The Morning Meeting with Al Tompkins is a daily Poynter briefing of story ideas worth considering and other timely context for journalists, written by senior faculty Al Tompkins.
The last time 30-year fixed mortgage rates were above 7% was in April 2002. Now, FreddieMac says, the average rate is 7.08% and rising. And 15-year mortgage rates average 6.36%. There is good news and bad news for people wanting to buy a new home. The good news is that higher rates will mean fewer buyers vying for the same property, so prices should drop. But buyers will pay the higher cost of borrowing every month.
It might be useful to put this data into some context. First, let’s look at how today’s rates compare to a year ago. A 30-year fixed-rate mortgage averaged 7.08 percent with an average of 0.8 points as of October 27, 2022, up from last week when it averaged 6.94 percent. A year ago at this time, the 30-year FRM averaged 3.14 percent.
(Freddie Mac)
The FreddieMac website included this passage from Sam Khater, Freddie Mac’s chief economist:
“As inflation endures, consumers are seeing higher costs at every turn, causing further declines in consumer confidence this month. In fact, many potential homebuyers are choosing to wait and see where the housing market will end up, pushing demand and home prices further downward.”
Now, let’s pull back a decade and you will notice that today’s rise does not look quite as dramatic. It’s the pandemic-era, valley-low rates that make the rates of today look like mountains.
(Freddie Mac)
And if you wonder why your parents or grandparents don’t get too excited about 7% mortgage rates, it might be because they remember the October 1981 interest rates of more than 18%. The gray vertical bars are recession years.
(Freddie Mac)
I drew a red line on that long-range graphic to make one more point. Notice on the graphic below how the 7% rate we stand at today is more like the average rate American mortgage interest rate borrowers paid in recent decades compared to the unprecedented low rates that followed the 2008 housing crisis and recession.
(Freddie Mac, Al Tompkins)
Oil companies report earnings, blowback begins in 3 … 2 … 1 …
There is one sure bet today. Minutes after Exxon tells us about its blockbuster third quarter, you will hear howls of protest and the voice of President Biden will echo his warning earlier this year when he said, “My message to the American energy companies is this: You should not be using your profits to buy back stock or for dividends. Not now. Not while a war is raging.” While most of the stock market is about 22% lower than a year ago, the Exxon Mobil Corporation share price is up 67% in the last year
(Yahoo Finance)
Bloomberg reports the five biggest oil companies together are expected to report third-quarter earnings that will top $50 billion.
Keep an eye on dwindling diesel supplies
Most of us are paying significantly less to fill our fuel tanks than we paid this summer. Gasoline prices have dropped by a fourth from their June peak, but diesel prices have only dropped 8%. One reason the prices of fuel paid by truckers and farmers have stayed high is that supplies are tighter than normal. Right now, there is about a 26-day supply which is 20% below the five-year average supply. USA Today reported:
Because diesel fuel is similar to heating oil, demand’s about to rise due to home heating this winter. “This is concerning,” said Patrick De Haan, head of petroleum analysis oil and refined products analyst at GasBuddy.com.
“Between now and the end of November, if we don’t build inventories, the wolf will be at the door,” Kloza said. “And it will look like a big ugly wolf if it’s a cold winter.”
“There’s a real threat something in the energy chain will go parabolic, and I think generally, the worry is that something that goes parabolic is diesel and heating oil,” he said, noting the time frame to watch closely is the dead of winter, from Dec. 15 to Feb. 15.
Heating oil bills shock customers
Homeowners are filling their heating oil tanks and, according to the U.S. Energy Information Administration, the average price of a gallon of residential heating oil is $5.79 for the week of Oct. 17, up from $5.48 last week and $4.64 the week before.
About 5.3 million American households use heating oil. About 82% of the households are in the Northeast. The top five states are in order: New York, Massachusetts, Pennsylvania, Connecticut and Maine.
Influenza activity is 10 times higher than a year ago
The flu season is here, and the virus is spreading fast. The CDC says last week about 1,600 people were here hospitalized with the flu.
The Walgreen Flu Index shows that southern states are having the most difficult time right now. Here are the cities with the highest infection counts with new data coming at the end of the week:
Top 10 DMAs with highest flu activity
1. Harlingen-Weslaco-Brownsville-McAllen, Texas
2. Columbus-Tupelo-West Point-Houston, Miss.
3. Corpus Christi, Texas
4. Beaumont-Port Arthur, Texas
5. New Orleans, Louisiana
6. Columbus, Georgia (Opelika, Ala.)
7. Houston, Texas
8. Lafayette, Louisiana
9. Mobile, Alabama-Pensacola (Ft. Walton Beach), Florida
10. Montgomery-Selma, Alabama
Top 10 states with highest flu activity
1. Louisiana
2. Mississippi
3. Texas
4. Alabama
5. Georgia
6. Tennessee
7. Arkansas
8. South Carolina
9. Puerto Rico
10. North Carolina
The upside of the worker shortage: People with disabilities are landing jobs
A New York Times story says that as employers grow more eager to find workers, they are discovering the trove of skilled workers they used to pass up: this who have disabilities and want jobs. The Times found that people with disabilities are not only getting more opportunities but better offers with more flexibility, including the ability to work from home:
“We have a last-in, first-out labor market, and disabled people are often among the last in and the first out,” said Adam Ozimek, chief economist at the Economic Innovation Group, a Washington research organization.
Remote work, however, has the potential to break that cycle, at least for some workers. In a new study, Mr. Ozimek found that employment had risen for workers with disabilities across industries as the labor market improved, consistent with the usual pattern. But it has improved especially rapidly in industries and occupations where remote work is more common. And many economists believe that the shift toward remote work, unlike the red-hot labor market, is likely to prove lasting.
More than 35 percent of disabled Americans ages 18 to 64 had jobs in September. That was up from 31 percent just before the pandemic and is a record in the 15 years the government has kept track.
The Times made a point I had not considered. “A recent study by the Federal Reserve Bank of New York estimated that close to 2 million working-age Americans had become disabled because of long Covid.”
One researcher points to some interesting statistics about hiring workers with disabilities. Employers report a 14% higher retention rate in the same roles when compared to their non-disabled counterparts. Pay attention to this summary:
The results of countless studies speak for themselves: If the right people with disabilities are selected for the right job and are given responsibility, they often outperform other employees, with higher levels of efficiency, productivity, accurateness, commitment, loyalty, and satisfaction. This, in turn, increases the company’s profitability and overall shareholder value.
It is too bad that it takes a worker shortage to wake employers up to the untapped potential of the workers they used to overlook. But let us turn to the Rolling Stones to summarize this lesson:
You can’t always get what you want
But if you try sometime, you’ll find
You get what you need
