Tag Archives: economic conditions

Business

Bank of America CEO predicts two years of pain ahead in the housing market

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New York
CNN Business
 — 

The CEO of one of the nation’s largest banks is preparing for an economic downturn in 2023. But he’s also hopeful that the likely recession will be brief and “mild.”

Bank of America

(BAC) CEO Brian Moynihan said in an exclusive interview with Poppy Harlow on “CNN This Morning” Tuesday that there is a lot of uncertainty in the global economy due to the potential US freight railroad strike, Russia’s war with Ukraine and Covid shutdowns in China.

So an economic pullback shouldn’t be a major surprise. But Moynihan told Harlow that the worst-case fears for the economy may not materialize — thanks to the continued resilience of American shoppers.

“That was predicted to happen earlier this year. There was going to be a real slowdown,” Moynihan said. “The Fed was going to raise rates and it’s all pushed out largely because of the US consumer.”

Moynihan’s comments about the economy are decidedly more bullish than some of his peers.

JPMorgan Chase

(JPM) CEO Jamie Dimon said earlier this summer that Americans should brace for an economic “hurricane.” And Goldman Sachs

(GS) CEO David Solomon told Harlow in July that there’s a “good chance” the United States has yet to reach peak inflation.

Still, Moynihan is concerned that there could be more tough times ahead for the housing market. Mortgage rates have skyrocketed this year due to the Federal Reserve’s series of aggressive interest rate hikes. That has made it difficult — if not impossible — for many younger Americans to buy a first home.

“This is the toughest thing. You have to slow down the economy. You have to slow down inflation. And the way you do that is raising interest rates,” Moynihan said. “The intended outcome of [the Fed’s] policies doesn’t feel good when you are trying to buy a home.”

Moynihan told Harlow that there could be two years of pain in the housing market before activity returns to normal.

But despite worries about the housing market, Moynihan said he’s still optimistic that the US economy will continue to lead the global recovery, especially given concerns about China’s recent Covid outbreak and the intensifying protests over the country’s strict lockdown policies.

“I think our economy is holding on better than the rest of the world,” he said.

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Business

Mortgage rates fall for the second week in a row

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Mortgage rates dropped again this week, after plunging nearly half a percentage point last week.

The 30-year fixed-rate mortgage averaged 6.58% in the week ending November 23, down from 6.61% the week before, according to Freddie Mac. A year ago, the 30-year fixed rate was 3.10%.

Mortgage rates have risen throughout most of 2022, spurred by the Federal Reserve’s unprecedented campaign of hiking interest rates in order to tame soaring inflation. But last week, rates tumbled amid reports that indicated inflation may have finally reached its peak.

“This volatility is making it difficult for potential homebuyers to know when to get into the market, and that is reflected in the latest data which shows existing home sales slowing across all price points,” said Sam Khater, Freddie Mac’s chief economist.

The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey only includes borrowers who put 20% down and have excellent credit. But many buyers who put down less money upfront or have less than perfect credit will pay more than the average rate.

The average weekly rates, typically released by Freddie Mac on Thursday, are being released a day early due to the Thanksgiving holiday.

Mortgage rates tend to track the yield on 10-year US Treasury bonds. As investors see or anticipate rate hikes, they make moves which send yields higher and mortgage rates rise.

The 10-year Treasury has been hovering in a lower range of 3.7% to 3.85% since a pair of inflation reports indicating prices rose at a slower pace than expected in October were released almost two weeks ago. That has led to a big reset in investors’ expectations about future interest rate hikes, said Danielle Hale, Realtor.com’s chief economist. Prior to that, the 10-year Treasury had risen above 4.2%.

However, the market may be a bit too quick to celebrate the improvement in inflation, she said.

At the Fed’s November meeting, chairman Jerome Powell pointed to the need for ongoing rate hikes to tame inflation.

“This could mean that mortgage rates may climb again, and that risk goes up if next month’s inflation reading comes in on the higher side,” Hale said.

While it’s difficult to time the market in order to get a low mortgage rate, plenty of would-be homebuyers are seeing a window of opportunity.

“Following generally higher mortgage rates throughout the course of 2022, the recent swing in buyers’ favor is welcome and could save the buyer of a median-priced home more than $100 per month relative to what they would have paid when rates were above 7% just two weeks ago,” said Hale.

As a result of the drop in mortgage rates, both purchase and refinance applications picked up slightly last week. But refinance activity is still more than 80% below last year’s pace when rates were around 3%, according to the Mortgage Bankers Association weekly report.

However, with week-to-week swings in mortgage rates averaging nearly three times those seen in a typical year and home prices still historically high, many potential shoppers have pulled back, said Hale.

“A long-term housing shortage is keeping home prices high, even as the number of homes on the market for sale has increased, and buyers and sellers may find it more challenging to align expectations on price,” she said.

In a separate report released Wednesday, the US Department of Housing and Urban Development and the US Census Bureau reported that new home sales jumped in October, rising 7.5% from September, but were down 5.8% from a year ago.

While that was higher than predicted and bucked a trend of recently falling sales, it’s still below a year ago. Home building has been historically low for a decade and builders have been pulling back as the housing market shows signs of slowing.

“New home sales beat expectations, but a reversal of the general downward trend is doubtful for now given high mortgage rates and builder pessimism,” said Robert Frick, corporate economist at Navy Federal Credit Union.

Despite a general trend of falling sales, prices of new homes remain at record highs.

The median price for a newly constructed home was $493,000 up 15%, from a year ago – the highest price on record.

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Business

Home sales drop for 9th month

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Home sales in the United States declined for the ninth month in a row in October as surging mortgage rates and high prices pushed buyers out of the market.

Sales of existing homes — which include single-family homes, townhomes, condominiums and co-ops — were down 28.4% in October from a year ago and down 5.9% from September, according to a National Association of Realtors report released Friday. All regions of the United States saw month-over-month and year-over-year declines.

That continues a slowing trend that began in February and marks the longest streak of declining sales on record, going back to 1999.

Sales in October were at their weakest level since May 2020, when the real estate market was at a standstill during the pandemic lockdowns. Beyond that, sales last month were the weakest they have been since December 2011.

Still, home prices continued to climb last month. The median home price was $379,100 in October, up 6.6% from one year ago, according to the report. But that’s down from the record high of $413,800 in June. The price increase marks more than a decade of year-over-year monthly gains.

“More potential homebuyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher,” said Lawrence Yun, NAR’s chief economist. “The impact is greater in expensive areas of the country and in markets that witnessed significant home price gains in recent years.”

Many homeowners who recently bought or refinanced into ultra-low mortgage rates are reluctant to sell. That has kept inventory painfully low.

At the end of October there were 1.22 million units for sale, down less than 1% from both last month and last year, according to the report. At the current sales pace, it would take 3.3 months to get through the existing inventory, up from 3.1 months in September and 2.4 months last year. But that’s still historically low: A balanced market is a 4 to 6 month supply.

“Inventory levels are still tight, which is why some homes for sale are still receiving multiple offers,” Yun added.

While nearly a quarter of homes in October sold over the asking price, homes sitting on the market for more than 120 days saw prices reduced by about 16%.

With fewer buyers shopping for homes, the average time a home stays on the market is getting longer.

Properties were typically on the market for 21 days in October, up from 19 days in September. Pre-pandemic, homes typically sat on the market closer to 30 days. Over half the homes sold in October were on the market for less than a month.

While prices are still climbing year over year nationally, the increase is smaller than it has been over the past couple years with annual home price appreciation peaking at 24% in May 2021.

And some markets are even seeing prices drop, especially areas that saw a huge increase in home price appreciation during the pandemic, Yun said.

Half the country can expect to see prices decline year over year in the months ahead, Yun said, most will be by a modest amount, while other areas will see bigger drops. But the other half will likely see a modest increase.

“Affordable areas will hold on, places like Indianapolis, where there is job growth,” he said.

Still, Yun said, nationally, home prices are 40% higher than in October 2019, prior to the pandemic.

“Household incomes have not risen by 40%,” he said.

Those struggling to buy their first home continued to be shut out, making up only 28% of transactions last month.

“First-time buyers are really struggling with high prices, the high bar to get into the market and high mortgage rates.”

Once the hurdle to homeownership improves a bit for buyers — either with falling prices or lower mortgage rates — we could again face a housing shortage, Yun said, because the number of fresh listings coming to market is lower now than a year ago.

Current homeowners aren’t selling and homebuilders are slowing home construction, too.

October housing starts, a measure of new home construction, dropped 4.2% from September, and were down 8.8% from a year ago, according to the US Census Bureau and the US Department of Housing and Urban Development.

“This is why more new home construction is needed, as well as more rehabilitation of disused buildings into residential units,” said Yun, noting that while construction of apartment buildings remains robust, single-family starts are below one year ago and well below historical averages.

“In the meantime, mortgage rates are falling from the peak levels of last month and the gate is opening for more homebuyers to qualify for a mortgage.”

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World

UK raises its windfall tax on energy companies and bets on nuclear power

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London
CNN Business
 — 

The UK government is hiking a windfall tax on oil and gas companies and extending the levy to electricity generators, as it scrambles to balance its budget amid an economic downturn. It is also investing in nuclear power for the first time in decades.

UK finance minister Jeremy Hunt announced the measures on Thursday while delivering the government’s medium-term budget, which laid out plans for higher taxes and cuts to public spending.

Beginning January 1, the Energy Profits Levy on oil and gas companies will increase from 25% to 35% and remain in place until the end of March 2028. That takes the total tax on the sector to 75%, according to the Treasury.

There will also be a new, temporary 45% levy on the excess profits of electricity generators over this period. In the United Kingdom, electricity prices are tied to wholesale gas prices, which means many power generators are also enjoying mega profits.

Together, these measures will raise £14 billion ($16.5 billion) next year and more than £55 billion ($65 billion) between 2022 and 2028.

There have been growing calls in Britain for higher taxes on the windfall profits of oil and gas companies, which have enjoyed record earnings this year thanks to rising prices driven by Russia’s invasion of Ukraine.

At the same time, households and businesses are being squeezed by decades-high inflation as a result of spiraling energy and food bills. The annual rate of UK inflation rose to 11.1% in October, its highest level in 41 years.

“I have no objection to windfall taxes if they are genuinely about windfall profits caused by unexpected increases in energy prices,” Hunt said in parliament on Thursday. “Any such tax should be temporary, not deter investment and recognize the cyclical nature of energy businesses,” he added.

The United Kingdom will spend an additional £150 billion ($176.9 billion) on energy bills this year compared to pre-pandemic levels, according to Hunt. That’s the equivalent to paying for a second National Health Service.

Hunt on Thursday also extended government support for energy bills by another 12 months until April 2024, but said average households should expect to pay £3,000 ($3,451) annually, up from £2,500 ($2,951) currently.

As well as hiking energy taxes, Hunt affirmed a £700 million ($824 million) investment into Sizewell C, a nuclear power station operated by France’s EDF in the east of England.

The deal was first announced by former prime minister Boris Johnson last September and is the first state backing for a nuclear project in over 30 years.

It will provide power to the equivalent of six million homes for over 50 years and represents “the biggest step” in Britain’s “journey to energy independence,” Hunt said.

Hunt reaffirmed the United Kingdom’s commitment to a 68% reduction in carbon emissions by 2030. “Last year nearly 40% of our electricity came from offshore wind, solar and other renewable sources,” he said.

He added that from April 2025 electric vehicle drivers will no longer be exempt from paying car taxes.

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Business

Key inflation report indicates the Fed’s rate hikes may be starting to cool prices

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Minneapolis
CNN Business
 — 

A key measure of inflation, wholesale prices, rose by 8% in October from a year before, according to the latest report from the Bureau of Labor Statistics.

While still historically high, it was the smallest increase since July of last year and significantly better than forecasts. It’s the second inflation report this month to show signs of cooling in the rising prices that have plagued the economy.

Economists expected the Producer Price Index, which measures prices paid for goods and services before they reach consumers, to show an annual increase of 8.3%, down from September’s revised 8.4%.

On a monthly basis, producer prices rose 0.2%, below expectations and even with the revised 0.2% increase seen in September.

Year-over-year, core PPI — which excludes food and energy, components whose pricing is more prone to market volatility — measured 6.7%, down from September’s revised annual increase of 7.1%.

Month-over-month, core PPI prices were flat, the lowest monthly reading since November 2020. In September, core PPI increased by a revised 0.2% from the month before.

Economists had expected annual and monthly core PPI to measure 7.2% and 0.3%, respectively, according to estimates on Refinitiv.

President Joe Biden heralded October’s PPI report Tuesday calling it “more good news for our economy this morning, and more indications that we are starting to see inflation moderate.”

“Today’s news – that prices paid by businesses moderated last month – comes a week after news that prices paid by consumers have also moderated,” Biden wrote Tuesday. “And, today’s report also showed that food inflation slowed – a welcome sign for family’s grocery bills as we head into the holidays.”

For much of this year, the Federal Reserve has sought to tamp down decades-high inflation by tightening monetary policy, including issuing an unprecedented four consecutive rate hikes of 75 basis points, or three-quarters of a percentage point.

The better-than-expected PPI data reflects an economy that has slowed, with supply moving more into balance, said Jeffrey Roach, chief economist for LPL Financial.

Costs associated with transportation and warehousing, for example, declined for the fourth consecutive month, a likely result of the improved global shipping climate, he said. Producer costs for new cars fell the most since May 2017, he added.

“Barring geopolitical or financial crises, inflation should continue its deceleration into 2023,” he said in a statement.

Since PPI captures price changes happening further upstream, the report is considered by some to be a leading indicator for broader inflationary trends and a predictor of what consumers will eventually see at the store level.

“The PPI read certainly adds more fuel to the fire for those who feel we may finally be on a downward inflation trend,” Mike Loewengart, Morgan Stanley’s head of model portfolio construction, said in a statement.

Last week’s Consumer Price Index showed inflation slowed to 7.7% from 8.2% year-over-year for consumer goods, surprising investors and giving Wall Street its biggest boost since 2020.

The CPI data was “reassuring,” Fed vice chair Lael Brainard said on Monday, signaling that the rate hikes appear to be taking hold, and if the economic data continues to show inflation on the decline, then the central bank could scale back the extent of its future rate hikes.

“When you look at the inflation numbers, there’s some evidence that we’ve peaked, but are we coming down quickly?” Steven Ricchiuto, chief economist for Mizuho Americas told CNN Business.

Ricchiuto noted that the October figures are only a couple steps lower than what was seen in September.

“These aren’t the types of things that tell the Fed to stop tightening rates,” he said. However, “they may tell you [that] you don’t need 75 basis points.”

CNN’s DJ Judd and Matt Egan contributed to this report.

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Business

Japan’s economy shrinks for first time in a year

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Japan’s economy unexpectedly shrank for the first time in a year in the third quarter, stoking further uncertainty about the outlook as global recession risks, a weak yen and higher import costs took a toll on household consumption and businesses.

The world’s third biggest economy has struggled to motor on despite the recent lifting of Covid curbs, and has faced intensifying pressure from red-hot global inflation, sweeping interest rate increases worldwide and the Ukraine war.

Gross domestic product fell an annualized 1.2% in July-September, official data showed, compared with economists’ median estimate for a 1.1% expansion and a revised 4.6% rise in the second quarter.

It translated into a quarterly decline of 0.3%, versus a forecast 0.3% growth.

On top of being squeezed by a global slowdown and soaring inflation, Japan has been dealing with the challenge of the yen’s slide to 32-year lows against the dollar, which has magnified cost-of-living strains by further lifting the price of everything from fuel to food items.

“The contraction was unexpected,” said Atsushi Takeda, chief economist at Itochu Economic Research Institute, adding that the biggest aberration were the larger-than-expected imports.

“But the three key pillars of demand – consumption, capital expenditure and exports – remained in positive territory, if not robust, so demand is not as weak as the headline figure shows.”

However, the risks to Japan’s outlook have risen as the global economy teeters on the brink of recession.

Economy Minister Shigeyuki Goto said a global recession could hit households and businesses.

At home, policymakers and citizens are bracing for a potential eighth wave of the Covid pandemic, adding to the gloom for private consumption which makes up more than half of the Japanese economy.

In the third quarter, private consumption grew 0.3%, a touch above consensus estimate for 0.2% growth but slowing sharply from the second quarter’s 1.2% gain.

“Growth should turn positive in Q4, amid a rebound in inbound tourism and a smaller trade deficit, but the eighth virus wave and rising inflation will limit the recovery,” said Darren Tay, Japan Economist at Capital Economics.

Tay noted that non-residential investment increased by 1.5% quarter-on-quarter, below consensus of a 2.1% rise and Capital Economics’ own estimate for a strong 3% growth rate.

Exports grew by 1.9% but were overwhelmed by hefty gains in imports, meaning external demand subtracted 0.7 percentage points from GDP.

Prime Minister Fumio Kishida’s government is stepping up support for households to try to ease the effects of inflation, with 29 trillion yen ($206.45 billion) in extra spending in the budget. The Bank of Japan has also maintained its ultra-loose monetary stimulus program to help revive the economy.

Capital Economics’ Tay sees a tough 2023 for Japan.

“As for 2023, Japan will be dragged into a mild recession in H1 by a global downturn that will weigh on exports and business investment.”

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Business

Jeff Bezos’ top tips for managing the economic downturn

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Washington
CNN Business
 — 

Amazon founder Jeff Bezos recently warned consumers and businesses they should consider postponing large purchases in the coming months as the global economy contends with a downturn and faces a possible recession.

The business leader offered his starkest advice yet on a faltering economy in an exclusive sit-down interview with CNN’s Chloe Melas on Saturday at Bezos’ Washington, DC, home.

Bezos urged people to put off expenditures for big-ticket items such as new cars, televisions and appliances, noting that delaying big purchases is the surest way to keep some “dry powder” in the event of a prolonged economic downturn. Meanwhile, small businesses may want to avoid making large capital expenditures or acquisitions during this uncertain time, Bezos added.

If enough consumers follow through with Bezos’ advice, it could mean lower sales for Amazon, the e-commerce giant Bezos founded and that created the vast majority of the billionaire’s wealth.

The New York Times reported Monday that Amazon plans to slash its workforce, laying off 10,000 workers, the largest reduction in the company’s history. That’s in addition to a previously announced hiring freeze in its corporate workforce. The company is second only to Walmart in the number of people it employs in the United States.

Amazon

(AMZN) said in October it expects sales for the final three months of the year to be significantly below Wall Street’s expectations. The weaker forecast came as rising inflation and looming recession fears weigh on consumer purchasing decisions as Americans focus more on travel and dining out and less on buying discretionary goods.

The company’s stock has fallen more than 40% as surging prices and changing customer behavior weigh on Amazon and the broader tech sector.

Bezos said the probability of economic conditions worsening makes it prudent to save some cash if it’s an option.

“Take some risk off the table,” he said. “Just a little bit of risk reduction could make the difference.”

Last month, Bezos tweeted a warning to his followers on Twitter, recommending that they “batten down the hatches.” The advice was meant for business owners and consumers alike, Bezos said in the interview.

Many may be feeling the pinch now, he added, but argued that as an optimist he believes the American Dream “is and will be even more attainable in the future” — projecting that within his own lifetime, space travel could become broadly accessible to the public.

Although the US economy is not, technically, in a recession, nearly 75% of likely voters in a recent CNN poll said they feel as though it is. Wages are up, but not enough to take the sting off inflation, most notably high prices of necessities like food, fuel and shelter. For those invested in stocks, it’s not been a great year, either, and that’s especially hard on retirees who are living off their investments.

Other business leaders have issued similar messages about the economy in recent months. Tesla

(TSLA) and Twitter CEO Elon Musk last month admitted demand for Tesla

(TSLA)s was “a little harder” to come by, and noted that Europe and China are experiencing a “recession of sorts.” Musk also warned that Tesla

(TSLA) would fall short of its sales growth target.

JPMorgan Chase CEO Jamie Dimon in October spooked the stock market by saying a recession could hit the United States in as little as six to nine months.

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Business

Meta to lay off 11,000 employees, as Zuckerberg says he is ‘accountable for missteps’

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New York
CNN Business
 — 

Facebook parent company Meta on Wednesday said it is laying off 11,000 employees, marking the most significant job cuts in the tech giant’s history.

The job cuts come as Meta confronts a range of challenges to its core business and makes an uncertain and costly bet on pivoting to the metaverse. It also comes amid a spate of layoffs at other tech firms in recent months as the high-flying sector reacts to high inflation, rising interest rates and fears of a looming recession.

“Today I’m sharing some of the most difficult changes we’ve made in Meta’s history,” CEO Mark Zuckerberg wrote in a blog post to employees. “I’ve decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go.”

The job cuts will impact many corners of the company, but Meta’s recruiting team will be hit particularly hard as “we’re planning to hire fewer people next year,” Zuckerberg said in the post. He added that a hiring freeze would be extended until the first quarter, with few exceptions.

In September, Meta had a headcount of more than 87,000, per a September SEC filing.

Meta’s core ad sales business has been hit by privacy changes implemented by Apple, advertisers tightening budgets and heightened competition from newer rivals like TikTok. Meanwhile, Meta has been spending billions to build a future version of the internet, dubbed the metaverse, that likely remains years away from widespread acceptance.

Last month, the company posted its second quarterly revenue decline and said that its profit was cut in half from the prior year. Once valued at more than $1 trillion last year, Meta’s market value has since plunged to around $250 billion.

“I want to take accountability for these decisions and for how we got here,” Zuckerberg wrote in his post Wednesday. “I know this is tough for everyone, and I’m especially sorry to those impacted.”

Meta is not alone in feeling the pain of a market downturn. The tech sector has been facing a dizzying reality check as inflation, rising interest rates and more macroeconomic headwinds have led to a stunning shift in spending for an industry that only grew more dominant as consumers shifted more of their lives online during the pandemic.

“At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth,” Zuckerberg wrote Wednesday. “Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected.”

“I got this wrong, and I take responsibility for that,” he added.

Meta’s headcount in September was nearly twice the 48,268 staffers it had at the start of the pandemic in March of 2020.

A handful of tech companies have announced hiring freezes or job cuts in recent months, often after having seen rapid growth during the pandemic. Last week, rideshare company Lyft said it was axing 13% of employees, and payment-processing firm Stripe said it was cutting 14% of its staff. The same day, e-commerce giant Amazon said it was implementing a pause on corporate hiring.

Also last week, Facebook-rival Twitter announced mass layoffs impacting roles across the company as its new owner, Elon Musk, took the helm.

In addition to the layoffs, Zuckerberg said the company expects to “roll out more cost-cutting changes” in the coming months. Meta, which like other tech giants is known for its vast, perk-filled offices, is rethinking its real estate needs, he said, and “transitioning to desk sharing for people who already spend most of their time outside the office.”

“Overall,” he said, “this will add up to a meaningful cultural shift in how we operate.”

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US

Exit polls: What voters are thinking as America goes to the polls

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CNN
 — 

Read below for analysis of CNN’s preliminary 2022 national exit polls.

Georgia voters were more likely to say that Democratic Sen. Raphael Warnock has good judgment than they were to say the same of his Republican challenger, Herschel Walker, according to the preliminary results of the Georgia exit poll conducted for CNN and other news networks by Edison Research. But more said Warnock holds views that are too extreme than said the same about Walker.

Just shy of half, about 46%, said only Warnock shows good judgment, with about 28% saying only Walker does, and nearly a fifth that neither candidate does.

Voters in Georgia were close to evenly split on whether or not Warnock’s views were too extreme. Slightly more than 4 in 10 said Walker’s views were too extreme, with just over half saying they were not.

Asked which candidate quality mattered most to their Senate vote, 36% of Georgia voters said they wanted a candidate who shared their values, 32% a candidate who had honesty and integrity, 19% a candidate who cared about people like them, and 8% someone who had the right experience.

7:08 p.m. ET / Ariel Edwards-Levy

More than 4 in 10 of Pennsylvania voters approve of the way Joe Biden is handling his job, but a majority disapprove of the president, who was born and raised in Scranton, according to the preliminary national results of the exit poll conducted for CNN and other news networks by Edison Research.

Voters in the commonwealth did not have a high opinion of former President Donald Trump either. Just 4 in 10 had a favorable opinion, while nearly 6 in 10 had an unfavorable opinion.

Meanwhile, just over half of Pennsylvania voters said Biden was not a factor in their vote. For those who said the president was a factor, more than 1 in 10 said they support him, while nearly a third said they oppose him.

More than half of Pennsylvania voters also said that Trump was not a factor in their vote. For those who said the former president was a factor, close to 1 in 5 said they support him, while about a quarter oppose him.

6:52 p.m. ET / Tami Luhby

More voters trust Republicans than Democrats to handle inflation and crime, according to the preliminary national results of the exit poll conducted for CNN and other news networks by Edison Research.

Roughly half of voters said they trusted GOP candidates on those two issues, while more than 4 in 10 voters said they trusted Democratic candidates.

When it comes to the issue of abortion, however, roughly half of voters said they trusted Democratic candidates, compared with more than 4 in 10 voters who said they trusted Republican candidates.

6:30 p.m. ET / Tami Luhby

Roughly 8 in 10 of voters in this year’s midterms said they were at least somewhat confident that elections in their state are being conducted fairly and accurately, according to the preliminary national results of the exit poll conducted for CNN and other news networks by Edison Research. About half said they were very confident. Only about 2 in 10 said they were not very or not at all confident.

But voters were also deeply concerned about the state of the country’s democracy. Slightly fewer than 3 in 10 said that they viewed democracy in the US today as at least somewhat secure, with about 7 in 10 feeling that democracy in the country is somewhat or very threatened.

Slightly over 6 in 10 voters accepted that Biden legitimately won the presidency in 2020, while about one-third denied the results of that election.

6:16 p.m. ET / Ariel Edwards-Levy

While voters in this year’s midterm election hold negative views of President Joe Biden, their views of his predecessor are even more negative, according to the preliminary national results of the exit poll conducted for CNN and other news networks by Edison Research.

Only about 37% of voters in this year’s midterms expressed a favorable view of former President Donald Trump, with around 6 in 10 viewing him unfavorably. About 16% of voters said their House vote this year was intended to express support for Trump, with just under 3 in 10 saying it’s intended to express opposition and the rest saying that Trump was not a factor.

Voters’ opinions of the GOP were slightly more positive than their views of Trump, with about 43% viewing the Republican Party favorably and just over half viewing it unfavorably. More than half, about 54%, say the GOP is too extreme.

6:00 p.m. ET / Ariel Edwards-Levy

There’s a significant partisan divide in voters’ priorities and attitudes this year, according to the preliminary national results of the exit poll conducted for CNN and other news networks by Edison Research.

Nearly half of voters who supported a GOP House candidate called inflation their top issue, with fewer than 15% picking any other issue as their priority. Among voters who backed a Democratic candidate, about 44% called abortion their top issue, with 15% or fewer picking any other issue.

Meanwhile, midterm voters were mostly opposed to the US Supreme Court decision to overturn Roe v. Wade, according to the preliminary national exit polls.

Slightly fewer than 4 in 10 said they felt enthusiastic or satisfied about the decision, while about 21% said they felt dissatisfied, and roughly 4 in 10 that they were angry.

About 60% of all voters said that abortion should be legal in most or all cases, up from 51% among voters who turned out for the 2020 general election.

5:52 p.m. ET / Ariel Edwards-Levy

Early indications suggest that this year’s midterm electorate may look older than the voters in the 2018 midterms, according to the preliminary national results of the exit poll conducted for CNN and other news networks by Edison Research.

Only about a tenth of voters in this election were under age 30, while roughly one-third were age 65 or older. In 2018, about 13% were under 30, and about 26% were 65 or older.

The electorate this year was split roughly between those who generally identify as Democrats (about 34%) and those who generally identify as Republicans (about 35%), with the remainder consisting of political independents and members of other parties. In 2018, Democrats made up a slightly larger voting bloc, about 37%.

About 76% of voters were White, and about 24% were voters of color. White voters with college degrees look to be a slightly larger share of the electorate this year – about 40% per the preliminary data, compared with 31% four years ago. By contrast, voters of color without a college degree look to have made up a slightly smaller share of the electorate this year.

5:29 p.m. ET / Ariel Edwards-Levy

Inflation tops voters’ list of concerns in this year’s midterm elections, with abortion a close second, according to the preliminary national results of the exit poll conducted for CNN and other news networks by Edison Research.

Approximately one-third called inflation the most important issue to their vote, with about 27% citing abortion. The remainder were roughly divided between picking crime, gun policy and immigration as their chief concerns.

The electorate’s views of the economy are largely gloomy. Only about one-quarter of voters felt positively about the current condition of the economy, with roughly three-quarters viewing it negatively – and about 4 in 10 saying it’s downright poor.

That’s more pessimistic than in the 2018 midterms, when 68% of voters said the state of the economy was excellent or good, and the 2020 presidential election, when 49% said the same.

About 46% of voters in this election say that their family’s financial situation had worsened over the past two years, while only about 1 in 5 said it had improved.

More than three-quarters of voters in this year’s election say that inflation has caused hardship for them and their family over the past year, with about 20% saying it’s been a severe hardship. And about 6 in 10 say that gas prices, specifically, have recently been a hardship.

5:23 p.m. ET / Ariel Edwards-Levy

Voters in this year’s midterm elections are broadly unhappy with the state of the nation and hold largely negative views of President Joe Biden, according to the preliminary national results of the exit poll conducted for CNN and other news networks by Edison Research.

More than 7 in 10 said they were less than satisfied with the way things are going in the country, with about one-third saying they were not just dissatisfied but angry with the state of the nation.

Biden’s approval rating stands at about 45% among voters in this year’s election – nearly identical to then-Donald Trump’s 45% approval rating four years ago among 2018 midterm voters. And voters in this election were more than twice as likely to strongly disapprove of Biden as they were to strongly approve of him.

Just shy of half of voters this year said that Biden’s policies are mostly hurting the country, with about 36% saying his policies are mostly helping, and the rest that they’re making no difference.

Many voters didn’t see their congressional vote as a referendum on the president – close to half said that Biden was not a factor in their vote, while about 18% said their vote was to express support for Biden, and about one-third that it was to express opposition to him.

Updated 5:13 p.m. ET / Ariel Edwards-Levy

The 2022 national exit polls include interviews with thousands of voters, both those who cast a ballot on Election Day and those who voted early or absentee. That scope makes them a powerful tool for understanding the demographic profile and political views of voters in this year’s election. And their findings will eventually be weighted against the ultimate benchmark: the results of the elections themselves. Even so, exit polls are still polls, with margins for error – which means they’re most useful when treated as estimates, rather than precise measurements. That’s particularly true for the earliest exit poll numbers, which haven’t yet been adjusted to match final election results.

CNN Exit Polls are a combination of in-person interviews with Election Day voters and in-person interviews, telephone and online polls measuring the views of early and absentee by-mail voters. They were conducted by Edison Research on behalf of the National Election Pool. In-person interviews on Election Day were conducted at a random sample of 250 polling locations. The results also include interviews with early and absentee voters conducted in-person at 72 early voting locations, by phone or online. Results for the full sample of 12,458 respondents have a margin of error of plus or minus 2 percentage points; it is larger for subgroups.

The Pennsylvania Exit Poll is a combination of in-person interviews with Election Day voters and telephone and online polls measuring the views of absentee by-mail and early voters. It was conducted by Edison Research on behalf of the National Election Pool. In-person interviews on Election Day were conducted at a random sample of 45 polling locations in Pennsylvania among Election Day voters. The results also include interviews with early and absentee voters conducted by phone or online. Results for the full sample of 1,608 voters have a margin of error of plus or minus 4 percentage points; it is larger for subgroups.

This story has been updated with additional information.

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Fact check: Biden’s midterms message includes false and misleading claims

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Washington
CNN
 — 

President Joe Biden has been back on the campaign trail, traveling in October and early November to deliver his pitch for electing Democrats in the midterm elections on Tuesday.

Biden’s pitch has included claims that are false, misleading or lacking important context. (As always, we take no position on the accuracy of his subjective arguments.) Here is a fact-check look at nine of his recent statements.

The White House did not respond to a request for comment for this article.

Biden said at a Democratic fundraiser in Pennsylvania last week: “On our watch, for the first time in 10 years, seniors are going to get the biggest increase in their Social Security checks they’ve gotten.” He has also touted the 2023 increase in Social Security payments at other recent events.

But Biden’s boasts leave out such critical context that they are highly misleading. He hasn’t explained that the increase in Social Security payments for 2023, 8.7%, is unusually big simply because the inflation rate has been unusually big. A law passed in the 1970s says that Social Security payments must be increased by the same percentage that a certain measure of inflation has increased. It’s called a cost-of-living adjustment.

The White House deleted a Tuesday tweet that delivered an especially triumphant version of Biden’s boast, and press secretary Karine Jean-Pierre acknowledged Wednesday that the tweet was lacking “context.” You can read a more detailed fact check here.

Biden said at a Democratic rally in Florida on Tuesday: “And on my watch, for the first time in 10 years, seniors are getting an increase in their Social Security checks.”

The claim that the 2023 increase to Social Security payments is the first in 10 years is false. In reality, there has been a cost-of-living increase every year from 2017 onward. There was also an increase every year from 2012 through 2015 before the payment level was kept flat in 2016 because of a lack of inflation.

The context around this Biden remark in Florida suggests he might have botched his repeat campaign line about Social Security payments increasing at the same time as Medicare premiums are declining. Regardless of his intentions, though, he was wrong.

Biden repeatedly suggested in speeches in October and early November that a new law he signed in August, the Inflation Reduction Act, will stop the practice of successful corporations paying no federal corporate income tax. Biden made the claim explicitly in a tweet last week: “Let me give you the facts. In 2020, 55 corporations made $40 billion. And they paid zero in federal taxes. My Inflation Reduction Act puts an end to this.”

But “puts an end to this” is an exaggeration. The Inflation Reduction Act will reduce the number of companies on the list of non-payers, but the law will not eliminate the list entirely.

That’s because the law’s new 15% alternative corporate minimum tax, on the “book income” companies report to investors, only applies to companies with at least $1 billion in average annual income. (There are lots of nuances; you can read more specifics here.) According to the Institute on Taxation and Economic Policy, the think tank that in 2021 published the list of 55 large and profitable companies that avoided paying any federal income tax in their previous fiscal year, only 14 of these 55 companies reported having US pre-tax income of at least $1 billion in that year.

In other words, there will clearly still be some large and profitable corporations paying no federal income tax even after the minimum tax takes effect in 2023. The exact number is not yet known.

Matthew Gardner, a senior fellow at the Institute on Taxation and Economic Policy, said in a Thursday email that the new tax is “an important step forward from the status quo” and that it will raise substantial revenue, but he also said: “I wouldn’t want to assert that the minimum tax will end the phenomenon of zero-tax profitable corporations. A more accurate phrasing would be to say that the minimum tax will *help* ensure that *the most profitable* corporations pay at least some federal income tax.”

Biden said at the Tuesday rally in Florida: “Look, you know, you can hear it from Republicans, ‘My God, that big-spending Democrat Biden. Man, he’s taken us in debt.’ Well, guess what? I reduced the federal deficit this year by $1 trillion $400 billion. One trillion 400 billion dollars. The most in all American history. No one has ever reduced the debt that much. We cut the federal debt in half.”

Biden offered a similar narrative at a Thursday rally in New Mexico, this time saying, “We cut the federal debt in half. A fact.”

There are two significant problems here.

First: Biden conflated the debt and the deficit, which are two different things. It’s not true that Biden has “cut the federal debt in half”; the federal debt (total borrowing plus interest owed) has continued to rise under Biden, exceeding $31 trillion for the first time this October. Rather, it’s the federal deficit – the annual difference between spending and revenue – that was cut in half between fiscal 2021 and fiscal 2022.

Second, it’s highly questionable how much credit Biden deserves for even the reduction in the deficit. Biden doesn’t mention that the primary reason the deficit plummeted in fiscal years 2021 and 2022 was that it had skyrocketed to a record high in 2020 because of emergency pandemic relief spending. It then fell as expected as the spending expired as planned.

Dan White, senior director of economic research at Moody’s Analytics – an economics firm whose assessments Biden has repeatedly cited during his presidency – told CNN’s Matt Egan in October: “On net, the policies of the administration have increased the deficit, not reduced it.” The Committee for a Responsible Federal Budget, an advocacy group, says the administration’s own actions have significantly worsened the deficit picture. (David Kelly, chief global strategist at JPMorgan Funds, told Egan that the Biden administration does deserve credit for the economic recovery that has boosted tax revenues.)

Biden said at the Florida rally on Tuesday: “Unemployment is down from 6.5 to 3.5%, the lowest in 50 years.” He said at the New Mexico rally on Thursday: “Unemployment rate is 3.5% – the lowest it’s been in 50 years.”

But Biden didn’t acknowledge that September’s 3.5% unemployment rate was actually a tie for the lowest in 50 years – a tie, specifically, with three months of Trump’s administration, in late 2019 and early 2020. Since Biden uses these campaign speeches to favorably compare his own record to Trump’s record, that omission is significant.

The unemployment rate rose to 3.7% in October; that number was revealed on Friday, after these Biden comments. The rate was 6.4% in January 2021, the month Biden took office.

During an on-camera discussion conducted by progressive organization NowThis News and published online in late October, Biden told young activists that they “probably are aware, I just signed a law” on student debt forgiveness that is being challenged by Republicans. He added: “It’s passed. I got it passed by a vote or two, and it’s in effect.”

Biden’s claims are false.

He created his student debt forgiveness initiative through executive action, not through legislation, so he didn’t sign a law and didn’t get it passed by any margin. Since Republicans opposed to the initiative, including those challenging the initiative in court, have called it unlawful precisely because it wasn’t passed by Congress, the distinction between a law and an executive action is a highly pertinent fact here.

A White House official told CNN that Biden was referring to the Inflation Reduction Act, the law narrowly passed by the Senate in August; the official said the Inflation Reduction Act created “room for other crucial programs” by bringing down the deficit. But Biden certainly did not make it clear that he was talking about anything other than the student debt initiative.

Biden correctly noted on various occasions in October that gas prices have declined substantially since their June 2022 peak – though, as always, it’s important to note that presidents have a limited impact on gas prices. But in an economic speech in New York last week, Biden said, “Today, the most common price of gas in America is $3.39 – down from over $5 when I took office.”

Biden’s claim that the most common gas price when he took office was more than $5 is not even close to accurate. The most common price for a gallon of regular gas on the day he was inaugurated, January 20, 2021, was $2.39, according to data provided to CNN by Patrick De Haan, head of petroleum analysis at GasBuddy. In other words, Biden made it sound like gas prices had fallen significantly during his presidency when they had actually increased significantly.

In other recent remarks, Biden has discussed the state of gas prices in relation to the summer peak of more than $5 per gallon, not in relation to when he took office. Regardless, the comment last week was the second this fall in which Biden inaccurately described the price of gas – both times in a way that made it sound more impressive.

You can read a longer fact check here.

Biden has revived a claim that was debunked more than 20 months ago by The Washington Post and then CNN. At least twice in October, he boasted that he traveled 17,000 miles with Chinese leader Xi Jinping.

“I’ve spent more time with Xi Jinping of China than any world leader has, when I was Vice President all the way through to now. Over 78 hours with him alone. Eight – nine of those hours on the phone and the others in person, traveling 17,000 miles with him around the world, in China and the United States,” he told a Democratic gathering in Oregon in mid-October.

Biden made the number even bigger during a speech on student debt in New Mexico on Thursday, saying, “I traveled 17-, 18,000 miles with him.”

The claim is false. Biden has not traveled anywhere close to 17,000 miles with Xi, though they have indeed spent lots of time together. Washington Post fact-checker Glenn Kessler noted in 2021 that the two men often did not even travel parallel routes to their gatherings, let alone physically travel together. The only apparent way to get Biden’s mileage past 17,000, Kessler found, is to add the length of his flight journeys between Washington and Beijing, during which, obviously, Xi was not with him.

A White House official told CNN in early 2021 that Biden was adding up his “total travel back and forth” for meetings with Xi. But that is very different than traveling “with” Xi as Biden keeps saying, especially in the context of a boast about how well he knows Xi – and Biden has had more than enough time to make his language more precise.

Biden claimed at the Thursday rally in New Mexico that under Trump, Republicans passed a $2 trillion tax cut that “affected only the top 1% of the American public.”

Biden correctly said in various October remarks that the Trump tax cut law was particularly beneficial to the wealthy, but he went too far here. It’s not true that the Trump policy “only” affected the top 1%.

The Tax Policy Center think tank found in early 2018 that Trump’s law “will reduce individual income taxes on average for all income groups and in all states.” The think tank estimated that “between 60 and 76 percent of taxpayers in every state will receive a tax cut.” And in April 2019, tax-preparation company H&R Block said two-thirds of its returning customers had indeed paid less in tax that year than they did the year prior, The New York Times reported in an article headlined “Face It: You (Probably) Got a Tax Cut.”

The Tax Policy Center did find in early 2018 that people at the top would get by far the biggest benefits from Trump’s law. Specifically, the think tank found that the top 1% of earners would get an average 3.4% increase in after-tax 2018 income – versus an average 1.6% income increase for people in the middle quintile, an average 1.2% income increase for people in the quintile below that and just an average 0.4% income increase for people in the lowest quintile. The think tank also found that the top 1% of earners would get more than 20% of the income benefits from the law, a bigger share than the bottom 60% of earners combined.

The distribution could get even more skewed after 2025, when the law’s individual tax cuts will expire if not extended by Congress and the president. If there is no extension – and, therefore, the law’s permanent corporate tax cut remains in place without the individual tax cuts – the Tax Policy Center has estimated that, in 2027, the top 1% will get 83% of the benefits from the law.

But that’s a possibility about the future. Biden claimed, in the past tense, that the law “affected” only the top 1%. That’s inaccurate.

This wasn’t the first time Biden overstated his point about the Trump tax cuts. The Washington Post fact-checked him in 2019, for example, when he claimed “all of it” went to the ultra-rich and corporations.



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