The Federal Reserve says it will accelerate the wind-down of its bond-buying program, the biggest step the central bank has taken in reversing its pandemic-era stimulus. Here’s how tapering works, and why it sends markets on edge. Photo illustration: Adele Morgan/WSJ
Category Archives: Economics
Housing: Why Rents Are Rising In The U.S. (CNBC)
Fresh numbers from the fall of 2021 suggest that rents will increase at a rapid pace in the coming years. That’s a problem for Americans; many spend 30% or more of their income on rent. A decade-long slowdown in house building is coming to a close, which could help renters.
But the new developments in construction are generally for high-end and luxury apartment units. Experts say the market conditions are pushing people further away from their jobs and weighing on the economy writ large. Market indicators suggest that rent hikes are coming in 2022.
Average rents for a one-bedroom apartment in the booming suburbs of Phoenix, Arizona, have more than doubled year over year, according to data from Apartment Guide. Meanwhile, rents in Manhattan have reached fresh records as life returns to the cities, according to Zumper.
The problems aren’t confined to the usual suspects, however. Rents for single-family homes across the country jumped more than 9% on average in August 2021 from the prior year, according to a report from the analytics firm CoreLogic.
Rents are moving fastest in the buzzy enclaves across the South and West. For Maria Arredondo, a teacher based in Austin, Texas, a sudden rent hike of nearly $400 forced her to make a move. “If I had signed the lease … it would be taking a lot of my savings. And so I decided to move to a new building, losing about 150 square feet,” she told CNBC. Mark Zandi of Moody’s Analytics said the strains on the housing construction market were building well before the pandemic took hold in the states.
“There’s a lot of evidence that the lack of housing closer to where the demand is and urban cores is having a meaningful negative consequence on long-term economic growth.“ Generous monetary and fiscal policies have juiced demand for goods and services coming out of the pandemic. All that extra money sloshing around the economy is bubbling up into the rent. The fresh demand is giving investors a reason to jump into the market.
Experts say that’s boosting desperately needed supply. But there’s a catch: The homes being built are priced into the high end of the market. As a result, the evidence suggests that renters will be paying more for shelter this decade.
Previews: The Economist Magazine – November 27
Infographic: Renewable Energy’s Falling Costs
Analysis: Can The U.S. Debt Keep Increasing Forever?
As lawmakers prepare for another hike in the U.S. debt ceiling, WSJ’s Greg Ip explains why it’s economically feasible for the U.S. to keep borrowing, as long as interest rates stay low.
Analysis: Higher Inflation – Is It Cause For Concern?
Inflation rates have been rising all over the world, surprising many economists. While the rich world is paying higher prices for durable goods such as cars, in emerging markets soaring food prices are a greater worry.
What is causing this unexpected bout of inflation, and will it last?
Video timeline: 00:00 – What’s happening with inflation? 00:53 – What is inflation? 01:42 – Inflation rates are rising 02:47 – How much is too much inflation? 03:13 – Inflation in the rich world 05:19 – Inflation in emerging markets 06:04 – How to curb inflation 07:27 – Why you shouldn’t worry Find The Economist’s briefing on inflation: https://econ.st/3ofFxtJ
Analysis: China’s New Reality, London Stock Market, Ford & GM EV’s
A selection of three essential articles read aloud from the latest issue of The Economist. This week: Xi Jinping’s campaign against China’s capitalist excesses, how to revive Britain’s stockmarket (10:11), and electric motor city (18:33).
Analysis: The Future Of Germany Is In Its Cars
As the election approaches, Germany’s carmakers will face the same challenges as its new leaders: a need to innovate, tackle climate change and reassess its trade relationship with China. How this world-renowned motor industry navigates the road ahead could tell a lot about Germany’s future.
Video timeline: 00:00 - Germany faces numerous challenges 00:49 - Can Germany’s cars reveal its future? (or whatever the title is) 02:13 - Is Germany too reliant on trade with China? 03:46 - Germany’s reluctance to digitalise 05:09 - The race to go electric 06:41 - The future of electric cars 08:17 - What’s in store for Germany’s new leader?
Reviews: How To Create Sustainable Business (MIT)
Analysis: Is America In Another Housing Bubble?
Home prices in the U.S. have climbed at a record pace during the pandemic. The median home price reached over $363,000 in June 2021, a 23.4% increase from 2020. Many of the houses are being sold above their asking price, often entirely in cash with bidding wars becoming the new norm to weed out the competition. So is America currently in another housing bubble and what are the signs that can help investors predict an oncoming crash?
Boomers Daily 