The Federal Reserve’s efforts to calm inflation could worsen the affordable housing crisis. We’ll also look at President Biden’s prayer for a good economy and the Democratic push to lower drug prices.
But first, we have some bad news for permanent DST fans.
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Why America’s housing shortage is likely to get worse
Rising interest rates and economic headwinds are making it harder for the United States to fill a dire shortage of affordable housing, and the problem is likely to get worse.
- The Federal Reserve has worked for months to lessen the sting of inflation by raising rates and slowing the housing market. As a result, home sales and construction have fallen off a cliff this summer.
- Sales of new and existing homes also fell for months after the Fed hiked mortgage rates. But experts say these rate hikes, coupled with supply shortages and historically low inventory, will only exacerbate the shortage.
“With mortgage rates rising, it’s really putting a lot of buyers on the fence and in the rental market because they just can’t afford the mortgage payments,” said Daryl Fairweather, chief economist at Redfin, in an interview.
Higher interest rates are also likely to prevent homebuilders from building enough homes to meet these needs. The pandemic itself froze home construction for months, then created a series of supply and labor shortages, delays, backlogs and obstacles to completing homes on schedule. and the budget.
Sylvan has more here.
Biden: ‘God willing, I don’t think we’re going to see a recession’
President Biden says he doesn’t expect the U.S. economy to slip into recession until a key gross domestic product report that could show the economy is contracting.
“We’re not going to be in a recession in my opinion,” Biden told reporters Monday after a virtual event focused on semiconductor legislation.
“The employment rate is still one of the lowest in history. It’s in 3.6 [percent] Region. We always end up with people who invest,” Biden continued. “Hopefully we’ll go from this rapid growth to steady growth, so we’ll see some of them shrink. But I don’t think we’re going to, God willing, I don’t think we’re going to see a recession.
- The White House is bracing for Thursday’s report from the Bureau of Economic Analysis, which could show a second straight quarter the economy has contracted, an indicator often used by economists to mark a recession.
- Many White House officials have spent the past week pushing back against the idea that the economy is in a recession based solely on data to be released on Thursday.
Alex Gangitano has more here.
Grain prices jump after Russian missile attack
A Russian missile attack on the Ukrainian port of Odessa boosted grain prices after they eased on news of a United Nations-brokered deal between Moscow and Kyiv late last week to move stranded agricultural products out of the Black Sea.
- Wheat futures jumped about 4% after Saturday’s attack, while soft red winter wheat jumped nearly 3% and corn futures rose 2% .
- The center is expected to be operational by Tuesday and ships laden with Ukrainian grain “could move within days,” UN deputy spokesman Farhan Haq said in a Monday briefing.
“We want all parties, as the secretary-general made clear on Saturday, to fully implement what they have agreed,” he said in reference to the UN-brokered initiative.
Tobias Burns has the details here.
PUSH ON DRUG PRICES
Democrats accelerate high-stakes final push to lower drug prices
Senate Democrats are making a final, high-stakes push to win legislation to lower prescription drug prices beyond the goal line.
While much of President Biden’s initial economic package, from climate action to raising taxes on the wealthy, was scrapped by Sen. Joe Manchin (DW.Va.), the party is trying to salvage a major measure to reduce the cost of prescription drugs that Manchin said he would support.
- It looks like Democrats have the votes to pass the measure without any GOP support, but a series of hurdles, including COVID-19 absences and a House decision, loom in the home stretch.
- The measure would allow Medicare to negotiate the price of popular drugs, prevent drugmakers from raising prices faster than the rate of inflation, and cap drug costs for seniors on Medicare at $2,000 a year at from 2025.
Peter Sullivan has more here.
Good to know
The Securities and Exchange Commission (SEC) on Monday charged former Rep. Stephen Buyer (R-Ind.) with insider trading, including buying stocks based on nonpublic information.
The SEC filed charges in Manhattan Federal District Court accusing the buyer of making illegal stock purchases in at least two instances, according to a news release from the agency. The SEC is seeking to force the buyer to return the profits it made from the alleged schemes.
Here’s what else we’ve got our eyes on:
- Sen. Elizabeth Warren (D-Mass.) wrote in a new op-ed that Federal Reserve Chairman Jerome Powell’s efforts to control inflation risked “triggering a devastating recession” and jeopardizing economic recovery country’s “surprisingly strong” post-pandemic.
- More than half of older women who live alone are classified as poor by federal poverty standards or have insufficient income to pay essential expenses, while 45% of men share the same financial situations, according to the Elder Index of the University of Massachusetts-Boston.
That’s all for today. Thanks for reading and check out The Hill’s Finances page for the latest news and coverage. Well see you tomorrow.
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