Tag Archives: economy and economic indicators

US

DOJ declares seized Mar-a-Lago materials list full and accurate despite Trump’s claims of planted evidence

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CNN
 — 

The Justice Department submitted, as part of the special master review of the Mar-a-Lago search, a slightly revised inventory of the materials seized in the search, along with an FBI affidavit indicating that the new inventory fully reflects what was taken.

The special master, Judge Raymond Dearie, had requested that the Justice Department submit an affidavit declaring whether the inventory captured a “full and accurate” picture of the search – a request that came after former President Donald Trump claimed, without evidence, that the FBI may have planted items during it.

Schiff reacts to Trump: ‘Those comments don’t demonstrate much intelligence of any kind’

“I am not aware of any documents or materials seized from the Premises on that date by the FBI that are not reflected in the Revised Detailed Property Inventory,” an FBI agent, whose identity was redacted, wrote in the new affidavit, “other than materials that the Privilege Review Team has not provided to the Case Team.”

According to the FBI, the agency had only a single business day to compile the first version of the inventory – filed several weeks ago – but has since had more time to review and catalog the list. The filing also noted that a review team filtered out potentially privileged material found after the seizure at Mar-a-Lago, which they have kept.

The agent said the revisions to the new list were “minor.”

According to CNN’s comparison of the two versions, the new version showed the same total number of documents marked classified as compiled in the previously filed inventory. The new version shows two fewer press clippings and two fewer empty envelopes with classified banners than the previous count. The revised inventory also shows a few dozen more government records without classified markings, out of the thousands that the FBI says it obtained in the search.

On Friday, Trump faces a deadline to submit to the special master descriptions of any seized items that he claims are missing from the inventory, or items that were included in the inventory that he says were not at the premises.

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World

British pound plummets to record low against the dollar

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CNN Business
 — 

The British pound fell to a new record low against the US dollar of $1.035 on Monday, plummeting more than 4%.

The slide came as trading opened in Asia and Australia on Monday, extending a 2.6% dive from Friday — and spurring predictions the pound could plunge to parity with the US dollar in the coming months.

The unprecedented currency slump follows British Chancellor of the Exchequer Kwasi Kwarteng’s announcement on Friday that the United Kingdom would impose the biggest tax cuts in 50 years at the same time as boosting spending.

The new tax-slashing fiscal measures, which include scrapping plans for rising corporation tax and slashing the cap on bankers’ bonuses, have been criticized as “trickle-down economics” by the opposition Labour party and even lambasted by members of the Chancellor’s own Conservative party.

Former Tory chancellor Lord Ken Clarke criticized the tax cuts on Sunday, saying it could lead to the collapse of the pound.

“I’m afraid that’s the kind of thing that’s usually tried in Latin American countries without success,” Clarke said in an interview with BBC radio.

The pound has been hammered by a string of weak economic data, but also the steep ascent of the US dollar, a safe haven investment that sees inflows in times of uncertainty.

The euro also hit a 20-year low of 0.964 per dollar.

But the economic outlook in the UK means the pound is suffering more than most, in the face of a disastrous energy crunch and the highest inflation among G7 nations.

The previous record low for the British pound against the US dollar was 37 years ago on February 25, 1985, when 1 pound was worth $1.054.

“Should there be any escalation to the war in Ukraine…we would see further sharp downside in the Pound as well as the Euro,” said Clifford Bennett, chief economist at ACY Securities, an Australian brokerage firm.

“One should not underestimate the crisis that is all of Europe at the moment and the Pound is more vulnerable than most,” he said.

The soaring US dollar also sent major Asian currencies tumbling on Monday.

China’s yuan slid 0.5% on the onshore market to the lowest level in more than 28 months. The offshore yuan fell 0.4%.

The rapid declines prompted the People’s Bank of China to impose a risk reserve requirement of 20% on banks’ foreign exchange forward sales to clients, starting Wednesday. The move would make it more costly for traders to buy foreign currencies via derivatives, which might slow the pace of the yuan’s declines.

Elsewhere in the region, the Japanese yen dropped 0.6% against the dollar to 144. Last Thursday, the Japanese central bank intervened in the currency market for the first time since 1998 to prop up the yen. The yen rebounded slightly following the intervention, but soon resumed the slide.

The Korean won also plunged 1.6% on Monday versus the greenback, falling below the 1,420 level for the first time since 2009.

Stock markets in the region were in a turmoil on Monday, after US stocks sold off on Friday as recession fears grow.

South Korea’s Kospi declined 2.7%, Japan’s Nikkei 225

(N225) dropped 2.4%, and Australia’s S&P/ASX 200 was down 1.4%. China’s Shanghai Composite Index dipped 0.1%.

“Risk sentiments have been dealt a major blow by the Fed’s latest policy action and guidance,” said DBS analysts in a research report on Monday.

The Federal Reserve on Wednesday approved a third consecutive 75-basis-point hike in an aggressive move to tackle white-hot inflation that has been plaguing the US economy.

Even without the Fed action, Europe is looking at a recession due to the war in Ukraine, and China is looking at “a substantially weak growth dynamic” because of a variety of domestic factors, the DBS analysts said.

“Add on top of that a sharp decline in US dollar liquidity and sharply higher US interest rates, the world economic outlook looks particularly precarious,” they added.

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Business

Thought you paid a lot to heat your home last year? Wait until this winter

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New York
CNN Business
 — 

After noticing his electric bills rising earlier this year, Jason Bell opted to go on a budget plan so he could spread the cost over 12 months. He and his husband, Shane, figured that would help them get through the coming winter since their Lake Harmony, Pennsylvania, home is heated by electricity.

It didn’t turn out that way. The couple is now paying $472 a month on the budget plan, up from around $290 a month last winter. That prompted Bell to resume his part-time job as a police officer on top of his full-time position as a state dog warden. The increase, combined with rising costs for food and other essentials, has left Bell debating whether to take on another part-time gig.

“The prices of everything have escalated to the point that a part-time job may not be enough to supplement the increases of bills that we have budgeted,” said Bell, 41, whose husband works as a certified nursing assistant while studying for his nursing degree.

Like Bell, many Americans are bracing for the cold reality that they will have to shell out even more to keep their homes warm this winter.

Families are expected to pay an average of 17.2% more for home heat this coming season, compared to last winter, according to the National Energy Assistance Directors Association. That comes on top of a big price increase last winter, bringing the two-year hike to more than 35%.

Those who heat with natural gas are facing the largest spike, with their cost for the winter heating season expected to soar 34.3% to $952, the association said.

The tab for heating oil is expected to jump 12.8% to $2,115. And those whose heat runs on electricity can expect to see a nearly 7% increase to $1,328.

Some people may not realize that heating their homes will be costlier this winter, especially since gasoline prices had been falling for months.

“In a lot of people’s minds, gasoline and home energy are the same,” said Mark Wolfe, the association’s executive director. “The surprise here is that the prices for heating fuels are going to be popping.”

Energy prices are on the rise in part because of the repeated heat waves that baked much of the United States this summer. That forced utilities to draw down on their natural gas reserves, which are also used to generate electricity, compounding the strain on inventory levels that were already below historical averages.

Oil prices, which spiked last winter after Russia invaded Ukraine in February, are declining but are still higher than they were last year.

Dan Pfoltzer was paying his landlord $150 a month to cover the cost of oil in the small house he rents in Nassau, New York. But over the summer, knowing that oil prices were up, Pfoltzer increased it to $310 a month so he wouldn’t be hit with a big bill over the winter.

“By the time this tank runs out, the money will be there for the next tank,” said Pfoltzer, 71, who lives alone and drives a school bus.

Still, the increased cost means that he won’t be able to pay all of his other bills, including those stemming from cancer treatment a few years ago. To keep his oil usage as low as possible, he plans to turn down the thermostat a few degrees to 67 and bundle up if he’s cold.

On the coast of Maine, Dale Christensen, Sr. and his family are already planning to use electric blankets in their living room and bedrooms this winter in an effort to minimize their heating bills. The 53-year-old is also looking at buying space heaters.

Christensen, a rural mail carrier, is already paying back his landlord for the $900 it cost to fill the oil tank when they moved into their rental house earlier this year. He’s expecting to receive a $1,300 bill later this fall to refill it for the start of winter and likely two more after that during the season.

Heat wasn’t an issue for the Christensens last winter because they lived in an apartment where it was included, though the couple had to make sure their elderly parents, who are on fixed incomes, stayed warm in their homes.

“Every year, we worry about our parents for the heating costs,” he said. “This year is even more stress and strain because, of course, now we have to pay for our heat.”

The family has applied for aid from the Low Income Home Energy Assistance Program, known as LIHEAP, to defray part of the cost of their oil bill. But Christensen isn’t counting on it until he hears whether they are approved.

Making matters worse is there is far less money in LIHEAP’s coffers this year, even though roughly 20 million American households — or 1 in 6 families — are behind on their utility bills.

The American Rescue Plan Act, which Congress approved in March 2021, provided a $4.5 billion boost to the program for this fiscal year, on top of a $3.8 billion regular appropriation. The stimulus money was mainly used to reduce the pandemic-fueled spike in arrears.

Both the House and Senate are looking at providing a $4 billion appropriation for LIHEAP for fiscal 2023, though lawmakers have yet to approve the federal government funding bill for the coming year. The Biden administration has asked for an additional $500 million for LIHEAP on top of what lawmakers are considering, while the energy directors association has called for $5 billion more.

Requests for help have been pouring in, even before the cold weather sets in, state energy directors say.

At this time last year, Energy Services Inc. in Wisconsin was getting a record 300 calls a day to its customer care center. Now, the nonprofit group, the main LIHEAP administrator in the state, is fielding more than 1,000 calls a day. A family of three making up to roughly $52,000 a year is eligible as long as funding is available.

“The need hasn’t gone away. It’s accelerating at such a rapid pace,” said Timothy Bruer, Energy Services’ executive director, who noted that his group ran out of LIHEAP crisis assistance money in fiscal 2022 for the first time in three decades. “Keeping the heat and power on, which is a basic necessity, has become an unaffordable luxury for tens of thousands of Wisconsin’s most vulnerable, at-risk households.”

In Massachusetts, the Worcester Community Action Council typically doesn’t start receiving LIHEAP applications until the temperature starts to fall, said Mary Knittle, director of energy sources at the nonprofit group. But this year they’ve been coming in “fast and furious,” she said, noting that first-time applications for the upcoming winter are up 60% compared to this time last year.

Residents are bracing for higher charges. One energy provider in the state just emailed its customers to inform them that electric bills will be an estimated $114 higher each month for average usage, compared to last winter — an increase of 64%, she said. It cited higher electric supply prices as the main reason.

Even those who don’t heat with electricity will be affected since it typically takes electricity to run home heating systems.

At the same time, Knittle will have far less money to distribute this winter, though the appropriation hasn’t been set yet. Last fiscal year, her agency received $24.6 million in LIHEAP funding, including a $13.9 million boost from the American Rescue Plan that has since been exhausted.

“Anxiety is very, very high,” Knittle said, noting that a family of three making roughly $68,500 is eligible for help in Massachusetts.

Martin Silva, Sr. is already hundreds of dollars behind on both his water and electric bills for the Bethlehem, Pennsylvania, home he shares with his wife. He’s expecting it will cost around $130 a month for natural gas to heat their drafty, old house, up from roughly $100 last year.

A dump truck driver, Silva hopes to repay his debts by cutting back even more on expenses, including trips to see his ill, elderly parents in New York City twice a month. But the mounting expenses have left him feeling “crushed.”

“You can’t get ahead, no matter how hard you try,” said Silva, 51.

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Business

America’s gas prices rise for the first time in 99 days

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New York
CNN Business
 — 

The historic streak of falling gasoline prices is over.

After sinking every day for more than three months, US gas prices edged higher – by a penny – to $3.68 a gallon, on average Wednesday, according to AAA.

That ends 98 consecutive days of falling pump prices, the second-longest such streak on record going back to 2005.

The last time the national average price for gasoline rose was June 14, when it hit a record of $5.02. Prices fell every day since then and Thursday would have marked the 100th straight day of declines.

The plunge in gas prices was driven by a series of factors, including stronger supply and weaker demand as drivers balked at high prices and unprecedented releases of emergency oil by the White House.

Another major factor that had been driving gas prices lower: Growing concerns of a global recession that could hurt demand for gas. People who lose jobs don’t have to drive to work, and even those with jobs pull back on their spending during recessions.

The strong dollar also helped to bring down the price of gas, because crude oil is priced in dollars. That means each dollar can buy more oil than it would if the value of the currency was stable or falling. The dollar index, which compares the value of the greenback to major foreign currencies, is up 15% this year. That also means oil prices are rising faster for countries that don’t use the dollar, which dampens global demand.

At the same time, Russia’s oil flows have held up better than feared despite sanctions and the war in Ukraine. Russia’s invasion of Ukraine, and the sanctions that followed, that helped to spark the steep rise in oil and gas prices. The average price the day of the invasion stood at $3.54 a gallon, just a bit lower than it is today. Russia’s announcement Wednesday that it would increase its mobilization of troops helped lift crude oil futures 2% in global markets.

Gas prices will probably remain relatively close to the current levels in the near term, said Tom Kloza, global head of energy analysis for OPIS, which tracks gas prices nationally for AAA.

“I don’t think you’ll see a major move higher or lower,” he said recently, ahead of Wednesday’s modest price rise. He said competing forces will affect prices in the near term.

US refining capacity remains limited. And OPEC along with other oil-producing nations recently agreed to cut production. Both put upward pressure on prices.

Meanwhile, seasonal factors, such as the end of the summer driving season and the annual end of the US environmental regulations requiring a cleaner, more expensive blend of gasoline during summer months, could help ease prices. Also pushing prices lower: Oil traders remain nervous about the state of the global economy.

“Crude has no speculative investment money behind it right now,” he said.

Wholesale gasoline futures point to sharply lower gas prices by the end of the year, with the possibility that gas under $3 a gallon could be common in much of the country by then, Kloza said. But he cautioned “futures prices are a notorious poor predictor of what the future will bring.”

Although sub-$3 gas remains rare – only 5% of America’s 130,000 gas stations are selling gas for under that price, according to OPIS – relatively cheap gas has become far more common with the months of decline. Nearly one station out of four nationwide is selling gas for less than $3.25 a gallon, and 56% are selling gas for less than $3.50 a gallon.

Cheaper gas has been a major boost to the US economy, easing inflationary pressure and giving Americans extra cash to spend. Since the typical US household uses about 90 gallons of gas a month, the drop in gas prices saves those households about $120 a month from what they had been paying since the peak in June.

A one-cent rise in gas prices is not a meaningful change for most drivers, and prices could slump again as global economic concerns grow along with fears that demand for fuel will keep sinking.

Yet if gas prices begin to rise that could undermine the Biden administration and the Federal Reserve’s efforts to keep inflation in check. Falling gas prices are the sole reason America’s consumer prices have remained steady overall during the past few months after rising sharply in 2021 and the beginning part of this year.

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World

US dollar hits new 20-year high as Russia calls up reservists

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London
CNN Business
 — 

The US dollar climbed to a new two-decade high on Wednesday after Russia said it was mobilizing 300,000 military reserves in an escalation of the war in Ukraine.

In a televised national address Wednesday, President Vladimir Putin announced an immediate partial mobilization of Russian citizens and threatened to use “all the means at our disposal” to defend Russia “and our people.” He also referenced the potential use of nuclear weapons.

The speech pushed the greenback up 0.4% against a basket of major currencies to its strongest level since 2002. Investors often seek safe haven in US dollar assets during times of geopolitical tension.

Oil prices also jumped. Brent crude futures, the global benchmark, gained 2.5%, rising to just below $93 per barrel.

Russian stocks slid 3.5% Wednesday after the announcement, adding to heavy losses incurred Tuesday after Putin threatened to hold referendums to annex parts of Ukraine still occupied by Russian forces. The ruble also dropped nearly 3% against the US dollar.

Asian stocks pulled back. While indexes in Europe initially dropped, they were last flat or slightly higher in morning trade ahead of the Federal Reserve’s latest policy announcement.

The euro initially slumped 0.7% to hit 98 cents ($0.97) against the US dollar, but has since ticked upwards. The currency, used by 19 European countries, sunk below the dollar in late August, shaken by soaring inflation and the energy crisis triggered by Russia’s invasion of Ukraine in February.

The war has added to stress for investors, since it makes it harder to predict when inflation will ease and could push central banks to maintain an aggressive tack for longer.

— Tara Subramaniam and Andrew Raine contributed reporting.

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Business

Stocks close higher ahead of Federal Reserve meeting

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New York
CNN Business
 — 

US stocks alternated between slight losses and modest gains Monday before eventually closing higher ahead of the Federal Reserve’s two-day policy meeting later this week.

The Dow closed up about 197 points, or 0.6%, while the S&P 500 and Nasdaq Composite rose 0.7% and 0.8% respectively.

The bond market reached its highest level in 10 years ahead of what is likely to be a decision by the central bank to raise interest rates by another three-quarters of a percentage point this week. The benchmark US 10-year Treasury note reached 3.5%, its highest level since 2011. The two-year Treasury note reached 3.9%, a 15-year high.

In addition to the Fed meeting, 16 other global central banks, including the Bank of England, are expected to further tighten monetary policy this week. Monetary policy meetings will also take place in Sweden, Norway, Switzerland, Japan, Brazil, Turkey, South Africa, Indonesia, Taiwan, Guatemala, Egypt, the Philippines and other countries.

Correction: An earlier version of this story misstated the number of years in which the bond market had reached its highest level. It was 10.

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US

Railroad strike averted after marathon talks reach tentative deal

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Washington, DC
CNN Business
 — 

Unions and management reached a tentative deal early Thursday, averting a freight railroad strike that had threatened to cripple US supply chains and push prices higher for many goods.

The deal with unions representing more than 50,000 engineers and conductors was announced just after 5 a.m. ET in a statement from the White House, which called it “an important win for our economy and the American people.”

A verbal agreement between the two sides was reached at about 2:30 am ET according to sources, and the final hours were spent getting the details worked out.

That concluded about 20 hours of talks between the unions’ leadership and the railroads’ labor negotiators hosted by Labor Secretary Marty Walsh. They began their meeting Wednesday morning with the clock ticking down to a strike that had been set to start at 12:01 am ET on Friday.

President Joe Biden called in personally to talk to negotiators around 9 pm ET Wednesday, according to a person familiar with negotiations. Biden stressed that catastrophic harm could come to families, businesses and communities if the rail system shut down. Sources within the unions were giving Biden’s call credit for helping to get the deal completed without a strike.

“We’re very proud of what was accomplished,” said Jeremy Ferguson, president of the conductors union and one of the leaders involved in the marathon session. He thanked Biden and Labor Department officials involved in the talks for the deal.

“Everybody pulled together to make sure that we could get our members what they deserved,” he said.

“This is the quality of life issue we have been trying to get for our members since bargaining started,” said Dennis Pierce, president of the engineers’ union and the other union official involved in the talks.

The agreement does not mean the threat of a strike has gone away entirely. The deal needs to be ratified by union members. But it’s good news for a wide range of businesses that depend upon the freight railroads to continue to operate, and for the wider US economy. About 30% of the nation’s freight moves by rail.

The deal gives the union members an immediate 14% raise with back pay dating back to 2020, and raises totaling 24% during the five-year life of the contract, that runs from 2020 through 2024. It also gives them cash bonuses of $1,000 a year.

Few other details of the deal have so far been made public. But the statement from Biden indicated that the major sticking point – involving work rules and scheduling issues – that had brought the country within a day of its first national rail strike in 30 years had been addressed in the unions’ favor.

“It is a win for tens of thousands of rail workers who worked tirelessly through the pandemic to ensure that America’s families and communities got deliveries of what have kept us going during these difficult years,” said Biden in a statement. “These rail workers will get better pay, improved working conditions, and peace of mind around their health care costs: all hard-earned.”

The dispute was about staffing shortages and scheduling rules that union leaders said had brought their membership to a breaking point. The unions say the railroads have been requiring their members to be “on call” and ready to report to work on short notice as often as seven days a week. Leadership of the two unions had said their members would not accept a contract without changes to those work rules.

Biden described the deal as “also a victory for railway companies who will be able to retain and recruit more workers for an industry that will continue to be part of the backbone of the American economy for decades to come.”

It is an important victory for Biden, who faced nothing but bad choices if a deal had not been reached. Backing Congressional action sought by the business community to impose a contract on workers would have angered his supporters among the unions. Letting the work stoppage play out risked massive economic consequences just ahead of the midterm elections.

Railroad workers are governed by a different labor law than most workers, one that limits their freedom to strike and allows for more governmental intervention. In July, Biden issued an order that prevented a strike at that time and created a panel, known as a Presidential Emergency Board, to try to find a solution to the dispute.

It also imposed a 60-day cooling off period during which the unions could not strike and management could not lock out workers. That cooling off period was due to end early Friday.

Biden could not have ordered the railroads to keep operating once the cooling off period ended Friday. Only Congress could have acted to get the unions back to work if a strike had begun.

With a wide range of business groups calling on Congress to act, Republicans had prepared legislation that would have given railroad management the deal they wanted. But Democrats were opposed to taking such action.

A union source said that Democrats’ refusal to side with management had been a key to the talks.

“Senate leaderership not acting gave space for these negotiations,” said the union source. He said that Walsh had “hung in” with the union during the negotiations.

“it was a slog yesterday,” he said, with lots of back and forth.

“Our people were not going to give up,” said the source. “Our people would have gone on strike” if a deal was not reached by the Friday deadline.

The Association of American Railroads also praised the deal and thanked the Biden administration, as well as the unions themselves, for their role in reaching an agreement.

The pay raises and bonuses had been recommended by a presidential panel charged with trying to find a solution to the impasse in negotiations at that time.

Those terms were lucrative enough for most of the rail unions to agree to tentative deals in recent weeks, the engineers and conductors, who were faced with work and scheduling rules that did not apply to others, refused to sign on without relief on the scheduling issue.

Shares of the major freight railroads – Union Pacific

(UNP), CSX

(CSX) and Norfolk Southern

(NSC) – were between 1% and 3% higher in premarket trading on the news. Shares of Berkshire Hathaway

(BRKA), which owns the fourth national freight railroad, Burlington Northern Santa Fe, was narrowly higher as well.

The threat of the strike had already started to disrupt operations. Amtrak, whose 22,000-mile system is almost exclusively over freight rail lines outside of the Northeast Corridor, had already canceled all long-distance trains. Amtrak said it “is working to quickly restore canceled trains and reaching out to impacted customers to accommodate on first available departures.” It said it will provide update soon as information becomes available.

The railroads had already stopped accepting shipments of hazardous and security-related materials a week ago. And Wednesday some of the railroads had stopped accepting shipments of crops from the agricultural industry.

Customers of the railroads who had been braced to major problems expressed relief that a strike had been avoided.

“This is fantastic news for the economy,” said Eric Hoplin, CEO of the National Association of Wholesale Distributors, in an appearance on CNN’s New Day Thursday. “My phone has been ringing off the hook over the last 48 hours, talking to distribution leaders from across the country, who were spelling out what some of the catastrophic consequences could have been to America’s supply chain and the economy.”

The US economy avoided several economic blows, including a potential spike in gasoline prices that could have undone the 26% decline in prices at the pump over the last three months. Although refineries get most of their oil through pipelines and ship out most of the gasoline they produce the same way, they still needed railroad tank cars to deliver other materials to refine gasoline and to take away waste products.

Higher prices for food and cars and a shortage of consumer goods well into the holiday shopping season were likely if there had been a prolonged strike, according to business leaders and economists.

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Business

Railroad strike 2022: Intensifying efforts to avert crippling strike go overnight

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New York
CNN Business
 — 

Talks aimed at averting a freight railroad strike that could cripple US supply chains continued overnight into Thursday. If the strike goes ahead early Friday, it could send prices higher for goods from gasoline to food to cars.

Two rail unions, representing more than 50,000 engineers and conductors who make up the two-person crews that make the trains run, are threatening the first rail strike in 30 years as of 12:01 am ET Friday. Union leaders and the railroads’ labor negotiators began meeting with Labor Secretary Marty Walsh at his Washington, DC, office at 9 a.m. ET on Wednesday.

The talks were still underway 18 hours later at 3 a.m. ET Thursday, a Labor Department spokesman told CNN.

White House press secretary Karine Jean-Pierre told reporters aboard Air Force One on Wednesday that “all parties need to stay at the table, bargain in good faith to resolve outstanding issues and come to an agreement. A shutdown of our freight rail system is unacceptable outcome for our economy and the American people, and all parties must work to avoid just that.”

The Labor Department asked both management and labor not to comment on the state of the talks, and neither responded to a request for comment.

Nearly 30% of the nation’s freight moves on the nation’s railroads. Many vital sectors — including oil refining, agriculture, auto and other manufacturing, plus the imports of consumer goods — depend on the railroads to operate. While a short strike would have a limited effect, economists say a strike lasting a week or more could have severe economic consequences.

The railroads announced last Friday that they had stopped accepting shipments of hazardous material, including fertilizer, as well as security-related materials, due to concerns that trains will immediately stop wherever they are once the strike begins. On Wednesday many stopped accepting shipments of agricultural products.

Members of Union Pacific

(UNP) train crews were informed by the railroad late Tuesday that if they’re in the middle of a trip when the strike begins at 12:01 am EST Friday they should park and secure their train and wait for transportation.

Freight railroad Norfolk Southern

(NSC) is planning to use management employees to operate a limited number of trains in the event of a strike Friday. That could allow critical materials to reach their destinations, like chlorine to water treatment plants.

“We’ll have some capability. Not a very good capability, but we’ll have some if it comes to that,” Norfolk Southern spokesman Connor Spielmaker told CNN Business Wednesday. “How we’re going to utilize them is still being planned out.”

Spielmaker said the railroads still hope to reach a deal with the unions and avert such a situation. Freight railroads CSX, BNSF and Union Pacific declined to say if they’ll be using management employees to operate trains in the event of a strike.

The threat of the strike could snarl commutes across the country. Many Amtrak and local commuter trains travel on railways owned by freight companies. If striking engineers park their trans midroute Friday morning, commutes could be disrupted. Amtrak on Wednesday said it canceled all long-distance trains starting Thursday, and it announced 10 additional routes would be shut down Thursday evening. Amtrak said additional delays or cancellations are possible.

The effort to avert a strike is a major test for President Joe Biden and his White House, which has positioned itself as one of the most pro-labor administrations ever. At the same time, it also wants to avoid any potential shocks to the economy, especially with the midterm elections just seven weeks away.

Railroad workers are governed by a different labor law than most workers, one that limits their freedom to strike and allows for more governmental intervention. In July Biden issued an order that prevented a strike at that time and created a panel, known as a Presidential Emergency Board (PEB), to try to find a solution to the dispute. It also imposed a 60-day cooling off period during which the unions could not strike and management could not lock out workers.

But Biden cannot order the railroads to keep operating once the cooling off period ends Friday. Only Congress can act to keep workers on the job if there is no deal. Sen. Richard Durbin, the second highest ranking member of the Democrats’ Senate leadership, told CNN this week that Congressional action is unlikely, despite business groups calling on Congress to act. The Senate is in recess on Friday, and many members of Congress are flying to London to attend Queen Elizabeth’s funeral.

The PEB’s recommendations called for workers to get an immediate 14% pay raise, plus back pay dating back to 2020. It also called for a 24% increase in pay during the five-year life of the contract from 2020 to 2024, and cash bonuses of $1,000 a year.

But it did not address the staffing shortages and scheduling rules that have become the key sticking point in the dispute. The engineers’ and conductors’ unions say the railroads are requiring their members to be “on call” and ready to report to work on short notice as often as seven days a week. Leadership of the two unions say their members would not accept a contract without changes to those work rules.

There are more than 50,000 other unions members at the railroads who maintain tracks, operate signals, dispatch trains and work as mechanics, among other jobs. But they are not subject to the same work rules, and those unions already accepted tentative deals with the railroads based on the PEB’s recommendations.

One of those unions, the Machinists, announced Wednesday that its members voted to reject its tentative labor deal. There are about 5,000 members of the union at the railroads working as locomotive machinists, track equipment mechanics and facility maintenance personnel.

Their rejection of the proposed contract is not an immediate setback in efforts to avoid the strike. The union said it will not go on strike before the end of the month, as it tries to reach a change in the tentative agreement that its members will accept. But it is a sign of the complexity the railroads are facing in reaching deals with a dozen different unions that are also acceptable to rank-and-file membership.

Two other unions, the Brotherhood of Railway Carmen and the Transportation Communications Union, which between them have 11,000 members, ratified deals on Wednesday.

– CNN’s Matt McFarland, Ali Zaslav, Kate Sullivan, Phil Mattingly, Maegan Vazquez and Andrew Millman contributed to this report

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Business

It’s so hard to get a house right now, people are giving up on buying

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Buying a home of her own became a priority for Kelly Robinson during the pandemic, as she began to feel cramped in her Indianapolis apartment.

“Last fall having to stay home so much, that really made me decide that it is time to buy a house,” she said. Among the top amenities she was looking for: outdoor space and more privacy.

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Further motivated by record low interest rates, Robinson set her sights to buy in the spring when she expected more properties would be available. It would also give her time to get her finances in order.

“But by the time I got pre-approved and started seriously looking at homes, the market got crazy” she said.

Robinson set a budget for $250,000. But in her market – the suburb of Greenwood – homes began selling within days, with as many as 10 competing offers, and sometimes going for $100,000 over the asking price.

“‘Crazy’ to me is not getting an inspection because you want to be number one on the homeowner’s list,” she said. “That is a risk I’m not wiling to take. And having to make an immediate decision the day you see it? That is another thing that makes me really nervous.”

So she decided to put the home search on ice and continue renting.

Courtesy Kelly Robinson

Kelly Robinson wants to buy a home outside of Indianapolis, but said the market is too aggressive now and has decided to wait.

“There are so many aggressive shoppers out there and I’m not willing to compete with that,” she said. “I need to be happy today, but I also want to be happy a year from now. If I overpay or don’t get an inspection, that will cause bigger issues down the road.”

Up against all-cash offers they can’t match and a feeding frenzy on each house they visit, many buyers are dropping out of the market and opting to wait it out and reevaluate their options.

The housing market was on fire this spring, leaving many would-be buyers burned out. Low mortgage rates have been fueling demand, but there’s also been a record-low inventory of available properties. That has pushed home prices to record highs, with some homes attracting multiple all-cash offers, and others selling for $1 million over the list price.

But home sales have fallen for the fourth month in a row, on a monthly basis, partially because there aren’t enough homes to buy, but also because the competition and higher prices are turnoffs to those who can’t afford to compete, according to a recent report from the National Association of Realtors.

“Clearly sales are moving down partly due to inventory shortage, but the affordability is squeezing some of the buyers out of the market,” said Lawrence Yun, NAR’s chief economist. “Homebuyers qualify for a mortgage based on their income, but with prices rising 20% or higher, it is simply pricing them out of the market.”

Only 32% of consumers believe it’s a good time to buy a home, according to Fannie Mae’s Home Purchase Sentiment Index for June. That’s a record low. High home prices were cited as the main reason people were pessimistic toward home buying. That sentiment was particularly strong among renters looking to buy for the first time, said Doug Duncan, senior vice president and chief economist at Fannie Mae.

“While all surveyed segments have expressed greater negativity toward homebuying over the last few months, renters who say they are planning to buy a home in the next few years have demonstrated an even steeper decline in homebuying sentiment than homeowners,” he said. “It’s likely that affordability concerns are more greatly affecting those who aspire to be first-time homeowners than other consumer segments who have already established homeownership.”

Still, even in the face of tough buying conditions, many would-be homeowners remain intent on purchasing now, Duncan said, especially with mortgage rates still relatively low and a down payment ready to go.

“I’m encouraging my buyers to stay the course,” said Corey Burr, a senior vice president at TTR Sotheby’s International Realty in Washington, DC. “They need to have a persistent confidence their dream home will become available and they can buy it. Just because it is difficult doesn’t mean it is impossible.”

It’s true, buying a home is not impossible. Plenty of people are doing it. But more people have tried and still aren’t able to buy. And there are limits to how much time and emotional energy buyers are willing to put toward being shut out of the market.

First-time homebuyers Steven and Laura Andranigian planned to move from their home near Monterey, California, to the Coachella Valley in southern California, where they have family and Laura got a job teaching elementary school.

Courtesy Steven Andranigian

Steven and Laura Andranigian were ready to be first-time homebuyers when they moved to California’s Coachella Valley. But after house hunting for months, they have decided to rent instead.

Looking for a home that costs less than $500,000 has them chasing properties as soon as they are listed. Many times, the houses are gone before they can even make an offer. Twice they’ve been laughed at for asking for time to get a pre-offer inspection. They’ve lost out on five bids so far.

“You get told, ‘Here are the 10 things you need to do to buy a house’” he said. “We did 20 of those. And it is still like, ‘Well, you’re not able to participate.’ Because there are people who are flush with cash who also want to buy here now.”

They had been saving to buy a home for years and have been looking for months. But now they realize that their purchase options are to buy something that needs work in an area they don’t want to live, to wait for a new construction home and pay a premium for it, or to buy something over their budget.

“The only way to buy [a home that costs] over $500,000 is for my in-laws to gift or loan us the difference,” said Steve Andranigian. “But that seems excessive for people who have stable, good jobs to get $200,000 from family. Even when you’ve done everything right you still need more?”

The Andranigians have decided to abandon their home search.

“We decided to rent while we wait for the housing market to settle or resolve itself,” Steven said.

But getting a rental isn’t going to be easy either. The most galling turn of events, he said, would be to have to rent a home they had put an offer on before.

They’ve already seen some homes that they bid on come back to market as rental homes right after closing. Even though a property like that would be the kind of home they would love to live in, it would pour salt in the wound to have to rent it after trying to buy it, he said.

“To have to talk to the landlord, and hear they were sitting on a ton of cash and they wanted to turn it into a rental while we are just trying to buy our first home would be really hard,” he said. “But to find out the landlord is a hedge fund and it is owned by some faceless company? That may be worse. We don’t want to rent the place. We want to buy.”

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