Economics

The 6% commission, a standard in home purchase transactions, is no more.

In a sweeping move expected to dramatically reduce the cost of buying and selling a home, the National Association of Realtors announced Friday a settlement with groups of homesellers, agreeing to end landmark antitrust lawsuits by paying $418 million in damages and eliminating rules on commissions.

The NAR, which represents more than 1 million Realtors, also agreed to put in place a set of new rules. One prohibits agents’ compensation from being included on listings placed on local centralized listing portals known as multiple listing services, which critics say led brokers to push more expensive properties on customers. Another ends requirements that brokers subscribe to multiple listing services — many of which are owned by NAR subsidiaries — where homes are given a wide viewing in a local market. Another new rule will require buyers’ brokers to enter into written agreements with their buyers.

Home loan borrowing costs fell for the second week in a row, pulling the average long-term U.S. mortgage rate to its lowest level since early February — good news for prospective home shoppers as the spring homebuying season gets underway.

The average rate on a 30-year mortgage dropped to 6.74% from 6.88% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.60%.

Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also fell this week, pulling the average rate down to 6.16% from 6.22% last week. A year ago it averaged 5.90%, Freddie Mac said.

Sen. Bernie Sanders (I-Vt.) on Wednesday introduced a bill to establish a standard four-day workweek in the United States without any reduction in pay.

The bill, over a four-year period, would lower the threshold required for overtime pay, from 40 hours to 32 hours. It would require overtime pay at a rate of 1.5 times a worker’s regular salary for workdays longer than 8 hours, and it would require overtime pay at double a worker’s regular salary for workdays longer than 12 hours.

The Thirty-Two Hour Workweek Act would also protect workers’ pay and benefits to ensure there’s no loss in pay, according to a press release.

The number of Americans applying for jobless benefits last week inched up but largely stayed at historically low levels as the labor market continues to thrive despite elevated interest rates.

The Labor Department reported Thursday that filings for unemployment claims for the week ending March 9 ticked down by 1,000 to 209,000 from the previous week’s 208,000.

The four-week average of claims, which evens out some of the weekly volatility, came in at 208,000, a decrease of 500 from the previous week.

In total, 1.81 million Americans were collecting jobless benefits during the week that ended March 2, an increase of 17,000 from the previous week. Last week’s number, which had been the most since November, was revised down by 112,000.

A New South Wales state plan to build apartments around Sydney train stations has run into local opposition.

Australia is grappling with a deepening housing crisis. Yet when it comes to the most obvious solution — constructing more apartments — city dwellers are pushing back against taller buildings.

Placards reading “Save Sydney’s Lungs” and “Wrecking Ball Coming to You” were waved by residents and councilors this week protesting a proposal from the New South Wales state government to boost density by allowing six-story apartment blocks to be built around suburban train stations. That will cause social problems, be destructive to the environment and the city’s heritage, opponents argue.

Yet a lack of apartments is causing problems too. Fueled by rapid immigration growth and insufficient supply of new dwellings, more and more people are being priced out of Sydney, where the average home now costs 13 times incomes and surging rents are adding to a cost of living crisis.

Key Points

• Social media has put a new spin on keeping up with the Joneses.
• Exposure to glorified lifestyles online has left many people, especially young adults, feeling financially inadequate, even if they’re doing relatively well, reports show.

Overwhelming evidence suggests social media has a negative effect on self-esteem.

That’s not only true for how people feel about their appearance and social status, but also their financial well-being and economic standing.

A new term, “money dysmorphia,” aims to describe the distorted view of one’s finances that nearly one-third, or 29%, of Americans say they now experience, according to a recent report by Credit Karma, often from comparing their financial situation to others’ and feeling inadequate.

Family Dollar, the struggling discount chain that caters to low-income customers predominantly in cities, will close about 1,000 stores as inflation takes a bite out of consumers’ wallets and low-cost-retailers’ profits.

Family Dollar will close 600 locations in the first half of 2024 and 370 stores over the next several years as store leases expire.

Dollar Tree, which owns Family Dollar, also said it will close 30 stores as leases expire.

Dollar Tree bought Family Dollar in 2015 for $8.5 billion. The combined company hoped that by joining forces, it could grow its customer base, reduce costs and fend off bigger retailers like Dollar General and Walmart. But Dollar Tree has struggled to integrate Family Dollar.

China stocks were lower Wednesday after the overnight United States inflation report that signaled a diminished possibility of the Fed’s rate cut made investors cautious.

Hong Kong stocks edged less than 0.1% lower at 17,082.11, ending its three consecutive days of gain. Hang Seng Tech Index advanced 0.4%, with JD.com gaining 0.3% after the company announced a share buyback of as much as $3 billion over the next three years.

The Shanghai Composite Index dropped 0.4% to 3,043.83, and the smaller market in Shenzhen also shed 0.3%.

The overnight report on U.S. inflation subdued investor optimism, with the data showing that consumers paid prices in February that were a bit higher than expected, making it less likely that the Federal Reserve could deliver long-sought cuts to interest rates at its meeting next week.

China’s local media reported Tuesday that the country’s state-owned banks may raise up to 80 billion yuan ($11.2 billion) in syndicated loans to assist the property developer China Vanke in meeting its impending repayment deadlines.

Some investors in a troubled trust fund in China are facing financial ruin under a government plan to return a fraction of their money, casualties of a slump in the property industry and a broader economic slowdown.

Sichuan Trust, headquartered in the southwest city of Chengdu, announced it was insolvent in 2020, stricken by sketchy accounting and failed investments in shopping malls and other projects. A deadline earlier this month to accept a 20%-60% “haircut” or loss on their investments has left some investors in deep financial trouble, according to public announcements and AP interviews with five people affected.

China’s economy, the world’s second largest, depends heavily on real estate development to drive growth and create jobs. Property prices and sales have languished after a crackdown on what leaders viewed as dangerous levels of borrowing, causing dozens of developers to default on their debts.

United Airlines Holdings Inc. has told Boeing Co. to stop building 737 Max 10 jets for the carrier, opting to switch to a smaller variant and the rival Airbus SE A321 until the US planemaker can pull the stretched single-aisle through its long-delayed certification.

“We’ve asked Boeing to stop building Max 10s, which they’ve done, for us and start building Max 9s,” United Chief Executive Officer Scott Kirby said Tuesday at a JPMorgan investor conference. “It’s impossible to say when the Max 10 is going to get certified.”

Once the Max 10 gets clearance to operate, United will switch back to the Max 10, Kirby said. The United CEO confirmed earlier Bloomberg reports that the airline is looking to swap out some of its massive order for 277 of that variant to use the A321 instead, offering the European planemaker the rare opportunity to seize an important piece of business from its chief rival.

Higher prices at the gas pump pushed up inflation more than expected in February, according to the latest Consumer Price Index from the Bureau of Labor Statistics.

However, stripping out categories that have more wild price swings — such as gasoline — inflation did slow in some key areas, fueling a touch of positive news for the Federal Reserve and consumers alike.

Overall, the closely watched inflation gauge showed that prices rose by 3.2% for the 12 months ended in February, the BLS said Tuesday. That’s up from January’s annual reading of 3.1%, and higher than economists’ expectations.

Recently released government data hammered home what we have known for at least a year: A national housing shortage, not broad-based price increases, is driving inflation.

Inflation over the past year was 3.1% — far less than in 2021 but still high enough for the Federal Reserve to keep interest rates elevated. However, unlike the inflation we saw soon after the onset of the pandemic, the more recent bout was overwhelmingly driven by the rising cost of what the Consumer Price Index classifies as “shelter” — including rent actually paid and the estimated rent that could be charged for owner-occupied homes.

Since the start of last year, most prices have risen very slowly or not at all. The price of goods — the tangible things we buy — remained essentially the same, rising just 0.1%. Food inflation, a source of post-pandemic pain for many households, was less than 3%. And other categories of prices actually fell: Household energy prices are down 2.4%, and the price of cars has fallen just over 1%. All told, for everything other than housing, inflation was just 1.5% — low enough that if housing prices had grown at historical rates, the Fed could have declared victory.

Pranay Karkale is spending years of savings and $60,000 in student loans to pursue a master’s degree in the United States, yet he considers himself lucky. At home in India, it’s common to hear about families selling off their land to send children to universities overseas.

Karkale was willing to do whatever it took once he got into Johns Hopkins University. A degree from a prestigious U.S. college, he believed, would open doors to a better job and higher pay than he would find in India.

“I don’t feel like I would have gotten the same level of education that I get here,” said Karkale, 23.

Historic numbers of students from India are studying at foreign universities as a fast-growing, aspirational generation of young people looks for opportunities they can’t find at home. India estimates 1.5 million students are studying at universities elsewhere — an eightfold increase since 2012 — with no country attracting more than the U.S.

The popularity of remote work in the United States has emptied office buildings, a cause for worry as their value falls and owners risk losses on property loans -- in turn putting pressure on smaller banks.

"There will be bank failures, but this is not the big banks," said Federal Reserve Chair Jerome Powell on Thursday.

In San Francisco, Washington and even New York, offices have been seeing half the number of people as before the pandemic, with white-collar workers reluctant to return to commuting.

Office vacancy rates across the country have risen to 13.5 percent in 2023 from 9.5 percent in 2019, and could hit 16.6 percent at the end of next year, said credit company Fitch Ratings in a December report.

The rule represents one of the biggest overhauls of U.S. corporate reporting in years and is a legacy-defining effort for SEC Chair Gary Gensler.

Wall Street’s top regulator green-lighted a groundbreaking rule aimed at uncovering new climate-related information from corporate America, capping a pressure campaign that has fractured Washington for two years.

…

It will require public companies in the U.S. to make a raft of new disclosures about climate-related risks that are large enough to threaten their businesses and how they are managing and adapting to them.

Many companies already voluntarily disclose climate-related information. But it’s not uniform and investors can often be left mystified reading companies’ reports, which can be difficult to decipher and compare against one another.

Since the plan’s introduction, Washington’s biggest business groups as well as conservative state attorneys general have aggressively hit back at the SEC with threats of litigation over what they say is a regulatory power grab riddled with technical issues.

U.S. job openings barely changed in January but remained elevated, suggesting that the American job market remains healthy.

The Labor Department reported Wednesday that U.S. employers posted 8.86 million job vacancies in January, down slightly from 8.89 million in December and about in line with economists’ expectations.

Layoffs fell modestly, but so did the number of Americans quitting their jobs — a sign of confidence they can find higher pay or better working conditions elsewhere.

Job openings have declined since peaking at a record 12 million in March 2022 as the economy roared back from COVID-19 lockdowns. But they remain at historically high levels: Before 2021, monthly openings had never topped 8 million.

Roughly 30 percent of autoworkers at a Toyota engine manufacturer in Missouri have signed union cards, United Auto Workers (UAW) announced Wednesday, making the plant the fourth new union drive launched in the last four months.

The factory in Troy, Mo., just outside of St. Louis, follows union drives in recent months at a Volkswagen plant in Tennessee and Mercedes and Hyundai manufacturers in Alabama.

The effort comes after the union made big gains for members following a six-week strike of three major automakers — Ford, General Motors and Stellantis — last fall. The UAW has committed to unionizing factories across the country, expanding from its power base in the Midwest.

American Airlines announced a massive order for new planes on Monday, splitting 260 new aircraft between Boeing, Airbus and Embraer in a move designed to meet growing travel demand and increase the airline’s supply of premium seats.

American said it placed options for up to 193 more planes over the next several years.

The airline and aircraft-makers did not disclose financial terms for the orders.

The package of orders includes 85 Boeing 737 Max 10s — a larger version of the Max that has not yet been certified by U.S. regulators. The plane is already years behind schedule, and United Airlines — which has 100 on order — is planning as if it will never receive the planes, according to its CEO.

KEY POINTS

• JetBlue Airways and Spirit Airlines on Monday said they are ending their agreement to merge.
• The CEOs of JetBlue and Spirit cited regulatory hurdles in ending their merger agreement.
• Spirit will receive $69 million from the deal termination its CEO said.

The debt load of the U.S. is growing at a quicker clip in recent months, increasing about $1 trillion nearly every 100 days.

The nation’s debt permanently crossed over to $34 trillion on Jan. 4, after briefly crossing the mark on Dec. 29, according to data from the U.S. Department of the Treasury. It reached $33 trillion on Sept. 15, 2023, and $32 trillion on June 15, 2023, hitting this accelerated pace. Before that, the $1 trillion move higher from $31 trillion took about eight months.

U.S. debt, which is the amount of money the federal government borrows to cover operating expenses, now stands at nearly $34.4 billion, as of Wednesday. Bank of America investment strategist Michael Hartnett believes the 100-day pattern will remain intact with the move from $34 trillion to $35 trillion.

Immigrants aided the pandemic recovery and may be crucial to future needs. The challenge is processing newcomers and getting them where the jobs are.

The U.S. economic recovery from the pandemic has been stronger and more durable than many experts had expected, and a rebound in immigration is a big reason.

A resumption in visa processing in 2021 and 2022 jump-started employment, allowing foreign-born workers to fill some holes in the labor force that persisted across industries and locations after the pandemic shutdowns. Immigrants also address a longer-term need: replenishing the work force, a key to meeting labor demands as birthrates decline and older people retire.

Net migration in the year that ended July 1, 2023, reached the highest level since 2017. The foreign-born now make up 18.6 percent of the labor force, and the nonpartisan Congressional Budget Office projects that over the next 10 years, immigration will keep the number of working Americans from sinking. Balancing job seekers and opportunities is also critical to moderating wage inflation and keeping prices in check.

International instability, economic crises, war and natural disasters have brought a new surge of arrivals who could help close the still-elevated gap between labor demand and job candidates. But that potential economic dividend must contend with the incendiary politics, logistical hurdles and administrative backlogs that the surge has created.

Non-paywall link

The IRS plans to go after 125,000 high-income earners who did not file tax returns going back to 2017 — and the agency says hundreds of millions of dollars of unpaid taxes are involved in these cases.

Beginning this week, the IRS will start sending out noncompliance letters to more than 25,000 people who earn more than $1 million per year and 100,000 people with incomes between $400,000 and $1 million who failed to pay their taxes between 2017 and 2021.

The campaign announced Thursday is part of the agency’s ongoing effort to pursue high wealth tax cheats — mandated in part by funding provided through Democrats’ Inflation Reduction Act passed into law in 2022 and a directive from Treasury Secretary Janet Yellen to IRS leadership not to increase audit rates on people making less than $400,000 a year annually.

Budweiser brewer Anheuser-Busch has reached a contract agreement with the Teamsters union that avoids a strike at its U.S. plants.

The union had threatened a strike at the brewer’s 12 U.S. plants if an agreement on a new five-year contract wasn’t reached by 11:59 p.m. EST Thursday. The Teamsters union represents 5,000 Anheuser-Busch workers who brew and package beer and even take care of the company’s legendary Clydesdale horses.

But the two sides said late Wednesday they had reached a tentative agreement that boosts wages and increases vacation days and pension contributions.

Arizona Attorney General Kris Mayes is suing software company RealPage along with multiple landlords over what her office calls an "illegal price-fixing conspiracy."

There are nine major Phoenix and Tucson area landlords named as defendants in the suit, including Apartment Management Consultants (AMC), Greystar Management Services, and HSL Properties.

“The conspiracy allegedly engaged in by RealPage and these landlords has harmed Arizonans and directly contributed to Arizona’s affordable housing crisis,” said Attorney General Mayes. “In the last two years, residential rents in Phoenix and Tucson have risen by at least 30% in large part because of this conspiracy that stifled fair competition and essentially established a rental monopoly in our state’s two largest metro areas."

The AG's lawsuit accuses the companies of illegally colluding to artificially raise rents and conceal their conspiracy from the public. It also accuses the companies of violating the Arizona Uniform State Antitrust Act and the Arizona Consumer Fraud act, along with costing Phoenix and Tucson-area residents millions of dollars more in rent.

"RealPage and its co-defendants must be held accountable for their role in the astronomical rent increases forced on Arizonans,” Mayes said.