Datapoints: Income Gap Grows Wider (and Faster)

The median wage is straightforward: it’s the midpoint of everyone’s wages. Interpreting the average, though, can be tricky. If the income of a handful of people soars while everyone else’s remains the same, the entire group’s average may still rise substantially. So when average wages grow faster than the median, as happened from 2009 through 2011, it means that lower earners are falling further behind those at the top.

One way to see the acceleration in inequality is to look at the ratio of average to median annual wages. From 2001 through 2008, during the George W. Bush administration, that ratio grew at 0.28 percentage point per year. From 2009 through 2011, the latest year for which the data is available, the ratio increased 1.14 percentage points annually, or roughly four times faster.

The reasons for the widening income gap aren’t entirely clear. Yes, the nation has had a big recession, but recessions typically tend to lessen inequality rather than increase it.

“We’re seeing the continued effects of the weak labor market and the long-term trends involving technology and globalization,” said Lawrence Katz, an economics professor at Harvard, “Our self-inflicted wounds from austerity are also exacerbating things.”

It’s always possible that the data for 2012 will show a narrowing of the gap, but Professor Katz says he wouldn’t count on it.

Rupee Drops, and Outlook Grows Darker for India

India’s economy slowed in early summer to its weakest pace since the bottom of the global economic downturn in 2009, government statistics released Friday evening showed.

The Central Statistics Office in New Delhi said that the economy grew 4.4 percent in the quarter ended June 30, well below economists’ expectations of 4.8 percent. The quarter was the weakest since output grew 3.5 percent in the quarter that ended March 31, 2009.

The accumulating signs of economic distress — slower growth, a widening current-account deficit, higher oil prices and rising inflation in general — suggest that the monthlong fall of the Indian rupee in currency markets may be a symptom of fundamental troubles in the Indian economy and not just part of the broader difficulties experienced by Asian emerging market currencies in recent weeks.

Hints that the Federal Reserve in the United States may soon shift to a tighter monetary policy have prompted global investors to shift billions of dollars out of financial markets from São Paulo to Jakarta to Mumbai, eroding the value of local currencies in developing economies. But the Indian rupee has fallen the fastest of any emerging market currency in the last month, down 8.1 percent. Broader investor disenchantment with emerging markets has been compounded here by worries about India’s economy, the third-largest in Asia after China’s and Japan’s.

Manufacturing and mining have been hit the hardest. A court-ordered halt to most iron ore mining across India for environmental reasons has hurt steel and other sectors; state governments have been raising taxes on the sector, and broader demand has begun to falter.

“The fact is, yes, the manufacturing sector has slowed down,” said Raj K. Singh, the chairman and managing director of the Bharat Petroleum Corporation, an oil refining and marketing company that is two-thirds owned by the Indian government and is one of the country’s largest businesses.

The data was released after stock market and currency trading had ended for the day, despite government promises to stay with the regular Friday morning release. After a week of considerable volatility, the rupee and the Mumbai stock market both had showed modest gains earlier Friday.

India enjoyed annual growth of 8 to 9 percent in the years leading up to the global financial crisis but has struggled to reach 6 percent since then, despite heavy government spending and large fiscal and trade deficits.

From corner stores to corporate boardrooms, the consensus in Mumbai these days is that stagnation may continue over the next few months, although almost no one expects a steep downturn.

Sitting in his office on Friday morning in front of an abstract Indian painting in blues and yellows, Mr. Singh voiced concern about a 7.2 percent drop in nationwide diesel consumption during the first three weeks of August from a year ago. Nationwide diesel consumption was also down 5.9 percent in July from a year ago.

But heavy monsoon rains have limited the need for diesel in irrigation pumps, making the comparison less clear, Mr. Singh cautioned. Rohit Dawar, the top diesel demand expert at the Petroleum Ministry in New Delhi, said in a telephone interview that diesel consumption had been artificially inflated in July and August last year by a peculiarity in government fuel subsidies, since removed, that temporarily made it cheaper to burn diesel instead of other fuels in industrial boilers.

Even allowing for all of these factors, however, “there is a slight slowdown” in diesel demand recently, Mr. Dawar said.

Plentiful monsoon rains, a key indicator for the Indian economy for thousands of years, have produced lush fields that could yet help stabilize broader measures of the economy in the coming months and forestall a steeper slowdown. While World Bank data show that value added in agriculture is only one-sixth of the economy these days, a good harvest could still play an outsize role in limiting recent increases in food prices.

Inflation will probably remain a problem, however, given that India relies almost entirely on imported oil, which becomes more expensive with each drop of the rupee. So important is oil to India’s trade deficit that desperate bidding for scarce dollars by Indian refiners helped drive the rupee briefly to a record low on Wednesday, before the Reserve Bank of India stopped the rout that evening by arranging to transfer dollars from its reserves to oil importers.

“Prices are rising for everything — petrol is more expensive, vegetables are more expensive,” said Bharat Hirji Gada, a local shopkeeper.

India has some advantages compared with European and other Asian countries that have experienced steep economic downturns following currency declines over the last two decades. The biggest advantage may be that the Indian government has long prohibited borrowing in foreign currencies by poor or middle-class households and by small and medium-size businesses.

Foreign debt has been concentrated among blue-chip companies and wealthy individuals. Many of these loans are to borrowers whose revenue is largely denominated in dollars, limiting their currency exposure, said Haseeb A. Drabu, the chief economist for the Essar Group, one of India’s heavy industry giants.

“The bulk of it would be hedged,” he said.

Neha Thirani Bagri contributed reporting.

As a Boom Slows, Peru Grows Uneasy

“This is Peru,” he said. “When you go to the shopping malls they’re full of people, they’re full. That’s a good indicator that people are really spending money.”

Peru’s economy grew an average of 6.4 percent a year from 2002-12 after adjusting for inflation, according to government figures, a remarkable period of sustained expansion that has made it one of the world’s star economies.

But suddenly growth has slowed here, and just beyond the view from Mr. Kristensen’s window, under Lima’s perpetually gray winter sky, the reason becomes clear.

At Dock 5B, ships are loaded with Peru’s mining riches, including copper ore, lead and zinc — the raw materials that fueled the Peruvian boom with their rising prices in recent years. But in the first six months of this year, mineral shipments through the port were down 12 percent by weight, according to APM Terminals, Mr. Kristensen’s company, which operates the facility for the Peruvian government.

The decrease resulted from a drop in demand in a struggling world economy and a slowdown in China, one of Peru’s top trading partners. Those factors have also caused mineral prices to plummet, sucking the wind from the sails of Peru’s economy.

This bust amid the boom has given vent to a national angst, with hand-wringing over the economy a mainstay of newspaper front pages and television news programs. Headlines bemoan soaring trade imbalances as the value of mining and other exports, including apparel and agricultural products, plunges at the same time imports are surging.

Miguel Castilla, the economy and finance minister, said he expected the economy to grow between 5.5 percent and 6 percent this year. While that was down from earlier predictions, it would maintain Peru’s place as one of the fastest-growing economies in Latin America. Even some of the most skeptical economists predict Peru’s economy will grow by nearly 5 percent this year, a rate that would be celebrated as a ripping success in many countries.

But in Peru, such predictions are being treated as something close to disaster.

“Growing for a decade at 6 percent, you get used to it,” said Gustavo Yamada, the dean of economics at the University of the Pacific in Lima. Mr. Yamada said he expected growth in Peru to settle into a range of about 4 percent to 5 percent in coming years.

“That creates a scenario,” he said, “of, ‘Hey, wait a minute, we were going to be the next Inca tiger, what a disappointment.’ ”

Polls show that consumer confidence has slipped this year, and a Peru Central Bank survey in June showed that investor confidence was at its lowest point in almost two years.

“We have become used to a sustained period of growth, and we have forgotten about cycles,” said Mr. Castilla, the economic minister.

Just as outside factors, like rising metals prices, fueled Peru’s boom, similar factors, like the slow recovery in the United States, Europe’s economic woes and China’s slowdown, are now causing it to cool down, he said.

“We’re at a crossroads,” Mr. Castilla said. “We have everything we need to cope with this less favorable world condition, but there’s an urgent need to implement the reforms that have been approved recently and to tackle other issues.”

Those changes include steps to clear away economic obstacles — like making government more efficient, making capital markets work better and improving infrastructure.

Mr. Castilla’s ministry has also chosen a list of 31 projects worth $22 billion, including mining and infrastructure, that it wants to fast-track by removing bureaucratic obstacles.

Peru’s economy is a mash-up of strengths and weaknesses. The country has robust international reserves, a large rainy day fund that can be used for economic stimulus in a crisis, and low public debt.

Poverty in Peru has been cut by more than half in recent years, falling from 59 percent of the population in 2004 to 26 percent last year, according to government figures. Millions have moved into the middle class, which the Inter-American Development Bank estimates has doubled in size from 2007-12 and now includes about half of all Peruvian families.

As U.S. Trade Deficit Grows, Some Growth Forecasts Drop

The trade deficit rose to $45 billion in May, up 12.1 percent from $40.1 billion in April, the Commerce Department said on Wednesday. It was the largest trade gap since November.

Exports slipped 0.3 percent to $187.1 billion. Sales of American farm products dropped to their lowest point in more than two years. American exports have been hurt by recessions in many European countries.

Imports rose 1.9 percent to $232.1 billion. Imports of autos and other nonpetroleum products rose widely.

The trade deficit is running at an annual rate of $501.2 billion, 6.3 percent lower than last year’s deficit.

Paul Dales, senior United States economist at Capital Economics, said the larger trade deficit for May indicated that economic growth in the second quarter could be even weaker than the sluggish 1.5 percent annual rate that he had forecast.

Economists at Barclays said the higher deficit led them to downgrade their growth forecast for the second quarter to 1 percent, from 1.6 percent.

The American economy expanded at an annual rate of only 1.8 percent in the first three months of the year.

For May, exports to the European Union were up 6.4 percent. But over the last five months, exports to this region have declined 6.3 percent from the same period in 2012. Europe has been hurt by a prolonged debt crisis, which has led to recessions across the Continent.

The United States trade deficit with China jumped 15.6 percent to $27.9 billion in May. That is close to the monthly high set in November. So far this year, the trade deficit with China, the largest with any country, is running 3 percent higher than last year.

DealBook: Talk of Takeover Grows at Health Management Hospital Group

David Albers/Naples Daily NewsPhysicians Regional Medical Center in Naples, Fla., part of Health Management Associates, the third-largest for-profit chain.

Ever since the chief executive of Health Management Associates, the for-profit hospital system, abruptly announced nearly three weeks ago that he would be leaving to lead a religious mission in South America, speculation has mounted about whether the company could be headed for a takeover.

Its stock has soared 36 percent to a six-year high. Its largest shareholder appears eager to play a bigger role in determining the company’s next steps, even if that means taking on the board. And executives from the most likely potential buyer have — without naming names — indicated they could be in the market.

This week, H.M.A., which is based in Naples, Fla., said its board had hired financial advisers to help it consider strategic alternatives but also made clear it would not discuss its plans in any detail.

Pressure is intensifying on the company and its board, particularly its chairman, William J. Schoen, who is viewed by some analysts as less than enthusiastic about selling.

A former chief executive who has shaped and reshaped the company several times over the decades, Mr. Schoen, 77, has been chairman for 27 years.

“He’s certainly someone who’s played a very strong role in forming the company’s strategy,” said Darren Lehrich, an analyst at Deutsche Bank. “There could be some protecting-the-legacy issues there.”

H.M.A. is the nation’s third-largest for-profit hospital chain, by number of beds, with 71 locations. It has struggled in recent months with falling inpatient admissions to its hospitals.

While other hospitals also reported weaker financials in the first few months of this year, the company’s revenue may have also been hurt by an investigation by CBS’s “60 Minutes” that ran late last year, highlighting concern over whether patients were being unnecessarily admitted. In the report, several former employees said the company coerced doctors to admit patients to its hospitals, regardless of medical need, to increase company profits.

H.M.A. has denied the accusations, saying admissions are based solely on what is best for patient care.

Among the myriad government investigations and civil lawsuits that the company discloses in its regulatory filings, H.M.A. has also indicated that United States attorney’s offices in seven states were investigating its physician referrals, including financial arrangements and the “medical necessity of emergency room tests and patient admissions.”

The inquiry appears to be part of a broader look by federal regulators into whether some of the nation’s hospitals are pressing emergency physicians and others to admit patients who could be treated without having to stay overnight in the hospital.

H.M.A. said it was cooperating with regulators.

Some Wall Street analysts say those various investigations and lawsuits could turn off potential buyers.

“Buying H.M.A. means dealing with its troubled operations plus escalating risks from burgeoning legal issues that could prove prohibitively expensive,” Vicki Bryan, an analyst at the bond research firm Gimme Credit, wrote in a note to clients earlier this month.

Others note that since a wave of acquisitions several years ago by private equity, most of the deal activity among public hospital systems has been for single hospitals or smaller deals.

“There are a lot of smaller, not-for-profit hospitals that are looking for financial partners,” said Dean Diaz, a senior credit officer at the Moody’s Corporation. “There are a lot of potential targets out there that can be done without necessarily looking for a big transformational deal.”

A series of curious moves kindled the recent speculation around the company.

In early May, Glenview Capital Management, the hedge fund founded by Lawrence M. Robbins, signaled in a regulatory filing that it had increased its stake and now held more than 37 million shares, or 14.6 percent of H.M.A.’s outstanding shares. The filing allowed it to make direct recommendations to the board.

The company’s stock hardly budged on the news. But the filing drew a much sharper, defensive response from the board.

More than two weeks later, at a board meeting, the company adopted a so-called poison pill to thwart any hostile takeover by a large investor. The pill goes into effect if any investor tries to buy 15 percent or more of the company.

Within a few days Glenview issued a clarification that said it had no interest in acquiring the company.

Investors were then surprised in late May when the company announced that its chief executive, Gary D. Newsome, 55, would retire at the end of July to take over as president of the Uruguay-Montevideo Mission in South America.

Mr. Newsome, who became chief executive in 2008, earned nearly $22 million in total compensation over the last three years, according to regulatory filings. Mr. Newsome had been a senior executive at Community Health Systems, another for-profit hospital system.

Gary Newsome is leaving as C.E.O. of the hospital chain.

This week, Glenview raised the stakes when it asked the board to remove or change the poison pill in a way that would allow investors to acquire a bigger stake without activating it, according to the regulatory filing.

The letter added that Glenview was evaluating whether to formulate a proposal to make changes “to all or a portion” of the company’s board.

That’s an unusually aggressive and public stance for Mr. Robbins, who observers say prefers to exert his influence on companies in a more friendly, behind-the-scenes way.

Mr. Robbins has been eager for hospital stocks for more than a year, talking them up at a New York investor conference a year ago. Glenview owns stakes in several publicly traded for-profit hospital systems.

The list of potential buyers for H.M.A. isn’t long, with many pointing to Community Health as the most likely candidate.

Citing the company’s success in its $6.8 billion takeover of Triad Hospitals in 2007, an executive for Community Health told investors at a conference in late May that it was “open to doing that again.”

But the executive emphasized that any potential deal would have to be done on friendly terms. Community Health learned that lesson the hard way after its unsuccessful unsolicited bid for Tenet Healthcare in 2010 wound up in an ugly mix of lawsuits and accusations of fraud and wrongdoing between the two hospital systems.

Community Health has disclosed it is also under investigation by the Justice Department, which is seeking information “about our relationships with emergency department physicians, including financial arrangements.” Community said it was cooperating with government officials. The company declined to comment further on the investigation and its potential interest in H.M.A.

The question many are asking is whether H.M.A.’s directors, particularly Mr. Schoen, would welcome even a friendly bid.

In its statement on Wednesday, the board said it had engaged Morgan Stanley and Weil, Gotshal & Manges to consider “strategic alternatives and opportunities available to H.M.A.”

While Mr. Schoen has spurned efforts by others to acquire H.M.A. in recent years, he is certainly no stranger to deal-making. The chairman of a small bank in Naples that he had started, Mr. Schoen joined H.M.A.’s board in 1983. Less than two years later, after setting the company on its course of acquiring rural hospitals, he was named co-chief executive.

Later, in 1988, Mr. Schoen took H.M.A. private and then public again in 1991.

But a few years ago, in 2007, when H.M.A. engaged in serious discussions about a potential buyout with a group of private equity firms, Mr. Schoen thwarted their efforts. He engineered a deal in which the company borrowed $3.25 billion, loading the company up with debt, to pay shareholders $2.4 billion in dividends.

Chamberlain Hrdlicka Grows Revenue by 13 Percent

Houston-based tax-boutique-turned-general-practice-firm Chamberlain Hrdlicka grew its gross revenue by nearly 13 percent in 2012 and is now focusing on expanding the capabilities of its Philadelphia-area office beyond just tax law.

Stevens & Lee Grows Revenue 1.3 Percent, PPP 1 Percent

Small increases in gross revenue and profits per equity partner (PPP) brought Stevens & Lee to all-time highs in those categories for 2012. The Reading, Pa.-based firm grew its gross revenue 1.3 percent from $113 million in 2011 to $114.5 million in 2012.

Cozen O'Connor Grows Revenue 5.6 Percent, PPP 8.4 Percent

Cozen O'Connor saw increases in its key financial metrics in 2012 thanks to strength in nearly all of its core practice areas, the firm said.