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Why are American workers becoming harder to find?

Labour shortages are rising even though unemployment remains high


The pandemic has led to all sorts of weird economic outcomes. 

The latest oddity is the growing chorus of complaints in America about a shortage of labour, even though 8m fewer people are in work today than before covid-19 struck. 

In early April Bloomberg reported that Delta Air Lines had cancelled 100 flights for lack of staff. 

People are so hard to find that one café in Florida has turned to robots to greet customers and deliver food. 

A branch of McDonald’s is paying potential burger-flippers $50 just to turn up for a job interview.


The data back up the anecdotes. 

Total vacancies are running at their highest level for at least two decades (see chart), indicating that firms have plenty of unfilled positions. 

Furthermore, job openings are leading to fewer hires than you would expect based on the historical relationship between the two. 

And even accounting for changes in the composition of the workforce, wage growth, at about 3%, has been surprisingly robust, suggesting that firms are offering bigger pay packets to tempt workers. 

If they persist job shortages could eventually fuel inflation, threatening the economic recovery.

There are three potential explanations for the puzzling shortages: over-generous benefits; fearful workers; and a reallocation of labour between industries. 

Start with America’s huge fiscal handouts. 

The latest stimulus cheques, posted in the spring, were for up to $1,400 per person. 

Seemingly every American knows of a neighbour’s cousin’s boyfriend who received a “stimmy” cheque, then quit his job in order to sit on the sofa. 

A federal supplement to unemployment insurance (ui), currently $300 a week, ensures that four in ten unemployed people earn more from benefits than they did in their previous job. 

Economic research has long concluded that more generous benefits blunt incentives to look for work.

Yet this relationship appears to have weakened during the pandemic. 

The fact that increases in ui payments have been time-limited may make workers reluctant to turn down a job with longer-lasting rewards. 

In the early part of the pandemic the ui supplement was even more generous, at $600, but its expiry in the summer had “little effect on overall employment”, according to a paper published in February by Arindrajit Dube of the University of Massachusetts-Amherst. 

Likewise, in the areas where the current $300 is a relatively larger boost to income, employment growth has not weakened since January, when that uplift was introduced.

This suggests that the second factor, fear, may be important in explaining America’s shortage of staff. 

Nearly 4m people are not looking for work “because of the coronavirus pandemic”, according to official data. 

And consider which industries are experiencing the most acute worker shortages. 

Jobs in health care, recreation and hospitality report the highest level of job openings, relative to employment. 

Many of these involve plenty of person-to-person contact, making their workers especially vulnerable to infection (a study from California earlier this year found that cooks were most at risk from dying of covid-19). 

By contrast, in industries where maintaining social distancing or being outside is often easier, labour shortages are less of an issue. 

The number of job openings per employee in the construction industry is lower today than it was before the pandemic.

The final reason for worker shortages relates to the extraordinary reallocation of resources under way in the economy. 

The headline growth in vacancies represents the rise in opportunities in some industries—say, clerks in diy stores—as others decline, reflecting changing consumer demands. 

Analysis by The Economist of over 400 local areas also finds a wide variation in job churn across geographies: the gap between jobs growth in the most buoyant areas and that in struggling ones is twice as wide as it was before the pandemic. 

Workers may take time to catch up with this creative destruction. 

A former bartender looking for work in downtown Manhattan, for instance, may not quickly spot and secure a position as a delivery driver in farther-out Westchester.

As vaccinations continue to reduce hospitalisations and deaths from covid-19, and limit the spread of the disease, Americans’ fears about taking high-contact jobs should fade too. 

But if shortages are to dissipate fully, and the threat of inflation is to be contained, some of the unemployed will also have to take up work in sectors and areas that are new to them.


Leaders and Laggards in the Post-Pandemic Recovery

While some major economies are recovering fast from the pandemic-induced recession, others are languishing, and still others remain in a state of acute crisis. The extent to which these global inequalities persist will depend on a range of factors, and will have profound implications for social, political, and geopolitical stability.

Nouriel Roubini



NEW YORK – After the most severe global recession in decades, private and official forecasters are increasingly optimistic that world output will recover strongly this year and thereafter. 

But the coming expansion will be unevenly distributed, both across and within economies. 

Whether the recovery is V-shaped (a strong return to above-potential growth), U-shaped (a more anemic version of the V), or W-shaped (a double-dip recession) will depend on several factors across different economies and regions.

With the coronavirus still running rampant in many countries, one key question is whether the emergence of virulent new strains will trigger repeated stop-and-go cycles, as we’ve seen in some cases where economies re-opened too soon. 

One particularly ominous possibility is that more vaccine-resistant variants appear, heightening the urgency of vaccination efforts that have so far been too slow in many regions.

Beyond the virus, there are a number of related economic risks to consider. A recovery that is slow or insufficiently robust could result in permanent scarring if too many firms go bust and labor markets start exhibiting hysteresis (when long-term unemployment renders workers unemployable owing to an erosion of skills). 

Another question is how much deleveraging there will be among highly indebted firms (small and large) and households, and whether this effect will be fully offset by the release of pent-up demand as consumers spend down pandemic-era savings.

Another area of concern is socio-political: will rising inequality become an even more salient source of instability and depressed aggregate demand? 

Much will depend on the scale, scope, and inclusiveness of policies to support the income and spending of those left behind. 

Likewise, it remains to be seen if the macro-policy stimulus (monetary, credit, and fiscal) implemented so far will be sufficient, insufficient, or actually excessive, leading to sharply rising inflation and inflation expectations in some cases.

Keeping all of these uncertainties in mind, the recovery currently looks like it will be stronger in the United States, China, and the Asian emerging markets that are part of Chinese global supply chains. 

In the US, a decline in new infections, high vaccination rates, increased consumer and business confidence, and the far-reaching effects of fiscal and monetary expansion will drive a robust recovery this year.

Here, the main risk is overheating.

The recent increase in inflation could turn out to be more persistent than the US Federal Reserve expected, and today’s frothy financial markets could undergo a correction, thereby weakening confidence.

In China and the economies closely linked to it, the recovery owes much of its strength to the authorities’ success in containing the virus early, and to the effects of macro stimulus, all of which allowed for a rapid re-opening and restoration of business confidence. 

But high levels of debt and leverage in some parts of the Chinese private and public sectors will pose risks as China tries to maintain stronger growth while reining in excessive credit. 

More broadly, the prospect of an escalating rivalry – a colder war – between the US and China will threaten Chinese and global growth, particularly if it leads to a fuller economic decoupling and renewed protectionism.

Europe is worse off, having suffered a double-dip recession in the last quarter of 2020 and the first quarter of 2021, owing to a new wave of infections and lockdowns. 

Its recovery will remain weak through the second quarter, but growth could accelerate in the second half of the year if vaccination rates continue to rise and macro policy remains accommodative. 

But phasing out furlough schemes and various credit guarantees too early could cause more permanent scarring and hysteresis.

Moreover, without long-needed structural reforms, parts of the eurozone will continue to register low potential growth and high public debt ratios. 

As long as the European Central Bank keeps buying assets, sovereign spreads (namely, the difference between German and Italian bond yields) may remain low. 

But monetary support eventually will need to be phased out, and deficits will need to be reduced. 

And the specter of populist Euroskeptic parties looking to exploit the crisis will constantly loom.

Japan, too, has had a much slower restart. 

Following a lockdown to control a new wave of infections, it experienced negative growth in the first quarter of this year and is now struggling to keep the summer Olympic Games in Tokyo on track. 

Japan, too, is in desperate need of structural reforms to increase potential growth and allow for an eventual fiscal consolidation. 

And its massive public debt may eventually become unsustainable, notwithstanding persistent monetization by the Bank of Japan.

Finally, the outlook is more fragile for many emerging and developing economies, where high population density, weaker health-care systems, and lower vaccination rates will continue to allow the virus to spread. 

In many of these countries, business and consumer sentiment is depressed; incomes from tourism and remittances have dried up; debt ratios are already high and possibly unsustainable; and financial conditions are tight, owing to higher borrowing costs and weaker currencies.

Moreover, there is only limited space for policy easing, and in some cases policy credibility could be undermined by populist politics.

Among the more troubled economies to watch are India, Russia, Turkey, Brazil, South Africa, many parts of Sub-Saharan Africa, and the more fragile, oil-importing parts of the Middle East. 

Many countries are experiencing a depression, not a recession. 

More than 200 million people are at risk of falling back into extreme poverty. 

Compounding these inequities, the countries that are most vulnerable to hunger and disease also tend to face the greatest threat from climate change, and thus will remain potential sources of instability.

While overall confidence is recovering, some financial markets are irrationally exuberant, and there is much underlying risk and uncertainty. 

The COVID-19 crisis likely will lead to an increase in inequality within and across countries. 

The more that vulnerable cohorts are left behind, the greater the risk of social, political, and geopolitical instability in the future.


Nouriel Roubini, Chairman of Roubini Macro Associates, is a former senior economist for international affairs in the White House’s Council of Economic Advisers during the Clinton Administration. He has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank, and was Professor of Economics at New York University's Stern School of Business. His website is NourielRoubini.com, and he is the host of NourielToday.com.

The Fed Might Start to Act Sooner to Head Off Housing Boom and Bust. What Could Happen.

By Randall W. Forsyth

Stacks of lumber in Chicago: Tight supplies of building materials have fed into a housing market boom. / Scott Olson/Getty Images


Can we talk? 

That immortal query from comedian Joan Rivers would succinctly sum up the mouthful from the minutes of last month’s Federal Open Market Committee meeting, which has perked up the ears of market watchers.

“A number of participants suggested that if the economy continued to make rapid progress toward the committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases,” reads the key sentence in the minutes, released this past week.

Classic Fed-speak, worthy of former Federal Reserve head Alan Greenspan, with qualifiers about even talking about reducing the central bank’s massive securities purchases running at a $120 billion monthly pace. 

While the onetime maestro once worried that his circumlocutions might actually be understood, Jerome Powell, the current Fed chairman, has been refreshingly forthright about the direction of policy.

In particular, he has insisted that monetary authorities weren’t even “thinking about thinking about” raising interest rates (with another “thinking about” thrown in on occasion). 

The Fed would continue to use its tools—which, importantly, include those asset purchases—to generate what it deems maximum employment, while letting inflation run above its 2% target for a time to make up for past shortfalls.

Fed watchers were surprised that a suggestion to begin a conversation about planning to reduce bond buying had come up so soon. 

They had circled late August on their calendars—when the Kansas City Fed will hold its annual policy confab in Jackson Hole, Wyo.—as the likely date for some sort of an announcement. 

And they’ve been guessing that an actual reduction in the securities purchases probably wouldn’t even start until early 2022.

The Fed arguably already could declare “mission accomplished” for its campaign to ease financial conditions after the financial markets’ near meltdown in March 2020 from the impact of the Covid-19 pandemic.

Since then, stocks have soared, with the S&P 500 index up over 85% from its meltdown low. 

In the credit markets, spreads between U.S. Treasuries and corporate bonds—both investment-grade and high-yield—have narrowed to historic tight levels. 

This indicates that investors are demanding little extra return for their added risk in holding nongovernment paper.

The same is true in the mortgage market, in no small part because of the Fed’s buying $40 billion net of agency mortgage-backed securities, along with $80 billion of Treasury notes and bonds every month. 

As a result, MBS spreads are the tightest on record—only about 20 basis points (two-tenths of a percentage point) over comparable Treasuries. 

For prospective home buyers, that means that a 30-year fixed-rate loan costs just 3% annually (excluding 0.6 of a point paid to the originator), a big factor in the red-hot housing market.

At least one central bank official has raised questions about why the U.S. central bank is pumping up already-inflated home prices, a point made here on more than one occasion.

“My own personal view is that the mortgage market probably doesn’t need as much support now,” Boston Fed President Eric Rosengren is quoted as having commented, according to a research report by J.P. Morgan economist Alex Roever, which says that the Fed official added, “And in fact, one of my financial stability concerns would be if the housing market gets overheated.”

Rosengren is a thought leader at the Fed, Roever observes. 

Before the pandemic, he raised concerns about inflated commercial real estate valuations. 

If Rosengren’s views gain traction, Roever contends, the central bank could shift more of its purchases to Treasuries from agency mortgage-backed securities, while keeping its current buying pace. 

Or it could start trimming MBS purchases before it slows its buying of Treasury paper. 

Or it could cut purchases of both but wind down the MBS buying sooner, which Roever views as most likely. 

But J.P. Morgan’s base case is that the Fed will start to reduce Treasury and MBS buying simultaneously, and ratchet them down to zero at the same time.

That said, there seems little justification to stoke housing demand at a time when the market is constrained by a lack of supply. 

New-home construction is being hampered by tight supplies of building materials and labor. 

The inventory of existing homes also is low, because homeowners are reluctant to sell when they can’t find a new abode.

The Fed might be exacerbating those problems through its securities purchases. 

It’s not as if the mortgage market needs help. 

Banks have been even bigger buyers of mortgage-backed securities, expanding their holdings of agency MBS by $532 billion annually, or about $44 billion a month, according to Joseph F. Kalish, chief global macro strategist at Ned Davis Research.

Banks have been stuffed with deposits, while they have been “starved for loan growth,” notes J.P. Morgan’s Roever. 

So they’ve been forced to put their cash to work in high-quality assets to generate some net interest income. 

Over the next year, agency MBS yield spreads could widen by 20 to 30 basis points over benchmark Treasuries, he estimates. 

Once the Fed fully withdraws from the market by halting the reinvestment of monthly interest and principal payments, an additional 20 basis points could be added to that.

Indeed, removal of the Fed’s implicit subsidy should help restore some stability to the housing market, in which starts plunged 9.8% in April to a seasonally adjusted annual rate of 1.569 million units. 

The supply challenges also are reflected in the backlog of housing units authorized but not started. 

These have risen sharply for the second straight month, reports the Nomura North America Economics team, led by Lewis Alexander.

This tightness has been seen in a slide in home builders’ stocks, according to Yardeni Research. 

The iShares U.S. Home Construction exchange-traded fund (ticker: ITB) fell 9.1% from May 10 to May 19, compared with a 1.6% drop in the S&P 500 in that span. 

That comes after the ETF’s 75.1% rise in the latest 12 months, versus a 39.7% gain in the S&P 500.

The ETF’s laggard performance reflects the surge in prices of key building materials, such as lumber and copper, which crimp builders’ margins. 

The higher material costs also have worsened affordability, despite low mortgage rates. 

In fact, respondents’ assessment of home-buying conditions in the latest University of Michigan consumer sentiment survey is at its lowest level since May 1971, the Nomura economists point out.

While some people deny the importance of soaring home costs in inflation, because of the way they’re included in the consumer-price index, even government statisticians could recognize what’s clearly evident to aspiring homeowners.

For now, lower rents have held down the CPI, despite the big jumps in home prices. 

But Jim Bianco, who heads the eponymous Bianco Research, contends that rents have been held down by the federal moratorium on evictions. 

Some tenants pay a “goose egg,” which lowers average rents.

The CPI is backward-looking. 

Moreover, the eviction moratorium is slated to end in September. 

Looking ahead, Evercore ISI’s proprietary survey of apartment companies points to an acceleration in rent increases. 

“Higher rents may be viewed as more structural than transitory,” according to a client note.

That’s not surprising, given that would-be buyers can’t find homes that are worth buying at inflated prices, amid the frenzy of people flocking to the suburbs. 

The popular narrative is that inflation has been mainly a function of soaring goods prices, especially commodities. 

But the market has started to do its job, with high prices curing high prices, notably in lumber futures, which are off 25% from their recent peaks. 

ICAP technical analyst Walter J. Zimmermann Jr. sees signs of “upside exhaustion” in rallies of other key commodities, too, including aluminum, corn, and crude oil.

But services matter much more to the U.S. economy. Homeowners’ equivalent of rent, calculated by the Bureau of Labor Statistics, accounts for about a third of the core CPI, which excludes food and energy costs.

As noted, that rent measure has been held down because of the pandemic’s effects. 

But forward-looking indicators of rent are pointing higher, which would lift key inflation measures. 

The worry for markets, then, would be if the Fed were forced to accelerate the tapering of its securities purchases, which would be a prelude to the eventual liftoff in its federal-funds rate target from the current rock-bottom 0%-0.25%.

Following the release of the FOMC minutes, the first 25-basis-point rate hike was being priced in for the first quarter of 2023, versus the second quarter of that year, as of May 10, according to NatWest Markets strategists John Briggs and Jan Nevruzi.

Long before then, however, the Federal Reserve assuredly will be talking.

COVID-19: Made in China?

Probably not, but recent statements are curious to say the least.

By: George Friedman


In a recent interview, Dr. Anthony Fauci was asked whether he was confident that COVID-19 developed naturally. 

He has long maintained that though it was not impossible, the virus was in all likelihood a product of natural evolution. 

But this time he said something curious: “No, actually. 

I am not convinced about that. 

I think we should continue to investigate what went on in China until we continue to find out to the best of our ability what happened.” 

In other words, he raised the possibility of unnatural and therefore nefarious origins.

I don’t peddle in conspiracy theories, but my job often demands that I play devil’s advocate for the sake of playing devil’s advocate. 

So let’s do that here.

Consider the supplementary information. 

Shortly after Fauci’s statement went public, The Wall Street Journal ran a story about an intelligence leak (notably, the agency from which it was leaked was not named) that said that in November 2019 three researchers at a lab in Wuhan were hospitalized with COVID-like symptoms. 

This was a month before China reported the first cases. 

Implicit in the intelligence leak was the idea that the three men somehow contracted the illness in the lab, and that the Chinese government knew they had fallen ill.

The timing is certainly curious. 

It seems to me that Fauci made the statement with the approval of the White House, that the White House at least knew about the leak and allowed it to move forward, and that both were linked and done for some purpose.

One possible purpose offered by The Wall Street Journal is that the two were meant to force the World Health Organization, which is meeting shortly, to reexamine its conclusion that it was the result of natural causes.

Another possible explanation is that this could be the White House’s attempt to let China know it knew the truth all along but allowed things to proceed as they did so as not to worsen bilateral relations. 

Put differently, it was a gesture meant to let China come clean on its own. Related to this is the domestic political angle. 

Throughout the campaign, Joe Biden trashed Donald Trump on all things (as challengers always do), including Trump’s accusation of China’s responsibility for the virus. 

If for some reason China was, in fact, responsible, then it would make sense for Biden to try to get ahead of the story without looking entirely foolish.

The PR angle applies to Beijing as well. 

If the Chinese fabricated this, it seems to me that it was to hide their incompetence and even stupidity. 

One of China’s strategic weapons is the vision that it comprises millions of experts working with precision to dominate the world. 

In fact, China has lots of smart people and sometimes creates very successful industries but blunders like the rest of us. 

If the virus was fabricated and escaped, it looks more like incompetence, and incompetence is the one thing China cannot afford to reveal. 

Perhaps it did not know what it created and did not know what it would do to the world but understood it would look stupid, something neither the executives in the lab nor later the Central Committee could afford. 

China tried to cover and everything got out of control.

Now, let’s come back down to earth. 

Neither of these explanations answers why China would have been creating such a virus in the first place. 

Manufacturing a biological weapon may be tempting for some governments, but they are bullets that can turn around and hit the shooter. 

Why develop something that would inevitably hit China as well as the rest of the world? 

If China was manufacturing these things as a purely intellectual enterprise, why not do it outside a major metropolitan area? 

Why not have a medical team on site that could tend to the exposed rather than allow them out into the world?

If the Chinese fabricated the virus, they were either completely incompetent or ignorant to what they had produced. 

I do not think the Chinese are foolish. 

Accidentally letting the virus out seems more plausible than deliberately unleashing it on your own public, especially considering that if China is capable of manufacturing something like this, it is probably capable of deploying it on its enemies.

Which brings me to my next point. 

If the virus was designed to ravage the world and allow China to emerge as a global hegemon, Beijing would still be guilty of ignoring the fact that it is the world’s biggest exporter. 

It depends on exports to maintain its economy. 

Killing your customers is bad business, and indeed the pandemic hurt the Chinese economy as much as it hurt others.

Of course, there is the possibility that the virus just happened as sometimes they do, and that the recent leaks indicate nothing more than two governments scrambling to make sense of something they can’t control. 

After all, if Biden wanted a WHO investigation, he could have just asked for it. 

If Washington wanted to be coy with China, it could have just reached out on informal channels.

I don’t know what exactly was in the intelligence reports, and I don’t know why there is a slow rhetorical shift in the White House. 

I only know that there is a shift that could change public opinion about China irreparably. 

The world’s view of China and its relations to its major adversary, the United States, rests on this.

The crypto crash, illustrated by the magic of chart crime

“A lesson. Explained with two charts.”

Jemima Kelly 



It’s been a rough ride for crypto this past week or so, hasn’t it? 

Bitcoin has lost a fifth of its value in the space of seven days; Ethereum has lost more than a third. 

If you were to use the total “crypto market cap” as a metric (which you definitely shouldn’t) you would say that the crypto market has lost more than $800bn in value since May 12th.

But we must put this into perspective. Saturday May 22nd, after all, is the 11-year anniversary of the first ever bitcoin payment for something in the real world, when 10,000 bitcoins were used to buy two slices of pizza. 

(At current rates, that would be $200m per pizza slice. Pretty wild.)

So yes, bitcoin has come a long way since then. 

We are prepared to accept that (though whether that is a good thing is a separate question to which we think the answer, all things considered, is BAH NON).

What we are less prepared to accept, however, is the idea that the past week’s bloodbath has been a drop in the ocean. 

For the top HODLers in this headless ponzi scheme yes, sure, but for the poor newcomers who got in a week ago, this can’t have been much fun.

And let’s not make any mistake about it: the Brodom of Cryptoland relies on these people to keep the whole thing going, as they themselves acknowledge (in somewhat astonishingly overt fashion):


But what we are certainly never prepared to accept is chart crime.

Presenting a “lesson” from TradingView, a company that says it builds “financial tools, charts, and software for the 🌎”:


Here’s a close-up of both of those charts.


And:


Do, please, note the interesting numbers on the Y-axis.

A lesson indeed! 

In how you can use charts to basically show anything you like. 

A lot of money might have been lost, but in chartological terms, everything is in fact A-okay(fabe).

Real-Estate Frenzy Overwhelms Small-Town America: ‘I Came Home Crying’

Buyers far from big cities lose out to investors and deep-pocket rivals in places where properties until a year ago offered affordable entry to the middle class

By Candace Taylor 

    House hunters waiting their turn at an open house this month in Northampton, Pa., north of Allentown.


Dominic Pollock, still in his work boots, stood on the lawn of a 1960s-era three-bedroom house for sale in the former steel town of Bethlehem, Pa., 60 miles north of Philadelphia. 

It was listed at $250,000.

“I really, really like it,” Mr. Pollock told his real-estate agent Danny Hazim, a buddy from high school in neighboring Allentown, Pa. Groups of other interested buyers huddled nearby and whispered to their agents in urgent tones, casting sly glances at rivals.

Mr. Pollock, 25 years old, was willing to go above the asking price. 

He and his fiancée, Brooke Terplan, 26, had made more than 20 offers on houses over nine months. 

Each time, they were outbid.



The couple had hoped to land a home by their wedding this week and begin a life together. 

Mr. Pollock lived with his brother, and Ms. Terplan, a labor-and-delivery nurse, lived with her parents.

Like many would-be buyers, they braced for disappointment.

Home prices in the U.S. have shot up in the past year, driven by limited supply, record-low interest rates and buyer demand. 

Bidding wars have spread from such high-profile locations as Palm Beach, Fla., and the suburbs outside New York City to smaller cities and towns, including long-neglected locales where properties typically sat on the market for months.

Brooke Terplan and her fiancé, Dominic Pollock, at an open house in Whitehall, Pa.


Local buyers bid against one another as well as against investors who now comprise about a fifth of annual home sales nationally. 

Online platforms such as BiggerPockets and Fundrise make it easier for out-of-town investors to buy real estate in smaller cities across the U.S., said John Burns of California-based John Burns Real Estate Consulting.

Often, Mr. Burns said, “the cash flows are better in the Tulsas and Allentowns of the world” for those seeking to rent out properties. 

In the fourth quarter of 2020, nearly a fifth of homes sold in the Allentown area were bought by investors, according to Mr. Burns’s data.

The median listed price for a house jumped 24% in January from a year earlier in the metropolitan area surrounding Allentown, the Rust-Belt city whose decline was memorialized in a 1982 Billy Joel song, according to data from Realtor.com. 

It was the same in such spots as Martin, Tenn., a small city 150 miles from Nashville, where the median asking price went up 159% over the same period; in Kendallville, Ind., about 30 miles outside Fort Wayne, it climbed 56%.

The average price for a house in the Allentown metro area, which includes Bethlehem, was about $225,000 a year ago, Mr. Campbell said. 

It has since shot past $270,000 in a market so hot that open houses trigger traffic jams, and properties sell in 48 hours.



Many homeowners want to sell while prices are high but hesitate for fear they won’t find an affordable place to move. 

Housing supplies can’t meet demand.

In Bethlehem’s 18018 ZIP Code, the average monthly number of homes for sale has fallen 65% in the past year to 25 from 2017-2019 levels, according to Realtor.com. ( News Corp, owner of The Wall Street Journal, operates Realtor.com under license from the National Association of Realtors.)

Buyers feel pressure to make snap decisions, and some forgo routine home inspections for fear of losing to another bidder. 

“If you’re a buyer, this is the most frustrating time,” said Jonathan Campbell, vice president of DLP Realty in Bethlehem. 

The local market, he said, is outpacing the mid-2000s housing boom.

With the exception of a few urban markets, including Manhattan and San Francisco, the U.S. is seeing “a chronic shortage of inventory, heavy sales volume and prices rising at levels wildly ahead of income growth,” said Jonathan Miller of New York-based Miller Samuel Real Estate Appraisers and Consultants. 

The Case-Shiller U.S. National Home Price NSA Index reported a 12% annual gain in February, a figure seen only a few times in the history of the index, said Craig Lazzara, a managing director at S&P DJI.

The ranch-style house where Mr. Pollock stood with Mr. Hazim on Kensington Road had been listed a day and already had several offers. 

It was 1,900 square-feet with a full bathroom and two half baths. The sellers would only take bids until 11 p.m. the following day.

Mr. Pollock, who installs fire sprinklers, agreed to submit an offer of $270,500, adding $20,500 to the asking price. To sweeten the deal further, he waived his right to an inspection of the plumbing, roof, foundation or any other part of the house.

“We will know by tomorrow,” his agent, Mr. Hazim, told him.


First home

Old blast furnaces at the long-defunct Bethlehem Steel plant rise over the Lehigh River, 90 miles west of New York City. 

The city of Bethlehem and neighboring Allentown were major industrial centers until a wave of factories moved overseas in the 1980s and 1990s.

In the center of Allentown, population 121,000, Victorian row houses once occupied by middle-class families were divided into low-cost apartment rentals. 

The city’s downtown has recently been redeveloped, but crime remains a common complaint, said Mr. Hazim, 25, who grew up there.

Healthcare and universities are now major employers in the region, which is known as the Lehigh Valley. 

Much of the area is still farmed. 

The road a few minutes drive outside of downtown Allentown is flanked by cornfields, and the air smells of manure.

From left, Dominic Pollock, Brooke Terplan and real-estate agent Danny Hazim about to tour a house in Bethlehem, Pa.


Mr. Pollock and Ms. Terplan grew up a few houses apart in an Allentown subdivision called Midway Manor. 

They started dating when they were 21. It was on New Year’s Eve 2016, at the pub where Mr. Pollock still tends bar on weekends. 

Someone asked if he was going to kiss Ms. Terplan at midnight, and he did.

The couple started looking for a house around the time they got engaged in August. 

They needed a place with room to start a family. 

Ms. Terplan said she wants to get pregnant as soon as they marry. 

“She really wants the American dream, the white picket fence, the two dogs out back,” Mr. Pollock said.

They had been saving for years and planned on making a 10% down payment when they started looking. 

“A couple people told us that it was going to be tough,” Mr. Pollock said, “but we couldn’t even fathom what we’d walk into.”

Before the pandemic, home prices in the Lehigh Valley began at around $15,000 for a mobile home and went to $400,000 for a two-story house in a newer subdivision.

Historic homes in the West End of Allentown sold for as much as $450,000. 

For years, buyers had their pick, Mr. Hazim said.

After the first round of pandemic lockdowns eased, real-estate offices reopened last June, Mr. Hazim said, and agents noticed a shift in the market right away.

First, there were fewer home listings than normal because of Covid-19 fears. 

“No one wants to list their house because no one wants random people coming in,” he said of the scariest period. 

“You never know who has it.”

Supply also was down because the government’s mortgage forbearance program sharply reduced home foreclosure sales. 

At the same time, Mr. Hazim said, demand for homes ballooned.

    A Lehigh Valley Health Network facility in Allentown, Pa.


Investors are attracted to the Lehigh Valley, Mr. Hazim said, because home prices and taxes are low relative to market-level rents. 

He recently worked with a New York City-based investor who bought a single-family house in the town of Northampton, about 20 minutes from Allentown.

The New Yorker paid $15,000 over the asking price—all cash, with no inspections—and planned to rent it out. 

The buyer, Mr. Hazim said, still marveling, took it sight unseen.

‘Shoot me now’

Mr. Pollock and Ms. Terplan first started looking in Bethlehem, close to their parents, and in nearby Easton, where Mr. Pollock lived with his brother. 

When one offer after another was rejected, they started looking farther afield and lifted their budget ceiling to $300,000 from $250,000.

Nearly once an hour on Ms. Terplan’s days off, she checked Zillow or Realtor.com for property listings, wondering, she said, “Are there any new ones?”

Their families were baffled at first. 

Ms. Terplan’s father “was getting so aggravated with us, like, ‘Hey, you’re doing something wrong!’ ” 

Mr. Pollock recalled. 

His future father-in-law couldn’t comprehend the market frenzy until they showed him the paperwork for one of the offers they had made above the asking price, Mr. Pollock said.

Mr. Hazim trudged alongside them. 

He showed the couple about 50 houses and shared their disappointment after rejected offers. 

He attended Dieruff High School in Allentown with Mr. Pollock and years later joined DLP Realty.



Mr. Hazim, 25, said he was working 12-hour days, seven days a week, and closing maybe five deals a month, about half of what he would expect while serving such a large pool of clients. 

“With so many hours required to close,” he said, “it’s going to turn out to be minimum wage.”

On a recent Wednesday, he took a two-hour drive to show his client Lisa Hanna a couple of listings she had found online. 

Both houses needed major repairs, and Ms. Hanna spent only minutes inside each of them.

“Shoot me now,” Ms. Hanna said, after exiting one in rural Ruscombmanor Township, Pa. 

“The pictures of this house are nothing like what the house is.”

Ms. Hanna, 48, who works for an insurance company in Bethlehem, was looking for a three-bedroom house with enough land to start breeding Great Danes. 

In two weeks of house-hunting, she saw 10 to 15 properties and made three failed offers. “I’m getting very discouraged,” she said.

She bought her current home six years ago, paying $116,000 for a new three-bedroom. 

It took her just a day to find it. 

Now, she worried she couldn’t find any house to move into. 

“It’s nerve-racking,” she said.

Many sellers have the same concern. 

“These people can’t list because they have nowhere to go,” Mr. Hazim said. 

He listed Ms. Hanna’s house for $189,000, and it sold within days in an all-cash purchase just under the asking price.

          Danny Hazim, a real-estate agent at DLP Realty.


She still hadn’t found another house, but the buyers agreed to give her 45 days to keep looking. 

After a month with no luck, “I was freaking out,” Ms. Hanna said.

Afraid she would lose her buyers, Ms. Hanna put in an offer on a two-bedroom house—smaller than she had hoped—in the Poconos, and it was accepted. 

The two transactions are slated to close on the same day in June.

For Mr. Pollock and Ms. Terplan, the rejections have made for an emotional roller coaster. 

“It’s tough,” said Mr. Pollock, especially for his fiancée, who falls in love with each house they bid for.

“There were days that I came home crying,” Ms. Terplan said.

When they were first engaged, Ms. Terplan said, she didn’t imagine they would still be looking for a house by the wedding. 

A few weeks ago, she said, “I had the realization that we’re probably not going to have a house before we’re married. I had a little bit of a breakdown.”

Rents in the area have gotten as high as mortgage payments, but it may come to that, the couple said.

After hours of waiting for a response to their bid on the Kensington Road house, Mr. Hazim got an email from the listing agent.

“Thank you for your offer,” it said. 

“We had 14 offers, and my sellers chose one that worked the best for them. 

Best of luck to your buyers.”

    Dominic Pollock and his fiancée, Brooke Terplan, at an open house in Northampton, Pa.

 

Photographs by Michelle Gustafson for The Wall Street Journal

The Big Tech Oligarchy Calls Out for Trustbusters

Concentrations of power in business or government endanger the popular rule envisioned by the founders.

By Josh Hawley

PHOTO: DENIS CHARLET/AGENCE FRANCE-PRESSE/GETTY IMAGES



This is the year of the woke corporation, the year the chieftains of the most powerful companies got bored with making money and decided to remake America, principally by telling Americans how bigoted and backward they are.

Major League Baseball shipped the All-Star Game out of Georgia when that state’s elected representatives dared enact modest election-integrity measures. 

Big Tech silenced a sitting president, banned books it didn’t like, and threatened to install itself as censor of the nation’s speech.

America’s founders had a word for this state of affairs: aristocracy. 

We might call it oligarchy, rule of the wealthy and the few. 

The founders understood that concentrations of power in either government or the economy are dangerous, threatening the rule of the people. 

That’s why they curbed monopolies and strictly limited the corporate form, largely confining its use to educational institutions and churches and sometimes public-works projects. 

They wanted the people to govern the nation, not an elite, whether that elite resided in government or business.

It’s time America recovered the founders’ political economy. 

We need a new era of trustbusting, an agenda to break up Big Tech and the other concentrations of woke capital that threaten to turn the U.S. into a corporate oligarchy. 

The aim should be simple: Give working Americans control again over their government and their society. 

In short, protect our democracy.

We are living in an age of monopoly power. 

Since the 1990s, two-thirds of American industry has become more concentrated. 

In 1995 the nation boasted 60 major pharmaceutical companies. By 2015 they had merged to form just 10. Big banks grow bigger while top airlines control ever larger shares of revenue. 

The credit-card market is now effectively a duopoly, and online it’s no better. 

Google and Facebook control more than 60% of digital advertising.

Big-business consolidation strips Americans of economic opportunity. In today’s corporate economy, small and new businesses struggle. 

New-business formation is barely half what it was in the 1970s, and the pandemic has further privileged the largest players at the expense of local and family enterprises. 

Concentrations of market power also mean a smaller share of gross domestic product for labor, which leads to flat wages for workers. 

As the market power of big U.S. corporations has increased, business investment has declined, meaning less spending on innovation and less productivity growth.

Not surprisingly, corporate monopoly leads to political power. 

It has always been thus. 

The giant railroads of the 19th century tried to bully and buy entire legislatures, including the U.S. Congress. 

Today, Major League Baseball—exempt from antitrust laws—and a cohort of megacorporations such as Delta and Coca-Cola are trying to order about states on election integrity, while Google, Facebook and Twitter decide which citizens may say what in the public square. 

Nike lectures the nation on social justice while it is suspected of profiting from forced labor overseas, as the Congressional-Executive Commission on China noted in its March 2020 report. 

Welcome to the woke economy, led by concentrated woke capital. 

Do as these companies say or face cancellation.

Americans weren’t content to let monopolists run the country a century ago, and we shouldn’t be today.

I propose three measures. 

First, break up Big Tech. 

The tech companies are the most powerful corporations in the country and likely in American history. 

They control what Americans read and what they say, what Americans share and what they buy. 

The Big Tech companies are the railroad monopolies, Standard Oil and the newspaper trust rolled into one, and tech CEOs are our robber barons. 

Congress should enact new bars on industry consolidation that will prevent the dominant tech platforms from simultaneously controlling separate industries and services. 

Google, for example, shouldn’t be able to own the world’s dominant web-search platform and run the cloud. 

That’s too much power and it’s bad for competition.

Second, cut the other megacorporations down to size. 

We can start by banning mergers and acquisitions for corporations larger than $100 billion. 

No exceptions. 

There is no good reason for a corporation to buy its way to the size of a small country. 

Vertical integration, in which one company buys up an entire supply chain—think Amazon marrying Whole Foods with its Prime shipping network—should also receive antitrust scrutiny.

Third, give courts a new standard to evaluate anticompetitive conduct. 

For years, courts have asked whether an alleged monopolist harms consumer welfare. 

In other words, does the business behavior in question drive up consumer costs?

That’s a fine question, but trustbusting isn’t about consumer prices alone. 

The tech companies insist that most of their services are free, even as they extract monopoly rents in other ways, like taking private consumer data without consent.

Trustbusting is about promoting robust competition. 

It’s competition that helps workers, spurs innovation and ultimately preserves the power of the ordinary citizen. 

Our founders understood that competition, not monopoly, is a friend to liberty.

Republicans were once the party of trustbusters. 

They should be again. 

The left is increasingly willing to cheer on the new monopolists—so long as they push the left’s agenda on cultural and other issues. 

In the face of this new alliance between big government and big business, conservatives must recover the wisdom of the founders’ vision: liberty, not monopoly.


Mr. Hawley, a Republican, is a U.S. senator from Missouri. He is author of “The Tyranny of Big Tech,” forthcoming May 4.

Biden’s First Hundred Days

Former President Donald Trump's attacks on free trade and immigration, narrow “America First” view of the world, and bias toward retrenchment have become part of the US political fabric. As Joe Biden's first hundred days in office have shown, the one thing American presidents cannot control is the context in which they operate.

Richard N.  Haass


WASHINGTON, DC – Joe Biden has been president of the United States for one hundred days, less than 7% of the time he was elected to serve. 

Still, it is not too soon to draw some tentative conclusions about the nature of his presidency.

Biden’s principal accomplishment to date is the expansion of the COVID-19 vaccine supply and the acceleration of domestic immunization. 

Some 220 million doses have been administered in the US since Biden took office. 

There is more than enough supply to ensure that every adult can be vaccinated. 

The daily death toll from the disease has fallen from over 4,000 per day to well under 1,000. 

The economy is poised to take off, with some even worrying that it could overheat.

In these same hundred days, the basic themes of the Biden presidency, articulated in his April 28 address to Congress, have emerged: an emphasis on tackling domestic challenges, a vastly expanded role for the federal government in both stimulating the economy and in providing basic services and financial support for citizens, and a commitment to confront racism, modernize infrastructure, increase the country’s competitiveness, and combat climate change. 

There is also a willingness to raise taxes on corporations and the wealthy to pay for some of what these initiatives will cost. 

How much of this agenda can be realized remains to be seen; for now, comparisons between Biden and Franklin Delano Roosevelt or Lyndon B. Johnson are understandable but somewhat premature.

Much of what Biden has done or wants to do represents a sharp departure from his predecessor, Donald Trump, and is popular with many Americans. 

On immigration, however, Biden’s approach is proving otherwise. 

His messaging is seen by some as partly responsible for the surge in people trying to enter the US via its southern border. 

Meanwhile, ceilings on refugee admissions are too high for many Republicans and not high enough for many Democrats.

It is on foreign policy, though, where the comparisons with Trump are the most interesting. 

At first glance, Biden could not be more different. 

He embraces multilateralism and has brought the US back into the World Health Organization and the Paris climate agreement. 

And his administration is working to reboot the 2015 nuclear deal with Iran that Trump unilaterally exited.

Biden has also restored traditional allies and alliances to a core position in US foreign policy. 

He has already hosted Japanese Prime Minister Yoshihide Suga in Washington and will make his first overseas trip to Europe in June for the G7 summit. 

No American troops will be withdrawn from Germany, something Trump had announced he would do. 

And the Biden administration has made human rights a centerpiece of its foreign policy, regularly criticizing Russia and China, sanctioning Myanmar, and publishing a report that holds Saudi Arabia’s Crown Prince Mohammed bin Salman responsible for the murder of Saudi journalist Jamal Khashoggi.

But there is more foreign-policy continuity between Biden and Trump than first meets the eye. 

Take Afghanistan, where the difference between them amounts to just over four months: Trump signed a pact with the Taliban that committed the US to withdraw all its military forces by May 1; Biden has committed to do so by September 11. 

Just as important, Biden echoed Trump’s insistence that the calendar, not local conditions, would determine the timing of the US military withdrawal.

There is considerable continuity when it comes to policy toward China as well. 

One no longer hears calls for regime change, but the one high-level diplomatic contact between US and Chinese officials could hardly have been less diplomatic. 

Meanwhile, the Biden administration has kept tariffs and export controls in place, continued to send US warships to challenge China’s claims in the South China Sea, repeated the description of Chinese actions in Xinjiang as genocide, sanctioned Chinese officials, and maintained high-level contacts with Taiwan.

As for trade, what is consistent is the lack of initiative. 

Missing from an otherwise robust policy toward China is any sign that the US is reconsidering its unwillingness to join Asia-Pacific regional trade groupings. 

Instead, there is a continued commitment to “Buy American” along with talk about foreign policy for the middle class, an otherwise empty slogan that suggests trade will remain a low priority given how controversial it remains with many Americans.

Even on COVID-19, the Biden presidency has embraced something of an “America First” approach when it comes to sharing (or, rather, refusing to share) American-produced vaccines with the rest of the world. 

This is belatedly changing, with a commitment to share an untapped supply of the AstraZeneca vaccine with others.

But the shift is limited, and the delay has provided strategic openings to China and Russia, slowed economic recovery around the world, increased hardship, and given COVID-19 variants more opportunity to emerge and gain traction.

In short, while Trump is no longer in the Oval Office, Trumpism still looms large. 

His attacks on free trade and immigration, promotion of a narrow “America First” view of the world, and bias toward retrenchment are now and for the foreseeable future part of the political fabric. 

The country remains polarized; Congress is nearly evenly divided. 

This leaves Biden limited room for maneuver as he seeks to promote democracy, conduct diplomacy, and reinvigorate global institutions.

Like all American presidents, Biden still enjoys considerable power and influence. 

But, as his first hundred days have shown, the one thing American presidents cannot control is the context in which they operate.


Richard Haass, President of the Council on Foreign Relations, previously served as Director of Policy Planning for the US State Department (2001-2003), and was President George W. Bush's special envoy to Northern Ireland and Coordinator for the Future of Afghanistan. He is the author of The World: A Brief Introduction (Penguin Press, 2020)