Sep202016
Millennials operate personal Ponzi schemes like Bernie Madoff
Borrowing money to pay debt is the most common form of personal Ponzi scheme. Lenders cloak debt consolidation and HELOC spending as sophisticated when it’s really a fool’s errand.
The Millennial Generation was too young to participate in the housing bubble of the early 00s. Instead, Baby Boomers and Generation Xers were the sophisticated financial geniuses who over-borrowed and overpaid for housing on a grand scale. What’s the main reason they did this? They wanted free money.
Rather than learn from the mistakes of the previous generation, Millennials embrace the same foolishness. Apparently, sacrifice and planning for tomorrow are overrated concepts.
Carpe diem — “Seize the Day” — The first Ponzi
Why do people make foolishly irresponsible financial decisions? Sometimes the mistakes are made in ignorance as people learn from their own mistakes, but sometimes this ignorance is willful and people don’t want to learn a truth that might adversely impact their pursuit of short-term gratification.
People make bad financial decisions because they want to pursue their short-term (and short-lived) pleasures at the expense of long-term goals and wants. People want instant gratification, and lenders learned to use this instinct to enslave people from a young age. Not long after people discover debt, they also discover the “sophisticated” financial management technique known as Ponzi borrowing.
Personal Ponzi Schemes
What does it mean to run a personal Ponzi scheme? A Ponzi Scheme is any investment where the returns come not from the investment but from the capital contributions of new investors. If you change the terms slightly, a Ponzi Scheme is also any debt where the payment of debt comes from borrowed money rather than current wages. In that respect, personal Ponzi schemes are easy to begin and grow. Anyone can borrow money to pay debt, right?
The really bad money decision millennial homeowners are making
Published: Sept 18, 2016, by Amy Hoak
Millennials are often described as prioritizing leisure and entertainment, but many are going into debt to fund them.
Most financial planners caution homeowners against using home-equity loans to fund short-term expenses, including vacations. Yet that is the most popular use of the money for the more than half of U.S. homeowners between the ages of 30 and 34 who have owned a home for three years or more and have taken out a home-equity loan, according to results of a recent Discover Home Equity Loans survey.
“It mystifies me that they’re taking out additional debt,” said Jackson Mueller, deputy director of the FinTech Program for the Center for Financial Markets at the Milken Institute, a nonpartisan think tank that aims to increase global prosperity.
Allow me to clear up the mystery. Millennials perceive home equity as free money. They didn’t earn it. The money magically appeared out of thin air due to the fact they purchased a house. Since this money was bestowed upon them by the appreciation fairy, and since lenders offer them access at very low rates, just like the foolish generations that preceded them, Millennials accept this nearly-free money, and they spend it.
“But it doesn’t really surprise me that they’re using alternative financing to fund certain things.”
Many millennials are shunning credit cards, looking for less expensive ways to borrow, he said.
And they feel very sophisticated in doing so. They fail to recognize the core error — spending money they didn’t earn — but they congratulate themselves on managing their debt so wisely.
Borrowing against a home can be a less expensive way to attain funds than credit cards. The average interest rate on a home-equity loan was 4.88% for the week ending Aug. 17, according to Bankrate.com; the average rate on a home-equity line of credit was 4.75%. The average credit-card rate was 16.1%. Interest on home-equity loans also may be tax deductible, said TJ Freeborn, spokeswoman for Discover Home Equity Loans.
The survey findings show that for many borrowers, “the home not only is the place they live and create memories, but also a financial asset,” Freeborn said. The results of the survey showed that 30 to 34 year-olds were also more likely than other age groups to view their home as an investment property.
In other words, they learned nothing from the mistakes of their parents and grandparents.
But borrowing against your home comes with risks. “It’s because people took money out of their homes that they went underwater,” said Deidre Campbell, global chair of the financial services sector for Edelman, a communications marketing firm that has done research on millennials and money. When housing prices fell during the last housing crash, some who took money out of their homes ended up owing more than the homes were worth — leading to a rise in foreclosures and short sales. …
Not to worry, they may also believe that real estate only goes up.
The most popular reasons the youngest group took the loans were vacations (43.3%) and emergency cash (41.8%), followed by home remodels (41.1%), medical expenses (36.2%) and weddings (31.2%). For the other age groups, debt consolidation and home remodels were the top responses.
“Home-equity loans should never be used for something like a vacation or other short-term wants,” wrote Ryan Fuchs, a financial planner … .
Pure consumer spending that acquires no tangible assets should never be financed, much less with 30-year debt. While memories of a vacation may last a lifetime, it’s pretty foolish to pay for it over 30 years.
Home remodels that add value to the property, such as redoing a kitchen or a master bath, can be a good use of home equity, Fuchs said.
Most people don’t add much value when they renovate their homes. Some improvements add more value than they cost, but most only add about $0.50 to $0.75 for each dollar spent. Some improvements, like pools or landscaping, add no value at all.
People convince themselves they add value when they renovate, but this rationalization merely masks their emotional decision to obtain something they wanted. It’s easy to justify spending $100,000 on a renovation if the owner believes (erroneously) they add more than $100,000 in value.
The bills never come due
HELOC borrowing seduces so many people because the money feels free. Most people know they must repay the loan when they sell the property, but that’s not as emotional and tangible as consumption today. People delay feeling the consequences of their decisions as long as possible, but at some point, the accounts must balance.
When people receive their closing checks — checks much smaller than they anticipated — then the reality of their behavior is difficult to deny. The money they were counting on for retirement or to move up to their next home simply doesn’t exist.
They already spent it.
[listing mls=”OC16706580″]
The greedy city feuds with the greedy county over billions in future revenue.
100 acres at Great Park that could earn O.C. $4 billion causes political fight, lawsuit threats
A county proposal to develop 100 acres it owns just south of the Great Park into apartments, hotels and retail could earn it nearly $4 billion over 75 years. But Irvine officials already are threatening to sue over a project they claim is a money grab that will congest roads and prevent future nearby developments.
Local roads allow for a limited number of car trips, and developers seek to claim them for their projects, which generally need to be viable with existing or planned infrastructure. The first party to release its plans gets first dibs on use of the road capacity.
That creates competition to be first, especially when that road capacity is near valuable, undeveloped property in one of Orange County’s wealthiest cities.
In a recent statement, Spitzer called the county’s project “selfish … to the detriment of others.” Irvine Councilman Jeff Lalloway agrees, saying the development will overload local streets.
“The impacts to our road and community need to be considered by the county, but apparently they don’t want to,” Lalloway said. “I hope the county comes to its senses so we don’t have to spend a lot of money on lawyers fighting this out for years.”
[Complete bullshit with specious arguments]
“The traffic volume (in the area) is a capped number, so I don’t believe this opposition has anything to do with traffic, but rather with which property is going to be allowed to generate it,” Nelson said.
[Simple truth]
Now, the question is: Does the county’s suggestion a decade ago that it might build government buildings on the 100 acres prevent it from now constructing homes, hotels and shops instead?
If Irvine plans to sue Orange County over the project, that question could be the fuel for a lawsuit.
The 2003 agreement states the county has “exclusive land use control” over the property and that it is “not limited to” the 15 government uses suggested in the document. County officials say that language gives them permission to build whatever they want on the land.
But Lalloway said despite that language, “no one ever contemplated residential or commercial,” uses for that property.
[Sounds like Irvine made a bad deal and now wants to go back on it.]
MORE…
The Real Reasons Many Millennials Are Still Living at Home
Pew Research Center reports, 32 percent of 18-to-34-year-olds were living with a parent – more than at any time since around 1940.
The prevailing assumption is that this phenomenon is a function of economic hardship, especially since it rose to prominence at the same time as the great recession was hitting hard. And while economics, in particular a tough labor market (not to mention the free laundry and stocked refrigerator), has certainly played a part in fueling the return home, the financial explanations only capture part of the reality.
The trend has played out in Europe as well. Data from the European Union’s 28 countries finds that almost half (48.1%) of 18-to-34-year-olds lived with their parents in 2014.
If dollars and cents were the only driver, why are millennials continuing to live with their parents even as the economy, job market and future prospects have rebounded? According to Pew’s analysis of U.S. Census Bureau data published last year, “the nation’s 18-to-34-year-olds are less likely to be living independently of their families and establishing their own households than they were in the depths of the Great Recession.”
Without discounting the financial factors, two other explanations help to explain the rise and growth of this trend beyond the narrow economic rationale.
First, we may be witnessing a restructuring of the life course: As the length of lives gets extended, the stages of life are likewise being recast. Social scientists have heralded the advent of an entirely new stage of life between adolescence and adulthood, often called “emerging adulthood.” The reasons that young people are taking longer to acquire the trappings of adulthood—marrying, settling into careers, buying a home later—can be attributed to developmental shifts as much as anything else.
The MacArthur Foundation’s research group on transitions to adulthood found that, “A new period of life is emerging in which young people are no longer adolescents but not yet adults.” This “stretched out walk to independence,” as it’s been called, may be giving young people and parents more – and better – time together.
Just as important, the return to the nest is as much about pull as it is about push. Many young people are coming back because they want to, because they are close to their parents. Of those 25 to 34 living with their parents, the Pew Research Center writes, “large majorities say they’re satisfied with their living arrangements (78%) and upbeat about their future finances (77%).”
“…we may be witnessing a restructuring of the life course…”
I certainly respect PEW research and I am sure they are collecting and analyzing the best data sets available.
But here is what bothers me. The essence of their report doesn’t square with my own observations: The reason kids (of all age groups) are living with parents is financial in nature.
Insufficient income to buy a home, student debt are certainly reasons and have been extensively written about, but what about care giving? Care giving to the elderly is unbelievably expensive and few are fully insured. As noted in the article, people are living longer. Elderly parents in their 80’s, 90’s are now very common.
In Europe, generations commonly live under the same roof. Real estate is passed down from generation to generation, often for hundreds of years.
Could such a trend be emerging in the USA?
Perhaps our sample set is not representative here in California, but I agree that all the people I know still living at home do so for financial reasons.
I think the multi-generational trend will become more common in California because it’s the only way young people have a chance to own a house. When there is plenty of housing, and when it’s affordable, young people go out on their own and start their own lives in their own houses. Take away that opportunity, and multi-generational housing becomes a necessity. As the survey shows, perhaps families are warming to this idea, but particularly in California, I think it’s being forced on people.
I live in La Crescenta area and prior to that in Glendale, when I played B-Ball at the Gym with grown folks and got to know many dudes, I came to the conclusion that no Armenian old enough to have a career lives alone, they live with multiple generations. They don’t even care if they do or not, they buy homes as family’s and rent them out the few Armenians that live on their own or to other people. The ones that can’t afford to move out, they still live at home and lease new cars. It’s the way of life for them.
Same deal with co-workers, lots of Asian colleagues and they live with multiple generations. There is no shame in it to them and they don’t care. Even after marriage, they either buy a home and move in the in-laws or they buy and rent to others. I got a few Indian friends from HS in the Anaheim Hills area, same deal their parents have huge homes and never move out. The ones that move out, do it for career purposes.
One of my friends growing up was Armenian and he had BOTH sets of grandparents living in his parent’s house. It used to drive him insane because they would monopolize the TV and watch the Armenian channel nonstop, which resembled a Borat level of production value. He also had to share a bathroom with at least one set of the grandparents which he hated because they would leave their old people stuff everywhere.
Eventually the grandparents passed away and my friend got married and moved out. Driving a nice car was always a top priority, which I think is a cultural trait. At his wedding, the priest that married them was driving a shiny new black Porsche. It may have been on loan, I’m not sure, but it was interesting that the priest needed to flash that kind of bling.
One thing to add is, a lot of them opt to start businesses rather than buying homes when they aren’t ready to move out or when there is no need. It’s not like they pile up the money, they drive nice cars and open smoke shops/liquor stores or Kabob joints.
Freddie Mac Starts Pilot Program With Looser Standards
First step down a slippery slope?
Mortgage-finance giant Freddie Mac and two nonbank lenders are loosening income and documentation requirements for mortgage applicants in a new pilot program.
The changes announced Monday are designed to help boost mortgage originations among first-time buyers, applicants with low-to-moderate incomes and those who live in underserved areas.
The moves come nearly a decade after the start of the mortgage meltdown, as many consumers remain shut out of the housing market largely because they can’t meet the underwriting criteria that most lenders require. Under the Freddie program, applicants will be able use the income of people who will live with them but aren’t going to be on the mortgage to qualify.
In addition, income from second jobs that borrowers have held for a relatively short period will be factored in. The pilot also doesn’t require bank statements that would show a paper trail of how some borrowers save for their down payments.
The pilot isn’t lowering down payment or credit score requirements. Rather it is loosening income criteria, including for applicants who have two jobs. Until now, Freddie Mac has required that borrowers who show their income from a second job when applying for a mortgage demonstrate that they have held that job for at least 24 months, a period that in the pilot is reduced to 12 months. Separately, self-employed borrowers will have more options to prove their business exists to the lenders.
In addition, borrowers who will be living with family or other individuals for at least 12 months after they purchase the home will be able to use those non-borrowers’ income to get approved for the mortgage. The income will be factored in to help improve the borrowers’ debt to income ratio, a key figure that compares borrowers’ monthly debt obligations to their gross monthly income.
Paperwork requirements will also loosen up for some borrowers who don’t have bank statements to show how they have saved for their down payment.
Baby steps.
I usually complain about loosening standards, but these changes are good overall. Income documentation standards were overly tight, which makes sense after the no-doc NINJA era, but it’s time to loosen up on people with real jobs and verifiable income that don’t meet some rigid guideline.
Trump Has A Winning Economic Message, But He’s Neglected It
Donald Trump outlined his tax and economic plan in Detroit on August 8. He returned to it last week for the first time in five weeks. In between, he mentioned bits of it. But concentrate on it? Nope.
His neglect of this issue has been a mystery. Why would he sideline an issue on which he has an enormous advantage over Hillary Clinton? Trump would provide incentives for private investment, economic growth, and job creation, a policy that worked brilliantly for Presidents Kennedy and Reagan. Hillary would provide zero incentives for growth and rely on government spending to generate jobs, a policy that has never produced a robust economy.
The contrast, so favorable to Trump, begged for him to harp on it in speech after speech. But he held back, talking about everything from terrorism to child care and driving some of his closest allies crazy.
But Trump may have known something the rest of us didn’t. Or maybe he’s just been lucky. In either case, he has soared from well behind in the race a month ago to a tie with Clinton today—without unleashing his best issue. Now he is. He’s poised to drive home his plans for the economy in the final weeks of the campaign.
His ideas seem fresh and appealing, all the more so given Trump’s gift for salesmanship. He says things that Reagan would have balked at and Kennedy would never have considered. Like this in last week’s speech at the New York Economic Club: “Everything that is broken today can be fixed, and every failure can be turned into a great success. . . . It’s time to start thinking big once again.”
His campaign manager is a veteran pollster and she is the one that has been controlling his messaging for the past 6 weeks. If he’s ignoring economic issues at the moment, it’s because she is telling him to ignore them as part of the “pivot” to the general election. He has obviously been focusing on issues that have the widest appeal possible and trade deals + lower corporate taxes are more niche at this point. Conversely, you have childcare which has an emotional component (our children!) that many moderates would support and Trump was able to get to the left of Hillary on it. Although she would lie to the contrary, I don’t think Hillary has a childcare plan at all.
My thoughts as well. 2 months ago, I was losing hope that Trump would trump corrupt Hillary but campaign changes he made in combination with Hillary being a corrupt/sick individual and more people aware of it has helped him.
It’s a long road to Nov, I think the debate on Monday will either seal it for Hillary or really help Trump (he still has an electoral vote disadvantage that leaves no room for error). At this point I would take Biden or Obama for a 3rd term before Hillary. It’s a shame that Trump supporters in California have no say in this election and we have to succumb to the super idiotic left and more left liberal logic at all times because it will always go democratic going forward.
I think the debates are critical for Trump because it provides him a chance to look Presidential. If he comes across as a bombastic asshole, which he did securing the nomination, he will flop. However, if he comes across as more dignified, he could get a boost similar to what Romney got after the first debate.
If he says anything insane, it will be over and he will have no one to blame but himself. I’m sure his team will be praying for him to just act normal and keep calm, “Presidential” would be a bonus.
Every year the pundits incorrectly predict rising rates. This year it appears they still believe rates will go up, but not as quickly as their previous forecasts.
Freddie Mac: Mortgage interest rates will hit 40-year low in 2016
If current trends hold steady, this year could prove to be a banner year for housing, Freddie Mac said in a new report.
In Freddie Mac’s new monthly outlook report, the government-sponsored enterprise states that it is currently projecting a “surge” in mortgage originations during the third quarter, further reinforcing its view that 2016 will be the “best year” for home sales since 2006.
Additionally, Freddie Mac’s current forecast is for the interest rate on the 30-year fixed-rate mortgage to finish the year with an average of 3.6%, making 2016’s mortgage rates the lowest in more than 40 years.
Previously, the lowest annual average happened in 2012 when the average hit 3.66%.
And Freddie Mac doesn’t expect the interest rate to increase much in 2017, either.
The GSEs current forecast shows the interest rate for the 30-year fixed-rate mortgage to finish 2017 at an average of 3.7%, hitting 3.9% during the year.
Freddie Mac also stated that it continues to expect mortgage originations to top $2 trillion this year, which would be the first time originations have been that high since 2012.
“Mortgage originations are expected to surge in the third quarter, reflecting the impact of Brexit in recent mortgage activity,” Freddie Mac Chief Economist Sean Becketti said. “We continue to believe that originations will reach $2 trillion this year, the highest since 2012.”
Freddie Mac’s forecast shows that mortgage originations in the third quarter will increase by $60 billion, or 11%, over the second quarter.
But Freddie Mac cautions that originations will calm down eventually.
“With rates rising modestly over the next few quarters refinance, activity will likely decline,” Freddie Mac states in its forecast. “Purchase originations will rise, but not enough to offset the decline in refinance activity.”
Is it really a prediction when the year is already 3/4th over?
It’s a low risk “projection” too considering rates wouldn’t have to go down very far to hit a new low.
As the US housing market shows signs of recovery, experts caution about possible risks
The housing market in the United States has been experiencing considerable growth in the last several years, with sales of new single-family homes reaching their highest level in more than 8 years (NYT, 2016). As we have seen in the past, the impact of the US housing market is extremely significant, merely because of its size. At USD $26 trillion, it’s the world´s largest asset class, even larger than the US stock market (Economist, 2016).
Not only have sales volumes increased, but according to Case-Shiller, which generates key indices of the housing industry in the United States, home prices in the US have grown 4.8% on average over the last two years and will continue that trend in the near future. In several cities, particularly in the western United States, prices of homes rose beyond 12% between June 2015 and June 2016 (Housingwire, 2016). Home prices are a key barometer of economic well-being in the United States, as they relate to personal equity and stimulate consumption.
Although the mortgage situation is different now, some analysts have concerns about a new bubble being created because US home prices today are only 1% below their highest point right before the housing collapse, as they have increased for 50 consecutive months (CNBC, 2016). Others are hesitant to call this a bubble, but they all seem to agree that critical factors which led to the previous mortgage crisis are not present this time, such as loose credit and excessive inventory of homes (Bloomberg, 2016).
We asked Lawrence Roberts, Chief Real Estate Economist at Market InSite Real Estate Advisors about his perspective on the current US housing market trends:
1. Many link the rise in home prices to low inventory. Do you believe this trend will continue?
The trend of low inventory will continue until prices rise 20%more above the peak. The lack of listings is largely attributable to the large number of underwater borrowers. Even those who are above water are not far enough above to execute a move-up trade. Those two groups are not listing and selling their homes today when they otherwise would be.
2. Home buying is not quite at the level as before the recession, but it is growing rapidly. Do you believe that is good news/bad news?
Improved home sales would be a good thing, particularly given the high-quality loan underwriting in place today. A rise in transaction volume is only bad if that volume is artificial and facilitated with poor loan terms.
O.C. home prices up as sales boom in August
Strong job growth, low interest rates and too few listings continue to stoke homebuyer demand in Orange County and across Southern California, driving up prices and boosting sales, housing market watcher CoreLogic reported Monday.
Homebuying soared 14.5 percent in August, rising year over year to 3,633 transactions. That’s the highest number of transactions for an August in 11 years, CoreLogic figures show.
The calendar may provide one possible explanation for last month’s increase. There were two extra business days than in August 2015. That boosted last month’s sales by at least 300.
[Back to the rosy spin]
But that alone didn’t account for improved sales or higher home prices.
Home sales averaged 158 transactions per day last month, vs. 151 per day in August 2015.
Meanwhile, the median price of an Orange County home – or price at the midpoint of all sales – jumped 6.4 percent to $649,000, the third-highest median on record.
“The big picture is that the housing market continues to edge back toward normalcy in the wake of the worst housing bust in modern history,” said CoreLogic research analyst Andrew LePage.
Finding agents to comment about the housing market was tough Monday. Many said they were too busy to talk.
“I have a lot of listings, and a lot of them are in escrow,” said Al Mozayeni, broker and owner of Coastline Real Estate of Irvine. “Cheap lending” and large numbers of international buyers continue to generate competition among buyers, he said.
“Lack of inventory is causing the prices to go up,” added Chuck Olson of Villa Park Realty.
They blamed the poor sales in July on the two missing business days, so at least they are not trying to hide that the surge in August was due partially to that as well. I would be more upset if they had played it off like the two extra days were not the cause, and that it was due to the strength of the market.
Trump And The Press—-A Death Struggle The Latter Won’t Win
Alerting the press that he would deal with the birther issue at the opening of his new hotel, the Donald, after treating them to an hour of tributes to himself from Medal of Honor recipients, delivered.
“Hillary Clinton and her campaign of 2008 started the birther controversy. I finished it. … President Barack Obama was born in the United States. Period.”
The press went orbital.
“Trump Gives Up a Lie But Refuses to Repent” howled the headline over the lead story in The New York Times.
Its editorial called Donald Trump a “reckless, cynical bully” spreading political poison in an “absurdist presidential campaign,” adding that Trump is the “ultimate mountebank” using a “Big Lie” that “made him the darling of the wingnuts and racists” and “nativist hallucinators.”
You get the drift.
While Trump’s depiction of the birther controversy was … inexact … there was truth in it. Obama’s campaign did charge the Clinton campaign withdrawing press attention to that photo of Obama in traditional Somali garb. Apparently, Sid Blumenthal did push a McClatchy bureau chief to search for Obama’s birth records in Kenya.
Tim Kaine was wailing on Sunday about how “painful” Trump’s birtherism has been to African-Americans. And Democrats and the media are pledging not to let it go, but to exploit Trump’s attempt to “delegitimize” Obama’s presidency.
These are crocodile tears. Obama gave the game away Saturday night. At the Black Caucus’s annual gala, says The Washington Post, a “beaming” Obama “gleefully” had the attendees rolling in “laughter” over Trump’s concession. “With just 124 days to go,” mocked Obama, “we got that thing resolved.”
Many news organizations will go along with the game. For many appear to be all in on Clinton’s depiction of half of Trump’s supporters as a “basket of deplorables” who are “racist, sexist, homophobic, xenophobic, Islamophobic … haters.”
Yet one wonders. Do the major media understand that in their determination, bordering on desperation, to kill Trump, they are killing their credibility? And as they are losing credibility they are losing the country.
According to a new Gallup poll, distrust of the press has hit an all-time high. Half the nation’s Democrats still trust the media, but only one-in-three independents and one-in-seven Republicans, 14 percent, believe the media are truthful, honest and fair.
The Birther issue was a non-issue. His support among black voters has rocketed from 3% to 20% over the past 4 weeks of polling.
I think many members of the press fail to recognize that their emotional and biased stories designed to torpedo his campaign actually have the opposite effect.
So many educated individuals in DC and they still can’t figure this out. They have used every card, the race card, poor card, sympathy card, etc. their deck is running out and average American’s can see through it.
They may eventually win the battle because all they really need is for Hillary to get to 270 but the long term affects will hurt their cause long after this election.
http://www.latimes.com/nation/politics/trailguide/la-na-trailguide-updates-a-lesson-in-how-not-to-read-a-poll-1474475574-htmlstory.html
A few days ago, Donald Trump’s support among African American voters in the USC Dornsife/L.A. Times Daybreak tracking poll of the election appeared to shoot upward.
Since early summer, when the poll started, Trump’s support among black voters had been in the low single digits in the poll, as it is in most surveys. Suddenly, he seemed to be nearing 20%.
Some of Trump’s supporters cheered and began developing theories for why their candidate had finally started breaking through to black audiences. Outraged liberal critics of the poll denounced it anew.
And then, just as quickly as the line on the chart had turned upward, it turned back down. As of Wednesday, Trump’s black support in the poll is back to the single digits, near where it had been all along.
What happened is an object lesson in how not to read polls, particularly a daily tracking poll such as the Daybreak survey.
All polls are subject to random statistical noise. Tracking polls, because they take a sample every day, are particularly likely to jump around for no reason other than chance. That’s especially true with a small sub-group like African Americans, who make up about one-eighth of the electorate.
The change in Trump’s support was always well within the poll’s margin of error for black voters, meaning there was a good likelihood that what appeared to be a shift was just random. Now that the level of support has returned to where it was, that seems likely to have been what happened.
The lesson for poll watchers: Be wary of short-term fluctuations, particularly those involving subgroups. Take margins of error seriously. And don’t leap to conclusions until the evidence is solid.
Thanks for sharing. I imagine many people will be watching this poll over the next few days to see if there was really a change or if it was just statistical noise.
The margin of error did spike among black respondents, so this analysis seems to be correct. I’m looking at the USC methodology page and the MoE among blacks is generally about 7-10%, but for the week that Trump’s support with them spiked, the MoE jumped to 30-35%. That means they probably had a really low number of black responses to the survey for that week and the results were skewed.
http://cesrusc.org/election/
You can see what I’m talking about by clicking this link, then choosing the ‘Characteristics of Candidate Support’ tab and scrolling down to ‘African American’. The grey shaded area represents margin of error.
Some days I am afraid Trump will win. Other days I am afraid Hillary will win.
The great political commentator Mark Shields told a funny story about two teams that met during World War II for the World Series. The A players were off fighting the war, as were a good many B players, so the guys left to play in this World Series were not top caliber players. Shields told the story so well with the team names and everything. Two radio announcers were talking as the first game was about to start. One said, “Well who do you think is going to win this series?” The other announcer said, “I don’t think either one of these teams can win.” That is how I feel.
Yep. We’ve come to the point that our leaders are the least bad individuals we could find.