When Michelle Bisutti, a 41-year-old family practitioner in Columbus, Ohio, finished medical school in 2003, her student-loan debt amounted to roughly $250,000. Since then, it has ballooned to $555,000.
It is the result of her deferring loan payments while she completed her residency, default charges and relentlessly compounding interest rates. Among the charges: a single $53,870 fee for when her loan was turned over to a collection agency.
"Maybe half of it was my fault because I didn't look at the fine print," Dr. Bisutti says. "But this is just outrageous now."
To be sure, Dr. Bisutti's case is extreme, and lenders say student-loan terms are clear and that they try to work with borrowers who get in trouble.
But as tuitions rise, many people are borrowing heavily to pay their bills. Some no doubt view it as "good debt," because an education can lead to a higher salary. But in practice, student loans are one of the most toxic debts, requiring extreme consumer caution and, as Dr. Bisutti learned, responsibility.
Unlike other kinds of debt, student loans can be particularly hard to wriggle out of. Homeowners who can't make their mortgage payments can hand over the keys to their house to their lender. Credit-card and even gambling debts can be discharged in bankruptcy. But ditching a student loan is virtually impossible, especially once a collection agency gets involved. Although lenders may trim payments, getting fees or principals waived seldom happens
Yet many former students are trying. There is an estimated $730 billion in outstanding federal and private student-loan debt, says Mark Kantrowitz of FinAid.org, a Web site that tracks financial-aid issues -- and only 40% of that debt is actively being repaid. The rest is in default, or in deferment, which means that payments and interest are halted, or in "forbearance," which means payments are halted while interest accrues.
Although Dr. Bisutti's debt load is unusual, her experience having problems repaying isn't. Emmanuel Tellez's mother is a laid-off factory worker, and $120 from her $300 unemployment checks is garnished to pay the federal PLUS student loan she took out for her son.
By the time Mr. Tellez graduated in 2008, he had $50,000 of his own debt in loans issued by SLM Corp., known as Sallie Mae, the largest private student lender. In December, he was laid off from his $29,000-a-year job in Boston and defaulted. Mr. Tellez says that when he signed up, the loan wasn't explained to him well, though he concedes he missed the fine print.
Loan terms, including interest rates, are disclosed "multiple times and in multiple ways," says Martha Holler, a spokeswoman for Sallie Mae, who says the company can't comment on individual accounts. Repayment tools and account information are accessible on Sallie Mae's Web site as well, she says.
Many borrowers say they are experiencing difficulties working out repayment and modification terms on their loans. Ms. Holler says that Sallie Mae works with borrowers individually to revamp loans. Although the U.S. Department of Education has expanded programs like income-based repayment, which effectively caps repayments for some borrowers, others might not qualify.
Heather Ehmke of Oakland, Calif., renegotiated the terms of her subprime mortgage after her home was foreclosed. But even after filing for bankruptcy, she says she couldn't get Sallie Mae, one of her lenders, to adjust the terms on her student loan. After 14 years with patches of deferment and forbearance, the loan has increased from $28,000 to more than $90,000. Her monthly payments jumped from $230 to $816. Last month, her petition for undue hardship on the loans was dismissed.
Sallie Mae supports reforms that would allow student loans to be dischargeable in bankruptcy for those who have made a good-faith effort to repay them, says Ms. Holler.
Dr. Bisutti says she loves her work, but regrets taking out so many student loans. She admits that she made mistakes in missing payments, deferring her loans and not being completely thorough with some of the paperwork, but was surprised at how quickly the debt spiraled.
She says she knew when she started medical school in 1999 that she would have to borrow heavily. But she reasoned that her future income as a doctor would make paying off the loans easy. While in school, her loans racked up interest with variable rates ranging from 3% to 11%.
She maxed out on federal loans, borrowing $152,000 over four years, and sought private loans from Sallie Mae to help make up the difference. She also took out two loans from Wells Fargo & Co. for $20,000 each. Each had a $2,000 origination fee. The total amount she borrowed at the time: $250,000.
In 2005, the bill for the Wells Fargo loans came due. Representatives from the bank called her father, Michael Bisutti, every day for two months demanding payment. Mr. Bisutti, who had co-signed on the loans, finally decided to cover the $550 monthly payments for a year.
Wells Fargo says it will stop calling consumers if they request it, says senior vice president Glen Herrick, who adds that the bank no longer imposes origination fees on its private loans.
Sallie Mae, meanwhile, called Mr. Bisutti's neighbor. The neighbor told Mr. Bisutti about the call. "Now they know [my dad's] daughter the doctor defaulted on her loans," Dr. Bisutti says.
Ms. Holler, the Sallie Mae spokeswoman, says that the company may contact a neighbor to verify an individual's address. But in those cases, she says, the details of the debt obligation aren't discussed.
Dr. Bisutti declined to authorize Sallie Mae to comment specifically on her case. "The overwhelming majority of medical-school graduates successfully repay their student loans," Ms. Holler says.
After completing her fellowship in 2007, Dr. Bisutti juggled other debts, including her credit-card balance, and was having trouble making her $1,000-a-month student-loan payments. That year, she defaulted on both her federal and private loans. That is when the "collection cost" fee of $53,870 was added on to her private loan.
Meanwhile, the variable interest rates continue to compound on her balance and fees. She recently applied for income-based repayment, but she still isn't sure if she will qualify. She makes $550-a-month payments to Wells Fargo for the two loans she hasn't defaulted on. By the time she is done, she will have paid the bank $128,000 -- over three times the $36,000 she received.
She recently entered a rehabilitation agreement on her defaulted federal loans, which now carry an additional $31,942 collection cost. She makes monthly payments on those loans -- now $209,399 -- for $990 a month, with only $100 of it going toward her original balance. The entire balance of her federal loans will be paid off in 351 months. Dr. Bisutti will be 70 years old.
The debt load keeps her up at night. Her damaged credit has prevented her from buying a home or a new car. She says she and her boyfriend of three years have put off marriage and having children because of the debt.
Dr. Bisutti told her 17-year-old niece the story of her debt as a cautionary tale "so the next generation of kids who want to get a higher education knows what they're getting into," she says. "I will likely have to deal with this debt for the rest of my life."
Wednesday, July 20, 2011
More Money for Struggling Homeowners
A new federal program is offering aid with a sweet kicker: It doesn't need to be repaid.
For the roughly four million homeowners who have fallen behind on their mortgage payments, the federal government is offering yet another remedy: free money to catch up on their loans.
The effort, called the Emergency Homeowners Loan Program, is the latest in the federal government's efforts to slow down the flood of foreclosures a necessary step to a meaningful recovery in the housing market, says a Department of Housing and Urban Development official. For people who have lost their jobs, the $1 billion program offers loans of up to $50,000 that don't actually need to be repaid, if applicants meet certain requirements.
The goal, says HUD, is to offer short-term aid to people who look like they'll be back on their feet soon. But critics say the loans may leave homeowners worse off in the long run. "This is a short run band-aid, a modest attempt to grapple with the severity of the situation," says Stuart Gabriel, director of the Ziman Center for Real Estate at the University of California, Los Angeles.
Rolled out by HUD and the nonprofit housing advocacy group NeighborWorks America, the program is making loans with far better terms than anything on offer at a local bank. The loans are interest-free. Payments go directly to the lender for a portion of the borrower's monthly mortgage, including missed payments or past due charges. And when the assistance period -- which runs for up to two years -- ends, 20% of the loan is forgiven with each passing year. In other words, for qualified borrowers who stay in their home for at least five years after the assistance period and who don't fall behind on their mortgage again, this money doesn't have to be paid back.
But some critics say that's where help for consumers ends. By taking this loan, borrowers risk falling further into debt. If they sell their home before the entire loan is forgiven, they'll be on the hook for the remaining amount. The same holds true if they fall behind on their mortgage payments again: they'll need to repay the remaining balance of the loan when they sell or refinance their home. Separately, borrowers aren't required to have equity in their home to receive this money, so someone who has to repay this loan risks owing more on the home later than they do now. For homeowners who are significantly underwater now, the loan may only delay foreclosure, says Gabriel. While the limit each person will get is up to $50,000, loans will average about $35,000 per person, according to NeighborWorks America.
Others say the program doesn't go far enough. The loans will be made available to around 30,000 applicants -- "a drop in the bucket," says Stu Feldstein, president at SMR Research, a housing and mortgage research firm. It's helpful, he says, but it won't be enough to seriously boost the ailing housing market. Roughly 4 to 4.5 million borrowers are behind on their mortgages by at least 90 days or are in foreclosure, accounting for roughly 8% of all mortgages. Housing analysts say the loss of income is the primary reason why borrowers are in danger of losing their homes. Those behind the program counter that the help will be significant for some. "If you are one of those 30,000 people, I think you should be very excited to get this help," says a NeighborWorks America spokesman.
The program started last week and will take applications through July 22. Many experts say it's still too early to say it will be successful, and so far federal assistance programs haven't impacted a significant number of borrowers. The government's Home Affordable Modification Program, which started in 2009 and was projected to help up to 4 million homeowners lower their mortgage payments has so far only permanently helped around 700,000 homeowners. To be eligible, homeowners must have lost income and be at risk of foreclosure due to involuntary job loss, underemployment or a medical or other economic condition; details on the application process are available online through
For the roughly four million homeowners who have fallen behind on their mortgage payments, the federal government is offering yet another remedy: free money to catch up on their loans.
The effort, called the Emergency Homeowners Loan Program, is the latest in the federal government's efforts to slow down the flood of foreclosures a necessary step to a meaningful recovery in the housing market, says a Department of Housing and Urban Development official. For people who have lost their jobs, the $1 billion program offers loans of up to $50,000 that don't actually need to be repaid, if applicants meet certain requirements.
The goal, says HUD, is to offer short-term aid to people who look like they'll be back on their feet soon. But critics say the loans may leave homeowners worse off in the long run. "This is a short run band-aid, a modest attempt to grapple with the severity of the situation," says Stuart Gabriel, director of the Ziman Center for Real Estate at the University of California, Los Angeles.
Rolled out by HUD and the nonprofit housing advocacy group NeighborWorks America, the program is making loans with far better terms than anything on offer at a local bank. The loans are interest-free. Payments go directly to the lender for a portion of the borrower's monthly mortgage, including missed payments or past due charges. And when the assistance period -- which runs for up to two years -- ends, 20% of the loan is forgiven with each passing year. In other words, for qualified borrowers who stay in their home for at least five years after the assistance period and who don't fall behind on their mortgage again, this money doesn't have to be paid back.
But some critics say that's where help for consumers ends. By taking this loan, borrowers risk falling further into debt. If they sell their home before the entire loan is forgiven, they'll be on the hook for the remaining amount. The same holds true if they fall behind on their mortgage payments again: they'll need to repay the remaining balance of the loan when they sell or refinance their home. Separately, borrowers aren't required to have equity in their home to receive this money, so someone who has to repay this loan risks owing more on the home later than they do now. For homeowners who are significantly underwater now, the loan may only delay foreclosure, says Gabriel. While the limit each person will get is up to $50,000, loans will average about $35,000 per person, according to NeighborWorks America.
Others say the program doesn't go far enough. The loans will be made available to around 30,000 applicants -- "a drop in the bucket," says Stu Feldstein, president at SMR Research, a housing and mortgage research firm. It's helpful, he says, but it won't be enough to seriously boost the ailing housing market. Roughly 4 to 4.5 million borrowers are behind on their mortgages by at least 90 days or are in foreclosure, accounting for roughly 8% of all mortgages. Housing analysts say the loss of income is the primary reason why borrowers are in danger of losing their homes. Those behind the program counter that the help will be significant for some. "If you are one of those 30,000 people, I think you should be very excited to get this help," says a NeighborWorks America spokesman.
The program started last week and will take applications through July 22. Many experts say it's still too early to say it will be successful, and so far federal assistance programs haven't impacted a significant number of borrowers. The government's Home Affordable Modification Program, which started in 2009 and was projected to help up to 4 million homeowners lower their mortgage payments has so far only permanently helped around 700,000 homeowners. To be eligible, homeowners must have lost income and be at risk of foreclosure due to involuntary job loss, underemployment or a medical or other economic condition; details on the application process are available online through
Saturday, July 9, 2011
The Next Big Boom Towns in the U.S
What cities are best positioned to grow and prosper in the coming decade?
To determine the next boom towns in the U.S., Forbes, with the help of Mark Schill at the Praxis Strategy Group, took the 52 largest metro areas in the country (those with populations exceeding 1 million) and ranked them based on various data indicating past, present and future vitality.
We started with job growth, not only looking at performance over the past decade but also focusing on growth in the past two years, to account for the possible long-term effects of the Great Recession. That accounted for roughly one-third of the score. The other two-thirds were made up of a a broad range of demographic factors, all weighted equally. These included rates of family formation (percentage growth in children 5-17), growth in educated migration, population growth and, finally, a broad measurement of attractiveness to immigrants -- as places to settle, make money and start businesses.
We focused on these demographic factors because college-educated migrants (who also tend to be under 30), new families and immigrants will be critical in shaping the future. Areas that are rapidly losing young families and low rates of migration among educated migrants are the American equivalents of rapidly aging countries like Japan; those with more sprightly demographics are akin to up and coming countries such as Vietnam.
Many of our top performers are not surprising. No. 1 Austin, Texas, and No. 2 Raleigh, N.C., have it all demographically: high rates of immigration and migration of educated workers and healthy increases in population and number of children. They are also economic superstars, with job-creation records among the best in the nation.
Perhaps less expected is the No. 3 ranking for Nashville, Tenn. The country music capital, with its low housing prices and pro-business environment, has experienced rapid growth in educated migrants, where it ranks an impressive fourth in terms of percentage growth. New ethnic groups, such as Latinos and Asians, have doubled in size over the past decade.
Two advantages Nashville and other rising Southern cities like No. 8 Charlotte, N.C., possess are a mild climate and smaller scale. Even with population growth, they do not suffer the persistent transportation bottlenecks that strangle the older growth hubs. At the same time, these cities are building the infrastructure -- roads, cultural institutions and airports -- critical to future growth. Charlotte's bustling airport may never be as big as Atlanta's Hartsfield, but it serves both major national and international routes.
Of course, Texas metropolitan areas feature prominently on our list of future boom towns, including No. 4 San Antonio, No. 5 Houston and No. 7 Dallas, which over the past years boasted the biggest jump in new jobs, over 83,000. Aided by relatively low housing prices and buoyant economies, these Lone Star cities have become major hubs for jobs and families.
And there's more growth to come. With its strategically located airport, Dallas is emerging as the ideal place for corporate relocations. And Houston, with its burgeoning port and dominance of the world energy business, seems destined to become ever more influential in the coming decade. Both cities have emerged as major immigrant hubs, attracting on newcomers at a rate far higher than old immigrant hubs like Chicago, Boston and Seattle.
The three other regions in our top 10 represent radically different kinds of places. The Washington, D.C., area (No. 6) sprawls from the District of Columbia through parts of Virginia, Maryland and West Virginia. Its great competitive advantage lies in proximity to the federal government, which has helped it enjoy an almost shockingly "good recession," with continuing job growth, including in high-wage science- and technology-related fields, and an improving real estate market.
Our other two top ten, No. 9 Phoenix, Ariz., and No. 10 Orlando, Fla., have not done well in the recession, but both still have more jobs now than in 2000. Their demographics remain surprisingly robust. Despite some anti-immigrant agitation by local politicians, immigrants still seem to be flocking to both of these states. Known better as retirement havens, their ranks of children and families have surged over the past decade. Warm weather, pro-business environments and, most critically, a large supply of affordable housing should allow these regions to grow, if not in the overheated fashion of the past, at rates both steadier and more sustainable.
Sadly, several of the nation's premier economic regions sit toward the bottom of the list, notably former boom town Los Angeles (No. 47). Los Angeles' once huge and vibrant industrial sector has shrunk rapidly, in large part the consequence of ever-tightening regulatory burdens. Its once magnetic appeal to educated migrants faded and families are fleeing from persistently high housing prices, poor educational choices and weak employment opportunities. Los Angeles lost over 180,000 children 5 to 17, the largest such drop in the nation.
Many of L.A.'s traditional rivals -- such as Chicago (with which is tied at No. 47), New York City (No. 35) and San Francisco (No. 42) -- also did poorly on our prospective list. To be sure, they will continue to reap the benefits of existing resources -- financial institutions, universities and the presence of leading companies -- but their future prospects will be limited by their generally sluggish job creation and aging demographics.
Of course, even the most exhaustive research cannot fully predict the future. A significant downsizing of the federal government, for example, would slow the D.C. region's growth. A big fall in energy prices, or tough restrictions of carbon emissions, could hit the Texas cities, particularly Houston, hard. If housing prices stabilize in the Northeast or West Coast, less people will flock to places like Phoenix, Orlando or even Indianapolis (No. 11), Salt Lake City (No. 12) and Columbus (No. 13). One or more of our now lower ranked locales, like Los Angeles, San Francisco and New York, might also decide to reform in order to become more attractive to small businesses and middle class families.
What is clear is that well-established patterns of job creation and vital demographics will drive future regional growth, not only in the next year, but over the coming decade. People create economies and they tend to vote with their feet when they choose to locate their families as well as their businesses. This will prove more decisive in shaping future growth than the hip imagery and big city-oriented PR flackery that dominate media coverage of America's changing regions.
The Next Big Boom Towns in the U.S.
No. 1: Austin, Texas
This is no surprise. Austin consistently sits atop Forbes' annual list of the best cities for jobs and scores highly in other demographics rankings. It is the third-fastest-growing city in the nation, attracting large numbers of college grads, immigrants and families with young children.
No. 2: Raleigh, N.C.
Raleigh has experienced the second-highest overall population increase and the third-highest job growth over the past two decades in the U.S. It also ranked among those regions seeing the biggest jump in new immigrants and is the No. 1 city for families with young children. The area is a magnet for technology companies fleeing the more expensive, congested and highly regulated northeast corridor. Affordable housing and short commute times are no doubt highly attractive to recent college graduates and millennials looking to start families.
No. 3: Nashville, Tenn.
The country music capital, with its low housing prices and pro-business environment, has experienced rapid growth in educated migrants, where it ranks an impressive fourth in terms of percentage growth. New ethnic groups, such as Latinos and Asians, have doubled in size over the past decade. A high quality of life, a vibrant cultural and music scene and a diverse population also make Nashville a desirable place to live.
No. 4: San Antonio, Texas
Like its other Texas neighbors, San Antonio boasts soaring population rates as well as a good job market and booming industry. One key factor in San Antonio's favor: stable house prices -- even by Texas standards. PMI Mortgage Insurance's most recent risk index, which is a two-year measure, lists San Antonio as having the lowest risk from falling prices among large Texas cities.
No. 5: Houston, Texas
Low housing prices, a stable job market and a vibrant immigrant community has helped Houston emerge as future boomtown. And with its burgeoning port and dominance of the world energy business, the area seems destined to become even more influential in the coming decade.
To determine the next boom towns in the U.S., Forbes, with the help of Mark Schill at the Praxis Strategy Group, took the 52 largest metro areas in the country (those with populations exceeding 1 million) and ranked them based on various data indicating past, present and future vitality.
We started with job growth, not only looking at performance over the past decade but also focusing on growth in the past two years, to account for the possible long-term effects of the Great Recession. That accounted for roughly one-third of the score. The other two-thirds were made up of a a broad range of demographic factors, all weighted equally. These included rates of family formation (percentage growth in children 5-17), growth in educated migration, population growth and, finally, a broad measurement of attractiveness to immigrants -- as places to settle, make money and start businesses.
We focused on these demographic factors because college-educated migrants (who also tend to be under 30), new families and immigrants will be critical in shaping the future. Areas that are rapidly losing young families and low rates of migration among educated migrants are the American equivalents of rapidly aging countries like Japan; those with more sprightly demographics are akin to up and coming countries such as Vietnam.
Many of our top performers are not surprising. No. 1 Austin, Texas, and No. 2 Raleigh, N.C., have it all demographically: high rates of immigration and migration of educated workers and healthy increases in population and number of children. They are also economic superstars, with job-creation records among the best in the nation.
Perhaps less expected is the No. 3 ranking for Nashville, Tenn. The country music capital, with its low housing prices and pro-business environment, has experienced rapid growth in educated migrants, where it ranks an impressive fourth in terms of percentage growth. New ethnic groups, such as Latinos and Asians, have doubled in size over the past decade.
Two advantages Nashville and other rising Southern cities like No. 8 Charlotte, N.C., possess are a mild climate and smaller scale. Even with population growth, they do not suffer the persistent transportation bottlenecks that strangle the older growth hubs. At the same time, these cities are building the infrastructure -- roads, cultural institutions and airports -- critical to future growth. Charlotte's bustling airport may never be as big as Atlanta's Hartsfield, but it serves both major national and international routes.
Of course, Texas metropolitan areas feature prominently on our list of future boom towns, including No. 4 San Antonio, No. 5 Houston and No. 7 Dallas, which over the past years boasted the biggest jump in new jobs, over 83,000. Aided by relatively low housing prices and buoyant economies, these Lone Star cities have become major hubs for jobs and families.
And there's more growth to come. With its strategically located airport, Dallas is emerging as the ideal place for corporate relocations. And Houston, with its burgeoning port and dominance of the world energy business, seems destined to become ever more influential in the coming decade. Both cities have emerged as major immigrant hubs, attracting on newcomers at a rate far higher than old immigrant hubs like Chicago, Boston and Seattle.
The three other regions in our top 10 represent radically different kinds of places. The Washington, D.C., area (No. 6) sprawls from the District of Columbia through parts of Virginia, Maryland and West Virginia. Its great competitive advantage lies in proximity to the federal government, which has helped it enjoy an almost shockingly "good recession," with continuing job growth, including in high-wage science- and technology-related fields, and an improving real estate market.
Our other two top ten, No. 9 Phoenix, Ariz., and No. 10 Orlando, Fla., have not done well in the recession, but both still have more jobs now than in 2000. Their demographics remain surprisingly robust. Despite some anti-immigrant agitation by local politicians, immigrants still seem to be flocking to both of these states. Known better as retirement havens, their ranks of children and families have surged over the past decade. Warm weather, pro-business environments and, most critically, a large supply of affordable housing should allow these regions to grow, if not in the overheated fashion of the past, at rates both steadier and more sustainable.
Sadly, several of the nation's premier economic regions sit toward the bottom of the list, notably former boom town Los Angeles (No. 47). Los Angeles' once huge and vibrant industrial sector has shrunk rapidly, in large part the consequence of ever-tightening regulatory burdens. Its once magnetic appeal to educated migrants faded and families are fleeing from persistently high housing prices, poor educational choices and weak employment opportunities. Los Angeles lost over 180,000 children 5 to 17, the largest such drop in the nation.
Many of L.A.'s traditional rivals -- such as Chicago (with which is tied at No. 47), New York City (No. 35) and San Francisco (No. 42) -- also did poorly on our prospective list. To be sure, they will continue to reap the benefits of existing resources -- financial institutions, universities and the presence of leading companies -- but their future prospects will be limited by their generally sluggish job creation and aging demographics.
Of course, even the most exhaustive research cannot fully predict the future. A significant downsizing of the federal government, for example, would slow the D.C. region's growth. A big fall in energy prices, or tough restrictions of carbon emissions, could hit the Texas cities, particularly Houston, hard. If housing prices stabilize in the Northeast or West Coast, less people will flock to places like Phoenix, Orlando or even Indianapolis (No. 11), Salt Lake City (No. 12) and Columbus (No. 13). One or more of our now lower ranked locales, like Los Angeles, San Francisco and New York, might also decide to reform in order to become more attractive to small businesses and middle class families.
What is clear is that well-established patterns of job creation and vital demographics will drive future regional growth, not only in the next year, but over the coming decade. People create economies and they tend to vote with their feet when they choose to locate their families as well as their businesses. This will prove more decisive in shaping future growth than the hip imagery and big city-oriented PR flackery that dominate media coverage of America's changing regions.
The Next Big Boom Towns in the U.S.
 ©Forbes Images |
This is no surprise. Austin consistently sits atop Forbes' annual list of the best cities for jobs and scores highly in other demographics rankings. It is the third-fastest-growing city in the nation, attracting large numbers of college grads, immigrants and families with young children.
 ©Forbes Images |
Raleigh has experienced the second-highest overall population increase and the third-highest job growth over the past two decades in the U.S. It also ranked among those regions seeing the biggest jump in new immigrants and is the No. 1 city for families with young children. The area is a magnet for technology companies fleeing the more expensive, congested and highly regulated northeast corridor. Affordable housing and short commute times are no doubt highly attractive to recent college graduates and millennials looking to start families.
 ©Forbes Images |
The country music capital, with its low housing prices and pro-business environment, has experienced rapid growth in educated migrants, where it ranks an impressive fourth in terms of percentage growth. New ethnic groups, such as Latinos and Asians, have doubled in size over the past decade. A high quality of life, a vibrant cultural and music scene and a diverse population also make Nashville a desirable place to live.
 ©Forbes Images |
Like its other Texas neighbors, San Antonio boasts soaring population rates as well as a good job market and booming industry. One key factor in San Antonio's favor: stable house prices -- even by Texas standards. PMI Mortgage Insurance's most recent risk index, which is a two-year measure, lists San Antonio as having the lowest risk from falling prices among large Texas cities.
 ©Forbes Images |
Low housing prices, a stable job market and a vibrant immigrant community has helped Houston emerge as future boomtown. And with its burgeoning port and dominance of the world energy business, the area seems destined to become even more influential in the coming decade.
Friday, July 8, 2011
Job outlook rises as reports suggest more hiring
WASHINGTON (AP) -- June may turn out to have been a good month to find a job after all.
A private report said businesses hired twice as many workers as economists had expected. Applications for unemployment benefits have reached a seven-week low. And more small businesses say they plan to increase hiring in the next three months, a trade association said.
The brighter outlook for jobs emerged one day before the government will issue the June employment report, regarded as the most reliable gauge of job creation.
The three reports suggested that the overall economy may also be starting to strengthen now that gas prices have begun to decline and supply disruptions stemming from Japan's crises have started to ease.
Economists responded to the latest data by raising their forecasts for hiring in June. Many now estimate that employers added at least 120,000 jobs. Some are predicting as many as 200,000 net new jobs for June.
That's well above the consensus forecast for 90,000, based on a survey of economists by FactSet. And it could signal that weak hiring in May was a setback caused by temporary factors.
"The end of job growth may have been reported prematurely," said Joel Naroff, chief economist at Naroff Economic Advisors.
The outlook brightened Thursday morning after payroll processor ADP said the private sector added 157,000 jobs last month. That was more than double the number economists had forecast. And it was much higher than the 36,000 jobs that ADP said employers had added in May.
Stocks rose after the report was released. The Dow Jones industrial average gained more than 118 points in afternoon trading.
Many economists said the ADP report was the reason they revised up their forecasts for the government's jobs report to be issued Friday.
Nigel Gault, chief U.S. economist at IHS Global Insight, raised his projection for net job gains in June from 100,000 to 140,000. Ian Shepherdson, chief U.S. economist at High Frequency Economics, boosted his forecast from 100,000 to 175,000.
"We always took the view that May was hit by one-time factors like severe weather and supply-chain disruptions, but this report suggests those factors were more significant than we thought," Shepherdson said.
In May, employers added only 54,000 jobs, far fewer than the average gain of 220,000 in the previous three months. The unemployment rate rose to 9.1 percent from 9 percent in April.
Among the evidence Thursday that the economy might be starting to pick up after a sluggish first half of the year:
-- Retailers posted strong sales in June, boosted by widespread discounts. Target Corp., Costco Wholesale Corp. and Limited Brands Inc. all exceeded Wall Street estimates. The International Council of Shopping Centers said retailers collectively enjoyed their best June in 12 years, based on a tally of 28 store chains. The figures are based on revenue at stores open at least a year.
-- The number of people who applied for unemployment benefits fell to a seasonally adjusted 418,000 last week, the Labor Department said. That's the lowest level in nearly two months. Still, applications have topped 400,000 for 13 weeks, evidence that the job market has weakened since the year began.
-- Small businesses say they're more likely to boost hiring in the next three months, according to a survey by the National Federation of Independent Business. In May, more companies said they planned to cut jobs.
And 15 percent of small companies say they have unfilled job openings, the NFIB said, up from 12 percent the previous month.
Gas prices have fallen sharply since peaking in early May at a national average of nearly $4 per gallon. Prices averaged $3.58 a gallon nationwide on Thursday, according to AAA.
And manufacturing activity expanded in June at a faster pace than the previous month, according to the Institute for Supply Management. That suggests the parts shortage caused by the March 11 earthquake in Japan is beginning to abate.
Those factors "are pretty much behind us, so unless we have something else unexpected, I think we'll be in good shape" in the second half of this year, said Kurt Karl, chief U.S. economist at Swiss Re.
The government said last month that the economy grew only 1.9 percent in the January-March quarter. Analysts are expecting similarly weak growth in April-June quarter.
The economy will grow at a 3.2 percent pace in final six months of the year, according to an Associated Press survey of 38 economists.
Still, growth must be stronger to significantly lower the unemployment rate. The economy would need to grow 5 percent for a whole year to significantly bring down the unemployment rate. Economic growth of just 3 percent a year would hold the unemployment steady and keep up with population growth.
AP Retail Writer Anne D'Innocenzio contributed to this report.
Friday, June 24, 2011
Ford slides, Toyota surges in key quality survey
(Reuters) - Trouble with new technologies including a clunky control system for its radios pounded Ford Motor Co's (F.N) ranking in a closely watched quality ranking, just a year after the U.S. brand led its mass-market rivals.
In a reversal of fortune, Japanese automaker Toyota Motor Corp's (7203.T) namesake brand, which last year tumbled to its lowest ranking ever due to a series of damaging recalls, pulled off a corresponding rebound, according to the influential study of U.S. consumers released on Thursday by J.D. Power and Associates.
Ford, the only U.S. automaker to avoid bankruptcy and a government bailout, saw its namesake brand slide to 23rd -- its lowest spot in a decade, down from 5th place last year, which represented, its highest ranking ever. Toyota rebounded to 7th from 21st last year.
"Ford is on the leading edge, certainly in the mass market, of trying to bring new technology into the vehicles," said David Sargent, J.D. Power's vice president of global vehicle research. "With that comes some risk that there will be unforeseen problems and that's exactly what happened.
"There's a great deal of parity between the different vehicles and different brands, so if you have a significant problem in a particular area, that can really set you back in terms of the rankings," he added.
Toyota's Lexus luxury brand captured the top spot, moving up from 4th last year.
The J.D. Power study, which records difficulties faced by new car owners in the first 90 days of ownership, was conducted between February and May of this year.
The results of the survey, the most comprehensive benchmark of new car quality, are used heavily in auto industry marketing and are seen as influential in shaping consumer perceptions. It is also watched as a barometer for resale values and as a proxy for warranty costs.
REBOOT A CAR?
Ford customers found the automaker's audio and interior control systems too complex or at times inoperable, Sargent said: "It's not as easy to reboot a car as it is a computer."
Mark Fields, Ford's president of the Americas, said on Tuesday ahead of the survey's release that the company's own quality ratings would be "mixed" for the year.
Ford was dinged earlier this year when influential magazine Consumer Reports did not give a "recommended" rating to its SUVs Ford Edge and Lincoln MKX because of the complexity of the MyFord Touch and the MyLincoln Touch systems.
Ford has acknowledged those problems, making software changes and offering customers training at Ford dealers. It also said Tuesday it is working to ease the use of voice-control systems in its vehicles and making improvements on a few of its powertrains.
"As we see issues in our own internal reporting, we jump all over them and quickly address them," Fields said.
Ford, whose F-150 pickup truck ranked No. 6 overall ahead of Toyota's Tundra truck at No. 12, reiterated on Thursday it moved quickly to address consumer complaints and quality was back on track.
On average across the industry, U.S. consumers reported 107 problems per 100 vehicles sold, an improvement from 109 problems last year and an all-time best performance in the study's 25-year history.
However, the industry average for all-new or heavily redesigned vehicles slid 10 percent to 122 problems per 100 vehicles, J.D. Power said. The decline was most stark in the engine and transmission, as well as audio, entertainment and navigation categories.
Software to improve fuel efficiency sometimes leads to engine or transmission "hesitation" when accelerating or changing gears, J.D. Power said.
Meanwhile, problem rates in the audio and entertainment category jumped 18 percent as many consumers complained their hands-free or voice-activation systems were not intuitive or did not always function properly.
U.S. automakers in recent years have spent heavily in a bid to close the gap with the Japanese automakers, led by Toyota and Honda Motor Co (7267.T), which had established a reputation for eliminating flaws from engineering and manufacturing. However, after finishing on average ahead of the import brands for the first time ever last year, they trail again this year.
General Motors Co's (GM.N) Cadillac luxury and GMC truck brands were the only ones among U.S. automakers to exceed the industry average, coming in at the 9th and 10th places. Only the top 10 brands in the survey topped the industry average.
GM's Chevrolet and Buick brands ranked 14th and 20th among the 32 brands measured. Ford's Lincoln brand finished 17th, while Chrysler's (FIA.MI) namesake, Ram, Jeep and Dodge brands ranked 16th, 22nd, 25th and 32nd, respectively.
(Additional reporting by Bernie Woodall in Detroit, editing by Dave Zimmerman)
Asian Shares Mostly Higher On Greek Optimism; Oil Stocks Fall
SINGAPORE (Dow Jones)--Asian stock markets were mostly higher Friday amid further progress toward a resolution to Greece's debt crisis, while regional oil plays were lower after a surprise decision by the International Energy Agency to release strategic crude oil reserves.
Japan's Nikkei Stock Average rose 0.4%, Australia's S&P/ASX 200 fell 0.1%, South Korea's Kospi Composite gained 0.7% and New Zealand's NZX-50 climbed 0.1%.
Dow Jones Industrial Average futures were up 38 points in screen trade.
Regional investors were encouraged by news Greece's government had agreed with the International Monetary Fund and the European Union on a five-year austerity program, taking a further step toward resolving the nation's debt crisis. Still, demand was tempered by global growth worries.
"There's a delicate balance between fear and value in the market," said RBS Morgans investment adviser Chris MacDonald in Sydney. "Investors are mostly sidelined as they wait to see if austerity plans are passed by the Greek parliament next week."
Oil stocks in the region were sold off after the IEA announced Thursday that members would release 60 million barrels of oil from emergency supplies to replace lost Libyan oil exports. August Nymex crude oil futures, which dropped sharply Thursday, were modestly higher in Asian trade. The contract was recently up 83 cents at $91.85 per barrel on Globex.
Inpex fell 2.6% and Japan Petroleum lost 1.3% in Tokyo, and in Seoul SK Innovation slumped 5.1% and S-Oil lost 4.9%, while Woodside Petroleum dropped 0.8% in Sydney.
The Tokyo market was supported by growing optimism for earnings of Japanese firms following recent relatively robust forecasts by Nissan Motor and Suzuki Motor.
"The improvement in earnings outlook has triggered a shift in buying in large-cap stocks from small and medium-sized shares," said Okasan Securities strategist Hideyuki Ishiguro.
Bellwether exporter stocks were up, with Sony 1.5% higher and Toyota Motor up 1.2%.
Chubu Electric Power rose 0.4% following a Nikkei report that the company will receive a Y100 billion emergency loan from the government to help fund fuel costs as the utility shut down its Hamaoka nuclear plant.
Nissan Motor fell 0.7% as it took a breather following a rise the previous session, while Suzuki Motor rose 0.9%.
In Seoul, investors responded favorably to positive news around the euro-zone debt woes.
"The Kospi is now attempting to test the 2080 point, but it seems a bit difficult to rise above the 2100 level amid weak foreign buying of late," said MiraeAsset Securities' analyst Jung Seung-jae.
Thursday's fall in oil prices supported airline stocks, with Korea Air Lines up 3.3%, and Asiana Airlines 3.6% higher.
Korea Express extended Thursday's sharp gains, tacking on 10.8% on news that Samsung SDS and Posco are mulling a consortium to bid for a controlling stake in the logistic company.
The Sydney market was choppy. Commonwealth Bank of Australia and National Australia Bank rose 0.9% each, while BHP Billiton and Rio Tinto advanced 0.3%-0.5%.
Telstra fell 1.4% after Morgan Stanley downgraded the stock and Moody's Investors Service on Thursday placed the phone company's debt on review for a possible downgrade following its broadband deal with the government.
In foreign exchange markets, the euro was steady against the U.S. dollar after rising Thursday on news that Greece had reached an agreement with the EU and the IMF on a five-year austerity program. However, market participants remained cautious as the austerity program faces a key vote in Greek parliament next week.
"The Greek government may face further hurdles in passing austerity measures next week," said Mike Burrowes, currency strategist at the Bank of New Zealand.
He noted comments Thursday from Greek opposition leader Antonis Samaras that the only way for Greece to repay its debt was for the government to change its current fiscal policies. "This suggests the vote on the austerity package next week will not be plain sailing," Burrowes said.
The single currency was at $1.4250 against the dollar, from $1.4257 late Thursday in New York, and at Y114.76 against the yen, from Y114.78. The dollar was at Y80.54, from Y80.50.
September Japanese government bond futures were up 0.13 at 141.38 points, while the 10-year cash JGB yield was down 0.5 basis point at 1.100%.
Spot gold was at $1,546.80 per troy ounce, down $1.20 from its New York settlement on Thursday.
-John Phillips, Dow Jones Newswires; +65-6415-4142; john.phillips@dowjones.com
TALK BACK: We invite readers to send us comments on this or other financial news topics. Please email us at TalkbackAsia@dowjones.com. Readers should include their full names, work or home addresses and telephone numbers for verification purposes. We reserve the right to edit and publish your comments along with your name; we reserve the right not to publish reader comments.
Japan's Nikkei Stock Average rose 0.4%, Australia's S&P/ASX 200 fell 0.1%, South Korea's Kospi Composite gained 0.7% and New Zealand's NZX-50 climbed 0.1%.
Dow Jones Industrial Average futures were up 38 points in screen trade.
Regional investors were encouraged by news Greece's government had agreed with the International Monetary Fund and the European Union on a five-year austerity program, taking a further step toward resolving the nation's debt crisis. Still, demand was tempered by global growth worries.
"There's a delicate balance between fear and value in the market," said RBS Morgans investment adviser Chris MacDonald in Sydney. "Investors are mostly sidelined as they wait to see if austerity plans are passed by the Greek parliament next week."
Oil stocks in the region were sold off after the IEA announced Thursday that members would release 60 million barrels of oil from emergency supplies to replace lost Libyan oil exports. August Nymex crude oil futures, which dropped sharply Thursday, were modestly higher in Asian trade. The contract was recently up 83 cents at $91.85 per barrel on Globex.
Inpex fell 2.6% and Japan Petroleum lost 1.3% in Tokyo, and in Seoul SK Innovation slumped 5.1% and S-Oil lost 4.9%, while Woodside Petroleum dropped 0.8% in Sydney.
The Tokyo market was supported by growing optimism for earnings of Japanese firms following recent relatively robust forecasts by Nissan Motor and Suzuki Motor.
"The improvement in earnings outlook has triggered a shift in buying in large-cap stocks from small and medium-sized shares," said Okasan Securities strategist Hideyuki Ishiguro.
Bellwether exporter stocks were up, with Sony 1.5% higher and Toyota Motor up 1.2%.
Chubu Electric Power rose 0.4% following a Nikkei report that the company will receive a Y100 billion emergency loan from the government to help fund fuel costs as the utility shut down its Hamaoka nuclear plant.
Nissan Motor fell 0.7% as it took a breather following a rise the previous session, while Suzuki Motor rose 0.9%.
In Seoul, investors responded favorably to positive news around the euro-zone debt woes.
"The Kospi is now attempting to test the 2080 point, but it seems a bit difficult to rise above the 2100 level amid weak foreign buying of late," said MiraeAsset Securities' analyst Jung Seung-jae.
Thursday's fall in oil prices supported airline stocks, with Korea Air Lines up 3.3%, and Asiana Airlines 3.6% higher.
Korea Express extended Thursday's sharp gains, tacking on 10.8% on news that Samsung SDS and Posco are mulling a consortium to bid for a controlling stake in the logistic company.
The Sydney market was choppy. Commonwealth Bank of Australia and National Australia Bank rose 0.9% each, while BHP Billiton and Rio Tinto advanced 0.3%-0.5%.
Telstra fell 1.4% after Morgan Stanley downgraded the stock and Moody's Investors Service on Thursday placed the phone company's debt on review for a possible downgrade following its broadband deal with the government.
In foreign exchange markets, the euro was steady against the U.S. dollar after rising Thursday on news that Greece had reached an agreement with the EU and the IMF on a five-year austerity program. However, market participants remained cautious as the austerity program faces a key vote in Greek parliament next week.
"The Greek government may face further hurdles in passing austerity measures next week," said Mike Burrowes, currency strategist at the Bank of New Zealand.
He noted comments Thursday from Greek opposition leader Antonis Samaras that the only way for Greece to repay its debt was for the government to change its current fiscal policies. "This suggests the vote on the austerity package next week will not be plain sailing," Burrowes said.
The single currency was at $1.4250 against the dollar, from $1.4257 late Thursday in New York, and at Y114.76 against the yen, from Y114.78. The dollar was at Y80.54, from Y80.50.
September Japanese government bond futures were up 0.13 at 141.38 points, while the 10-year cash JGB yield was down 0.5 basis point at 1.100%.
Spot gold was at $1,546.80 per troy ounce, down $1.20 from its New York settlement on Thursday.
-John Phillips, Dow Jones Newswires; +65-6415-4142; john.phillips@dowjones.com
TALK BACK: We invite readers to send us comments on this or other financial news topics. Please email us at TalkbackAsia@dowjones.com. Readers should include their full names, work or home addresses and telephone numbers for verification purposes. We reserve the right to edit and publish your comments along with your name; we reserve the right not to publish reader comments.
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