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Economic downturn took greatest toll on Hispanics’ household wealth, research finds

BY Antoinette Alexander

NEW YORK — The bursting of the housing market bubble and the recession that followed took a greater toll on the wealth of minorities than whites, especially Hispanics, whose median household wealth plunged 66% from 2005 to 2009, according to a Pew Research Center analysis of newly available government data from 2009.

The median household wealth among Hispanics fell from $18,359 in 2005 to $6,325 in 2009. The percentage drop — 66% — was the largest among all racial and ethnic groups, according to the new report released Tuesday by the Pew Research Center’s Social and Demographic Trends project. During the same period, median household wealth declined 53% among black households and 16% among white households.

As a result of these declines, the typical black household had $5,677 in wealth (assets minus debts) in 2009; the typical Hispanic household had $6,325 in wealth; and the typical white household had $113,149, according to the data.

These lopsided wealth ratios are the largest in the quarter century since the government first published such data, according to Pew Research, and roughly twice the size of the ratios that had prevailed between these three groups for the two decades prior to the Great Recession.

The Pew Research report, which provides the first look at how the Great Recession impacted household wealth, found that plummeting house values were the principal cause of the erosion in wealth among all groups. However, because Hispanics derived nearly two-thirds of their net worth in 2005 from home equity and a disproportionate share reside in states that were in the vanguard of the housing meltdown, Hispanics were hit hardest by the housing market downturn.

Among the report’s other key findings:

  • About one-third of Hispanic (31%) and black (35%) households had zero or negative net worth in 2009, compared with 15% of white households. In 2005, the comparable shares had been 23% for Hispanics, 29% for blacks and 11% for whites;

  • About one-quarter of all Hispanic (24%) and black (24%) households in 2009 had no assets other than a vehicle, compared with 6% of white households. These percentages are little changed from 2005; and

  • During the period under study, wealth disparities also increased within the Hispanic community. The top 10% of Hispanic households saw their share of all Hispanic household wealth rise from 56% in 2005 to 72% in 2009.

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Credit Suisse: Total basket up 2.7% year over year; highest rate of price inflation in two years

BY Michael Johnsen

NEW YORK — Financial services firm Credit Suisse tabulated total basket increases of 2.7% year over year and 1% month over month for retail.

“Our monthly pricing survey in Dallas and Chicago showed that all retailers raised prices on a year-over-year and month-over-month basis with the exception of Jewel [a Supervalu banner operating in Chicago],” Credit Suisse research analyst Ed Kelly wrote in a note published Monday.

And though recent comments from Dollar General and Walmart suggested that lower-end consumers are beginning to feel the pinch from higher costs, retailers are by and large successfully passing those price increases along to the consumer. “Thus far, the pricing environment has remained rational, although the key player to continue watching is Walmart,” Kelly noted.

That increase in product pricing is accelerating most significantly across food items, Kelly noted. “Inflation was highest in our food basket, up 6.5% year over year, an acceleration from 3.4% last month,” he wrote. Health and beauty inflation was up 0.7% year over year, versus 2.9% in May. On a month-over-month basis, food inflation totaled 2.6%; conversely, average price changes were down across health and beauty products by 0.9%.

Walgreens and CVS/pharmacy had some of the greatest pricing disparities, as compared with everyday-low-price value leader Walmart. In the Chicago market, Walgreens relative pricing was 28.3% higher than Walmart; CVS’ prices were 21.9% higher. In Dallas, CVS/pharmacy relative pricing was 30.9% higher than Walmart, and Walgreens was 25.6% higher.

That’s not altogether a bad situation for the two drug retailers tracked in the Credit Suisse pricing survey but bears watching, Kelly cautioned. “We believe that drug stores are among the best-positioned retailers to pass along inflation, but they must remain vigilant not to let their pricing gap versus other formats increase too much,” he said.

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Walmart reorganizes for back-to-school season

BY DSN STAFF

BENTONVILLE, Ark. — Walmart announced that it is making back-to-school shopping even easier with new store improvements.

Back-to-school items now are organized, both in stores and online, in one place and categorized by school age group, so families can quickly and easily shop supplies appropriate for their child’s grade, the company reported. Many of the most common school supply list items are located down the center of the back-to-school aisle, allowing families to quickly check these items off their list.

“We know our customers need to stretch their dollars as far as they can,” said Duncan Mac Naughton, Walmart’s chief merchandising officer. “We’re making it even easier and more affordable for them this back-to-school season with low prices on more items along with our ad match policy and a better shopping experience.”

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