It goes without saying, meanwhile, that broker outreach is also essential: making sure brokers are equipped with as strong a knowledge of a lender’s offerings as possible as they present options to their clients. “We’re a private lender for non-owner-occupied investment properties, so we want to make sure that if an investor stumbles upon RCN … [Read more…]
Still, prospects on the single-family side were slightly brighter, with housing starts in that sector climbing by 2.7% compared with August as single-family building permits also posted a marginal gain, rising by 0.3%. U.S. total #HousingStarts were 1354K (SAAR) in September 2024. #CensusEconData pic.twitter.com/iwGMhPLfvW — U.S. Census Bureau (@uscensusbureau) October 18, 2024 Fortunes were mixed … [Read more…]
For mortgage brokers, rate volatility is presenting its fair share of hurdles – not least when it comes to locking in refinances. While rates increased last week, they’ve fallen precipitously since earlier this year, and many borrowers are open to biding their time to see where they might eventually land. That means a big challenge … [Read more…]
Well, it looks like we’re here in another US election year already.
As Advanced Mustachians, we already know that the ongoing battle of Harris vs. Trump should not be consuming much of our time. Sure, we do our research and cast our votes but after that we move right on to focus on other things within our own circle of control.
But out of all the things the politicians like to bicker about, there’s one area where MMM does need to set the record straight, and that area is of course money. Your money, the economy in general, and the overall wealth of the nation.
Politicians are already not known for being the sharpest tools in the shed when it comes to technical stuff like science, technology, or economics. But this year the discourse has become particularly dumb, as our candidates try to manipulate undecided voters in swing states with ideas that are based on irrational emotions rather than sound economic sense.
For one particularly funny example, you may have noticed that the competing party (Trump in this case) is attacking the incumbents (Biden/Harris) over the “bad economy.” When in fact the US economy is stronger than it has ever been, with the lowest unemployment we’ve ever seen as well.
It’s hard to imagine a better situation than we have right now, and in fact the recent bout of higher inflation is a sign that things have been going too well, and we needed to step on the brakes with the help of higher interest rates.
But somehow the people still seem to believe that we have a “bad” economy. Take a look at this Gallup poll showing that while most people (85%) are doing really well right now, they assume that it’s just their own good fortune – only 17% believe the economy is doing well.
This is mathematically impossible, because if most people are doing well, that’s the definition of a good economy! And suspiciously enough, this widespread wrongness correlates quite nicely with the rise of social media misinformation.
So the politicians and the news have been doing the opposite of what they should be doing in an ideal situation (sharing accurate information). And sure, we can always just ignore their speeches and go on with our lives. But when it comes to economics, knowledge is power (and money). The more accurately we understand how things really work, the wealthier we will all become.
So with all that in mind, I hereby present you with my list of the…
Top Dumb Things Politicians Want You To Believe About The Economy
1:The President Controls the Economy
If there’s a recession, the opposition party likes to blame it on the current president. If the economy is booming, the current president likes to give himself (or possibly soon herself) credit for all of that success. But really, the US economy is way too big – and thankfully way too free – for the president to control or really even influence all that strongly.
In reality, our economy is a gigantic machine which converts labor and materials into things like iPhones, hospitals and pumpkin pies. And although we’re the biggest economy at 26% of the planet, we are still heavily influenced by that much bigger 74% of economic activity that the other 7.6 billion people on Earth are busy producing everywhere else.
When we have our inevitable little boom and bust cycles, they are mostly caused by the normal cycle of irrational exuberance (and greed) like the 2007 housing boom, followed by brief periods of extreme fear and pessimism like the 2008-2012 financial and housing crash.
The government does play a role too, by setting tax rates and other rules. But the effects of these policies are usually so delayed and unpredictable, that you can’t draw a straight line between today’s president and today’s economy. In other words, the government does its best to adjust the rudder on our giant ship, but in the short term our economy lurches around on the waves and storms of the ocean.
2:The President Controls Interest Rates
This one is especially funny to me, as our candidates feign sympathy for the hard life of middle class Americans, who now face higher borrowing costs on their credit cards and car loans and mortgages. They claim they will fight to bring the interest rates down. Trump even goes as far as bullying our Federal Reserve board members (who can only do their jobs if we allow them to function as independent experts) and suggesting that he would take over the whole department, if elected.
The real story is that while monetary policy would be a terrible tool to leave in the hands of a sitting president (see Argentina), it does function as an excellent set of gas and brake pedals for the economy if used properly. When things slow down and unemployment gets too high, a cut to the interest rates will produce a boost in everything from new jobs to stock prices. But if things get too hot, you get rapid inflation which can mess up the system.
3: Inflation has Made Life Harder for Americans (and the President Can Magically Reverse it)
This line of reasoning is even dumber than the last one. For a couple of years after the Covid era, we had rapid inflation. It was caused by a rare combination of a goods shortage caused by things like factory closures and remote work, plentiful demand from government stimulus spending and low interest rates. These factors have since ironed themselves out, and inflation is back down to an ultra-low 2.4%.
But most significantly, wages have still risen faster than inflation so we are all better off than before! Since 2019, overall prices are up 19% and our wages are up 21%. So even after all that inflation, we are still doing just fine. But the candidates are still bickering over inflation as if it’s an actual problem, and even worse promising to “bring prices back down”. And they’ve managed to convince the electorate that “higher wages and prices” is the same thing as “a bad economy”. Which is just plain wrong.
Bonus dumbness: politicians also occasionally blame “greedy corporations” for increasing prices to hoard profits. While price increases are totally acceptable in a market system (as a business owner you are free to set prices wherever you like), in reality it doesn’t usually happen because our markets are too competitive. For example, a recent deep analysis from NPR showed that no, grocery stores haven’t made any windfall profit at all off of this recent bout of Covid-fueled inflation.
4: The President Controls Housing Prices
One important thing that has changed over the past ten years is that US house prices and rents have both risen much faster than general inflation and even wages. On the positive side, interest rates have also risen which tends to make houses feel more expensive and is supposed to help bring house prices down. But it hasn’t happened yet which means we have the double whammy of higher prices and higher interest costs for mortgage borrowers.
The dumb part is that our candidates are proposing things that would make the problem even worse, like subsidies for first-time homebuyers or schemes to reduce the interest rates. When really the solution is to increase the supply of housing, which I personally think will happen if we stop putting up roadblocks for homebuilders (myself included) to build housing.
Things like faster and cheaper permits, less onerous and expensive building codes, eliminating suburban-style zoning and setback and car parking rules, and changing laws so that NIMBYs no longer get any say over what other people do with their own land could all help reduce the cost of building a house by about 50%, quickly and permanently.
5: The President Controls Gas Prices, and They Are Currently “High” and We Want Them Lower
Ahh, gasoline! The most ridiculous of things to worry about and the fuel for many of MMM’s rants since 2011.
First of all, on an inflation-adjusted basis, gasoline is still about the same price as it was in 1950: in the $3-4 range per gallon, in today’s dollars.
Secondly, it is so cheap that even with our huge inefficient American vehicles, the average household is still only spending 2.5% of their disposable income on the stuff! (The funny part is that they spend many times more on the rest of the car ownership experience while thinking gas is the part that is expensive)
Third, gasoline has been obsolete for almost a decade now. You can get a used electric car for less than the price of a comparable used gas car, or if you’re a fancypants money waster like me, new EVs are also cheaper than their gas counterparts. You get a faster, nicer car that almost never needs maintenance OR gasoline, and save money.
So why are we even still talking about this antique fuel of a previous era? Why aren’t the candidates also arguing over the price of Kodak film or typewriters or fax machines?
6: The Economy is Something We Should Even Worry About
The funniest part about all this economic talk is that we’re focusing on the wrong thing. While hard work and business and advancing the frontiers of human knowledge are all fun things, the reality is that we passed the point of having “Enough” decades ago. When the American middle class complains about how hard we have it these days, it’s like a bunch of overfed people at a buffet wishing they could just have one more flavor of donuts stacked onto the table.
Yes, we have income and wealth inequality so that the rich tend to get richer more quickly. And yes, we should keep that in check with a somewhat progressive tax system because a more equal society tends to be a more peaceful and happy one.
But have you noticed that as the rich people get richer, they don’t get any happier? It’s because after you pass the point of “Enough”, adding more money doesn’t really help much.
And “Enough” is much more defined by your mindset (and your collection of life skills) than your paycheck. So if the politicians really cared about improving our happiness and wellbeing, they’d be preaching the Principles of Mustachianism rather than pandering to the specific requests of coal miners or billionaires.
But alas, winning an election is a very different thing than proposing stuff that is actually best for the country. And for that reason, we cast our votes for the best party and then tune back out until the next election.
Happy voting!
In the Comments: Has the election season been getting you down, pumping you up, or just giving you a thorough dose of “Meh”?
Further Reading/Watching:
While researching economic stats for this article, I came across a quirky but informative series of videos called USA Facts by none other than Microsoft co-founder Steve Ballmer. It seems that he had the same frustration as me: Americans are fighting over a bunch of opinions and misinformation without even bothering to look up the actual facts. So he made a well-produced series of videos that just share the facts without the baggage of political hype on top of them. I wish our politicians could do the same thing!
Bonus Podcast based on this article! Thanks to the magic of AI, you can direct the wizardry within Google to generate a custom-made podcast on almost anything on the Internet. A reader just emailed me this take on this episode – remarkably human-like and even entertaining! https://notebooklm.google.com/notebook/0e1d0af8-8888-466c-abe4-8b1da8986773/audio
Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Learn how presidential policies on tariffs, immigration, and prices can impact your everyday expenses like groceries and gas.
What can a president actually do to lower prices and fight inflation? Can campaign promises really impact your wallet, or are they just political hot air? Hosts Sean Pyles and Anna Helhoski discuss presidential policies and how they affect everything from the cost of gas to your grocery bill to help you understand the real impact of political decisions on your finances. They begin with a discussion of inflation, with tips and tricks on understanding how inflation is measured, what drives price hikes, and what role the president plays in influencing it.
Then, Anna talks to Derek Stimel, an associate professor of teaching economics at UC Davis, about the economic implications of tariffs and immigration policies. They discuss how tariffs raise the price of imported goods, how immigration impacts labor costs and wages, and what these political policies mean for your everyday purchases.
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Episode transcript
This transcript was generated from podcast audio by an AI tool.
Sean Pyles:
What’s the first thing you do when you go to the grocery store? Do you run to the produce aisle and look for the freshest broccoli, maybe? Or conversely, are you heading for the candy section? I don’t judge. But pretty soon after that, you’re probably starting to look at prices, right? The price of, well, everything is a daily question in our lives. So it’s not surprising that prices are playing a part in this year’s presidential election.
Derek Stimel:
I just find it interesting that both presidential candidates have focused on these highly volatile markets, which we often think they really can’t do that much about, and that are often driven by these global forces basically. But both of them have focused on those as their avenues to bringing inflation down.
Sean Pyles:
Welcome to NerdWallet’s Smart Money Podcast. I’m Sean Pyles.
Anna Helhoski:
And I’m Anna Helhoski.
Sean Pyles:
And this is episode two of our Nerdy deep dive into presidential policy and personal finances. Hey Anna, I don’t know if you’ve noticed, but we’ve got a presidential campaign underway.
Anna Helhoski:
Hard to miss it. Talk about drama. And every great drama has a storyline. One big part of this year’s storyline in the campaign has been prices, specifically inflation and what it’s done to our bottom lines.
Sean Pyles:
Yeah. Inflation hit a high of 9.1% back in 2022, and we’ve been paying a whole lot more for a lot of things over the last few years. And it’s not subtle, it’s very noticeable. Anna, is there anything specific that has popped up on your radar as more expensive than just a couple of years ago? Something where you said whoa, that is way more than I used to pay.
Anna Helhoski:
Yeah. So I have a bread place near me and a few years ago the prices were pretty reasonable for a big loaf of fresh bread, like $6 a loaf.
Sean Pyles:
Yeah, that’s like New York reasonable, I’ll say.
Anna Helhoski:
Yeah, exactly. No, that’s how I gauge everything. But then flour prices spiked and suddenly the price went up to nearly $10, which is way more than I’m willing to pay. What about you, Sean? Did gecko food get more expensive along with anything else?
Sean Pyles:
Since you mentioned it, crickets for my gecko Ozzy did go up about 12%. I now spend a whopping $2.25 a week for those creepy bugs for the old guy. Of course, it’s not just these one-off items, these are just the things that the two of us noticed in spades. Houses are more expensive, cars are more expensive, credit cards are more expensive. It just takes more out of your budget to buy stuff.
Anna Helhoski:
So what can a president do about it? As we heard in last week’s episode, the answer is not a lot by themselves. They often need Congress or the Fed or both, and sometimes a lot of luck to have an impact on the economy and specifically on prices. But that doesn’t stop them from making all kinds of promises about the changes they’d make if we sent them to or back to the White House. Let’s talk about what they can do in reality.
Sean Pyles:
And as we noted in the last episode, we’re not here to take sides or fan the flames of an already contentious political season. Our goal here is the same one we always have at NerdWallet, to help you, our listeners, make smart informed decisions about the stuff that impacts your finances. Sometimes that means choosing a new high-yield savings account. Other times that means voting for the candidate who you believe will help you achieve your life and financial goals.
All right, well, we want to hear what you think too, listeners. To share your thoughts around the election and your personal finances, leave us a voicemail or text the Nerd hotline at 901-730-6373. That’s 901-730-N-E-R-D. Or email a voice memo to [email protected]. So Anna, who are we hearing from today?
Anna Helhoski:
We’re talking with Derek Stimel. He’s an associate professor of teaching economics at the University of California, Davis. So not only is he an expert in macroeconomics, but he’s an expert in teaching it. He’ll help us parse what presidents can and can’t do to affect the price of all sorts of goods that we all buy. Derek Stimel, welcome to the show.
Derek Stimel:
Thanks for having me.
Anna Helhoski:
Presidential administrations tend to take the credit or get the blame for things that happen, at least when it comes to public perception. That means that the Biden-Harris administration has taken a lot of flak from the Republican Party and from many Americans for elevated prices that we’re seeing in the wake of the pandemic. And since we are just a few months away from a new administration, can you talk a little bit about how much influence presidents actually have on inflation and prices?
Derek Stimel:
Normally we don’t think of them as the major driver of inflation in the economy. Usually, it’s things like monetary policy, so interest rates, and the supply of money. Sometimes it can also be things outside of the economy, shocks as we sometimes say in economics. So things that happen globally, for example. Having said that, it’s not to say that there can’t be some causes that are driven by policy of the government. For example, in the current situation, some people do point to some government spending that took place in the aftermath of COVID and the policies surrounding that. That might’ve been some fuel for inflation. But it’s not usually the first thing we think of. In this particular situation of our recent inflation, I suspect it’s not the first number one thing causing the inflation.
Anna Helhoski:
Let’s get into some of the campaign promises that each candidate has made. Some of the promises might just be politicking, but some of it could become a reality. Start off with former President Donald Trump’s proposals. Thus far, there have been multiple reports and assessments from economists who say that his proposals, if enacted, would be inflationary. And one of the main drivers of that projected inflation is Trump’s promise to levy 10% across-the-board tariffs on all foreign goods. Can you explain how tariffs and prices interact?
Derek Stimel:
Tariffs are basically a tax on imported goods. For any tax, it’s going to have the following effects on the market, which is, the tax gets levied, let’s just say it’s the 10% just to have a number. And then the businesses basically have to, in a sense, make a decision about do we absorb this tax ourselves, do we pass it on to the customers, and if so, in what proportion? They may not pass on the full 10%, it’s unlikely they’re going to absorb the full 10% themselves. So there’s going to be a split. So in some loose setting, maybe they raise prices by 5% and they absorb 5% of it to get up to the 10, or maybe it’s 8 and 2, or 3 and 7, or what may be. But the point is that basically, it’s going to lead to higher prices on those products.
So in this particular situation, we’re talking about higher prices for imported goods. And I think as we’re all generally aware from our day-to-day shopping and if we ever look at the label of anything, we buy a lot of imported goods in the United States. So it’s not unreasonable to think that raising taxes essentially on imported goods would ultimately boost the prices of those imported goods and then on average raise our cost of living at least somewhat.
Anna Helhoski:
Now, Trump claims that his tariffs would spur American manufacturing and domestic competition for production. Is that something that does happen or would likely happen as a result of tariffs?
Derek Stimel:
So it definitely can happen that there could be some… you know, businesses have to make the best decisions based on the rules of the game as they are. Raising tariffs would definitely change the rules and businesses would likely respond to that. And so to the extent that they could and that the U.S. was a major market to them, at least some businesses would try to reallocate or relocate back into the U.S. in order to avoid this tariff, basically. But I think the question is: Would that be enough to counterbalance the effect of this higher tax across the board? I don’t have hard data on it, but the likely answer is it wouldn’t be enough. So we would still see higher prices as a result, and so we would have to deal with the consequences. But there could be some reallocation or relocation of businesses for sure.
Anna Helhoski:
Another promise Trump has made is to lower gas prices. Under his first administration, he increased oil production and then Biden went further still. So how much can a president impact gas prices?
Derek Stimel:
The gas market or the market for energy more broadly defined is very much a global market, but the U.S. is in a way in a unique position of being the center of that global market. You hear a lot about that the U.S. dollar is this global reserve currency. Oil for example is usually traded in dollars and that sort of thing. So we do have a little bit more power than some other countries. The answer would be maybe a bit different if it was us talking about Canada doing something or whatever. It is also probably true that gas prices or prices of energy in general are really often driven by these global shocks. So in this particular case, the disruptions that took place due to Russia’s invasion of Ukraine are really the prime mover probably of energy prices in the recent years. And it’s not clear that any president would be able to have done something about that directly. Obviously, it’s more of a geopolitical thing than an economic policy thing.
Anna Helhoski:
Switching gears again, I’m hoping you can talk a little about the connection between immigration and the prices that consumers pay for certain everyday goods and services. And note for listeners, as you may know, Trump has promised to use law enforcement and the National Guard to deport many millions of undocumented immigrants. Beyond the humanitarian implications and the logistical questions raised by this proposal, what are some of the economic implications?
Derek Stimel:
Kind of a classic way of thinking about it economically, especially when we’re talking about things like inflation, is that we think that business costs basically would drive a lot of inflation, or at least it could be a prime driver of inflation. And inside those business costs, labor costs are often a large portion of those costs. And of course, that has to do a lot with the supply of labor that’s available relative to the demand for that labor. And so we live in an aging society, the baby boomers are basically retiring. And of course, this is reducing our labor supply or at least likely to reduce our labor supply in the coming years. So what that would mean economically is that would tend to push up wages all else the same, which of course then could also push up prices. Businesses, when they face these increased labor costs, have to make a choice about how much to pass on to customers in terms of higher prices.
So with that all in mind, if you also cut off the amount of immigration into the economy, you would think that that’s likely to put further pressure on wages in the economy. It’s going to further, in a sense, reduce or at least not provide any extra slack for the supply of labor, and so that’s going to further push up wages and further push up prices overall. That’s not to say we shouldn’t think about reforming immigration in some way, shape, or form, but that’s just to say economically that if you reduce the supply of labor, the price of that labor, the wages, and all the other forms of compensation that come with it is going to go up and businesses are going to pass at least some of that on to customers in the form of higher prices.
Anna Helhoski:
And are there any specific areas of the economy that could be altered if you deport millions of people who were already in the workforce?
Derek Stimel:
There’s the initial disruption, uncertainty that would surround it, which could shake out in all sorts of ways, many of which are probably not positive. Imagine the local restaurant down the street suddenly loses half its staff. And what are they going to do? So we would expect a lot of service sector jobs to maybe be impacted by these sorts of things, a lot of things that we interact with daily. And then there’s also this issue about if you create shortages in one area, let’s say you create a shortage in one service sector, it could spill over to other unrelated service sectors as well. Maybe now the one sector has to basically go poach employees from the other one. And so maybe it starts to spill over into other areas where you wouldn’t think of, say, quote, unquote, “illegal immigrants” basically playing a role, but it actually could have this cascade to other markets.
Anna Helhoski:
More of our interview in a moment. Stay with us. I want to talk about Donald Trump’s proposal to weaken the power of the Federal Reserve by bringing the central bank under more direct control of the president. And listeners, we’ve said it before, but the Federal Reserve is nonpartisan and operates independently. That means that the president doesn’t tell the Fed what to do and the Fed doesn’t make its decisions based on politics. Derek, it seems like the separation is pretty crucial to ensuring public trust in the central bank’s ability to make decisions. But if Trump was successful in his plans to more directly influence the Fed’s activities, what are some of those economic implications?
Derek Stimel:
Stepping back for a second, we generally think that the Fed’s main role is to keep inflation, especially over the longer term, relatively low and stable. And one element that tends to be critical to that is their basically credibility to commit to that policy of keeping inflation low and doing what it takes. None of us liked in the recent years the interest rates going up, but it’s seen as this necessary thing to do to bring inflation back down to that longer-term goal. And so the concern basically is that a lot of that comes from the fact that the Fed is independent to some degree from the rest of the government. It’s important to understand that they’re not completely independent. The president plays a role in nominating people to serve in the Fed. Congress obviously has to approve these things. But this general separation of like, oh, you can’t tell us when to change interest rates or you can’t tell us we can’t do this policy and we have to do some other policy or whatever, that tends to be important as this inflation fighter credibility that the Fed has.
If that gets eroded, I think the concern would be basically that people in the economy start to not believe in the Fed as much as an inflation fighter. That lack of credibility starts to make people think, “Well, they say they want 2% inflation, but given that they’re tied to the rest of the government, I think it’s maybe going to be more like two and a half, 3%.” So expectations start to tick up on inflation. And one thing about inflation is that expectations really play an important role and they tend to be self-fulfilling. We all expect five, we’ll get five. And so basically the Fed’s independence is one of… There’s some others of course, but it’s one of the main things that’s tying down those expectations because it’s helping the Fed maintain its credibility to be there when we need them to fight inflation.
Anna Helhoski:
Well, those are the main things I want to talk about in terms of Donald Trump, but I want to switch gears and talk about Vice President Kamala Harris’s plans to battle inflation. She recently unveiled a plan to ban price gouging. So first off, what is price gouging and how have we seen it happen?
Derek Stimel:
So in economics, price gouging doesn’t really have a specific definition, to be honest with you, but the loose idea is that it’s taking, quote, unquote, for lack of a better term, “unfair advantage of a situation in order to raise prices.” Sometimes these situations are obvious, which are… There’s an earthquake that happens, let’s say, so suddenly the price of gas and water in the surrounding area is going to skyrocket. That kind of idea of taking advantage of other people’s misery and something that was really out of their control, a natural disaster, that’s really what we see as price gouging. So in this particular context, what we’re talking about with Vice President Harris is this view where, say, for example, grocery stores taking advantage of the circumstances to basically raise prices on their products in an unfair way. But it’s a bit nebulous once you start to get away from things that I think we all would agree are clearly things out of our control, like natural disasters.
Anna Helhoski:
And is there anything already in place to prevent price gouging?
Derek Stimel:
So states generally have laws that prevent price gouging in the situations we’re talking about like natural disasters, so hurricanes and floods and earthquakes, and so forth. What Vice President Harris is really talking about is basically a federal ban across the board on all forms of price gouging. At least that’s what I understand it to be. And we don’t have that. It’s not really clear what the criteria would be for that as well. So for example, if a company raises prices on its products by 5%, how do we decide if that’s just normal market forces or is it price gouging in some ways? In other words, how do we decide the fairness of it all? Generally speaking, in our economy, we let the markets work that out, and then everybody individually makes a decision about, nope, that’s too expensive, I’m not going to buy it, or I guess I’m willing to pay that price, that kind of thing.
Anna Helhoski:
So some critics of Harris’s proposal, including Donald Trump have said that this is a price control. So what is a price control? Why don’t economists like price controls and would Harris’s proposal to ban price gouging actually be a price control?
Derek Stimel:
Basically, a price control is essentially the government setting a maximum price in a marketplace. So sort of saying, “Hey, you can charge no more than X for this product.” And of course, we have price controls in the economy. The ones that people typically talk about classically are certain cities that have rent control. What people are basically saying is that this price gouging idea would in a way limit how much businesses can raise prices. And that would in a way be similar to what happens in a price control situation where the government often does cap how much a business can raise prices.
The good and bad of economics a lot of times is that there’s tradeoffs for everything. Concern would be basically that maybe grocery stores, because that’s the one that’s been central to all this argument, has really been the price of food, is that basically, maybe you wouldn’t see as many new grocery stores opening up, or at least in a lower frequency. Maybe you would start to see the quality of what’s on the shelves in the grocery stores start to decline a little bit. So on the one hand, you get the prices of the things you buy don’t go up as much maybe, but on the other hand, there’s less of them available and at least for some of them, maybe the quality of those products might go down a little bit.
Anna Helhoski:
So beyond preventing price gouging, Harris has also vowed to lower prescription drug prices and she wants to do this with price caps by allowing Medicare to negotiate prices, speeding up delivery of generic drugs, and cracking down on big pharma. So how impactful could some of these efforts be in terms of making prescription drug prices more affordable?
Derek Stimel:
Oh, it could. Not surprisingly, the federal government via Medicare is a huge consumer in this marketplace, which basically means they have a lot of power, market power we would call. In this particular case, the technical term is monopsony power. But basically, yeah, they would have a lot of power potentially to negotiate and there would be spillover effects for people who don’t have Medicare. In terms of being able to lower, say, prescription drug prices by allowing Medicare to do this giant negotiation basically with the big pharma companies, that honestly could have a big impact on those prices for sure, because Medicare is so huge.
Anna Helhoski:
Right. And you touched on housing earlier, but let’s talk a little bit about Harris’s big proposals with her plans to make housing more affordable. One that really stuck out to me is a plan to prevent corporate landlords from using price-fixing algorithms.
Derek Stimel:
This is a brave new world that we’re in, and there’s a lot of times where regulation is behind the technology, where basically a lot of these businesses… And it’s of course not just in real estate, it’s in a lot of other areas as well, in finance in particular, where they basically use these computerized algorithms to essentially search for the deals that they want to transact. Is it price-fixing or is it the fact that all of these algorithms basically tend to point in the same direction because they often use the same data in order to churn through all their calculations? It’s not clear to me, I guess, how that might be enacted and then also what the implications would be.
Anna Helhoski:
And Harris said she would support construction of 3 million new housing units in the next four years, among other plans. And fundamentally, in order to lower housing prices or rent or the supply of homes for purchase, we just need more housing. So could Harris’s proposals spur more construction? And also what can a president do to facilitate housing growth?
Derek Stimel:
So much of this is local. I mean, so much of this is red tape based on local housing boards and all these other types of things, the “not in my backyard” kind of stuff. And so it’s not really clear what anybody at a national level could really do about that kind of stuff because so much of it is all of the local political machines and so forth that basically drive all these policies. As a general idea, I think the basic point that, yes, the way you have to basically lower housing prices or at least keep them from going up as much is to supply more housing, is definitely the answer. Because the housing market in a sense is unique compared to other markets, in that the supply is basically fixed by the number of units and very, what we would say in economics, inelastic. You’re not going to really get around that unless you just simply build more.
Anna Helhoski:
Derek, are there any other proposals from either of the candidates that we’re overlooking that could contribute to lowering prices or to increasing inflation?
Derek Stimel:
I think the last thing I would mention, I guess. I know President Trump wants to increase the domestic production of natural gas and coal and all that sort of thing. And I do find it interesting that both Vice President Harris and President Trump have focused on these areas of inflation. In the case of former President Trump, it’s energy costs, and in the case of Vice President Harris, it’s basically food costs. And these are the things that are specifically excluded by the Fed when they’re looking at the longer-term measures of inflation. So I just find it interesting that both presidential candidates have focused on these highly volatile markets, which we often think they really can’t do that much about, and that are often driven by these global forces, basically. But both of them have focused on those as their avenues to bringing inflation down.
I think the very last thing I might add in, which is probably too big to really get into, is the extent that the deficit and the national debt might play in terms of inflation in other parts of the economy, especially going forward as it’s ballooned a lot. There are some theories out there, for example, that it does play a role in inflation and to the extent that the policies of the two candidates might add to the deficit, and of course, then by extension add to the debt. That could be in a way a hidden inflation factor that we tend to not focus so much on.
Anna Helhoski:
And one we’ll probably pay for in the future.
Derek Stimel:
Yeah, somebody will eventually.
Anna Helhoski:
Derek Stimel, thank you so much for joining us today.
Derek Stimel:
Yeah, absolutely. Thank you so much for having me.
Anna Helhoski:
Sean, there’s something else I want to point out that I didn’t get to in my conversation with Derek, but came from researching an article on this topic, and that’s price tolerance. Right now, people are still pretty price intolerant because so much is elevated from where we remember it being. But if prices actually did drop across the board, it would be a big problem. Economy-wide price drops really only happen when there’s a big recession. And I think Trump and Harris’s campaigns both know this. They can’t bring back pre-pandemic prices, so what they can do strategically is make promises that are most relevant to people.
Sean Pyles:
Right. And last week we talked about how one individual president can’t really transform the economy on their own. But your conversation with Derek Stimel illustrates how a president’s priorities can make a bigger impact on an issue-by-issue basis. Former President Trump is focused on lowering the price of gas. Vice President Harris wants to make housing more affordable. And we saw how President Biden was able to push for lower prices on certain drugs like insulin. Although we should note, of course, that Biden wasn’t able to do that without the help of Congress.
Anna Helhoski:
So Sean, one other thing. Maybe it’s obvious but it’s worth saying, is that while we have pointed to a lot of ways in which a president cannot really control things like pricing, the president is also the leader of his or her respective political party, and that often means that the party and its political leaders will coalesce around these policies, making them more viable.
Sean Pyles:
Yep. We’ve mentioned that the president often has to work with Congress to get bills passed that can fulfill their promises. And members of their party, while they don’t necessarily march in lockstep, they will frequently work with that president to pursue his or her economic agenda. So no, the president can’t wave a magic wand, but if their party also has control in Congress, that makes a world of difference in the ability to make those goals happen.
Anna Helhoski:
And that’s a case for making sure you’re paying attention to what candidates are saying up and down the ballot. The presidential candidates aren’t the only ones to make a difference. Do some research on your congressional candidates, and for that matter, city council and school district, because they all touch public money and that’s your money. It always helps to educate yourself on how they plan to spend it. You can find the latest money news updates in NerdWallet’s financial news hub, which we’ll link to in the show notes, or just search online for NerdWallet financial news.
Sean Pyles:
So Anna, tell us what’s coming up in episode three of the series.
Anna Helhoski:
Well, Sean, next time we’re using a word nobody likes but matters a lot to your finances: taxes. We’ll hear what the current candidates for the highest office in the land want to do with the money that comes out of your paycheck.
Amy Hanauer:
Two-thirds of the cost of making those individual tax cuts permanent would go to the richest fifth of Americans. So to the richest 20% of Americans. So just for a sense of what that will cost, in 2026 alone, that will cost more than $280 billion.
Anna Helhoski:
For now, that’s all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373. That’s 901-730-N-E-R-D. You can also email us at [email protected]. And remember, you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes.
Sean Pyles:
This episode was produced by Tess Vigeland and Anna. I helped with editing. Rick VanderKnyff and Amanda Derengowski helped with fact-checking. Megan Maurer mixed our audio. And a big thank you to NerdWallet’s editors for all their help.
Anna Helhoski:
And here’s our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
Sean Pyles:
And with that said, until next time, turn to the Nerds.
Though the Halepuna Waikiki by Halekulani hotel sits in the heart of tourist-packed Waikiki on the island of Oahu, it’s quiet and relaxed. The 284-room boutique hotel offers a refreshing alternative to the sprawling resorts that dominate the area.
But the real standout about this boutique oasis? No resort fees.
I visited Halepuna Waikiki for two nights, as part of a longer trip to Oahu. The resort initially caught my attention for its lack of resort fees. I grew even more interested when I learned about how much it included. Notably, it offered complimentary access to multiple museums that I had long been yearning to visit given my family’s Hawaiian heritage.
Though nightly rates typically run over $300 a night (slightly higher than Oahu’s average nightly hotel room rate of $272, based on May 2024 data from the Hawai‘i Tourism Authority), the free museum access alone went a long way in justifying it. Without that complimentary access, my travel companion and I otherwise would have spent more than $150 combined on museum tickets.
That made the decision easy — and it didn’t hurt that the hotel was quite fancy, too.
About the Halepuna Waikiki
Halepuna Waikiki by Halekulani is the sister property of Halekulani, On the Beach at Waikiki —one of the oldest (and most famous) Waikiki beach hotels. As for the Halepuna Waikiki, this property is relatively new. It opened in October 2019, but closed for more than a year during the COVID-19 pandemic.
The hotel reopened in April 2021 with several awards and titles to its name. That includes a AAA Four Diamond Award, which is a prestigious award recognizing hotels for their upscale style, amenities and service.
Features include a rooftop infinity pool with ocean views, plus a sleek lobby designed with custom light fixtures, vaulted ceilings and floor-to-ceiling windows that offer up a light and airy aesthetic.
The Halepuna Waikiki location
The Halepuna Waikiki offers the best of both worlds in that it has ocean views without sitting directly on the beach. That means you can still get a great view without the exorbitant beachfront price tag.
The hotel sits just one block from the beach on one side, and one block from Kalakaua Avenue — Honolulu’s main shopping street — on the other side. Since the hotel sits tucked away on a side street, it tends to be a little quieter than most other Waikiki hotels, and it usually won’t have as many non-hotel guests wandering through the lobby.
Halepuna parking is available, but it’s not cheap. Whether you opt for valet or self-parking, you’ll pay $50 per day. Given the hefty parking fee coupled with the hotel’s prime, walkable location, you might not actually want a rental car in Honolulu anyway.
To get there from the airport, it’s usually best to take a taxi or rideshare. Ubers generally cost about $30 to $40 between Honolulu’s Daniel K. Inouye International Airport and the hotel.
Halepuna Waikiki rooms
Halepuna Waikiki by Halekulani has 284 guest rooms and four suites. The best views are from the oceanview rooms on higher floors (floors 19 through 23), as they’re not obstructed by the buildings in front.
These Deluxe Ocean View rooms tend to cost about 15% more than the Ocean View rooms with obstructed views and about 30% more than the standard Waikiki view rooms.
The rooms have modern amenities, like a bedside and dress charging station with ports for USB and HDMI, plus a Bluetooth connection. Shades are remote controlled, and bathrooms have nice features like a lighted vanity and magnifying mirror.
The rooms also have some nods to the local culture. For example, each room has a unique photo taken by a local photographer, and the bath amenities use locally-sourced Hawaiian oils and extracts.
All rooms also have a refrigerator and coffee maker. The complimentary refillable water bottles make for a great souvenir.
Key amenities at the Halepuna Waikiki
The rooftop infinity pool on the hotel’s eighth floor is remarkable.
The area also has a hot tub, plenty of lounge chairs and cabanas available for rent. Conveniently, complimentary sunscreen is available for hotel guests.
A rooftop garden and grass turf space adjacent to the pool is a nice place to sunbathe outside of the pool deck.
The eighth floor also offers a gym, which offers fairly standard equipment like cardio machines and dumbbells.
One unique feature caters to the workcation crowd — the business center and hospitality suite. This room offers work desks where hotel guests can post up with no reservations required. If you do need to reserve a private space, there’s also a separate, bookable meeting room that accommodates up to 24 people.
One underrated amenity is a coin-operated laundromat, which is also located on the eighth floor.
In addition to the on-property amenities, the Halepuna offers some free events and tickets. For example, guests can participate in complimentary, daily surf demonstrations held on the beach in front of Halekulani.
Halepuna guests also receive complimentary admission at the biggest museums in the state, including the Bishop Museum and Honolulu Museum of Art. Given that general adult admission costs $34 to the Bishop Museum and $25 to the Honolulu Museum of Art, that alone could go a long way in justifying the hotel room rate.
Halepuna Waikiki restaurants
The Halepuna has two restaurants:
Halekulani Bakery: This morning spot serves coffee and pastries, and it’s most famous for its Halekulani Coconut Cake.
Umi By Vikram Garg: This seafood-centric restaurant open for breakfast and dinner is located in the hotel lobby. Each dish uses high-end and unique ingredients, such as fried rice made with seafood, bacon and koshihikari rice. Even the pancakes are elevated; the “Mai Tai Pancake” is served with caramelized pineapple and a rum-coconut essence.
Halekulani restaurants
Dining options are slim at Halepuna, but that’s where Halekulani, its sister property across the street, shines. The hotel has about a half-dozen different places to eat, and Halepuna guests can charge purchases made at Halekulani back to their room.
La Mer: The award-winning La Mer serves French cuisine with ‘flavors of Hawaii.’
Orchids: Though it’s open all day, Orchids is a great spot for Waikiki brunch in particular, as well as Waikiki afternoon tea given its ocean views and diverse menu that embraces both Asian and American cuisine.
House Without A Key: Then there’s one of the most famous restaurants in Waikiki: House Without A Key. Though it’s not fancy, it’s still an elevated spot for lunch, dinner or drinks. Don’t plan on rushing through a meal here, as the draw is enjoying the Hawaiian music and hula performances held in front of the restaurant’s century-old kiawe tree.
It’s all outdoor seating, though there’s an expansive, covered area offering an open-air, indoor-like place to eat.
The food is just as good as the vibes. There’s all sorts of burgers, fish and flatbreads. The highlight, though, is found on the sunset cocktail menu: kabayaki fries. With this dish, fries are doused in the famous Japanese sauce, and then topped with furikake, garlic, onions and kewpie mayonnaise. Don’t miss it.
Who is the Halekulani Waikiki best for?
The Halepuna Waikiki by Halekulani offers the perfect combination of modern yet luxurious touches, a tucked-away atmosphere plus a prime Waikiki location – all at a competitive price, especially considering the absence of resort fees.
The complimentary cultural access and exclusive privileges at the Halekulani elevate the experience even further. For travelers seeking a luxurious and intimate escape in Waikiki, the Halepuna Waikiki is one of the best hotels in Waikiki.
Booking the Halekulani Waikiki
There are a few ways to pay for your stay, so compare prices before booking. Booking options include:
Direct through Halepuna: When you book directly on Halepuna’s website, you can take advantage of exclusive offers. These vary by time of year, but often include deals like free breakfast for two.
I Prefer Hotel Rewards: The free-to-join hotel loyalty program doesn’t have a huge presence in the U.S., but it serves hundreds of hotels and resorts worldwide. Like most hotel loyalty programs, members can rack up points to exchange for free nights. Plus, members have access to exclusive rates, early check-in and space-available room upgrades.
The hotel also usually appears on American Express Travel, where it’s part of the issuer’s Fine Hotels + Resorts® program. Cardholders who pay with their The Platinum Card® from American Express can get up to $200 in statement credits per calendar year on prepaid bookings through Fine Hotels + Resorts® or The Hotel Collection bookings through American Express Travel. (The Hotel Collection requires a minimum two-night stay.) Though that card has an annual fee of $695 (see rates and fees), the statement credits can go a decently long way in justifying it. Terms apply.
Plus, AmEx cardholders who book through FHR are eligible for space-available room upgrades, complimentary breakfast, a $100 property credit and late checkout. Terms apply.
To view rates and fees of The Platinum Card® from American Express, see this page.
Economic topics took center stage in the vice presidential debate Tuesday night between Ohio Sen. JD Vance and Minnesota Gov. Tim Walz. The candidates defended their tickets while debating intensely on inflation, housing, child care and health care.
The debate, held in New York City and hosted by CBS, gave Walz and Vance the opportunity to more clearly define themselves to voters, as both were thrust quickly into the national stage this summer. In contrast to the presidential debate three weeks ago between former President Donald Trump and Vice President Kamala Harris, the vice presidential debate was strongly focused on policy.
Also unlike the first debate between Trump and Harris, the Walz-Vance debate remained civil and sometimes agreeable. The pair even found common ground in the fact that both have made public misstatements in the past — Vance in his prior condemnation of Trump and Walz incorrectly stating that he had been in Hong Kong during the 1989 Tiananmen Square massacre.
But it was still a debate between candidates with stark conflicting views on most issues, especially abortion and immigration. They used their time to attack the others’ rivals at the top of the ticket. The biggest moment of tension between the two men came when Walz confronted Vance about whether he believed that Trump lost the 2020 election — Vance bypassed the question and instead pivoted to a claim about pandemic-related censorship on Facebook.
As Walz and Vance supported their respective running mates, here’s what they had to say on some key economic issues:
The economy
Vance said Harris has already had the time to enact her policy plans, some of which he said “even sounds pretty good”: “If Kamala Harris has such great plans for how to address middle-class problems, then she ought to do them now.”
Walz attacked Trump for his contributions to the state of the economy the Biden-Harris administration inherited. He said: “We were already, before Covid, in a manufacturing recession — about 10 million people out of work, largest percentage since the Great Depression.”
Walz also gave his appeal to voters when it comes to Trump’s tax policies: “How is it fair that you’re paying your taxes every year and Donald Trump hasn’t paid any federal tax in the last 15 years?”
Housing affordability
Harris wants to increase housing production and encourage first-time home buying through downpayment support. Walz supported Harris’ plans and attacked Trump’s plan to seize federal lands
Trump wants to make housing more affordable by seizing federal lands, providing tax incentives and deporting immigrants. Trump has stated many times that migrants have driven up competition and increased housing prices — this claim is false, but Vance said he would share evidence after the debate via social media. Vance said that one of the strategies for lowering housing costs (in addition to Trump’s plan to deport migrants) would be lowering energy prices.
The VP candidates did agree on one thing, sort of. Walz said “The problem we’ve had is that we’ve got a lot of folks that see housing as another commodity.” Vance also said “We should get out of this idea of housing as a commodity,” before returning to more rhetoric related to immigration.
Health care
Vance promised to cover preexisting conditions if Trump is elected.
Walz spoke about Trump’s opposition to the Affordable Care Act and his attempts to repeal it during his time in office.
On abortion, Vance rebuffed the conjecture that he supported a national ban on abortion, although he did support a bill that would have done just that in 2022. He added that he wants the Republican Party to be pro-family: “I want us to support fertility treatments. I want us to make it easier for moms to afford to have babies.”
Meanwhile, Walz fiercely denied Trump’s accusation that he supports abortion in the ninth month of pregnancy.
Child care
Vance claimed that Trump’s plan to levy a 10% tariff on all foreign imports (with up to 60% for Chinese imports and 100% for vehicle imports from Mexico) would bring in money that would help bring down child care costs. Walz disagreed and said the tariffs would raise prices, which has been backed up by economists from all over the spectrum, including the nonpartisan Tax Foundation.
Walz said Harris would make a paid family leave a priority. “A federal program of paid family medical leave and help with this will enhance our workforce, enhance our families and make it easier to have the children that you want.” Vance said there is a bipartisan solution to child care.
There are no additional debates scheduled for either the presidential or vice presidential candidates.
By midnight on the East Coast, the Polymarket, a prediction market platform, projected a 65% chance that upcoming polls will show Vance won the debate.
The report highlighted the primary reasons why borrowers are seeking forbearance. Nearly 68.4% of homeowners in forbearance cited temporary hardships like job loss, divorce, disability, or the death of a family member. Another 25.9% attributed their need for forbearance to natural disasters, while only 5.7% of borrowers remain in forbearance due to ongoing financial impacts … [Read more…]
In this post, I’ll dive into the state of the housing market. We’ll analyze trends in interest rates, housing inventory, and inflation, exploring how these factors interact and impact both buyers and sellers. While no one has a crystal ball, I’ll review the latest insights and provide my best estimates of what may happen in the future.
Table of Contents
Video: Is the Housing Market Seeing a Big Slow Down? 2025 Predictions
A Complex Housing Market
As many of you know, I’ve been involved in real estate for a while—licensed since 2002, investing in rental properties since 2010, and flipping houses since 2003. This experience has given me the chance to observe a variety of markets, but this one stands out as particularly frustrating. Whether you’re trying to buy, sell, or refinance a property, the high interest rates are making things difficult for everyone involved.
If you’re in the industry, whether as an agent, lender, or working with title companies, fewer transactions mean it’s hard to make money. The root of this challenge?
Interest rates, which we’ll explore in greater detail below.
How Much Money Do Real Estate Agents Make Their First Year?
Housing Inventory: The National and Local Picture
Let’s start with inventory. Realtor.com’s data shows an 8% increase in the number of homes actively for sale compared to last year. This is a positive sign as more inventory should help stabilize the market. Additionally, the total number of unsold homes, including those under contract, has grown by 6.5%, and newly listed homes are up by 2.8%. However, these increases are small, and inventory levels remain well below pre-pandemic norms.
Locally, in Colorado, we see similar trends. The number of homes for sale has increased slightly, but it’s still far below the levels we saw before COVID-19. This is a national trend as well—active listings remain way down compared to the pre-crash era of 2006 when 5 to 6 million homes were for sale across the U.S., compared to just 1.15 million today.
The Impact of Interest Rates
Now, let’s talk about interest rates, which are arguably the biggest factor shaping today’s housing market. Historically, high rates haven’t always caused home prices to drop. For example, in the early 1980s, rates soared to 18%, yet home prices continued to rise. While today’s rates (hovering around 7-8%) seem steep compared to recent years, it’s worth noting that there are far fewer homes for sale, which keeps prices stable.
In fact, as Realtor.com’s data shows, median home prices increased by 1.4% year-over-year, despite high interest rates. Houses are also selling faster, with homes spending just 69 days on the market—a four-day improvement over last year.
How High Interest Rates Impact Real Estate Investments
The Role of Inflation and Predictions for 2024
Inflation has played a key role in pushing interest rates higher. If inflation continues to decline, there’s a chance we’ll see rates come down, which could stimulate the market again. However, it’s hard to predict exactly how much rates will fall. A small drop might make the market more competitive, while a significant drop could lead to a resurgence in demand, possibly driving prices higher again.
While we can’t predict the future, one thing is clear: the low number of listings and persistent demand have helped prevent any drastic price drops.
Future Value Inflation Calculator
Local Market Trends in Greeley, Colorado
Let’s zoom in on my local market in Greeley, Colorado. We’ve seen some fluctuations in pricing, but nothing too extreme. For example, the median sales price for November 2023 was $380,000, down 6% from November 2022, when it was $405,250. But if you compare December prices, you see an increase of 4%, with the median price rising from $405,970 in December 2022 to $423,373 in December 2023.
This variability highlights how easy it is to manipulate data to suggest a “crash” by selectively choosing specific months. Real estate markets are local and often volatile, especially when you’re dealing with small data sets. So, while headlines might shout about a 6% price drop, the reality is often more nuanced.
The Bigger Picture
Ultimately, the current housing market remains challenging, but it’s not on the brink of a crash. There are fewer homes for sale, but prices are staying relatively steady, even with high interest rates. Looking ahead, if rates drop, we could see a more competitive market, but it’s unlikely we’ll see significant price declines.
As always, be cautious of fear-mongering headlines that focus on short-term data points to predict disaster. The reality is more complex, and long-term trends suggest a market that remains stable, even in the face of rising rates and fluctuating inventory.
Thanks for reading, and if you have any questions about real estate or want more insights into the market, hit me up in the comments below.
That’s because expectations of a “gangbusters” spring market are growing. “Going back to maybe the first three to five months of the year, the narrative I was putting out there to people was… we’ve got limited supply,” he said. “Once demand goes up, so will prices. Would you rather buy a house at $500,000 today, … [Read more…]