by Calculated Risk on 8/20/2009 10:08:00 AM

From the Mortgage Bankers Association (MBA): Delinquencies Continue to Climb, Foreclosures Flat in Latest MBA National Delinquency Survey

The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 9.24 percent of all loans outstanding as of the end of the second quarter of 2009, up 12 basis points from the first quarter of 2009, and up 283 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.
...
The delinquency rate breaks the record set last quarter. The records are based on MBA data dating back to 1972.

The delinquency rate includes loans that are at least one payment past due but does not include loans somewhere in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the second quarter was 4.30 percent, an increase of 45 basis points from the first quarter of 2009 and 155 basis points from one year ago. The combined percentage of loans in foreclosure and at least one payment past due was 13.16 percent on a non-seasonally adjusted basis, the highest ever recorded in the MBA delinquency survey.
...
“While the rate of new foreclosures started was essentially unchanged from last quarter’s record high, there was a major drop in foreclosures on subprime ARM loans. The drop, however, was offset by increases in the foreclosure rates on the other types of loans, with prime fixed-rate loans having the biggest increase. As a sign that mortgage performance is once again being driven by unemployment, prime fixed-rate loans now account for one in three foreclosure starts. A year ago they accounted for one in five....” said Jay Brinkmann, MBA’s Chief Economist.
emphasis added

We're all subprime now!

More to come ...

by Calculated Risk on 8/20/2009 10:00:00 AM

Here is the Philadelphia Fed Index released today: Business Outlook Survey.

The region's manufacturing sector is showing some signs of stabilizing ....

The survey's broadest measure of manufacturing conditions, the diffusion index of current activity, increased from -7.5 in July to 4.2 this month. This is the highest reading of the index since November 2007. The percentage of firms reporting increases in activity (27 percent) was slightly higher than the percentage reporting decreases (23 percent). Other broad indicators also suggested improvement. The current new orders index edged six points higher, from -2.2 to 4.2, also its highest reading since November 2007. The current shipments index increased 10 points, to a slightly positive reading.

Labor market conditions remain weak. Firms continue to report declines in employment and work hours, but overall job losses were not as large this month. The current employment index increased from a weak reading of -25.3 to -12.9, its highest level in 11 months. Twenty-three percent of firms reported declines in employment this month, down from 30 percent in the previous month. ...

Click on graph for larger image in new window.

This graph shows the Philly index for the last 40 years.

The index was been negative for 19 of the previous 20 months, before turning slightly positive this month. Employment is still weak.

by Calculated Risk on 8/20/2009 08:30:00 AM

The DOL reports weekly unemployment insurance claims increased to 576,000:

In the week ending Aug. 15, the advance figure for seasonally adjusted initial claims was 576,000, an increase of 15,000 from the previous week's revised figure of 561,000. The 4-week moving average was 570,000, an increase of 4,250 from the previous week's revised average of 565,750.

The advance number for seasonally adjusted insured unemployment during the week ending Aug. 8 was 6.24 million.

Click on graph for larger image in new window.

This graph shows the 4-week moving average of weekly claims since 1971.

The four-week average of weekly unemployment claims increased this week by 4,250 to 570,000, and is now 88,750 below the peak of 19 weeks ago. It appears that initial weekly claims have peaked for this cycle - but the average has increased 22,000 from the low of two weeks ago.

The number of initial weekly claims is still very high (at 576,000), indicating significant weakness in the job market. The four-week average of initial weekly claims will probably have to fall below 400,000 before the total employment stops falling.

It is difficult to calculate the number of workers who have exhausted their extended claims, but that number is expected to rise sharply over the next few months. From the O.C. Register: Estimate doubles for jobless losing benefits Sept. 1 (ht Keith)

An estimated 143,000 unemployed workers in California will exhaust their jobless benefits by Sept. 1, according to new figures released by the state Employment Development Department.

That's more than double the 61,906 state officials estimated a month ago. The number is based on workers who will exhaust the basic 26 weeks of benefits plus the three extensions approved by Congress.

If Congress does not approve a fourth extension in benefits, EDD projects that 264,000 Californians will be kicked off the unemployment rolls by the end of the year.

by Calculated Risk on 8/20/2009 12:11:00 AM

From The Times: City taken by surprise as Bank of England’s figures herald end of recession

Britain has emerged from the worst recession since the Second World War, new Bank of England figures suggested yesterday ...

Detailed forecasts published by the Bank showed that gross domestic product (GDP) will rise by 0.2 per cent between July and September, marking the first economic expansion since the first three months of last year. The Bank expects the economy to continue to expand in the fourth quarter, by 0.4 per cent, and sustain the recovery throughout next year.

Note that the GDP figures in Britain are not annualized (0.4 percent is about 1.6 percent as reported in the U.S.)

The recession has apparently ended in Japan, Germany, and France.

by Calculated Risk on 8/19/2009 08:39:00 PM

On the agenda for the FDIC board meeting next week:

Memorandum and resolution re: Final Statement of Policy of Qualifications for Failed Bank Acquisitions.

Memorandum and resolution re: Final Rule on the Extension of the Transaction Account Guarantee Program.

Memorandum and resolution re: Notice of Proposed Rulemaking Regarding Risk-Based Capital Guidelines; Impact of Modifications to Generally Accepted Accounting Principles; Consolidation of Asset-Backed Commercial Paper Programs; and Other Related Issues.

The first item is important because this is the issue supposedly limiting bids from private equity firms for failed banks. See from MarketWatch: FDIC chills private-equity bank bidders

On the second issue, from Reuters: US to study impact of new off-balance-sheet rules (ht jb)

U.S. regulators plan to gauge how severe of a hit banks will take from an accounting change that will force them to bring more than $1 trillion of assets back on their books.

Next week regulators expect to propose a rule that seeks input on whether banks need more time to build capital cushions against the assets that were once held by off-balance-sheet trusts.

Banks will still have to move the assets back on to their books on Jan. 1, 2010, but regulators want feedback on the impact of the accounting change and whether it might be prudent to phase in the risk-weighted capital that must be held against the assets.

There is much more in the article.

by Calculated Risk on 8/19/2009 05:03:00 PM

From Bloomberg: BBVA Said to Win FDIC Bidding for Guaranty Financial of Texas

Banco Bilbao Vizcaya Argentaria SA ... was selected to take over the assets of Guaranty Financial Group Inc. in a government-assisted transaction ...

Guaranty might be seized tomorrow - or even today (like what happened with BankUnited after the deal was leaked).

Guaranty will be the second largest failure of the year.

by Calculated Risk on 8/19/2009 04:06:00 PM

From Peter Eavis at the WSJ: Colonial Bank Marks a New Low for Loans

In doing the deal, BB&T is marking down Colonial loans and real-estate collateral by 37%, a number that reflects a large amount of estimated losses. The biggest mark is on construction loans; BB&T is cutting their value by 67%.

And here is the BB&T presentation.

Click on slide for larger image in new window.

Yes, Colonial had some really bad loans. Peter Eavis quoted Daryl Bible, BB&T's chief financial officer: "When we looked at Colonial's portfolio versus ours, we saw a lot of borrowers we turned away."

Still it appears the BB&T / Colonial marks are the lowest yet.

by Calculated Risk on 8/19/2009 01:25:00 PM

From Bloomberg: U.S. Commercial Property Values Fall as Rent Declines Forecast

The Moody’s/REAL Commercial Property Price Indices fell 1 percent in June and are down 36 percent from their October 2007 peak, Moody’s Investors Service said in a report today.
...
“It’s too soon to call the bottom,” said Connie Petruzziello, a Moody’s analyst and co-author of the commercial property price report.

The Moody’s survey found a 4 percent increase in office prices in the second quarter compared with the previous three months ... Industrial properties ... fell 20 percent in the quarter, while apartments fell 16 percent and retail properties 8 percent.

I think the office prices increase was an anomaly. Other CRE prices fell much faster.

Here is a comparison of the Moodys/REAL Commercial Property Price Index (CPPI) and the Case-Shiller composite 20 index.

Notes: Beware of the "Real" in the title - this index is not inflation adjusted - that is the name of the company (an unfortunate choice for a price index). Moody's CRE price index is a repeat sales index like Case-Shiller.

Click on graph for larger image in new window.

CRE prices only go back to December 2000.

The Case-Shiller Composite 20 residential index is in blue (with Dec 2000 set to 1.0 to line up the indexes).

This shows residential leading CRE (although we usually talk about residential investment leading CRE investment, but in this case also for prices), and this also shows that prices tend to fall faster for CRE than for residential.

by Calculated Risk on 8/19/2009 11:20:00 AM

As a companion to the Problem Bank List (unofficial), here is a list of failed banks since Jan 2007. Deposits, assets and estimated losses are all in thousands of dollars.

Losses for failed banks in 2009 are the initial FDIC estimates. The percent losses are as a percent of assets.

See description below table for Class and Cert (and a link to FDIC ID system).

The table is wide - use scroll bars to see all information!

NOTE: Columns are sortable - click on column header (Assets, State, Bank Name, Date, etc.)





Class: from FDIC

The FDIC assigns classification codes indicating an institution's charter type (commercial bank, savings bank, or savings association), its chartering agent (state or federal government), its Federal Reserve membership status (member or nonmember), and its primary federal regulator (state-chartered institutions are subject to both federal and state supervision). These codes are:

N National chartered commercial bank supervised by the Office of the Comptroller of the Currency

SM State charter Fed member commercial bank supervised by the Federal Reserve

NM State charter Fed nonmember commercial bank supervised by the FDIC

SA State or federal charter savings association supervised by the Office of Thrift Supervision

SB State charter savings bank supervised by the FDIC

Cert: This is the certificate number assigned by the FDIC used to identify institutions and for the issuance of insurance certificates. You can click on the number and see "the last demographic and financial data filed by the selected institution".

by Calculated Risk on 8/19/2009 10:00:00 AM

From Bloomberg: Scholes, Merton Says Banks Should Value Assets Better (ht Brian)

Financial institutions should use mark-to-market accounting or list the hard-to-value securities on public exchanges whenever possible, Scholes said in a Bloomberg Radio interview yesterday. ...

“I’d like to see us encourage many more securities held on the books of the banks be migrated to exchanges if possible,” he said. Doing so would “allow for market discovery and market pricing as much as possible,” Scholes added.
...
“This is not the way forward,” [Merton, Robert Kaplan and Scott Richard] wrote. “While regulators and legislators are keen to find simple solutions to complex problems, allowing financial institutions to ignore market transactions is a bad idea.”

Don't hold your breath.

And from the SEC: Sample Letter Sent to Public Companies on MD&A Disclosure Regarding Provisions and Allowances for Loan Losses (ht LDM)

Clear and transparent disclosure about how you account for your provision and allowance for loan losses has always been critically important to an investor’s understanding of your financial statements. ... Finally, although determining your allowance for loan losses requires you to exercise judgment, it would be inconsistent with generally accepted accounting principles if you were to delay recognizing credit losses that you can estimate based on current information and events. Where we believe a financial institution’s financial statements are inconsistent with GAAP, we will take appropriate action.
emphasis added

Don't hold your breath.

And from the Jackson Hole conference in 1987: Restructuring the Financial System. Concluding remarks from Gerald Corrigan:

Clearly there is a broad-based consensus that something has to be done about restructuring our financial system. There is even a broadbased consensus as to why it has to be done. I certainly would count myself among those who put considerable urgency behind the task of getting it done.

Nothing was done. Hopefully no one held their breath.

by Calculated Risk on 8/19/2009 07:43:00 AM

From Reuters: U.S. architecture billings index up in July: AIA

... The Architecture Billings Index rebounded more than 5 points last month to a reading of 43.1, reversing a similar decline in June, according to the American Institute of Architects.

The index has remained below 50, indicating contraction in demand for design services, since January 2008 ...

Credit remains tight and government stimulus funds have had little visible impact on project activity, AIA Chief Economist Kermit Baker said.

"There has been too much contraction in recent months to get overly optimistic about business conditions," Baker said.
...
Nonresidential construction includes commercial and industrial facilities like hotels and office buildings, as well as schools, hospitals and other institutions. The AIA's Billings Index, which began in 1995, is considered a measure of construction spending nine to 12 months in the future.
emphasis added

Click on graph for larger image in new window.

This graph shows the Architecture Billings Index since 1996. The index is still below 50 indicating falling demand.

Historically there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on commercial real estate (CRE). This suggests further dramatic declines in CRE investment later this year and next.

by Calculated Risk on 8/19/2009 12:02:00 AM

From David Streitfeld at the NY Times: In Appraisal Shift, Lenders Gain Power and Critics

Mike Kennedy, a real estate appraiser in Monroe, N.Y., was examining a suburban house a few years ago when he discovered five feet of water in the basement. The mortgage broker arranging the owner’s refinancing asked him to pretend it was not there.

Brokers, real estate agents and banks asked appraisers to do a lot of pretending during the housing boom, pumping up values while ignoring defects. While Mr. Kennedy says he never complied, many appraisers did, some of them thinking they had no choice if they wanted work. A profession that should have been a brake on the spiral in home prices instead became a big contributor.

On May 1, a sweeping change took effect that was meant to reduce the conflicts of interest in home appraisals while safeguarding the independence of the people who do them.

Brokers and real estate agents can no longer order appraisals. Lenders now control the entire process.

The Home Valuation Code of Conduct is setting off a bitter battle. Mortgage brokers, lenders, real estate agents, regulators and appraisers are all arguing over whether an effort to fix one problem has created many new ones.

Streitfeld discusses the origins of the HVCC and the current situation (only the appraisal management companies and lenders are happy). Interesting story.

by Calculated Risk on 8/18/2009 09:32:00 PM

From Reuters: Guaranty Financial draws bid -- sources

A consortium that is led by financial services executive Gerald Ford and includes several private equity firms submitted a bid for troubled bank Guaranty Financial, despite uncertainty over U.S. regulation guidelines, sources familiar with the matter said on Tuesday.

It was unclear how many offers were submitted in total by Tuesday's deadline for bids, but sources said that there were also expected to be bids from other parties.

Today was the deadine for bids for the assets of Guaranty ($14.4 billion in assets as of Q1). My guess is the bank will be seized this week.

From Nick Timiraos at the WSJ: Corus Bids Enter the Final Stretch

New York developer the Related Cos. and Lubert-Adler Partners LP, a Philadelphia real-estate investment firm, have teamed up to bid on the assets of condo lender Corus Bank, joining a rival offer from Los Angeles private-equity fund Colony Capital LLC and iStar Financial Inc., the New York commercial-mortgage real-estate investment trust.

Several real-estate professionals see the Related-Lubert team as having the inside track to the bank's assets in a sale brokered by the Federal Deposit Insurance Corp., though other private-equity firms remain in the mix ...

From other reports, it appears the bidding on the assets of Corus will be open until Sept 3rd (Corus had $7.6 billion in assets as of Q1).

These will be the 2nd and 4th largest failures of the year. Colonial had $25 billion in assets, and BankUnited had $12.8 billion in assets when they failed.

by Calculated Risk on 8/18/2009 06:54:00 PM

The following article is about one of the ex-Credit Suisse brokers being found guilty of securities fraud. The judge's comments about the culture in financial services industry are on point ...

From Bloomberg: Ex-Credit Suisse Broker Eric Butler Guilty of Securities Fraud

U.S. District Judge Jack Weinstein ... asked lawyers for both Butler and the government, when they file sentencing papers, to put Butler’s acts in the context of “how pernicious and pervasive was the culture of corruption, lack of regulation” and “serious negligence in the financial services industry in supervising people like this.”

Some of these operations made J.T. Marlin look legit (OK, another movie reference).

by Calculated Risk on 8/18/2009 04:00:00 PM

Note: Google / Blogger is under a DDoS-style attack again - sorry for any inconvenience.

Click on graph for larger image in new window.

Instead of comparing the markets from the peak (See: the Four Bad Bears), Doug Short matched up the market bottoms for four crashes (with an interim bottom for the Great Depression).

Note that the Great Depression crash is based on the DOW; the three others are for the S&P 500.

From Edmunds.com: “Cash for Clunkers” Sales on the Rapid Decline (ht Bob_in_MA)

The rush of automotive sales activity brought on by the "Cash for Clunkers" program is fading fast, according to Edmunds.com, whose latest study of car buyer behavior indicates that automotive purchase intent is down 31 percent from its peak in late July.

“Now that there is plenty of money in the program and the most eager shoppers have already participated, the sense of urgency is gone, and the pace of intent decline is accelerating,” observed Edmunds.com CEO Jeremy Anwyl. "Inventories are getting lean and prices are climbing, giving consumers reasons to sit back."

Last week, activity was down 15 percent from the late July peak, and Edmunds.com analysts predict that in the coming days, purchase intent will return to levels seen before the launch of Cash for Clunkers. Purchase intent has proven to be a reliable leading indicator of sales to come in the following 90 days.

“Our research indicates that Cash for Clunkers buyers have come in three waves: the first was the informed, pent-up buyers who anxiously waited for the program to launch, while the second was the mass market who responded to advertising and other promotional coverage of the program,” recalls Edmunds.com Senior Analyst Jessica Caldwell. “Now the industry is largely servicing the third wave, which is generally made up of people who had to chase down copies of lost titles and other paperwork and are now able to finally participate. It is unclear where the customers will come from after this wave crests and breaks.”

And from a Guaranty Bank (Texas) NT 10-Q SEC filing:

As described in the July 23 8-K, the Company does not believe it is possible to raise sufficient capital to comply with the Orders to Cease and Desist described in the Company’s Current Report on Form 8-K filed on April 8, 2009. Accordingly, the Company no longer believes that it will be able to continue as a going concern.

The Company continues to cooperate with the Office of Thrift Supervision (the “OTS”) and the Federal Deposit Insurance Corporation (“FDIC”) as they pursue alternatives for the business of the Bank. Any such transaction would not be expected to result in the receipt of any proceeds by the stockholders of the Company.

Bids for Guaranty's assets were due today, and it is very likely that Guaranty will be seized this week by the FDIC. Guaranty keeps repeating the warning - and still the stock is trading above zero ...

by Calculated Risk on 8/18/2009 01:39:00 PM

From DataQuick: Southland home sales rise again as higher-cost areas awaken

Southern California homes sold last month at the fastest clip for a July in three years and the fastest pace for any month since December 2006. ...

A total of 24,104 new and resale houses and condos closed escrow in San Diego, Orange, Los Angeles, Ventura, Riverside and San Bernardino counties last month. That was up 3.6 percent from 23,262 in June and up 18.6 percent from 20,329 a year ago, according to San Diego-based MDA DataQuick.

July’s sales total was 8.7 percent lower than the average number sold in July – 26,410 – since 1988, when DataQuick’s statistics begin. July home sales have ranged from a low of 16,225 in July 1995 to a peak of 38,996 in 2003.

Sales have increased year-over-year for 13 consecutive months. ...

Although sales of lower-cost foreclosures have tapered off, the high end of the housing market has awakened this summer from a long slumber, during which sales had been at or near record lows. July sales of existing single-family houses rose above a year ago in many coastal towns, including Manhattan Beach, Redondo Beach, Huntington Beach, Newport Beach, Carlsbad, Encinitas and La Jolla. Among the higher-cost Southland communities not posting such a gain were Malibu, Rancho Palos Verdes, Beverly Hills, Brentwood and Del Mar.
...
Last month 43.4 percent of the Southland houses and condos that resold had been foreclosed on in the prior year – the lowest level since June 2008. July’s foreclosure resales figure was down from 45.3 percent in June and from a peak 56.7 percent in February 2009.
...
“Have prices hit bottom? While some data continue to hint at that, it remains an especially risky call to make given the uncertainty over the magnitude of future job losses and foreclosures. The recent drop in foreclosure resales, coupled with the rise in high-end sales, has helped stabilize some of the regional home price measures. But there’s still quite a bit of distress out there, and plenty of unknowns with regard to how lenders and borrowers will choose to proceed,” said John Walsh, DataQuick president.
...
Investors and other absentee buyers, defined as those who will have their property tax bills sent to a different address, bought 19.4 percent of the Southland homes sold last month. That’s up from 15.5 percent a year ago and a monthly average since 2000 of about 15 percent. San Bernardino County had the highest share of absentee buyers in July: 27 percent.
...
Foreclosure activity remains near record levels ...
emphasis added

Last year sales were very low in the high end areas, so some year-over-year pickup isn't surprising. Unfortunately DataQuick didn't break out the actual numbers.

Close to 20% of properties are being bought by investors, and 43.4% are foreclosure resales. These numbers are still very high and will probably increase after the Summer.

by Calculated Risk on 8/18/2009 12:06:00 PM

Here is an excerpt on cap rates in Manhattan ...

From Bloomberg: Manhattan Office Sales Ground to Halt in First Half

The scarcity of property sales has made it hard to calculate prices and yields, [CB Richard Ellis] said.

The so-called capitalization rate, or a property’s net operating income divided by purchase price, may have risen to about 7 percent for stable, prime Manhattan office buildings, CB Richard Ellis said.

During the peak, cap rates in Manhattan got as low as about 3 percent.

The increase in cap rates suggests more than half off the peak prices of a few years ago - and probably even more since rents have fallen too (reducing operating income) and vacancy rates are rising sharply (pressuring rents more).

No wonder "buyers and sellers are far apart on bids"!

by Calculated Risk on 8/18/2009 10:00:00 AM

It appears that single-family housing starts bottomed in January of this year. Single-family starts in July were 37 percent above the January low - based on the seasonally adjusted annual rate (SAAR).

How does this compare to previous housing recoveries?

Click on graph for larger image in new window.

The first graph compares the current recovery with four previous housing recoveries. The recoveries are labeled with the month that single-family housing starts bottomed.

Starts fell to record lows in the current housing bust (adjusted for changes in population, or number of households, would make the current bust even worse).

Usually housing starts increase steadily for the first two years following a housing bottom.

The second graph shows the same data, normalized by setting the bottom for single-family housing starts to 100.

This graph shows that housing starts usually double in the two years following the bottom. Starts increased 80 percent over two years in the recovery following the Jan 1991 bottom, and 136 percent in the recovery following the Jan 1970 bottom.

If starts doubled over the two years following the Jan 2009 bottom, single-family starts would recover to 715 thousand by Jan 2011. And looking at the first graph some people might think single-family starts might recover to a 1.1 million rate within 2 years. That seems very unlikely.

I started this year looking for the bottom in single family housing starts (and I think the bottom is in), but I expect the recovery to be sluggish because of all the excess housing units, and also because of the ongoing decline in the homeownership rate. I'll have more on this later - but hopefully these graphs show what many people expect.

by Calculated Risk on 8/18/2009 08:30:00 AM

Click on graph for larger image in new window.

Total housing starts were at 581 thousand (SAAR) in July, off slightly from June, but up sharply over the last three months from the all time record low in April of 479 thousand (the lowest level since the Census Bureau began tracking housing starts in 1959).

Single-family starts were at 490 thousand (SAAR) in July, up slightly from June; 37 percent above the record low in January and February (357 thousand).

Permits for single-family units were 458 thousand in July, suggesting single-family starts might decline slightly in August.

Here is the Census Bureau report on housing Permits, Starts and Completions.

Building Permits:
Privately-owned housing units authorized by building permits in July were at a seasonally adjusted annual rate of 560,000. This is 1.8 percent (±1.4%) below the revised June rate of 570,000 and is 39.4 percent (±1.8%) below the July 2008 estimate of 924,000.

Single-family authorizations in July were at a rate of 458,000; this is 5.8 percent (±1.1%) above the revised June figure of 433,000.

Housing Starts:
Privately-owned housing starts in July were at a seasonally adjusted annual rate of 581,000. This is 1.0 percent (±8.5%)* below the revised June estimate of 587,000 and is 37.7 percent (±5.1%) below the July 2008 rate of 933,000.

Single-family housing starts in July were at a rate of 490,000; this is 1.7 percent (±7.1%)* above the revised June figure of 482,000.

Housing Completions:
Privately-owned housing completions in July were at a seasonally adjusted annual rate of 802,000. This is 0.9 percent (±10.1%)* below the revised June estimate of 809,000 and is 26.4 percent (±6.9%) below the July 2008 rate of 1,089,000.

Single-family housing completions in July were at a rate of 491,000; this is 4.1 percent (±8.9%)* below the revised June figure of 512,000.

Note that single-family completions of 491 thousand are at the same level as single-family starts (490 thousand).

It now appears that single family starts bottomed in January. However I expect starts to remain at fairly low levels for some time as the excess inventory is worked off.

by Calculated Risk on 8/17/2009 10:45:00 PM

As I follow up to my post Sunday, Health Care Spending and PCE, here is an animation of the U.S population distribution, by age, from 1950 through 2050. The population data and estimates are from the Census Bureau.

Note: the third graph (link) is a Dynamic Population Pyramid of the same data from the Census Bureau.

Watch for the original baby bust preceding the baby boom. Those are the people currently in retirement. With the original baby bust now at the age of peak health care expenses, these are the best of times (from a demographics perspective) for health care.

Animation updates every 2 seconds.

Click on graph for larger image in new window.

The second graph is from the Department of Health & Human Services.

Although it would be interesting to break down health care expense by more age groups - this graph does shows that health care expenses are almost three times higher for those over 65 than those under 65. So - in the first graph - as the baby boomers move into the last 4 columns, the health care expenses will rise sharply.

And from the Census Bureau: Dynamic Population Pyramid (1950 - 2050) (note: Iframe version removed - Census Bureau site was slowing down)

Super cool graph. The first graph is in percentages, the one from the Census Bureau is in actual numbers. For you Harold and Maude fans, there will be a lot of older women in 2050.