March 29, 2024

Off the Charts: Younger Households Are Slower to Make Gains in Net Worth

The Fed said last week that household wealth rose by $3 trillion in the first quarter, to $70.3 trillion. It was the first time the total exceeded the $68.1 trillion total posted in the third quarter of 2007, before the recession began, and was the largest quarterly increase since 1999, when the stock market was rising rapidly.

In the first quarter, a third of the gain in wealth came directly from rising values of corporate stocks owned by households. That was a little more than the gain attributed to rising real estate values.

The Federal Reserve Bank of St. Louis pointed out that there are more households now than there were in 2007, and that there has been inflation as well. As can be seen in an accompanying chart, the average household wealth at the end of the quarter was $613,635, a figure that is 11 percent below the peak of $689,996 (in 2013 dollars) set in the first quarter of 2007.

Those averages are deceptive, in that they are raised by the high wealth of a relatively small number of households. A very different picture emerges from looking at the median — the level at which half the households are richer and half poorer. That statistic can be calculated from the Fed’s triennial survey of consumer finances. In the studies conducted in the 1990s, the median net wealth was about one-quarter of the average. In the 2000s, the median fell to about one-fifth of the average, and in 2010, it was down to about one-sixth of the average.

During the housing boom, said William R. Emmons, the chief economist of the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis, “exactly the people you would think need to act conservatively were doing the opposite.” Homeownership rates, and mortgage debt levels, rose for younger households, as well as for less educated and minority ones. Those groups suffered more during the crisis, he said, and have been slower to recover.

Mr. Emmons compiled average wealth figures for different groups from the triennial surveys, and estimated how they have changed since the 2010 survey. The charts also show the results based on age. While all age groups have yet to recover to their 2007 wealth, when adjusted for inflation, older households are down just 3 percent on average, while those headed by middle-age people are down about 10 percent. But the decline is nearly 40 percent for the younger group.

During the housing boom, households ended up with more of their wealth in real estate than before, and mortgage debt rose to record levels relative to the size of the economy. The proportion of wealth in homes is now back to close to the level of the 1990s, but the debt levels remain high by historical standards.

Floyd Norris comments on finance and the economy at nytimes.com/economix.

Article source: http://www.nytimes.com/2013/06/15/business/economy/despite-recovery-younger-households-are-slower-to-make-gains.html?partner=rss&emc=rss

The Media Equation: At FX, a Playbook That Gives Its Series Free Rein

How come? Because the guy who is greenlighting the shows, John Landgraf, the president and general manager of FX Networks, spent many years making them himself, or at least trying to make them.

He learned early on that the guidance he received from the networks was not going to lead to remarkable television.

“I always got the same dumb note from the networks. ‘Can you make the character more likable?’ ” he recalled last week in a phone interview. “Not make them more exciting, more compelling, more interesting, no, it was always make them more likable.”

Mr. Landgraf, who worked as a network executive at NBC during the ’90s and had a hand in “Friends,” “ER” and “The West Wing,” went on to form a television production company with Danny DeVito. He had 53 projects in development from 1999 to the early 2000s — nine that became pilots, six that were made into shows and one, “Reno 911!” that made it beyond a single season, albeit on Comedy Central.

“It was crazy-making,” he said.

He became convinced that network television was broken — that in an effort to make characters more likable, the industry made television that not anyone much liked.

Mr. Landgraf’s turn on the other side of the table came in 2004 when he became president of FX, the basic cable channel owned by News Corporation. He inherited “Nip/Tuck” and “The Shield,” but they were aging and he needed to replace them, so he went on a spree — of saying yes.

“We wanted to adapt our process to what the creatives needed and have a more efficient outcome,” he said. “We write a check to fund the production and they send us the shows. By trusting the people you work with — sharing the authority — and being willing to fail, things have gone pretty well for us.”

He said yes to a lot of dark and spicy fare — it is not as lurid as pay cable can be, but it is only technically less naked. And it is clearly intended for adults.

With that in mind, he said yes to the comedian Louis C.K., who had been flailing on HBO and then tried to come up with something that networks would swallow. In exchange for producing a pilot for almost nothing, Louis C.K. had complete freedom. The result was a brutally funny mash-up of sitcom and stand-up that clicked for FX.

He also said yes to “Archer,” an animated period-spy series — nothing about those three things says television gold — about an agent with high testosterone and a low I.Q. It contains some of the most remarkable, densely funny writing on television.

“It’s Always Sunny in Philadelphia” has improbably lived, going into syndication with, you guessed it, the least likable group of characters you could conjure. Last week, I happened to see the comedian W. Kamau Bell in New York and thought, this guy is funny, somebody should give him a show. Somebody already had, on FX.

Mr. Landgraf spent money on “Justified,” a Southern gothic inspired by Elmore Leonard that featured a laconic, trigger-happy marshal chasing charismatic, speechifying villains who belong in the television pantheon. He gave the go ahead to “American Horror Story,” a lurid, scary weekly trip to the dark side. And he said yes to “Sons of Anarchy,” a wildly popular drama that would be described, in industry speak, as Hamlet on Harleys.

Mr. Landgraf is not just a yes man. He has shunned reality shows because, as he succinctly explained, “I don’t like them.”

He has had his failures, including “Dirt,” “The Riches” and “Terriers.”

“In our industry, shows are ‘not renewed,’ never ‘canceled.’ ” he said. “I’ve canceled shows and I think you have to own those failures to learn from them.”

Mr. Landgraf is treasured by writers on the beat because, in an industry built on euphemism, he says what he thinks.

It’s not that the rest of the industry lacks taste, it’s just most are so busy living in fear that a creative risk seems out of the question.

E-mail: carr@nytimes.com; twitter.com/carr2n

Article source: http://www.nytimes.com/2013/02/04/business/media/at-fx-a-playbook-that-gives-its-series-free-rein.html?partner=rss&emc=rss

Economix Blog: Casey B. Mulligan: When Times Get Tough, the Elderly Work

Casey B. Mulligan is an economics professor at the University of Chicago.

The elderly are one group whose work hours now exceed what they were before the recession began. This pattern is most evident in the most depressed regions of the United States.

Today’s Economist

Perspectives from expert contributors.

The recession has varied in different regions of the United States. In some areas – including Arizona, California, Florida, Hawaii, and Nevada – housing prices surged more dramatically in the early part of the 2000s than they did in the rest of America, and their economies fell hard when housing prices collapsed.

One view is that such areas experienced a deeper recession because their banks became overwhelmed with defaults and were unable or unwilling to make new loans to consumers and businesses. Without those new loans, demand collapsed more than it did nationwide, and jobs were especially difficult to find, even while people living in the area were especially eager to work.

Absent demand, just about all workers will have a tough time retaining a job or finding a new one.

Another view is that old loans are the problem, not newer ones. A significant fraction of households and businesses are typically so burdened with the debts they accumulated during the housing surge that they have little incentive to produce and work, because their creditors would get most, if not all, of the fruits of their labor.

In contrast to the no-new-loans-and-no-demand theory, old loans do not affect all workers; some are less burdened by debt. The elderly may fall in this category, because they are more likely to have saved money over their lifetimes and to have paid off their mortgages. Although some elderly working for debt-burdened employers may have lost jobs, on average the elderly in these areas should be working more because they have better incentives to do so.

The chart below compares 2007-10 changes in work hours for two areas –- the regions where housing prices rose and fell the most, on the left side of the chart, and the rest of the United States on the right. For middle-aged and younger people (blue bars), hours worked fell 12 percent in the large cycle regions and about 9 percent in the rest of the United States.

Hours worked by elderly people increased in both regions.

As I noted a few weeks ago, the average American elderly person worked more in 2010 than did the average elderly person before the recession began, even while work hours were down sharply for middle-aged and young people. The chart above shows that this is true even in the states that generally experienced the largest collapse during this recession.

Demand is not the only factor driving employment patterns.

Article source: http://feeds.nytimes.com/click.phdo?i=a6b1f9ed4fb70bf8c2554795faa4e60c

Economix: A Long, Slow Slog Back to Normal

While the 216,000 net jobs that the economy added last month were certainly welcome, the growth wasn’t nearly fast enough to get the country back on the path to full employment anytime soon.

The Great Recession dug the country’s job market into a very deep hole. As I mentioned in an earlier post, the economy today still has 5.3 percent fewer nonfarm payroll jobs than it had when the recession began in December 2007. If payroll growth continues apace with the gains experienced in March, it will take nearly three years for the economy to recover the jobs lost during the recession.

The chart below shows what this long, slow slog would look like. (The Brookings Institution put together a similar chart a few months back.)

The solid blue line shows the change in employment since the recession started over three years ago. As you can see, the line stops in March 2011, which is the most recent employment data point we have. The dashed blue line shows what employment would look like if the economy added exactly 216,000 jobs each month:

DESCRIPTIONSource: Bureau of Labor Statistics

As you can see, the dashed blue line finally reaches the level of prerecession employment in January 2014 — nearly three years from now.

The dashed green line is one alternative, if unlikely, trend. It shows what job growth would look like if, from here on out, the economy had monthly job growth as strong as it was during the best month of the 2000s — 472,000, the number of jobs added on net in March 2000. Even at that (very optimistic) pace, payrolls would not recover the ground lost during the recession until July 2012.

Even more depressingly, none of this takes into account the fact that the number of working-age Americans has been growing in the last few years, which means that if the economy were healthy it would have more jobs today than it had at the beginning of the recession.

Article source: http://feeds.nytimes.com/click.phdo?i=5e1db345f4e16b3d211fd83a081dbf25