Economy

NEW YORK (Reuters) – If you want a better financial situation for yourself, here is a surprisingly simple piece of advice: Ask for it.Want a lower interest rate on your credit card? Ask. Want bank fees waived? Ask. Want a lower medical bill? Ask.That is the advice of LendingTree chief credit analyst Matt Schulz in his new book, “Ask Questions, Save Money, Make More.”For a lot of different reasons – culture, habit, anxiety – we do not like asking people for things. And it is costing us money.“The worst thing that can happen is that somebody tells you no,” says Schulz. “But if they say yes, great things can happen.”Consumers tend to think that all the costs we encounter in life are forever fixed, but, in reality, very few of them are. Just one example: 76% of those who asked for a lower credit card rate got one, according to a LendingTree survey.Getting better deals every day requires negotiation – and that is a skill few have developed. Here are a few tips to give yourself a financial makeover by asking the right questions.NOTCH SOME BIG WINSAs satisfying as it is to get a small bank fee waived, what is really going to transform your financial life is most people’s biggest monthly expense – housing.Getting a big win here could mean tens of thousands of dollars, so be thorough, disciplined and creative about saving money on a mortgage. That could mean anything from consulting multiple lenders and playing offers against each other, to “buying points” (paying a fee up-front for a lower rate), to reducing closing costs, to getting a shorter-term loan, to considering adjustable-rate products.NEGOTIATE EVERYTHINGSome things are obviously negotiable (like used cars), while others are not. One area people do not normally think of as ripe for haggling: Medical bills. Since a doctor’s office is such an intimidating environment, we assume that everything on the bill is 100% correct, when “in truth it’s often not,” Schulz says.Review the bill and make sure it is accurate, he advises. The difference between one code and another on a medical bill can be a huge amount of money.Another avenue for negotiating medical discounts is simply paying cash – it saves healthcare providers from the challenge of dealing with insurance companies.USE SCRIPTSIn many cultures around the world, haggling is an art form. In American society, not so much – which is why we are so nervous and clumsy about it.To get you past that anxiety, Schulz has included pre-written scripts for almost every financial encounter you can imagine: What to say, how to react to their response, and so on.With that kind of cheat sheet, you can get over your nervousness, practice and eventually get to a skill level where you do not need those scripts anymore.BOOST YOUR COMPENSATIONYou should not feel ashamed about asking for what you are worth. And total compensation does not have to be just about a dollar amount – it could be about increased benefits, vacation days, tuition reimbursement or other perks.Remember that you are not powerless in this situation. If you are a valued employee who is good at their job, the cost of finding and training someone to replace you would be significant.And if asking for more salary freaks you out, run through it at home first with friend or relative. “Practice really helps,” Schulz says. “It’s a bit like exercising, building stronger muscles, and getting your reps in. That will make things easier on you.”BE NICEThe old stereotype is that negotiating is a zero-sum game, where one person wins, the other loses, and you have to act hyper-aggressive to bulldoze your opponent. All of that is false.After all, if you are a customer-service rep who is yelled at dozens of times daily, are you more likely to help someone who is cursing you out, or aid someone who is treating you with kindness and respect?The concept of “lifetime value” means that everyone can come out with a win, Schulz says. You get something waived, and they retain a loyal customer who will likely make them money down the road. The bottom line? Ask away. Once you do hone those abilities, a whole lot of financial possibilities open up. Says Schulz: “People have way more power over their money than they think they do.” More

NEW YORK (Reuters) – Federal Reserve officials are keen to start debating their balance sheet run-down endgame, but benign market conditions, recent central banker comments and bond dealer estimates now suggest the process may run longer than previously thought.One factor driving the rethink is a puzzling bout of better-than-expected liquidity conditions in U.S. short-term financing markets that has for now at least forestalled a run of volatility that some on Wall Street had expected to force the Fed’s hand into stopping the balance sheet shrinkage effort known as quantitative tightening.On top of that, minutes of the Fed’s most recent meeting in January showed some policymakers interested in an extended slowdown in the pace of shrinkage – a tapering – that could actually allow QT to proceed for a longer period. And bond dealers also now project that QT will not end outright until next year rather than late this year and leave the Fed with an even smaller balance sheet.How this plays out in the months ahead is a secondary – but still important – obsession on Wall Street to the guessing game over when the Fed starts rate cuts. That’s because the Fed’s only previous QT effort in 2018-19 ended in a market ruckus that no one wants to see repeated.”At the moment, the key concept in both rate and balance sheet policy is discretion,” said Jonathan Cohn, head of U.S. rates desk strategy at Nomura Securities International. “Without evident pressure in funding markets, the Fed has discretion regarding when it slows QT.”The Fed scooped up about $4.6 trillion of bonds during the COVID-19 pandemic as one of its planks alongside near-zero interest rates to prop up the economy through the health crisis. The effort to add liquidity to the financial system and keep it running smoothly more than doubled the size of its overall balance sheet to roughly $9 trillion.When a surge in inflation forced the central bank to start jacking up interest rates in March 2022, officials soon after started winnowing down the size of its stash of Treasuries and mortgage-backed securities, allowing up to $95 billion a month to mature from the balance sheet without being replaced.Total Fed bond holdings are now down to about $7.1 trillion and the full balance sheet has fallen to just below $7.7 trillion.SOFT FUNDINGA combination of larger Treasury debt issuance, higher interest rates and Fed QT had been expected to continue to drain liquidity this year, potentially inducing volatility in short-term funding markets, but so far that’s not happened. In fact, the borrowing rate in a key repurchase agreement (repo) market, where banks and other market players swap cash for Treasuries, has declined in recent weeks.”There’s been soft funding recently, overnight rates have been a little softer,” said Scott Skyrm, executive vice president of money market trading firm Curvature Securities.Just why remains unclear.”We don’t have a good answer for it, we’re asking ourselves the same question,” said Joe DiMartino, head of the repo desk at Clear Street. “There just seems to be way more cash than anticipated over the last several weeks.”A key upshot is usage of the Fed’s overnight reverse repo facility (ONRRP), which had become a favored place for Wall Street firms to park excess cash and a touchstone for Fed officials for market liquidity levels, may hold up more than expected. Its daily usage shrank over the last year from more than $2 trillion to an average of about $540 billion through February.As cash drains from ONRRP, still-abundant bank reserves at the Fed are expected to start falling, leading to a tightening in overall financial system liquidity that the Fed wants to keep under control by tapering QT.”The reality is that the drive to lower balances within the reverse repo facility has a little bit of upward pressure on it, and it won’t necessarily get to zero anytime soon,” said Jerome Schneider, leader of short-term portfolio management and funding at bond giant PIMCO. 2025 NOW EYED FOR QT ENDLast week’s minutes from their latest meeting showed an eagerness by many Fed officials to get moving on planning the QT endgame. That said, the minutes showed “some participants” eyeing a plan to start a prolonged taper process that would allow QT to continue at a diminishing pace even after rate cuts begin later this year.On the heels of that, the release late last week of the survey of primary dealers conducted ahead of each Fed policy meeting showed firms also expect a lengthy tapering operation starting this summer. They have pushed out estimates for when QT ends entirely to January or February 2025 from the fourth quarter of 2024 as estimated in the survey ahead of December’s Fed meeting.Moreover, the latest dealer survey pegs the Fed’s bond portfolio balance at $6.5 trillion at the end of QT – $250 billion less than estimated previously. And they also see more room for ONRRP levels to decline before QT ends – to $125 billion versus $375 billion in the December survey.Still, most Fed officials recognize the uncertainty ahead of them and want to proceed carefully so as not to repeat the events of five years ago.Philadelphia Fed President Patrick Harker last week said he favors proceeding “methodically” while watching for market tightness to flare up. Atlanta Fed President Raphael Bostic told CNBC earlier this month that “we just want to make sure our actions don’t cause disruptions.” That said, some in the Fed are less worried about smooth moves. Jeffrey Schmid, new president of the Kansas City Fed, said Monday: “I don’t favor an overly cautious approach to balance sheet runoff for the sake of avoiding any volatility in interest rates. Instead, some interest-rate volatility should be tolerated as we continue to shrink our balance sheet.” More

WASHINGTON (Reuters) – A divided and chaotic U.S. Congress will make a last-minute attempt to avert a partial federal government shutdown on Thursday, less than 48 hours before funding for some federal agencies is due to expire.The Republican-controlled House of Representatives is expected to take up a short-term stopgap measure that would extend by one week federal funding that expires at midnight on Friday (0500 GMT Saturday) and set a March 22 funding deadline for other government agencies.But the effort to get the measure through the House and Democratic-led Senate and onto President Joe Biden’s desk in time could face hurdles, especially in the Democratic-led Senate, where some hardline Republicans are expect to demand amendment votes in exchange for fast-tracking the bill. The stopgap, the fourth needed to keep federal agencies open in fiscal 2024, which began Oct. 1, is intended to give the House and Senate time to pass 12 appropriations bills to fund the government for the remainder of the fiscal year. About two months have passed since Republican House Speaker Mike Johnson and Democratic Senate Majority Leader Chuck Schumer agreed on a $1.59 trillion discretionary spending level for the fiscal year. House and Senate leaders on Wednesday reached agreement on a slate of full-year appropriations bills to fill in the details.Representative Tom Cole, a senior Republican appropriator, expected the stopgap to pass the House without difficulty. “Congress has already voted not to shut down,” Cole told Reuters. “People want to keep working.” But the measure, known as a continuing resolution or “CR,” already faces hardline opposition in the House and could need a majority of House Democratic votes for passage.That could mean problems for Johnson, who has been pressured by hardline Republicans to use a shutdown as a bargaining chip to force Democrats to accept conservative policy riders. “We’re doing what the Democrats want to do, so that it’ll pass the Senate and be signed by the White House. And that’s not a win for the American people,” said Representative Bob Good, chairman of the hardline House Freedom Caucus.Passage of the CR on Thursday would give the Senate less than two days to enact the measure and require Schumer, the top Democrat in Congress, to win an agreement from Senate Republicans to circumvent a web of parliamentary rules and procedural hurdles that could take a week to navigate.Senator Rand Paul, a Republican maverick with a track record for delaying must-pass legislation before, said he and other hardliners could consent to such a deal if allowed to offer amendments to reduce spending and the federal debt. “We won’t just say we’re going to roll over and let them continue to ruin the country,” Paul told Reuters.Major ratings agencies say the repeated brinkmanship is taking a toll on the creditworthiness of a nation whose debt has surpassed $34 trillion. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.This article is an on-site version of Martin Sandbu’s Free Lunch newsletter. Sign up here to get the newsletter sent straight to your inbox every ThursdayLast week I asked if US politics was still about “the economy, stupid”, highlighting the mismatch between solid real wage growth among the lower paid and the weak economic sentiment/support for President Joe Biden. Since then, James Mackintosh (formerly of this parish) wrote to me to point out that poorer groups spend more of their money on food and rent, and their costs rose more than overall consumer prices. Using inflation rates specific to income groups may show a lower real wage rise than the numbers I highlighted last week. In the same vein, a new research paper co-authored by Lawrence Summers returns to an old debate by pointing out that higher interest rates are themselves a part of the cost of living. The authors show that if we use alternative inflation measures that incorporate borrowing costs better, the dissatisfaction of consumers is more understandable. The exposure to rising rates, too, may vary by income level.The question these observations raise is a difficult one: which inflation rates should monetary policy try to keep low and stable? The answer must depend on why we care about inflation in the first place. That’s a question for another column, for today I look at another issue where decomposing the aggregate data matters a lot for how to think about conclusions: the productivity divergence between the two sides of the Atlantic.Both the US and EU economies have performed much better than expected in the recovery from the pandemic, despite the energy crisis, geopolitical risk and monetary tightening. But their achievements are very different. In the US, overall growth has powered ahead, but labour force participation has not recovered to the pre-pandemic rate (the rise in raw jobs numbers comes down to population growth). In the EU, the employment rate is at record highs, including in countries often seen as chronic failures in getting people into work — but growth has stagnated. Together, these describe a productivity divergence. Labour productivity in the US has grown much faster than in the EU. Why has this happened? The answer matters for how you judge the policy choices on both sides of the Atlantic — in particular, Washington’s much bigger fiscal stimulus and ongoing deficit spending, as well as its tolerance of high unemployment in the pandemic (coupled with historically high unemployment benefits) as against the European preference to subsidise temporary leave schemes that maintained employment relationships.But to be in a position to ask why, we better look first under the bonnet of the US productivity mini-miracle. The US Bureau of Economic Analysis produces quarterly labour productivity data — real output per hour worked — for the major economic sectors. These figures show that in the four years from the end of 2019, real output per hour worked in the US non-farm business sector rose 6.4 per cent. Employment increased 4 per cent, while average hours fell 1.3 per cent — for a total expansion in output of 9.2 per cent and output per worker rising by about 5 per cent.How much of this was due to manufacturing, the sector that gets so much attention? Factories only employ one-tenth of the whole non-farm business sector, so they need outsized productivity growth to move the aggregate needle. But as it happens, manufacturing has been no success story in the post-pandemic recovery. Labour productivity only grew 0.9 per cent in four years, and even that meagre gain was offset by a fall in total hours worked. (Durable manufacturing performed worse — with an outright fall in productivity, albeit from a higher level — than non-durables.) The magic, then, must largely have happened in services. It’s harder to find fine-grained and up-to-date data on output per hour worked for narrower sectors. But we can combine the BEA’s more detailed sector-level real value added data (which goes up to the third quarter of 2023) and sector-level employment numbers to measure output per worker (not per hour) in the four years to September 2023. The numbers below refer to productivity in that sense.How much of the productivity boom is down to reallocation from less productive to more productive sectors, as many of us hoped that the “Great Resignation” would spur? Not much, it turns out — at least in terms of shifts between large sectors. The chart below shows the shift in employment shares (in percentage points of total employment) of each large sector arranged from most to least productive. While there was a small movement into the highly productive financial activities sector, there were also shifts into less-than-average output per worker sectors such as educational and health services. Overall output per worker was, however, boosted by shifts out of low-productivity sectors, such as retail trade and leisure and hospitality. But it didn’t help that employment shares also fell in above-average productive sectors such as manufacturing and rose in below-average ones such as construction.On my back-of-the-envelope estimate, these sectoral shifts only boosted output per worker by a quarter of a per cent or so. So at a broad sector level, the hopes of a productivity-enhancing reallocation are not borne out. But that tells us little about reallocation between companies in the same sector (and between subsectors), so the jury is still out. Free Lunch readers may already have drilled down to more detailed numbers — send any research my way.I have charted the within-sector productivity improvements (measured as output per worker) below. The biggest productivity jumps took place in information services (media, telecoms, data processing) and professional services, where real value added per worker leapt by 30 and 15 per cent respectively. Most other service sectors largely held up the all-economy productivity growth rate, with significant exceptions in wholesale trade and transportation/warehousing. These were, of course, the sectors that went on hiring sprees as the home delivery boom took off — and have clearly struggled to put their new workers to work productively.The sector with the fastest output-per-worker growth may not, of course, be the greatest contributor to the overall productivity performance, if the sector is not very big: information services employ less than 2 per cent of workers. So the final chart shows the absolute contribution of each large sector to the US’s four-year productivity growth. The picture is unequivocal. The productivity surge happened above all in knowledge-intensive industries: professional and business services, education and health, and information services. These are, of course, the ones that can most easily exploit remote-working technologies. They also seem to be the ones that have added the most to their physical capital stock. So investment works and markets respond to demand. Who would have thought? Other readablesYou are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Numbers newsBillions in annual profits generated by immobilised Russian foreign exchange reserves should be used to buy weapons for Ukraine, says European Commission president Ursula von der Leyen.Recommended newsletters for youChris Giles on Central Banks — Your essential guide to money, interest rates, inflation and what central banks are thinking. 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Anthony Mark Patterson confessed to having contributed to nearly 3,000 trades that the prosecutor alleges were fraudulent, and to attempted fraud worth around 500 million crowns, the broadcaster said. Patterson is charged with participating in a scheme in which the Danish state lost more than 9 billion crowns between 2012 and 2015.The “cum-ex” schemes, which flourished after the 2008 global financial crisis, involved banks and investors swiftly dealing shares around dividend payout days, blurring stock ownership and allowing multiple parties to claim tax rebates in several countries including Germany and Belgium.Prosecutor Marie Tullin told the court that the fraud happened via tax refunds to U.S. pension plans that were not eligible to pay dividend tax in Denmark. She said nearly all of the tax refunds ended up with Solo Capital Partners, a London-based hedge fund founded by the main suspect Sanjay Shah, and claimed that the defendants never actually owned the shares. Patterson’s defence lawyer Henrik Stagetorn told the court that his client had received 100 million crowns for his role in the trading scheme, DR reported.Stagetorn in mid-February said Patterson had planned to confess. Patterson had initially denied wrongdoing.Shah, whose hearings are due to begin on March 11, was also present at the court on Thursday, Ritzau news agency reported. Shah was extradited to Denmark from Dubai in early December and is still held in detention. He denies wrongdoing. ($1 = 6.8727 Danish crowns) More

HONG KONG (Reuters) -Hong Kong’s property market immediately celebrated the removal of decade-long curbs with a jump in transactions, property agents said on Thursday, as authorities made a concerted bid to boost the city’s depressed real estate market.Long among the world’s most expensive housing markets, Hong Kong saw prices plunge 20% from their 2021 peak, hurt by the COVID-19 pandemic, an exodus of residents triggered by Beijing’s imposition of a national security law and interest rate hikes. On Wednesday, Hong Kong removed all additional stamp duties, reversing an unsuccessful government push over the past decade to cool housing prices.The financial hub recorded 28 transactions in the new home market on Wednesday, up from 14 the previous day and a daily average of four to five units last week, while the secondary market also saw a 50% increase from Tuesday.Home sellers also turned bullish, with some raising their asking prices by 3-5%, according to property agents. “We see the market is reacting positively,” Sammy Po, the residential CEO of Midland Realty, told Reuters.”Buyer confidence has generally improved and they have speeded up their entry into the market.”The latest relaxations could also attract more second homebuyers, foreigners and investors, property agents said, as they no longer need to pay up to 15% of additional stamp duties. In a parallel move, the city’s de facto central bank on Wednesday raised the maximum amount homebuyers can borrow for most purchases to 70% from 50-60% previously, and for investors to 60% from 50%.Shares of Midland surged as much as 44.6% on Wednesday, and many realtor branches put up new posters to celebrate the “historical” day. “Curbs became history; new era for the property market”, one read. The website of Centaline Property Agency, another large realtor, was temporarily down after the government announcement due to a surge in traffic.”It’s a 180-degree change. People who were not interested in the property market are now also interested,” said Louis Chan, Centaline Asia Pacific vice chairman, adding homeowners were also keen to check the valuation of their home.Recent purchases would focus on small to mid-sized apartments, the agents expected.SHORT-TERM BOOSTSome young people, however, said they would wait and see given lacklustre career prospects, low wage growth and prices still beyond the reach of many potential first-time buyers.Home prices in the city rocketed 200% in the decade to 2021, worsening one of the world’s most unaffordable markets and contributing to social dissent that broke out in mass anti-government protests in 2019. Housing transaction volumes plunged 30% in the last two years as more residents turned to the rental market, and market participants said it is essential to see more sales for the prices to stabilize. Midland expected volumes could surge up to 40% in March, while major developers New World Development forecast volumes could rise at least 40% to 50% and Henderson Land (OTC:HLDCY) forecast 30% for the full year.Seizing on the improved sentiment, New World told an earnings conference on Thursday it planned to launch nearly 2,500 new flats in the next six months.However, it did not expect prices to see big gains as much supply has accumulated in the market.Some agents cautioned conditions remain challenging.”The negative factors such as high interest rates and a weak economy still exist and simply withdrawing the measures is not enough to reverse the downward trend,” said Joseph Tsang, Chairman of JLL in Hong Kong.Interest rate cuts and an economic improvement would be needed for prices to bottom out and rebound, he added.”There aren’t many job opportunities for young people in Hong Kong right now, and the job market is very limited,” said Kevin Chow, a 25-year-old PHD student. “Coupled with the immense pressure young people face in affording property, many are relocating to the north in mainland China or overseas, so I don’t think the property market in Hong Kong will rise again.”($1 = 7.1945 Chinese yuan renminbi) More

Costlier vehicles and repairs are pushing premiums higher even as the increase in U.S. consumer prices is tapering overall.Job growth, wage growth and business growth are all lively, and inflation has steeply fallen from its 2022 highs. But consumer sentiment, while improving, is still sour.One reason may be sticker shock from some highly visible prices — even as overall inflation has calmed. The cost of car insurance is a key example.Motor vehicle insurance rose 1.4 percent on a monthly basis in January alone and has risen 20.6 percent over the past year, the largest jump since 1976. It has been a huge hit for those driving the roughly 272 million private and commercial vehicles registered in the country. And it has played a part in dampening the “mission accomplished” mood on inflation that was bubbling up in markets at the beginning of the year.According to a recent private-sector estimate, the average annual premium for full-coverage car insurance in 2024 is $2,543, compared with $2,014 in 2023 and $1,771 in 2022.That spike has a variety of causes, but the central one is straightforward: Cars and trucks are pricier now, so insurance for them is, too.The annual change in the cost of car insurance

Note: Data is the year-over-year percentage change in motor vehicle insurance per the U.S. city average, not seasonally adjusted.Source: U.S. Bureau of Labor StatisticsBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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