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Question of the Day
Applications fall to 15-year low
Mortgage applications to purchase a home fell last week to a 15-year low despite the lowest mortgage rates in decades.
Many potential buyers are holding off because they are worried about job security and fear the economy could slip back into another recession.
The Mortgage Bankers Association said Wednesday that an index measuring mortgage applications, which is adjusted for seasonal factors, fell 2.4 percent last week from the previous week. Home mortgage applications plunged 5.7 percent to the lowest level since December 1996.
Few expect the lowest mortgage rates in decades to energize the depressed housing market. Over the past year, the average rate on the 30-year fixed mortgage has been below 5 percent for all but two weeks. Last week, it hit a four-decade low of 4.15 percent.
Yet sales remain unhealthy. Sales of new and previously occupied homes both fell in July. Sales of new homes are on pace to finish the year as the lowest on records dating back to 1963. The pace of resales is shaping up to be the worst in 14 years.
Higher orders ease economic worries
A surge in demand for autos and aircraft drove orders for long-lasting manufactured goods higher in July, easing fears that the economy might be on the verge of another recession.
The rebound in the auto industry helped offset a decline in orders for most other factory goods.
Stocks rose after the better-than-expected report showed the biggest increase in durable-goods orders since March, when the earthquake and tsunami in Japan disrupted supply chains and slowed auto production.
Overall orders for durable goods rose 4 percent last month, the Commerce Department said Wednesday.
Survey: Employers mull ending health coverage
INDIANAPOLIS | Nearly 1 of every 10 midsize or big employers expects to stop offering health coverage to workers once federal insurance exchanges start in 2014, according to a new survey from a large benefits consultant.
Towers Watson also found in a survey completed last month that an additional 20 percent of the companies are unsure about what they will do.
Another big benefits consultant, Mercer, found in a June survey of large and smaller employers that 8 percent are either “likely” or “very likely” to end health benefits once the exchanges start.
Employer-sponsored health insurance has long been the backbone of the nation’s health insurance system. But the studies suggest that some employers, especially retailers or those offering low wages, feel they will be better off paying fines and taxes than continuing to provide benefits that eat up a growing portion of their budgets every year.
A large majority of employers in both studies said they expect to continue offering benefits once the exchanges start. But former insurance executive Bob Laszewski said he was surprised that as many as 8 percent or 9 percent of companies already expect to drop coverage a couple of years before the exchanges start.
Switzerland, Britain agree to deal on tax evasion
GENEVA | Swiss banks will have to pay $630 million to Britain as part of an agreement to end tax evasion, the Swiss government said Wednesday.
Britain’s treasury described the deal struck by senior officials in Zurich on Wednesday as “historic.”
“The agreement will resolve the long-standing abuse of Swiss banking secrecy by those who seek to conceal the proceeds of tax evasion and is expected to secure billions of pounds of unpaid tax for the U.K. exchequer from 2013,” the treasury said.
The deal is the latest in a series struck by Switzerland in a bid to shed its image as a haven for tax cheats. The country inked a similar agreement with Germany earlier this month, though the sums involved there were much higher, as Switzerland has long been a favored destination for tax evaders from its northern neighbor.
The Swiss Bankers Association welcomed the deal, noting that Britain had agreed to accept an anonymous withholding tax in place of automatic information exchange on bank clients, something to which Swiss financial institutions have fiercely objected.
Under the deal, Switzerland will levy a withholding tax of 27 percent to 48 percent on the Swiss accounts of British taxpayers.
Country’s PC shipments pass U.S.
SAN FRANCISCO | China has passed an important technological milestone: It became the world’s biggest consumer of PCs in the second quarter, according to new market research by IDC.
Computer makers shipped about 18.5 million PCs in China in the second quarter, compared with 17.7 million in the U.S.
The U.S. is still expected to be the world’s largest market for the full year, but it likely will lose that distinction next year. IDC forecasts that 85.2 million PCs will be shipped in China compared with 76.6 million in the U.S. in 2012.
China’s PC market is growing at a time when U.S. and European PC markets are contracting, the result of economic anxieties and competition from smartphones and tablet computers such as Apple’s iPad.
China already has the world’s largest Internet population, having surpassed the U.S. in 2008.
Market research numbers such as IDC’s are imprecise measurements. IDC’s figures refer to shipments to distributors and end users, so they include PCs that ultimately may not have been sold. However, they are often the best public gauge about the strength of the spread of technology.
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