The New Poor - Blacks in Memphis Lose Decades of Gains

Josh Anderson for The New York Times

Tyrone Banks in his home in Memphis. He is in danger of losing it after the payments on his mortgage rose and he lost his job at FedEx. More Photos »

By MICHAEL POWELL

MEMPHIS — For two decades, Tyrone Banks was one of many African-Americans who saw his economic prospects brightening in this Mississippi River city.

A single father, he worked for FedEx and also as a custodian, built a handsome brick home, had a retirement account and put his eldest daughter through college.

Then the Great Recession rolled in like a fog bank. He refinanced his mortgage at a rate that adjusted sharply upward, and afterward he lost one of his jobs. Now Mr. Banks faces bankruptcy and foreclosure.

“I’m going to tell you the deal, plain-spoken: I’m a black man from the projects and I clean toilets and mop up for a living,” said Mr. Banks, a trim man who looks at least a decade younger than his 50 years. “I’m proud of what I’ve accomplished. But my whole life is backfiring.”

Not so long ago, Memphis, a city where a majority of the residents are black, was a symbol of a South where racial history no longer tightly constrained the choices of a rising black working and middle class. Now this city epitomizes something more grim: How rising unemployment and growing foreclosures in the recession have combined to destroy black wealth and income and erase two decades of slow progress.

The median income of black homeowners in Memphis rose steadily until five or six years ago. Now it has receded to a level below that of 1990 — and roughly half that of white Memphis homeowners, according to an analysis conducted by Queens College Sociology Department for The New York Times.

Black middle-class neighborhoods are hollowed out, with prices plummeting and homes standing vacant in places like Orange Mound, White Haven and Cordova. As job losses mount — black unemployment here, mirroring national trends, has risen to 16.9 percent from 9 percent two years ago; it stands at 5.3 percent for whites — many blacks speak of draining savings and retirement accounts in an effort to hold onto their homes. The overall local foreclosure rate is roughly twice the national average.

The repercussions will be long-lasting, in Memphis and nationwide. The most acute economic divide in America remains the steadily widening gap between the wealth of black and white families, according to a recent study by the Institute on Assets and Social Policy at Brandeis University. For every dollar of wealth owned by a white family, a black or Latino family owns just 16 cents, according to a recent Federal Reserve study.

The Economic Policy Institute’s forthcoming “The State of Working America” analyzed the recession-driven drop in wealth. As of December 2009, median white wealth dipped 34 percent, to $94,600; median black wealth dropped 77 percent, to $2,100. So the chasm widens, and Memphis is left to deal with the consequences.

“This cancer is metastasizing into an economic crisis for the city,” said Mayor A. C. Wharton Jr. in his riverfront office. “It’s done more to set us back than anything since the beginning of the civil rights movement.”

The mayor and former bank loan officers point a finger of blame at large national banks — in particular, Wells Fargo. During the last decade, they say, these banks singled out blacks in Memphis to sell them risky high-cost mortgages and consumer loans.

The City of Memphis and Shelby County sued Wells Fargo late last year, asserting that the bank’s foreclosure rate in predominantly black neighborhoods was nearly seven times that of the foreclosure rate in predominantly white neighborhoods. Other banks, including Citibank and Countrywide, foreclosed in more equal measure.

In a recent regulatory filing, Wells Fargo hinted that its legal troubles could multiply. “Certain government entities are conducting investigations into the mortgage lending practices of various Wells Fargo affiliated entities, including whether borrowers were steered to more costly mortgage products,” the bank stated.

Wells Fargo officials are not backing down in the face of the legal attacks. They say the bank made more prime loans and has foreclosed on fewer homes than most banks, and that the worst offenders — those banks that handed out bushels of no-money-down, negative-amortization loans — have gone out of business.

“The mistake Memphis officials made is that they picked the lender who was doing the most lending as opposed to the lender who was doing the worst lending,” said Brad Blackwell, executive vice president for Wells Fargo Home Mortgage.

Not every recessionary ill can be heaped upon banks. Some black homeowners contracted the buy-a-big-home fever that infected many Americans and took out ill-advised loans. And unemployment has pitched even homeowners who hold conventional mortgages into foreclosure.

Federal and state officials say that high-cost mortgages leave hard-pressed homeowners especially vulnerable and that statistical patterns are inescapable.

“The more segregated a community of color is, the more likely it is that homeowners will face foreclosure because the lenders who peddled the most toxic loans targeted those communities,” Thomas E. Perez, the assistant attorney general in charge of the Justice Department’s civil rights division, told a Congressional committee.

The reversal of economic fortune in Memphis is particularly grievous for a black professional class that has taken root here, a group that includes Mr. Wharton, a lawyer who became mayor in 2009. Demographers forecast that Memphis will soon become the nation’s first majority black metropolitan region.

That prospect, noted William Mitchell, a black real estate agent, once augured for a fine future.

“Our home values were up, income up,” he said. He pauses, his frustration palpable. “What we see today, it’s a new world. And not a good one.”

Porch View

“You don’t want to walk up there! That’s the wild, wild west,” a neighbor shouts. “Nothing on that block but foreclosed homes and squatters.”

To roam Soulsville, a neighborhood south of downtown Memphis, is to find a place where bungalows and brick homes stand vacant amid azaleas and dogwoods, where roofs are swaybacked and thieves punch holes through walls to strip the copper piping. The weekly newspaper is swollen with foreclosure notices.

Here and there, homes are burned by arsonists.

Yet just a few years back, Howard Smith felt like a rich man. A 56-year-old African-American engineer with a gray-flecked beard, butter-brown corduroys and red sneakers, he sits with two neighbors on a porch on Richmond Avenue and talks of his miniature real estate empire: He owned a home on this block, another in nearby White Haven and another farther out. His job paid well; a pleasant retirement beckoned.

Then he was laid off. He has sent out 60 applications, obtained a dozen interviews and received no calls back. A bank foreclosed on his biggest house. He will be lucky to get $30,000 for his house here, which was assessed at $80,000 two years ago.

“It all disappeared overnight,” he says.

“Mmm-mm, yes sir, overnight,” says his neighbor, Gwen Ward. In her 50s, she, too, was laid off, from her supervisory job of 15 years, and she moved in with her elderly mother. “It seemed we were headed up and then” — she snaps her fingers — “it all went away.”

Mr. Smith nods. “The banks and Wall Street have taken the middle class and shredded us,” he says.

For the greater part of the last century, racial discrimination crippled black efforts to buy homes and accumulate wealth. During the post-World War II boom years, banks and real estate agents steered blacks to segregated neighborhoods, where home appreciation lagged far behind that of white neighborhoods.

Blacks only recently began to close the home ownership gap with whites, and thus accumulate wealth — progress that now is being erased. In practical terms, this means black families have less money to pay for college tuition, invest in businesses or sustain them through hard times.

“We’re wiping out whatever wealth blacks have accumulated — it assures racial economic inequality for the next generation,” said Thomas M. Shapiro, director of the Institute on Assets and Social Policy at Brandeis University.

The African-American renaissance in Memphis was halting. Residential housing patterns remain deeply segregated. While big employers — FedEx and AutoZone — have headquarters here, wage growth is not robust. African-American employment is often serial rather than continuous, and many people lack retirement and health plans.

But the recession presents a crisis of a different magnitude.

Mayor Wharton walks across his office to a picture window and stares at a shimmering Mississippi River. He describes a recent drive through ailing neighborhoods. It is akin, he says, to being a doctor “looking for pulse rates in his patients and finding them near death.”

He adds: “I remember riding my bike as a kid through thriving neighborhoods. Now it’s like someone bombed my city.”

Banking on Nothing

Camille Thomas, a 40-year-old African-American, loved working for Wells Fargo. “I felt like I could help people,” she recalled over coffee.

As the subprime market heated up, she said, the bank pressure to move more loans — for autos, for furniture, for houses — edged into mania. “It was all about selling your units and getting your bonus,” she said.

Ms. Thomas and three other Wells Fargo employees have given affidavits for the city’s lawsuit against the bank, and their statements about bank practices reinforce one another.

“Your manager would say, ‘Let me see your cold-call list. I want you to concentrate on these ZIP codes,’ and you knew those were African-American neighborhoods,” she recalled. “We were told, ‘Oh, they aren’t so savvy.’ ”

She described tricks of the trade, several of dubious legality. She said supervisors had told employees to white out incomes on loan applications and substitute higher numbers. Agents went “fishing” for customers, mailing live checks to leads. When a homeowner deposited the check, it became a high-interest loan, with a rate of 20 to 29 percent. Then bank agents tried to talk the customer into refinancing, using the house as collateral.

Several state and city regulators have placed Wells Fargo Bank in their cross hairs, and their lawsuits include similar accusations. In Illinois, the state attorney general has accused the bank of marketing high-cost loans to blacks and Latinos while selling lower-cost loans to white borrowers. John P. Relman, the Washington, D.C., lawyer handling the Memphis case, has sued Wells Fargo on behalf of the City of Baltimore, asserting that the bank systematically exploited black borrowers.

A federal judge in Baltimore dismissed that lawsuit, saying it had made overly broad claims about the damage done by Wells Fargo. City lawyers have refiled papers.

“I don’t think it’s going too far to say that banks are at the core of the disaster here,” said Phyllis G. Betts, director of the Center for Community Building and Neighborhood Action at the University of Memphis, which has closely examined bank lending records.

Former employees say Wells Fargo loan officers marketed the most expensive loans to black applicants, even when they should have qualified for prime loans. This practice is known as reverse redlining.

Webb A. Brewer, a Memphis lawyer, recalls poring through piles of loan papers and coming across name after name of blacks with subprime mortgages. “This is money out of their pockets lining the purses of the banks,” he said.

For a $150,000 mortgage, a difference of three percentage points — the typical spread between a conventional and subprime loan — tacks on $90,000 in interest payments over its 30-year life.

Wells Fargo officials say they rejected the worst subprime products, and they portray their former employees as disgruntled rogues who subverted bank policies.

“They acknowledged that they knowingly worked to defeat our fair lending policies and controls,” said Mr. Blackwell, the bank executive.

Bank officials attribute the surge in black foreclosures in Memphis to the recession. They say that the average credit score in black Census tracts is 108 points lower than in white tracts.

“People who have less are more vulnerable during downturns,” said Andrew L. Sandler of Buckley Sandler, a law firm representing Wells Fargo.

Mr. Relman, the lawyer representing Memphis, is unconvinced. “If a bad economy and poor credit explains it, you’d expect to see other banks with the same ratio of foreclosures in the black community,” he said. “But you don’t. Wells is the outlier.”

Whatever the responsibility, individual or corporate, the detritus is plain to see. Within a two-block radius of that porch in Soulsville, Wells Fargo holds mortgages on nearly a dozen foreclosures. That trail of pain extends right out to the suburbs.

Begging to Stay

To turn into Tyrone Banks’s subdivision in Hickory Ridge is to find his dream in seeming bloom. Stone lions guard his door, the bushes are trimmed and a freshly waxed sport utility vehicle sits in his driveway.

For years, Mr. Banks was assiduous about paying down his debt: he stayed two months ahead on his mortgage, and he helped pay off his mother’s mortgage.

Two years ago, his doorbell rang, and two men from Wells Fargo offered to consolidate his consumer loans into a low-cost mortgage.

“I thought, ‘This is great! ’ ” Mr. Banks says. “When you have four kids, college expenses, you look for any savings.”

What those men did not tell Mr. Banks, he says (and Ms. Thomas, who studied his case, confirms), is that his new mortgage had an adjustable rate. When it reset last year, his payment jumped to $1,700 from $1,200.

Months later, he ruptured his Achilles tendon playing basketball, hindering his work as a janitor. And he lost his job at FedEx. Now foreclosure looms.

He is by nature an optimistic man; his smile is rueful.

“Man, I should I have stayed ‘old school’ with my finances,” he said. “I sat down my youngest son on the couch and I told him, ‘These are rough times.’ ”

Many neighbors are in similar straits. Foreclosure notices flutter like flags on the doors of two nearby homes, and the lawns there are overgrown and mud fills the gutters.

Wells Fargo says it has modified three mortgages for every foreclosure nationwide — although bank officials declined to provide the data for Memphis. A study by the Neighborhood Economic Development Advocacy Project and six nonprofit groups found that the nation’s four largest banks, Wells Fargo, Bank of America, Citigroup and JPMorgan Chase, had cut their prime mortgage refinancing 33 percent in predominantly minority communities, even as prime refinancing in white neighborhoods rose 32 percent from 2006 to 2008.

For Mr. Banks, it is as if he found the door wide open on his way into debt but closed as he tries to get out.

“Some days it feels like everyone I know in Memphis is in trouble,” Mr. Banks says. “We’re all just begging to stay in our homes, basically.”

Hard Times Have Younger Floridians Catching the Early Bird

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By DAMIEN CAVE

MIAMI BEACH — The early bird special at Cafe Prima Pasta began last year after the restaurant’s owner, Gerardo Cea, lost all his savings in real estate and began seeing his regular customers at the supermarket.

“They weren’t coming anymore,” Mr. Cea said. “They couldn’t afford it.”

He expected his offer of a 50 percent discount before 6 p.m. to attract the usual crowd of frugal retirees. But word kept spreading, and on most nights now, at least half the tables are filled with young families, singles or hip couples — women in short skirts and men who prefer “dude” to “sir.”

Across Florida in fact, the early-bird special is experiencing a revival. With that label and some newer versions, several restaurants have introduced early dining discounts since the recession started, and younger people are arriving in larger numbers at classic establishments that have been serving up free dessert for decades.

Image by Vidiot via Flickr

Part of it is purely business — promotions work when people have less money to spend — but restaurant owners, researchers and patrons say it also reflects a changing mood. It is a sign, they say, of shifting priorities, as Americans respond to tighter budgets with a demand for value and a willingness to alter their habits to enjoy a little fun.

Many restaurant owners, on Florida’s east and west coasts, now report seeing behavioral changes that remind them of the generation that survived the Depression. In addition to coming in early for specials, they said, more customers have been using coupons, sitting down only after studying the menu and wasting less food.

“The value of money has changed in America,” said James Accursio, whose family has owned the Capri, an Italian restaurant in Florida City, since it opened in 1958. “We’re not high rollers anymore.”

His restaurant is one of many experiencing a moment reminiscent of the movie “Cocoon.” As Mr. Accursio scanned his main dining room on a recent Saturday just before the early bird expired at 6:30, he saw more young faces where only old ones used to be. To his left sat the Dawkins family, ages 47, 33, 23, 8 and 3; by the door, a man with a full head of dark hair checked his iPhone across from his date; and near the back were the Slaters, a family of 11 that crossed demographic lines.

Their ages ranged from 80 — for Marty Slater, the matriarch, who said she had been coming to the Capri since she moved to Florida in the ’50s — down to 19. Economically, it was a middle-class group. On one side of the table sat an architect, a social worker and a manager in manufacturing. And nearly all said they had been hurt by the recession.

As a result, they said, old-fashioned restaurants like the Capri — think iceberg lettuce, not arugula — had become especially appealing because they offered consistent value, and it was not just the early bird’s filet mignon for $12.95. It was also the respectful treatment — the waiters in ties, the greetings of “Mr.” and “Mrs.,” the effort to remember the orders of regulars, and letting everyone stay as long as they wanted.

“When you go out now, you have to have a plan,” said Gary Green, 34, who married into the family after leaving Jamaica. At the Capri, he said, “there’s less risk.”

Katherine Slater, the restaurant’s only diner with a nose stud and dyed red hair, said she had only recently begun to understand what her elders saw in such places. “When I was young, 18, I was like, why would I want to go out to dinner there with my parents and my grandparents?” she said. “Now I’m 21. I appreciate it.”

Nearly everyone in the state feels a little poorer these days — with unemployment at its highest rate since 1975 and real estate values continuing to drop. That insecurity has reshaped the local mindset, say many Floridians under 55, and taken the shame out of scrimping.

For instance, Cassandra Eriser, 35, an aesthetician with cover girl looks who works giving facials at a South Beach spa, is not what most people imagine when they think early bird. But there she was at Cafe Prima Pasta on a recent Sunday at 5:30 p.m., finishing up a meal of tilapia with her boyfriend, a musician with a shaved head.

With wine and tip, the couple spent less than $25 each.

“It’s a great way to try a new restaurant without forking over a lot of money,” Ms. Eriser said.

Image by Don Nunn via Flickr

A few nights later at Cafe Prima Pasta, the urge to splurge brought out a party of 13. Mostly employees of a nonprofit in their 20s and 30s, they laughed as they explained that they were eating early for a simple reason: “Because we’re broke.”

At the early bird for Tropical Acres Steakhouse in Fort Lauderdale, which opened in 1949, Edward and Denisa Wainwright said they were celebrating their anniversary there because it was affordable and still felt fancy.

“This reminds us of the New England style,” said Mr. Wainwright, 55. Even before the dessert cart arrived, he said he was full. A Harvard graduate, he said he taught at Kaplan Test Prep, making half what he used to make at a database company.

“We’ve had to get used to it,” Mrs. Wainwright, 52, said. “We don’t go out as much because of the money.”

In some circles, of course, the early bird still carries a whiff of mothballs, thus the rebranding. When Benihana tried it last summer in South Florida, they called it “twilight dining.” At Café Baci in Sarasota, which has also seen more young people lately, they use “early dining.”

Hudson Riehle, a senior vice president for research at the National Restaurant Association, said other restaurants around the country had tried “afternoon dining” or just ditched the label entirely, using “prix fixe” instead.

“The term ‘early bird’ may be a little dated from a lexicon standpoint, like ‘doggy bag,’ ” Mr. Riehle said. “But the concept has been and will continue to be an extremely effective marketing tool for certain restaurants in certain markets.”

At Cafe Prima Pasta, at least, the early bird has already become an institution, and almost too much of a success. Mr. Cea, 43, an immigrant from Argentina who learned the restaurant business in New York, said he recently realized that there were too many people arriving early with a taste for high-end meat and fish, like imported branzino. It was his turn to tighten the belt; a few weeks ago, he introduced a more limited menu.

“It’s beautiful, the American dream, it’s great,” Mr. Cea said. “But if you don’t put your feet on the ground, what it’s given you will be taken away.”

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A Racial Divide Is Bridged by Recession - NYTimes.com

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By SHAILA DEWAN

McDONOUGH, Ga. — During the housing boom, Henry County, a suburb of Atlanta, had its share of racial tension as more and more blacks joined the tens of thousands of others pouring in, creating a standoffish gap between the newcomers and the county’s oldtimers.

But the recession has begun to erase those differences.

Blacks and whites have encountered one another in increasing numbers recently in the crowded waiting rooms of the welfare office and at the food pantry, where many of both races have ventured for the first time. Struggling black-owned businesses are attracting the attention of white patrons. Neighbors are commiserating across racial lines.

At the Division of Family and Children Services, Keasha Taylor, 36 and black, helped explain the system recently to a white mother. Ms. Taylor, who was there because her family had been evicted, told the mother, who was in line for food stamps, that a child with acute asthma might be eligible for Social Security.

“Right now, a lot of white people are in this situation,” Ms. Taylor said, recalling the conversation later. “We’re already used to poverty; they’re really not.”

Denese Rodgers, the county director of social services, who is white, has held several lunch meetings at A J’s Turkey Grill, owned by Diane Walker, a black woman, in hopes of helping business.

“It was in one of our abandoned strip malls, a forlorn looking kind of place, but when you walk in, it’s just pristine,” Ms. Rodgers said. “She’s doing everything right, it’s just not full.”

Peggy Allgood, a 54-year-old black woman who lost her job and four-bedroom house and is now living in a trailer park, said she had noticed the recession obliterating racial differences up and down the economic scale.

“It’s gotten to the point where everyone I talk to, their hours have been cut, their jobs have been cut,” Ms. Allgood said. “My neighbor, she’s white, she’s trying to find a job. She hasn’t had any luck.”

The recession hit Henry County, for years one of the nation’s fastest growing areas, at a time when it was already struggling to come to terms with startling demographic change. In 1990, the county was almost 90 percent white. Now, as its population has more than tripled to 192,000, according to 2008 census estimates, the white percentage of the population has shrunk to 60 percent.

The county’s elected government is still all white and Republican, and some leaders and newcomers alike have tried in various ways to make local board and governments more diverse. But nothing else has worked to remove barriers as quickly as economic hardship.

“There used to be a lot of racial tension here, but everybody knows that we need each other to survive this recession,” said Eugene Edwards, the president of the Henry County branch of the National Association for the Advancement of Colored People. “People now, they seem to be starting to care for one another.”

Once fueled by construction, the county has been left by the recession with a blighted crop of abandoned white utility hookups, meant for new subdivisions, sprouted in the woods.

Last year, the Chamber of Commerce took a multiracial group of leaders to the Birmingham Civil Rights Institute, but such officially sponsored efforts at bonding have slowed.

“The recession has pretty much tied folks down to survival mode,” said Steve Cash, the executive director of the Henry Council for Quality Growth, who is white. “A lot of things that were happening before aren’t happening now.”

And a lot of things that were unheard of before are happening now. Women in Jaguars pull up to the local food pantry, and former millionaires hunker down in grand, unsellable homes.

One reason blacks have not gained more political power is that they are not heavily concentrated in any single area in the county — the cul-de-sacs carved out of farmland and pastures in the last decade became racially mixed enclaves for the upwardly mobile. Now, the foreclosure notices and uncut lawns in those same subdivisions reinforce the notion that everyone is in the same sinking boat.

Statistics also suggest that the recession’s burden is falling with similar force on both races. In June 2006, 55 percent of the families receiving food stamps were black, and 44 percent were white. Those percentages remain the same today, although the size of each group has increased by about 50 percent.

Unemployment claims follow that pattern: in January 2008, 49 percent of those who filed for unemployment were white, and 45 percent were black. In August 2009, 49 percent were white, and 48 percent were black.

Across the country, there have been many reports about the recession’s racial divide, as blacks have lost their jobs and houses at far higher rates than whites. But Henry County, about a 30-minute drive south of downtown Atlanta, has a very different profile from the rest of the nation. In Henry, the median income of black families, $56,715 in 2008, approaches that of whites, $69,728 (nationally, the average income gap was $20,000). Blacks in Henry County, many of whom are retirees from the North or professionals who work in Atlanta, are more likely than whites to have a college degree.

That does not mean that Henry County is a perfect laboratory of equality. Blacks made up a disproportionately high number of those seeking government assistance both before and after the slowdown. Since 2006, the number of blacks on Medicaid has more than tripled, outpacing the increase among whites.

And as in the rest of the country, blacks in Henry were more than twice as likely as whites to take out risky sub-prime mortgages, meaning more black families than white are struggling to keep their homes.

Keith and Kenya Rucker, who are black, recently declared bankruptcy in an effort to keep the home they bought for $155,000 with an adjustable-rate mortgage when they had two incomes, before Mr. Rucker lost his job as a restaurant manager. Both said they could not rely on family members for help with their ballooning payments.

“I’m not racist, but it’s harder for black men,” Mr. Rucker said, as his wife huddled with their 8-year-old daughter, KéUnica. Mr. Rucker, who is from Orlando, Fla., echoed many experts who say that middle-class blacks have fewer resources, either financial or social, to fall back on if they get into trouble. “Where I’m from,” he said, “every friend that I had is a drug dealer, locked up, on drugs or dead.”

But Dennis and Jenny Duncan, a white couple who once owned millions of dollars in real estate assets as former developers, felt equally stymied. Interviewed in the lavish home they built for themselves, they said the sheriff had just come to call and told them their belongings would soon be seized to satisfy debts. Unlike Ms. Rucker, neither has a college degree, making work difficult to find.

The idea that the recession is an equalizer has become accepted in Henry County. Both black and white residents were hesitant to say that either race had taken a greater hit. But Ms. Taylor, the black woman who dispensed advice at the county food stamp office, said there were some notable distinctions between blacks and whites.

“They’re a little weaker than we are at handling things like this,” she said, adding without rancor, “but I know they get more sympathy than we do.”

Economy Expands in 3rd Quarter, First Time in a Year - NYTimes.com

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By CATHERINE RAMPELL

Ending the longest contraction since World War II, the United States economy finally grew in the third quarter of this year, the Commerce Department said on Thursday.

The nation’s gross domestic product expanded at an annual rate of 3.5 percent in the three months ending in September, matching the economy’s average annual growth rate from the last 80 years. But the end of government programs to encourage spending on things like cars and houses, alongside employers’ continued reluctance to hire more workers, means the recovery may not last, economists say.

“The big picture perspective is that things have improved,” said Jan Hatzius, chief United States economist at Goldman Sachs. “The question is, how sustainable is this growth going forward?”

Job-seekers, he says, probably will not see the benefits of a recovery for months to come.

The spike in G.D.P. came from a somewhat shrunken base. The economy had been falling for four straight quarters, bottoming with a 6.4 percent decline in the first three months of this year, the steepest quarterly fall since 1982.

Much of the growth in Thursday’s report can be attributed to the billions in federal aid devoted to economic renewal, economists say.

.

“That alters the dynamic of a recession and a recovery, and what you’re left with, to some degree, is an artificial recovery,” said Dan Greenhaus, chief economic strategist at Miller Tabak, an investment research firm. “Over the next several quarters, the support for the economy on the part of the government wanes and the economy has to find its own footing.”

The cash-for-clunkers program helped increase consumer spending on durable goods, which grew by an annual rate of 22.3 percent in the third quarter compared to a decline of 5.6 percent in the previous quarter. Similarly, economists say the $8,000 federal tax credit for first-time homebuyers helped revive spending on housing, which increased 23.4 percent in the third quarter, in contrast to a decrease of 23.3 percent in the second quarter.

The economic growthcame without a major surge in inflation. The price index for gross domestic purchases, a broad measure of prices that Americans pay for goods and services, increased at an annual rate of 1.6 percent in the third quarter, compared with an increase of 0.5 percent in the second, the department said. Excluding food and energy prices, the inflation index rose 0.5 percent in the third quarter, compared with an increase of 0.8 percent in the second.

The stock market surged in reaction to the news, with major indexes up over 1 percent in early afternoon trading.

Thursday’s report will probably provide ammunition to both advocates and opponents of additional federal spending to stimulate certain parts of the economy, as mutually reinforcing pessimism among consumers and employers continues to fester.

On the one hand, the poor job market, along with wealth losses from housing and the stock market, is discouraging Americans from increasing their spending by too much. Consumer spending on nondurable goods like food and clothing, for example, increased 2 percent in the third quarter, compared with a decline of 1.9 percent in the second quarter.

Likewise, stagnant consumer demand and withering consumer confidence have left companies wary of hiring more employees — or, for that matter, taking any expensive risks. The jobless rate reached 9.8 percent in September, its highest rate in 26 years. According to Thursday’s report, business investment in buildings and other structures fell at an annual rate of 9 percent in the third quarter.

“At some point firms will have to begin to bring some of their workers back, but it may not be anytime soon,” said Joseph Brusuelas, director of Moody’s Economy.com. “That means 2010 may be a year of growth in the economy, but it’s likely to be characterized as jobless growth.” Initial jobless claims fell 1,000 in the week ending Oct. 24 to 530,000, according to a Labor Department report also released Thursday. The number has been trending downward, but is still well above claim levels historically associated with job creation, according to John Ryding, chief economist at RDQ Economics.

Such forces may pressure Washington to look for selective interventions in the labor market, in addition to last winter’s broader $787 billion stimulus package, much of which will be distributed next year. Proposals on the table include another extension in unemployment benefits and various job creation programs.

A slower drawdown in inventories was one bright spot in Thursday’s report, as it indicated that businesses have largely sold out their current stock and may rev up orders in the coming months to replenish supplies.

“Everybody had been dealing with a just-in-time status quo,” said Sandra Westlund-Deenihan, president and design engineer for Quality Float Works, a plant in Schaumburg, Ill., that manufactures metal float balls and valve assemblies. “They were living off inventories they’d built up over the last several years. Now they’ve drawn that down and reached a point where they may have to have it ready and back on the shelf again.”

Like many American manufacturers, Ms. Westlund-Deenihan says that international business has helped keep her company afloat. United States exports over all grew at an annual rate of 14.7 percent in the third quarter, while imports grew 16.4 percent.

“We’re seeing a strong rebound in trade simply because global trade had collapsed before,” said Robert Barbera, the chief economist at ITG.

Javier C. Hernandez contributed reporting.

Resilience, Hope and Family Remain Along Recession Road

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By Theresa Vargas
Washington Post Staff Writer
Wednesday, October 14, 2009

This is the last installment of Half a Tank, a four-month quest to find people whose lives have been altered by a flattened economy.

When we first met Danny Glass, he was sitting in a tent, half-naked, too weak to put on pants.

He knew he was dying.

"Can I ask a favor?" he said to Michael Williamson, the Washington Post photographer with whom I traveled across the country this summer. "Can I use one of those photos for my obituary?"

That was in June. Flash forward to a couple of weeks ago: Michael and I stand in that same tangle of woods behind a motor vehicles office in Woodbridge, but we see no Danny, just the rain-soaked remnants of his belongings: a stained couch cushion he used as a mattress. A plastic water bowl for a dog he surrendered to a better home. A hospital wristband with his name on one side and the words "fall risk" on the other.

Michael and I don't know whether to feel relief or sadness. We don't know whether Danny is dead or in the clean bed he hadn't had in a long while.

About four months had passed since we began a road trip across the country and into the lives of hundreds of Americans affected by the recession. We would drive more than 20,000 miles, down highways and through back roads, talking to everyone from an Elvis impersonator in Memphis to an asphalt paver in Las Vegas.

On our lowest days, we pulled ticks from our hair and cried in a darkened car, weighed down by what we'd just witnessed. On our best, we laughed with a couple we picked up on the side of the road and marveled at the resiliency of those who had lost everything except hope.

We would pass through 30 states without getting a ticket, stay in more cheap motels than Tom Bodett -- including one with barbed wire outside the door -- and find stories of hardship wherever we stopped.

In Tennessee, we'd meet a young couple unable to afford a $186 engagement ring from Wal-Mart. In Florida, we'd find a recently laid-off UPS worker on a bed of concrete outside a church, writing a letter to his mother. And in Colorado, we'd spend an evening with a 36-year-old industrial designer who'd lost her job, two homes and a sense of who she was.

But all that would come later.

When Michael and I met Danny, we had no idea what was ahead of us. We didn't know whether we'd find a country dinged by the financial crisis or crippled by it. All we knew was that for the newly homeless -- men and women forced by foreclosures and unemployment to seek out borrowed couches, crowded shelters and unfamiliar streets -- Danny was an example of life at its lowest. If there was a bottom to hit, he was there, sitting inches from a mountain of empty Thunderbird bottles, the contents of which had eaten away at his liver.

How many people would the recession push to that point? How many people would be sitting in the woods a decade from now because of what happened to them this year?

That Danny was smart and charming was clear even at his weakest. He kissed my hand when I reached to shake his. "Sometimes," he told me, "when you don't appear to be anything, that's when you're someone." His blue eyes were haunting, if only because they hinted at a man much younger than he looked.

Michael and I promised to come back at the end of our trip to check on him.

That's why we were standing at the tent on a recent weekday and that's why, when we found it vacant, we started digging through a pile of garbage a foot high. We found only hints that no one had been there for a while: old prescription pill bottles, newspapers from June.

Danny wasn't at the local hospital. An employee there who knew him suggested I try the morgue. But that wasn't necessary.

Danny was an extreme example of what we had seen all along the road: men and women determined to survive despite their circumstances. The couple with the ring on layaway decided not to wait for better days and got married with a $50 ring instead. The UPS man wrote not only about his laments, but his hopes. "I'm lost," his letter read. "There got to be a job out there some where." And the industrial designer who once cried every day discovered a middle ground between fierce autonomy and forced dependence.

As for Danny, no one forced help on him. He asked for it. Just weeks after we met him, he called Gayle Sanders, director of the Hilda M. Barg Homeless Prevention Center in Woodbridge, which is operated by Volunteers of America.

"I don't want to die alone and have somebody find me in two weeks," Sanders said Danny told her. She and her husband picked him up. In his first weeks at the shelter, he could not walk and could barely talk. The nursing assistant at the hospice told Sanders that Danny had just weeks to live.

Danny remembers none of this. All he knows is he woke up in a bed, not knowing how he had gotten there.

"There's certain points of my life that are lost forever in my memory bank," he said. "And it's probably best I don't remember."

He now lives in a nursing home where he has a bed with clean sheets and a table topped with cards from relatives he hadn't talked to in decades.

Until we visited Danny there, he hadn't seen the photo Michael had taken of him in the woods. It showed a bearded, gaunt-faced old man with large bags under his eyes.

"It's like walking through the twilight zone, looking at that and looking back at the situation I was in," said Danny, who is 53.

Danny is the first to blame himself for where he ended up. He remembers feeding the homeless in Georgetown in the mid-1970s. He slowly became one of them. "I was so drunk up most of the time I don't even know when the fall really started," he said. "Drinking for me was as normal as breathing."

As we spoke, Danny clutched a newly assembled photo album. One call at a time, Sanders was able to find Danny's relatives in Texas and Florida and piece together how a man ends up in the woods. In one picture, Danny cradles a phone, talking to a brother he hadn't seen for more than 30 years.

Dennis Glass, 48, of Abilene, Tex., said he had been trying to find Danny for years. He was in sixth grade when Danny left the children's home where the brothers and their two sisters landed after their father left and their youngest brother died under their mother's care.

Dennis returned to the home in the 1990s to look for traces of his relatives. He found many but could never locate Danny. That is, until he received an e-mail from a cousin who had heard from Sanders.

Files Dennis found at the home included results of IQ tests: Danny had scored the highest of the siblings.

"When you look at the pictures of him as a child, there is such potential, such promise, such hope," said Dennis, who has visited Danny once and plans another trip soon. "Compare that to what you saw of Danny and the tent and it's, 'How did this happen?' We all make choices. You just have to go back and say, 'How much of this is your own choice, and how much of this is what life dealt you?' "

Danny, who said he has stopped drinking, is planning ahead. He wants to talk to high school students about peer pressure, using his life as a warning.

Michael and I also changed on the road. We barely knew each other when we set out on this trip, but by the end, we could predict what the other would order at a restaurant and knew when the emotions of the day had become too much. In the months we were gone, recession-related headlines went from alarming to guardedly optimistic, but we know that for many the crisis is not over. For those who lost jobs or homes, there are still fears, still unknowns.

Even stories with happy endings came with uncertainties. The couple who couldn't afford the ring still lack jobs. The UPS worker fell so far out of the mainstream that I couldn't find him again -- no cellphone, no address. And the woman who lost two homes could not bring herself to attend a wedding in her home town recently because there would be a dress to buy and the inevitable job questions she was not ready to answer.

Danny's health has improved so much that he has been told he no longer qualifies for hospice care and must be out of the nursing home in a month. He can stay at the shelter for 30 days after that. Then, he doesn't know where he'll go.

He doesn't like to think about it, but there's always a tent in the woods.

"I'm trying to go forward," Danny said. "I'm trying to not go back. But I don't see any other opportunities on my horizon. At least I know I can survive if I have to get in that situation again."

To read other Half a Tank entries, go to voices.washingtonpost.com/recession-road.

In Downturn, Military Reports Historic Recruiting Success

Image via Wikipedia

In Midst of Downturn, All Targets Are Met

By Ann Scott Tyson
Washington Post Staff Writer
Wednesday, October 14, 2009

For the first time in more than 35 years, the U.S. military has met all of its annual recruiting goals, as hundreds of thousands of young people have enlisted despite the near-certainty that they will go to war.

The Pentagon, which made the announcement Tuesday, said the economic downturn and rising joblessness, as well as bonuses and other factors, had led more qualified youths to enlist.

The military has not seen such across-the-board successes since the all-volunteer force was established in 1973, after Congress ended the draft following the Vietnam War. In recent years, the military has often fallen short of some of its recruiting targets. The Army, in particular, has struggled to fill its ranks, admitting more high school dropouts, overweight youths and even felons.

Yet during the current budget year, which ended Sept. 30, recruiters met their targets in both numbers and quality for all components of active-duty and reserve forces.

"We delivered beyond anything the framers of the all-volunteer force would have anticipated," Bill Carr, deputy undersecretary of defense for military personnel policy, said at a Pentagon news conference.

The wars in Afghanistan and Iraq are considered by experts to be an unprecedented test of the volunteer military's resilience. Its ability to bring fresh recruits into the force is critical not only to increasing the overall size of the Army and Marine Corps, but to ensuring that additional units are available to rotate into conflict zones. Some Army units sent overseas recently have been deployed at less than full strength.

As lengthy, multiple combat tours place U.S. forces under enormous stress, the willingness of young people to enlist has surprised even military leaders, experts said.

The military is suffering "strains that are tragic in personal lives, but institutionally the ground forces have held together and are not broken. They are even recovering a little bit as we speak," said Michael O'Hanlon, a senior fellow at the Brookings Institution.

Still, it is difficult to predict how much stress the volunteer military can take as it navigates uncharted waters, experts said.

"There is no way to tell at what point the Army will break in the sense of mass desertion, or people unwilling to stay in, or not meeting recruiting quotas," O'Hanlon said.

Overall, the Defense Department brought in 168,900 active-duty troops, or 103 percent of the goal for the fiscal year, officials said. It reached 104 percent of the goal for recruitment of National Guard and reserve forces.

The quality of recruits also improved, with about 95 percent reporting that they had received high school diplomas; last year, 83 percent of the Army's active-duty recruits had diplomas, short of the goal of 90 percent. The active-duty Army this year admitted only 1.5 percent of recruits who scored in the lowest acceptable category on the standard qualification test; in recent years, that figure had reached nearly 4 percent.

Carr said strong recruitment was driven by economic conditions that have made civilian jobs scarce, along with other factors such as pay increases and investment in recruiting budgets.

The recession "was a force," Carr said, and, "given the unemployment that we had not directly forecast, allowed us to be for much of the year in a very favorable position."

Historically, there has been a strong correlation between rising unemployment and increases in "high quality" enlistments, according to Curt Gilroy, the Pentagon's director of accession policy.

Carr said the Defense Department spent about $10,000 on advertising, marketing, recruiters and other budget items per recruit, with the Army spending more than double that, at $22,000.

"The unemployment . . . left us with more dollars per recruit than proved to be minimally necessary," he said.

Carr also credited hefty enlistment bonuses for the military's success, saying 40 percent of recruits received an average bonus of $14,000, compared with $12,000 on average in 2008. The size of the bonus varied by service, with the Army, which has the toughest mission, offering more.

Maj. Gen. Donald Campbell, head of the Army's recruiting command, said one factor in its success was putting a large number of recruiters on the streets.

"I think the most important thing that helps us with success, whether you're talking money, resources, advertising, is having the right number of recruiters, soldiers on the ground," he said.

In recent years, military officials cited the intensity of the fighting in Iraq as dampening interest in military service among 17-to-24-year-olds and, in particular, lessening the support of parents and other influential adults. But Pentagon officials said earlier this year that the declining violence in Iraq had made young people more willing to sign up.

Carr said that given the success this year, the Pentagon is cutting its $5 billion recruiting budget by 11 percent for next year.

Recession threatens families in Cambodia

Layoffs among parents augur a rise in child labour: experts.

Photo by: Sovan Philong

Fourteen-year-old bookseller Vichet waits for customers along the riveside on Tuesday.

A STEEP decline in Cambodia's garment exports for the month of July has forced officials to reassess the strength of the global economic downturn and its impact on the country, as child welfare experts warn that the Kingdom's most vulnerable citizens - its children - may have the most to lose.

Official figures released Tuesday showed a 26.4 percent plunge in garment exports for July compared with a year ago and a 17.5 percent slide from June, - the latest in a series of grim economic indicators that prompted an admission by the head of the Cambodian Economic Association that the worst of the crisis could still be ahead.

Standing in the path of that slide, says Bill Salter, head of the International Labour Organisation's subregional office in East Asia, are Cambodia's children.

"The trend threatens to push 200,000 people back into poverty and erect new financial obstacles in front of children trying to access education,"
Salter said Tuesday during the launch of a national workshop studying the impact of the global economic crisis on child labour.

An estimated 40 percent of children aged between 7 and 17 years are currently engaged in some form of child labour, the group ChildFund Australia said in June.

Child labour rising
ILO officials said earlier this year that the number of children working in hard-labour conditions in Cambodia had grown from an estimated 250,000 in 2002 to about 300,000 this year.

The government has acknowledged the risks facing children, especially as families dependent on the garment sector - the Kingdom's largest industrial employer - suffer job losses or salary cuts that could prompt them to pull children out of school and into the workforce.

Cambodia's garment sector, which accounts for about 90 percent of the Kingdom's total exports, has borne the brunt of an economic downturn that can be linked directly to the rising numbers of children being forced into work, the ILO's Salter said, as cash-strapped families increasingly view education as a financial burden.

Veng Heang, director of the Department of Child Labour within the Ministry of Labour, said the link between the global crisis and child labour was no surprise.

"We knew that the economic crisis would impact children," he said Tuesday, adding that a rise in instances of child begging, scavenging and domestic labour would not be unexpected.

Warnings over deteriorating child welfare came amid protests by thousands in the garment sector over slashed pay.

More than 70,000 garment workers have been laid off since the crisis began, industry analysts say, with another 100,000 under threat in the next two years.

Nearly 3,000 employees at the Sky High Garment Factory in Daun Penh district went on strike on Monday to protest drops in their salaries, inadequate working conditions and unexpected work stoppages.

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Race, Wealth, and Intergenerational Poverty

Darrick Hamilton and William Darity Jr. | August 17, 2009

Despite an enormous and persistent black-white wealth gap, the ascendant American narrative is one that proclaims our society has transcended the racial divide. But wealth is a paramount indicator of social well-being. Wealthier families are better positioned to afford elite education, access capital to start a business, finance expensive medical procedures, reside in higher-amenity neighborhoods, exert political influence through campaign contributions, purchase better legal representation, leave a bequest, and withstand financial hardship resulting from an emergency.

The wealth gap is the most acute indicator of racial inequality. Based on data from the 2002 Survey of Income and Program Participation, white median household net worth is about $90,000; in contrast it is only about $8,000 for the median Latino household and a mere $6,000 for the median black household. The median Latino or black household would have to save nearly 100 percent of its income for at least three consecutive years to close the gap. Furthermore, 85 percent of black and Latino households have a net worth below the median white household. Regardless of age, household structure, education, occupation, or income, black households typically have less than a quarter of the wealth of otherwise comparable white households.

Since the election of Barack Obama, a growing belief has emerged that race is no longer a defining feature of one's life chances. But the extraordinary overlap between wealth and race puts a lie to the notion that America is now in a post-racial era. The smallest racial wealth gap exists for families in the third quartile of the income distribution where the typical black family has only 38 percent of the wealth of the typical white family. In the bottom income quartile -- the group containing the working poor -- a black family has a startlingly low 2 percent of the wealth of the typical white family.

Those who recognize the racial wealth gap but still embrace the idea of a post-racial America have crafted two explanations for this disparity. The first is that, in search of immediate gratification, blacks are less frugal when it comes to savings. Indeed, in an April lecture at Morehouse College, Federal Reserve Chair Ben Bernanke attributed the racial wealth gap to a lack of "financial literacy" on the part of blacks, particularly with respect to savings behavior.

Such an explanation, however, is not the case. Economists ranging from Milton Friedman to Marjorie Galenson to the recently deceased founder of the Caucus of Black Economists, Marcus Alexis, found that, after accounting for household income, blacks historically have had a slightly higher savings rate than whites. In 2004, economists Maury Gittleman and Edward Wolff also found that blacks save at a moderately higher rate than do whites, again after adjusting for household income. This indicates even greater black frugality because many higher-income blacks offer more support to lower-income relatives than do whites, further reducing their resources to save.

The second explanation given to support the post-racial narrative is that inferior management of assets owned by blacks has resulted in lower portfolio returns. However, recent research finds no significant racial differences in asset appreciation rates for families with positive net worth.

Recessions disproportionately affect black and Latino families. During the 1999–2001 recession, median household wealth fell by 27 percent for both Latinos and blacks, while it grew by 2 percent for whites. The current recession likely will worsen the racial wealth gap. Although whites are more likely than blacks to own their home, the share of black wealth in the form of housing is nearly twice as large as the white share. And with blacks far more likely than whites to have been steered toward sub-prime loans in discriminatory credit markets, the foreclosure crisis is bound to have a more deleterious effect on black wealth than on white wealth.

For example, a recent report on mortgage lending and race by the Institute on Race and Poverty at the University of Minnesota found that black Twin City residents earning over $150,000, in comparison to whites earning below $40,000, were twice as likely to be denied a home loan. Those fortunate (or unfortunate) enough to get a loan were more than three times as likely to have a sub-prime loan.

Economic studies also demonstrate that inheritances, bequests, and intra-family transfers account for more of the racial wealth gap than any other demographic and socioeconomic factor, including education, income, and household structure. These intra-familial transfers, the primary source of wealth for most Americans with positive net worth, are transfers of blatant non-merit resources. Why do blacks have vastly fewer resources to leave to the next generation?

Apart from the national failure to endow ex-slaves with the promised 40 acres and a mule after the Civil War, blacks were deprived systematically of property, especially land, accumulated between 1880 and 1910 by government complicity and fraud as well as seizures by white terrorists. During the first three decades of the 20th century, white rioters destroyed prosperous black communities from Wilmington, North Carolina, to Tulsa, Oklahoma. Restrictive covenants, redlining, and general housing and lending discrimination also inhibited blacks from accumulating wealth.

Given the importance of intergenerational transfers of wealth and past and present barriers preventing black wealth accumulation, private action and market forces alone cannot close an unjust racial wealth gap -- public-sector intervention is necessary.

Indeed, the public sector already subsidizes asset acquisition. A 2004 report by the Corporation for Enterprise Development estimates that, even before the current financial crisis, the federal government allocated $335 billion of its 2003 budget in the form of tax subsidies and savings to promote asset development such as mortgage deductions. This excluded any corporate subsidies and tax savings and was more than 15 times the amount spent on education.

At issue is not the amount but the recipients. Those earning over $1 million a year received about one-third of the entire allocation, while the bottom 60 percent of earners received only 5 percent. Individuals in the bottom 20 percent typically received a measly $4.24 benefit. A more progressive distribution could be transformative for low-income Americans.

The surge in the post-racial perspective has moved us away from race-specific policies. However, wealth, given the racial disparity of its distribution, can be an effective non-race-based instrument to eliminate racial inequality. We could shift from an income-based to a wealth-based test for transfer programs. Policy eligibility based on net worth below the national median would qualify a large proportion of black households. Electronic financial records and publicly available home appraisals now make it easier to estimate net worth, and to avoid savings crowd-out, the program could be structured similarly to the Earned Income Tax Credit program, which uses a phase-out schedule to avoid work disincentives.

These changes in eligibility should be coupled with policies to promote asset building. For example, the American Dream Demonstration program uses individual development accounts to create match incentives for low-income savers. Another initiative, the Saving for Education, Entrepreneurship, and Downpayment, established children's development accounts (sometimes called "baby bonds") to create endowed trusts for children at birth. In the United Kingdom, since 2005, every newborn receives a trust ranging from 250 pounds to 500 pounds depending on familial resources.

In 2004, the American Saving for Personal Investment, Retirement, and Education (ASPIRE) Act was introduced in Congress to establish children's development accounts in the U.S. While the nation's first black president eschews race-specific policies, perhaps a strongly amended ASPIRE bill designed to progressively distribute funds based on familial net worth can be the policy that enables him to "bind ... [black America's] grievances ... to the larger aspirations of all Americans."

We envision a "baby bond" plan of much greater magnitude -- progressively rising to $50,000 or $60,000 for children in families in the lowest wealth quartile and accessible once the child turns 18 years of age. We also would determine eligibility for such a program based upon the net-worth position, rather than the income, of the child's family (all children whose family fell below the national median for wealth would receive baby bonds).

We should strive not for a race-neutral America but a race-fair America. For that to occur, the transmission of racial economic advantage or disadvantage across generations would have to cease. Public provision of a substantial trust fund for newborns from wealth-poor families would also go a long way toward achieving the ideal.

Iraqi Immigrants Struggle to Adjust to Life in the U.S.

By KIRK SEMPLE

Not long after the Iraq war began in 2003, Uday Hattem al-Ghanimi was accosted by several men outside the American military base where he managed a convenience store. They accused him of abetting the Americans, and one fired a pistol at his head.

Now, after 24 operations, Mr. Ghanimi has a reconstructed face as well as political asylum in the United States. On July 4, his wife and three youngest children joined him in New York after a three-year separation.

But the euphoria of their reunion quickly dissipated as the family began to reckon with the colder realities of their new life. Mr. Ghanimi, 50, who has not been able to work because of lingering pain, is supporting his family on a monthly disability check of $761, food stamps and handouts from friends. They are crammed into one room they rent in a two-bedroom apartment on the Upper West Side of Manhattan, in a city whose small Iraqi population is scattered. And Mr. Ghanimi’s wife and children do not speak English, deepening their sense of isolation.

“They say, ‘Let’s go back,’ ” Mr. Ghanimi said glumly. “It’s not what they were thinking. I told them, ‘Just be patient.’ ”

For years after the American invasion of Iraq, thousands of Iraqis clamored for admission to the United States and found the door all but closed — until the government reacted to widespread criticism in 2007 by making it easier for more to enter with special visas or as refugees.

But now that Iraqis are arriving in larger numbers, many are discovering that life in the United States is much harder than they expected.

A report released in June by the International Rescue Committee, a refugee resettlement organization in New York, said that many Iraqi immigrants have been unable to find jobs, are exhausting government and other benefits and are spiraling toward poverty and homelessness.

Advocates for immigrants in New York and elsewhere say that Iraqis have had more difficulty getting settled than most migrant populations. Many are well educated and arrive with unrealistically high expectations of the life that awaits them. Though most have received assistance from government or private agencies, large numbers have immigrated in the depths of the recession.

Many also need help dealing with the physical and emotional wounds of war.

“I’ve never seen a population where the trauma is so universal,” said Robert Carey, vice president for resettlement and migration policy at the International Rescue Committee.

More than 30,000 Iraqis have been resettled in the United States since the 2003 invasion as refugees, or with special visas for those who worked closely with the American government. At least 1,500 more have been granted asylum, federal officials say.

A vast majority have arrived in the past two years, settling thinly across the country, with larger concentrations in San Diego, Phoenix, Houston and Dearborn, Mich. More than 1,100 have been resettled in the New York region, with at least 100 in New York City.

In Iraq, many worked as doctors, teachers, scientists and interpreters — often for Americans, giving some the hope that they would be rewarded with a comfortable life here. But like accomplished immigrants from other countries, most have found that overseas credentials do not always apply in the American market, compelling them to compete for lower-skill jobs.

Nour al-Khal, 35, who arrived in New York as a refugee in 2007, has been mentoring several Iraqi families. Among the hardest adjustments, she said, is accepting the likelihood that they will not make a lateral professional move.

“We fight over that,” said Ms. Khal, who was shot in Basra, in southern Iraq, in 2005 while working as an interpreter for Steven Vincent, an American journalist who was killed in the attack. Ms. Khal was a senior manager for an American development contractor; in New York, the best job she could initially find was as a receptionist at a real estate firm.

“I just accepted it,” said Ms. Khal, who now works as a translator. “It was so hard.”

The New York region offers notable opportunities for newcomers. Public transportation is good, and social service agencies have a wealth of experience with recent immigrants. But living costs are high, and the Iraqi population — unlike other immigrant groups that have colonized neighborhoods and formed associations — is atomized, fostering an alienation that is aggravated by the city’s relentless pace.

“My life is miserable,” said Dunya al-Juboori, 29, a former hair salon owner in Baghdad who came as a refugee in 2007 and lives in Medford, N.J. She has been working for minimum wage at a salon in the mornings and attending cosmetology school the rest of the day, leaving no time or money to develop a social life. She has not seen her family since 2006, when she left Iraq to seek treatment in Jordan for advanced lymphoma.

“I cry every day,” she said, adding quickly, “Not in the morning, because I’m too busy.”

Ehab, 34, who worked for a development contractor in Baghdad but fled after receiving threats, said recent immigrants from Iraq are in need of profound guidance. (He spoke on the condition that his surname not be published, saying he feared that insurgents in Iraq would attack his family.)

“An Iraqi who is transitioning from a country in war needs a lot of care,” said Ehab, who arrived in New York as a refugee in 2007 and works as a project coordinator for Proskauer Rose, a Manhattan law firm that has helped hundreds of refugees and asylum seekers.

Mr. Ghanimi, the store manager who was shot, is deeply grateful for the free medical care, legal assistance and housing he received while his face was repaired and his family’s asylum applications were processed.

But the tasks still at hand are overwhelming, he said — like finding a new apartment, getting his wife treatment for a variety of physical and emotional ailments and enrolling his children, 21, 17 and 11, in classes.

His most important job, he said, is to convince them all that they are better off here than in Baghdad — at the very least, because their lives are not at risk.

“I told them everything here is beautiful,” he said. “Electricity 24 hours, not like in Iraq. The weather is very good, not like in Iraq. There are many things you can’t get in Iraq. And they come and say, ‘Yeah, but you can’t get it.’ ”

A few days later, he took the family to Times Square at sunset, to experience the full effect of the lights. They were wide-eyed, dazzled by the swirl of activity.

“Maybe it will take time to put everything in place,” Mr. Ghanimi said. “But I feel like everything will be good.”

Off the Charts - Index of Leading Indicators Is Signaling the Recession’s End

By FLOYD NORRIS

THE American recession appears to be nearing an end, but only after it has become the deepest downturn in more than half a century.

The index of leading indicators, which signals turning points in the economy, is rising at a rate that has accurately indicated the end of every recession since the index began to be compiled in 1959.

The index was reported this week to have risen for the third consecutive month in June, and to have risen at a 12.8 percent annual rate over those three months. Such a rise, pointed out Harm Bandholz, an economist with UniCredit Group, “has always marked the end of the contraction.”

Mr. Bandholz said he expected that the National Bureau of Economic Research, the official arbiter of American economic cycles, would eventually conclude that the recession bottomed out in August or September of this year.

If that proves to be accurate, the recession that began in December 2007 will have lasted 21 or 22 months, making it the longest downturn since the Great Depression.

There are caveats to the forecast, of course. Somewhat illogically, the index of leading indicators is subject to revision in coming months, which could make the recent gain seem smaller and not necessarily indicative of an approaching recovery.

Only seven of the 1o leading indicators for June have been reported by the government, while the other three were estimated by the Conference Board, an independent research group that compiles the indicators. Some of the seven indicators that have been reported may be revised.

As can be seen in the accompanying charts, six of the seven recessions since 1960 either ended in the month the indicator first showed a 12 percent annualized gain, or had ended a month or two before the index did so.

The exception was the 1990-’91 recession, which was followed by one of the slowest recoveries ever. The official end of the recession was in March 1991, but the recovery was so tepid that it was not until December 1992 that the economic research bureau made that call. As it happened, December was the same month the indicator first showed such a strong three-month rise.

An end to recession is not, of course, the same thing as the beginning of a boom. The indicator “has an unblemished record on calling the turning point,” said another economist, Robert J. Barbera of ITG, “but it is not a particularly good guide to the power of the upturn.”

Indeed, one of the strongest moves in the leading indicators came at the end of the brief 1980 recession, as credit controls were removed. But the economy soon fell into another, longer recession.

Mr. Bandholz thinks we may get a “W” recovery, in which early gains are followed by weaker figures. “We do not expect this recovery to be strong and self-sustaining,” he said. “What is lacking is support from consumer spending.”

During the most recent three months, the strongest indicators have been the financial ones. The Standard & Poor’s 500-stock index has risen while the gap has widened between long-term and short-term interest rates. The indicators index was also helped by an increase in consumer expectations and a slowing in deliveries by suppliers. (Slower deliveries are assumed to be caused by rising orders, although such a change could indicate the suppliers simply laid off too many workers.)

Two of the 10 indicators — the money supply and new orders for consumer goods — have shown declines.

Another measure compiled by the Conference Board, the index of coincident indicators, has fallen for eight consecutive months, and dropped in 17 of the last 19 months. That indicator is often used by the economic research bureau in dating decisions, and its failure to stabilize is a reason that Mr. Bandholz says he thinks the downturn is not yet over.

The index of coincident indicators has fallen 6.4 percent from the peak it reached in November 2007, making this the deepest recession since 1960. Before this cycle, its steepest decline was a 5.6 percent slide during the 1973-’75 downturn.

Floyd Norris’s blog on finance and economics is at nytimes.com/norris.