage of vessels to carry goods and fuel fast cash loans.

South Korea's exports of ships almost tripled from a year earlier and those of petrochemical goods soared 155 percent. Exports of mobile phones rose 22 percent from a year ago, the report showed.

Hyundai Heavy received $19.8 billion in orders for ships, marine engines, offshore platforms and other products in the first six months of 2008, 62 percent more than a year earlier.

Net exports, the difference between exports and imports, powered more than half of the economy's second-quarter growth.

`Main Driver'

“Exports will continue to be the main driver of our economic growth as local demand stays weak,'' said Lee Sang Jae, an economist at Hyundai Securities Co. in Seoul.

Domestic demand is slowing. Households, burdened with record debt, were at their most pessimistic in almost four years in June. Manufacturers' confidence for August sank to the lowest level in more than three years.

Factory output rose 6.7 percent in June from a year earlier, the smallest gain in nine months. Sales of consumer goods declined 1 percent in June, the first drop in two years.

The Bank of Korea said last month that exports to China and emerging markets may keep the economy from cooling too much.

The won has fallen 8 percent this year against the dollar. That has aided South Korean exporters by making their products cheaper overseas even as it has driven up local prices by increasing the cost of imports.

Figures later today may show consumer prices jumped 5.7 percent in July from a year earlier, the highest in almost a decade, adding pressure on the central bank to raise interest rates, according to a survey of economists.

Bank of Korea Governor Lee Seong Tae and his board left interest rates at a seven-year high of 5 percent in July, saying economic growth will slow and inflation will remain high for a “significant period.''

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