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    How Inflation and High Interest Rates Have Changed the Economy

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    As inflation cools and the Federal Reserve cuts rates, an era of economic upheaval is coming to a close, but not without lingering marks.People with jobs have started showing up at homeless shelters in Atlanta. Families who can’t cover their grocery bills are pushing up demand at a Boston food bank. A dearth of available houses is plaguing Sacramento. Yet reports of recent raises abound, and a partly retired homeowner near Pittsburgh is happy about his savings.America’s bout of painfully high inflation — and the period of high interest rates meant to cure it — is finally drawing toward a close. Price increases are nearly back to a normal pace, so much so that the Federal Reserve voted on Wednesday to lower borrowing costs for the first time in more than four years.But even as the nation’s tumultuous pandemic economic era begins to approach its end, the period is destined to leave lingering marks.There are many things to celebrate about the current moment. Inflation has so far cooled without a major economic pullback, a development few economists thought possible. Consumers are still spending at a solid clip. Years of strong job growth and solid wage gains have lifted up many workers, and a run-up in stock prices is padding retirement accounts.The Greater Boston Food Bank has delivered more than 100 million pounds of food every year since 2020, up from less than 70 million in 2019.Sophie Park for The New York TimesYet the past several years have also brought serious and lasting challenges. Prices remain sharply elevated compared with their prepandemic levels, and many families are still struggling to adjust. Some have seen their wages fall behind costs. For others, pay gains have kept pace with inflation, but the memory of cheaper egg and rent prices endures, leaving an ongoing sense of sticker shock. And across the country, housing affordability has tanked, a trend that could take time and even policy changes to reverse.Grocery Inflation Jumped, Then CooledGrocery inflation was even more rapid than overall price increases in 2022, though it has recently calmed notably.

    Source: Bureau of Labor Statistics Consumer Price IndexBy 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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    Harris Economic Plan Focuses on Prices, a Key Vulnerability

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    Vice President Kamala Harris has been balancing the challenges of defending “Bidenomics” and charting her own course on the economy.As Vice President Kamala Harris unveiled her economic plans in recent weeks, former President Donald J. Trump has accused her of being a Marxist, a communist and a socialist.When they meet on Tuesday night for their only scheduled presidential debate, Ms. Harris will have the opportunity to rebut those claims and confront Mr. Trump about his record of managing the U.S. economy.She will also lay out her vision, which has been challenging as she tries to defend “Bidenomics” and demonstrate that she has a plan to chart a new course amid widespread economic discontent among many Americans who are struggling with high prices and other affordability issues.In a compressed presidential campaign, Ms. Harris indicated that she would continue many of President Biden’s policies, which aim to raise taxes on companies and punish them for price gouging, while also trying to strike a more business-friendly tone. In some cases, such as her embrace of ending taxation of tips, the vice president has even shown a willingness to adopt the policies put forward by Mr. Trump.How Ms. Harris would ultimately govern if elected will depend largely on the makeup of Congress, but her initial suite of proposals — from taxes to trade to child care — suggests that she would take the economy in a vastly different direction than her Republican opponent.Cost of LivingPerhaps Ms. Harris’s biggest political vulnerability is the run-up in prices that occurred during the Biden administration. Mr. Trump has repeatedly blamed the vice president for causing inflation to surge after the coronavirus pandemic, a phenomenon that stemmed from a mix of factors such as supply chain issues, Russia’s invasion of Ukraine and repeated bursts of fiscal stimulus to keep families and businesses afloat. The higher cost of goods initially hurt Mr. Biden when he was running against Mr. Trump, and Ms. Harris is now facing many of the same concerns from Americans who are feeling negative about a relatively strong economy.We 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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    Harris and Trump Have Differing Plans to Solve Housing Crisis

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    The two presidential nominees are talking about their approaches for solving America’s affordability crisis. But would their plans work?America’s gaping shortage of affordable housing has rocketed to the top of voter worry lists and to the forefront of campaign promises, as both the Democratic nominee, Kamala Harris, and the Republican candidate, Donald J. Trump, promise to fix the problem if they are elected.Their two visions of how to solve America’s affordable housing shortage have little in common, and Ms. Harris’s plan is far more detailed. But they do share one quality: Both have drawn skepticism from outside economists.Ms. Harris is promising a cocktail of tax cuts meant to spur home construction — which several economists said could help create supply. But she is also floating a $25,000 benefit to help first-time buyers break into the market, which many economists worry could boost demand too much, pushing home prices even higher. And both sets of policies would need to pass in Congress, which would influence their design and feasibility.Mr. Trump’s plan is garnering even more doubt. He pledges to deport undocumented immigrants, which could cut back temporarily on housing demand but would also most likely cut into the construction work force and eventually limit new housing supply. His other ideas include lowering interest rates, something that he has no direct control over and that is poised to happen anyway.Economist misgivings about the housing market policy plans underline a somber reality. Few quick fixes are available for an affordable housing shortfall that has been more than 15 years in the making, one that is being worsened by demographic and societal trends. While ambitious promises may sound good in debates and television ads, actual policy attempts to fix the national housing shortfall are likely to prove messy and slow — even if they are sorely needed.Here’s what the candidates are proposing, and what experts say about those plans.Harris: Expand Supply Using Tax Credits.Ms. Harris is promising to increase housing supply by expanding the Low-Income Housing Tax Credit, providing incentives for state and local investment in housing and creating a $40 billion tax credit to make affordable projects economically feasible for builders.We 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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    Why Interest Rate Cuts Won’t Fix a Global Housing Affordability Crisis

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    Central bankers are lowering borrowing costs, but that won’t be a cure-all for a widespread lack of affordable housing.To Moira Gallagher, 38, buying a house in Anchorage would be a step toward financial stability for her growing family. But even with a six-figure household income and stable jobs, she and her husband have struggled to make a purchase.High mortgage rates, limited housing supply and historically poor affordability have kept buying a home stubbornly out of reach for Ms. Gallagher, an economic researcher who is expecting her third child. Three- or four-bedroom homes in good school districts are both hard to come by and prohibitively expensive.“It makes it hard to feel secure,” she said. “It affects everything.”From Anchorage to Amsterdam, many developed and even emerging economies are confronting a similar problem: Housing supply is failing to meet demand, helping to push home prices to levels that are out of reach even for middle-income families.Affordability problems have been exacerbated by high central bank interest rates, which officials across the globe have been using to tackle rapid inflation. Those policy rates trickle through financial markets to elevate mortgage rates — making it even more expensive for borrowers to buy a home and for builders to finance construction for new houses and apartments.The second part of that equation is now poised to change. Central banks in many economies are lowering interest rates or preparing to do so imminently. The European Central Bank and Bank of England are already cutting borrowing costs, and the chair of the U.S. Federal Reserve signaled last week that it would start reductions in September.But those rate cuts are unlikely to be a panacea for housing affordability.While the shift in central bank stance is already translating into somewhat lower mortgage rates in many countries, borrowing costs are not expected to fall back to the levels that prevailed during the 2010s. Several economists said 30-year mortgage rates in the United States, for instance, could end up in the 5.5 to 6 percent range, down from their 7.5 percent peak last year but still up notably from the 4 percent that was normal before the pandemic.Home Prices Jump in Developed WorldHow inflation-adjusted home prices are shaping up across advanced economies.

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    O.E.C.D. house price indexes, 2015=100
    Data reflects first quarter of each year.Source: Organisation for Economic Co-operation and DevelopmentBy The New York TimesWhat Share of Income Does a Typical Home Cost? Across metro areas in the United States, the cost of owning a typical home has been rising as a share of the local median income.

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    Share of income that would go to owning standard home
    Source: The Atlanta Fed’s Home Ownership Affordability MonitorBy 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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    U.S. Plans to Accuse RealPage of Enabling Collusion on Rents

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    The Justice Department is set to file an antitrust suit against the real estate company RealPage alleging illegal price-fixing facilitated by algorithms.The Justice Department plans to file an antitrust lawsuit as soon as Friday against the real estate software company RealPage, claiming its software enabled landlords to collude to raise rents, two people with knowledge of the lawsuit said.The suit, which will be joined by California, Colorado, Minnesota, North Carolina, Washington and other states, was expected to accuse RealPage of facilitating a price-fixing conspiracy that boosted rents beyond market forces, according to the people, who spoke on the condition of anonymity because of the sensitivity of the case.The suit would escalate the government’s efforts to regulate what it sees as misuse of technology. Officials have sued Google, Amazon, Meta and Apple over what they said were monopolistic behaviors that harm consumers.RealPage’s YieldStar product, which gathers confidential real estate information, has been at the heart of the government’s concerns. Landlords, who pay for the software, share information about rents and occupancy rates that is otherwise confidential. Based on that data, an algorithm generates suggestions for what landlords should charge renters, and those figures are often higher than they would be in a competitive market, according to allegations in prior lawsuits against RealPage by state attorneys general.A spokeswoman for the Justice Department declined to comment.Owned by the private equity firm Thoma Bravo, RealPage has advertised its software to landlords as a tool that can help them outperform the market by 3 percent to 7 percent. It says its software is used in metro areas around the country.RealPage did not immediately respond to requests for comment. A spokesperson for Thoma Bravo did not immediately respond to a request for comment.We 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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    30-Year Mortgage Rate Dips to 6.46%; Home Sales Rise

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    Home buyers this week saw the lowest average rate since early 2023, and existing-home sales rebounded in July. Analysts predict more relief ahead.Mortgage rates dipped this week to a recent low, with analysts predicting a sharper drop in the coming months that could motivate potential home buyers.The average rate on 30-year mortgages, the most popular home loan in the United States, fell slightly to 6.46 percent this week, Freddie Mac reported on Thursday. That was only a slight decline from the 6.49 percent average a week earlier, but was the lowest level since May 2023. Mortgage rates, which stood at around 3 percent in late 2021, began climbing when the Federal Reserve started raising its benchmark rate to combat inflation, reaching levels not seen in two decades. The 30-year rate has been steadily easing since April, when it rose above 7 percent.Sam Khater, chief economist at Freddie Mac, said mortgage rates hovering below 6.5 percent over the past two weeks had not been enough to prompt a significant uptick in home purchases.“We expect rates likely will need to decline another percentage point to generate buyer demand,” Mr. Khater said in a statement.More significant relief could be on the horizon. The Fed is expected to start lowering interest rates in September, after holding them at 5.3 percent for the past year. Although the Fed’s benchmark rate and mortgage rates aren’t directly connected, a Fed rate cut could indirectly put even more downward pressure on mortgages.And while borrowing costs remain twice as high as three years ago, there is some evidence that home buyers are starting to respond to the small but steady decline. Existing-home sales rose above expectations in July after four consecutive monthly declines, according to data released on Thursday by the National Association of Realtors. The 1.3 percent increase lifted sales to a seasonally adjusted annual rate of 3.95 million units.Consumers are “definitely seeing more choices” as affordability improves, Lawrence Yun, the association’s chief economist, said in a statement. But existing home sales are still down 2.5 percent from the prior year.“Despite the modest gain, home sales are still sluggish,” Mr. Yun said.Potential home sellers also continue to feel locked into lower rates on their existing loans, keeping their houses off the market. The median existing-home owner has a rate below 4 percent, said Chen Zhao, who leads the housing economics team at the real estate services company Redfin.More homeowners are starting to list their properties for sale to keep up with demand, Skylar Olsen, chief economist at Zillow, said in a statement. But the number of homes available at any given time is still lower than before the pandemic, she said. More

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    What Kalamazoo (Yes, Kalamazoo) Reveals About the Nation’s Housing Crisis

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    A decade ago, the city — and all of Michigan — had too many houses. Now it has a shortage. The shift there explains today’s costly housing market in the rest of the country.For years, when Michigan politicians talked about the state’s housing problem, they were referring to a surplus: too many run-down houses, stripped of valuable copper, sitting empty and blighting neighborhoods. Now the message has flipped. In her State of the State address this year, Gov. Gretchen Whitmer lamented the housing shortage and landed one of her biggest applause lines with, “The rent is too damn high, and we don’t have enough damn housing. So our response is simple: ‘Build, baby, build!”If you want to know what the housing crisis for middle-income Americans looks like in 2024, spend some time in Michigan. The surplus-to-shortage whipsaw here is a mitten-shaped miniature of what the entire country has gone through.I’ve been writing about housing and the economy for two decades, and have watched as the nation’s housing market has made the journey from boom to bust to deficit, seemingly without pausing for a normal middle. There are lots of reasons this happened, but they center on a big one: the late-2000s housing bust, which the country has never fully recovered from. Or as Ali Wolf, chief economist at Zonda, a data and consulting firm, put it: “The Great Recession broke the U.S. housing market.”At first, rapidly rising housing costs seemed like a regional problem. It made sense that places like San Francisco, which was already expensive, filled with well-paid tech workers and hamstrung by stringent building regulations, would be in crisis. Much of the rest of the country was still affordable, however, so high-cost “superstar cities” were seen as an exception instead of a warning.Now California’s problem is everywhere. Double-income couples with good jobs are priced out of homeownership in Spokane, Wash. Homeless encampments sprawl in Phoenix. The rent is too damn high in Kalamazoo.The housing crisis has moved from blue states to red states, and large metro areas to rural towns. In a time of extreme polarization, the too-high cost of housing and its attendant social problems are among the few things Americans truly share. That and a growing rage about the country’s inability to fix it.We 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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    Harris and Trump Offer a Clear Contrast on the Economy

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    Both candidates embrace expansions of government power to steer economic outcomes — but in vastly different areas.Vice President Kamala Harris and former President Donald J. Trump flew to North Carolina this week to deliver what were billed as major speeches on the economy. Neither laid out a comprehensive policy plan — not Ms. Harris in her half-hour focus on housing, groceries and prescription drugs, nor Mr. Trump in 80 minutes of sprinkling various proposals among musings about dangerous immigrants.But in their own ways, both candidates sent voters clear and important messages about their economic visions. Each embraced a vision of a powerful federal government, using its muscle to intervene in markets in pursuit of a stronger and more prosperous economy.They just disagreed, almost entirely, on when and how that power should be used.In Raleigh on Friday, Ms. Harris began to put her own stamp on the brand of progressive economics that has come to dominate Democratic politics over the last decade. That economic thinking embraces the idea that the federal government must act aggressively to foster competition and correct distortions in private markets.The approach seeks large tax increases on corporations and high earners, to fund assistance for low-income and middle-class workers who are struggling to build wealth for themselves and their children. At the same time, it provides big tax breaks to companies engaged in what Ms. Harris and other progressives see as delivering great economic benefit — like manufacturing technologies needed to fight global warming, or building affordable housing.That philosophy animated the policy agenda that Ms. Harris unveiled on Friday. She pledged to send up to $25,000 in down-payment assistance to every first-time home buyer over four years, while directing $40 billion to construction companies that build starter homes. She said she would permanently reinstate an expanded child tax credit that President Biden temporarily established with his 2021 stimulus law, while offering even more assistance to parents of newborns.She called for a federal ban on corporate price gouging on groceries and for new federal enforcement tools to punish companies that unfairly push up food prices. “My plan will include new penalties for opportunistic companies that exploit crises and break the rules,” she said, adding: “We will help the food industry become more competitive, because I believe competition is the lifeblood of our economy.”We 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