Los Angeles Times - 13.11.2019

C2 WEDNESDAY, NOVEMBER 13, 2019 LATIMES.COM/BUSINESS

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With so much student loan debt on their shoulders, it’s not

surprisingthatyoungerAmericansarepostponingbuyingtheir

first home. But a couple of recent surveys have quantified

exactlyhowlongstudentloansaredelayinghomeownership.

According to data from the Federal Reserve, even a $1,000

studentloandebtcanlowerthehomeownershipratebyabout

1.5percent.Thatequatestoputtingoffbuyingahouseby2.5

months.

But of course mostAmericans with student loans owe much

morethan$1,000.Infact,asofJuly,theaveragestudentloan

balanceperdebtorwas$37,172.That’smorethanthreetimes

theaveragebalancethanin2006,accordingtotheFed.

Addtotheincreaseddebtloadthathouseholdincomeshave

remainedmostlystagnantforbachelor’sdegreeholders,while

rentshavemostlyincreased,andithasbeenincrediblydifficult

formanygraduatestopaydowntheirdebt.

As a result, the average U.S. adult carrying student loans is

delayinghomeownershipby7.7years.

Another recent survey, by Clever Real Estate, found that al-

most a full half (48 percent) of current undergraduates with

studentdebtalreadyexpecttoputoffbuyingahousebecause

oftheirloans.

Thesurveyalsofoundthat,onaverage,Americansbelieve28

istheidealagetobuyahome.However,themediancollege

graduatewithstudentdebtdoesn’texpecttobeabletoafford

ahomeuntilage35.Incontrast,studentswithnostudentdebt

saidtheyplantobuyahomebyage30.

AgenerationalshiftisalsovisibleintheFeddata.In2015,only

37%ofmillennialswereabletobecomehomeowners,whichis

approximately8percentagepointslowerthanthehomeowner-

shiprateofGenerationXadultsandbabyboomerswhenthey

werethesameage.

Student loan debt delaying home ownership by 7 years

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BUSINESS BEAT

SunPower Corp., one of
the largest U.S. solar-panel
makers, is giving up its man-
ufacturing business to focus
on installing rooftop solar
systems.
The company is spinning
off its panel production op-
erations into a new com-
pany, Maxeon Solar, that
will be based in Singapore
with factories in France,
Malaysia, Mexico and the
Philippines, according to a
statement Monday. As part
of the deal, a Chinese suppli-
er of silicon wafers will make
a $298-million equity invest-
ment, valuing Maxeon at
$1.03 billion.
SunPower described the
move as a natural evolution
of the maturing solar busi-
ness. Panel makers once had
to help create their own mar-
ket by installing the equip-
ment they manufactured.
Now the market is big
enough for companies to
specialize in one or the other.
First Solar Inc., the largest
U.S. panel maker, walked
away in September from the
business of building solar
farms to focus on manufac-
turing. SunPower is moving
in the opposite direction.
“As the industry gets big-
ger, you get companies that
specialize,” SunPower Chief

Executive Tom Werner said

in an interview. “It’s part of

the mainstreaming of solar.”

The spinoff means the

U.S. is losing a major panel

maker just as President

Trump tries to preserve so-

lar manufacturing jobs at

home. The Trump adminis-

tration imposed tariffs on

solar equipment imports

last year in an effort to pro-

vide domestic manufactur-

ers with a level playing field.

SunPower had won an ex-

emption to the duties for the

panels it made overseas be-

cause of the premium nature

of its products.

Werner will continue to

run SunPower, and the San

Jose company will hold onto

a small panel factory in Ore-

gon.

Jeff Waters, who leads

SunPower’s technologies

business unit, will become

CEO of Maxeon, after the

tax-free spinoff is complete

in the second quarter.

SunPower panels are

known for being the most ef-

ficient in the industry, able

to convert more of the ener-

gy in sunlight into electricity.

That can give its panels an

advantage for space-con-

strained installations such

as rooftops, though they can

also be more expensive than

rivals’ products.

Tianjin Zhonghuan

Semiconductor Co. will own

almost 29% of Maxeon after

its investment, and existing

SunPower shareholders will

own the rest. SunPower is

majority-owned by the

French oil giant Total. Sun-

Power shares rose 0.6% to

$8.52 on Tuesday.

In the early days of re-

newable energy, SunPower

and First Solar built and

sold some of the biggest U.S.

solar farms. That strategy

was born in part by a need

for the panel producers to

create markets for their

products, said Pavel

Molchanov, an analyst at

Raymond James & Associ-

ates.

Renewables have be-

come more common since

then, and the price for solar

panels has plunged. Compa-

nies are now choosing to spe-

cialize in an effort to find an

edge over their rivals. “The

one-stop-shop of 10 years

ago is largely in the rear-view

mirror,” Molchanov said.

First Solar sees that edge

in manufacturing. It rolled

out its flagship Series 6

product and just started

production at a new $1-bil-

lion factory in Ohio. In Sep-

tember, the company said it

would move away from

building power plants.

SunPower said it will fo-

cus on installing residential

and commercial rooftop so-

lar projects. It’s already one

of the biggest suppliers,

competing against Sunrun

Inc., Vivint Solar Inc. and

Tesla Inc.’s energy unit.

That market is expected to

grow after a California law

that requires solar panels on

most new houses takes ef-

fect in January, and Werner

said he has deals to supply 18

major home builders.

Solar-panel firm quits manufacturing

SunPower, a major

U.S. producer, is

shifting to installing

rooftop systems as

industry matures.

A SUNPOWERcrew installs solar panels in San Ramon, Calif. SunPower will spin off its panel production into a new firm, Maxeon Solar.

Robert NickelsbergGetty Images

bloomberg

Trump renewed his assault

against the Federal Reserve,

saying it was hurting the

United States by not copy-

ing other central banks in

deploying negative interest

rates.

“We are actively compet-

ing with nations who openly

cut interest rates, so now

many are actually getting

paid when they pay off their

loan, known as negative in-

terest,” Trump said.

“Give me some of that

money. I want some of that

money. Our Federal Reserve

doesn’t let us do it,” Trump

said, drawing a laugh from

the audience. “It puts us at a

competitive disadvantage to

other countries.”

The Fed cut interest

rates last month for the

third time this year to shield

the economy from uncer-

tainty over trade and weaker

global growth, while signal-

ing that it won’t cut further

unless the outlook worsens.

The Fed’s benchmark rate

now lies in a target range of

1.5% to 1.75%, which is low by

historic standards but

higher than Japan and the

euro zone, which have

shifted to negative rates in

an effort to lift moribund

economies.

“We’re paying actually

high interest. We should be

paying by far the lowest in-

terest,” Trump said. After

noting the gains U.S. stock

markets have notched dur-

ing his presidency, he said

they could have risen a fur-

ther 25% “if we had a Fed

that worked with us.”

Trump economic advisor

Larry Kudlow subsequently

told CNBC that he didn’t

know whether Trump actu-

ally wants negative interest

rates in the United States.

“I don’t think the U.S.

needs negative rates,” said

Kudlow, who is director of

the White House’s National

Economic Council. “Our

economy is in very good

shape.”

The president has per-

sistently sought to shift

blame for slowing U.S. econ-

omic growth onto the Fed

and away from his trade war

with China, which some

businesses say has prompt-

ed them to delay investment

decisions. U.S. manufactur-

ing has slumped, but con-

sumers remain resilient, and

employers continue to hire

new workers at a solid pace.

Fed Chairman Jerome H.

Powell is scheduled to testify

before Congress on Wednes-

day and Thursday.

Murray and Miller write for

Bloomberg.

President Trump said
the United States will in-
crease tariffs on Chinese
goods if the first part of a
broader trade agreement
isn’t reached.
“If we don’t make a deal,
we’re going to substantially
raise those tariffs,” he said
Tuesday in a speech to the
Economic Club of New York.
“They’re going to be raised
very substantially. And
that’s going to be true for
other countries that mis-
treat us too.”
China is “dying” to make
a trade deal with the U.S.,
Trump said, adding that
he’d sign it only if it’s good for
American companies and
workers. Still, he said, “we’re
close — a significant Phase 1
deal could happen, could
happen soon.”
Trump also spent a good
deal of his speech praising
the overall gains that the
U.S. economy has posted on
his watch. Speaking to the

audience of executives and

economists, he criticized the

Federal Reserve for not

slashing interest rates to be-

low zero and said that a

Democratic victory in 2020

would endanger stock mar-

ket gains.

Trump and Chinese

President Xi Jinping had

planned to sign the first

phase of a U.S.-China trade

deal at an international con-

ference this month in Chile,

but the conference was can-

celed because of social un-

rest in that country.

A new site for the signing

hasn’t been announced. U.S.

locations proposed by the

White House have been

ruled out, according to a per-

son familiar with the matter.

Locations in Asia and Eu-

rope are now being consid-

ered instead, the person

said, asking not to be identi-

fied because the discussions

weren’t public.

Trump reiterated com-

plaints about China’s as-

cendance in the global econ-

omy. “Nobody’s cheated bet-

ter than China,” he said.

“The theft of American jobs

and American wealth is

over.”

U.S. stocks have rallied to

record highs in recent days

partly on optimism that ten-

sions are cooling in an 18-

month dispute between the

world’s two largest econo-

mies involving tariffs on

some $500 billion worth of

goods.

The economic stakes of a

prolonged trade war are ris-

ing for both countries.

China’s exports and im-

ports continued to shrink in

October, though slightly less

than economists had fore-

cast. The nation’s trade sur-

plus with the United States

widened over the month to

$26.4 billion — heading in the

opposite direction from the

narrowing that Trump has

called for to balance the

countries’ trading relation-

ship.

In his speech Tuesday,

Trump threatens China on trade

He says U.S. will raise

tariffs ‘substantially’ if

first part of a broader

deal can’t be reached.

By Brendan Murray
and Rich Miller

PRESIDENT TRUMP,

speaking in New York,

praised economic gains.

Spencer PlattGetty Images

JetBlue Airways Corp.,

bowing to rising competitive

pressures, began offering a

no-frills option Tuesday in

the first revamp of its fare

categories since they were

introduced in 2015.

Customers buying a re-

duced Blue Basic fare won’t

get a refund if they have to

cancel, can’t make changes

to the reservation and will

have to board last — stand-

ards that match other air-

lines for the category. There

are no extra fees for a carry-

on bag and one personal

item.

JetBlue is feeling pres-

sure from ultra-discounters

such as Spirit Airlines Inc.

and Frontier Airlines, as well

as from larger carriers like

Delta Air Lines Inc. and

American Airlines Group

Inc. that adopted the re-

duced, no-extras basic fares

several years ago to keep

from losing customers to

less expensive rivals.

“Over the last few years,

it’s become very clear this

no-frills basic economy seg-

ment has become a larger

and larger set of customers,”

Dave Clark, JetBlue’s vice

president of sales and reve-

nue management, said in an

interview. “Not having that

offering, we couldn’t com-

pete effectively.”

Blue Basic also will give

JetBlue the tools to “more

aggressively” drive fares

lower, said JetBlue Presi-

dent Joanna Geraghty. The

carrier, which plans to begin

transatlantic flights in 2021,

hasn’t decided whether to

offer Blue Basic on that serv-

ice, she said.

In contrast to competi-

tors, the Blue Basic fare will

allow passengers to select a

seat 24 hours before a flight

at no charge. They also will

receive the normal on-board

amenities such as seat-back

entertainment screens and

Wi-Fi access.

JetBlue offers “bundled”

fare categories in which the

price rises along with the

number of options it in-

cludes, such as free carry-on

bags, loyalty points, board-

ing position and more leg-

room. The airline will retain

its existing Blue fare catego-

ry, and a new option named

Blue Extra will replace Blue

Flex, with lower fares, more

flexibility to change or can-

cel reservations and early

boarding. A category

dubbed Blue Plus will be of-

fered only in limited interna-

tional markets.

Blue Basic fares went on

sale Tuesday on a few routes,

including Fort Lauderdale,

Fla., to Nassau, Bahamas,

while Blue Extra debuted on

most of JetBlue’s network.

Availability will be expanded

over the next two months,

Geraghty said.

JetBlue rolls out

no-frills fare: Pay

less and board last

bloomberg