Business Stories of the Week: May 18, 2018

by May 18, 2018

Mortgage rates have risen to levels not seen since 2011, ending an era of low-cost borrowing. (Photo Credit: Pixabay user under paulbr75)

 

Trump misses deadline to fix NAFTA

Negotiations to set new trade rules for the North American Free Trade Agreement, or NAFTA, have diminished, reports Quartz. House Speaker Paul Ryan gave a deadline of May 17 for the Trump Administration to notify Congress of any deal. This missed deadline gives Democrats, if they win one or both houses of Congress come this year’s midterm elections, the opportunity to revise NAFTA in the future, which could impact the chances of President Trump’s deal to be approved by Congress. If Congress decides to look at a deal past the deadline, it will take a significant amount of time to review and enact new trade rules.

Special discount for Amazon Prime customers at Whole Foods

Amazon announced this week it will give customers 10 percent off items at Whole Foods, Reuters reports. The move comes as Amazon hopes to gain a competitive lead in the grocery price wars between Walmart and Krogers. “Given how important it is for Amazon to provide value for their customers, and customers value lower prices, I would think they’d be comfortable operating Whole Foods at a lower margin while experimenting with the operating model,” said Tom Furphy, former vice president of consumables and AmazonFresh, and now chief executive of Consumer Equity Partners. Some Prime members still need convincing to buy everyday products at Whole Foods, with its reputation as “Whole Paycheck” coined from expensive items at the store.

Online sales grow for Walmart

Exceeding analysts’ expectations, Walmart, the biggest multinational retailer, has seen a 33 percent increase in online sales during the first three months of 2018, the New York Times reports. The company is under pressure to compete with Amazon and other online retailers. It is offering customers different services, from an easy-to-use website to a fast home delivery. Analysts are saying Walmart needs to find new customers, and the retailer is doing that by catering to younger online shoppers Amazon has branded to for years. “A big question facing Walmart… is how much e-commerce sales are cannibalizing transactions that would have otherwise been made in its stores,” writes Michael Corkery, the author of the article.

Mortgage rates climb to highest level since 2011

Up to 4.61 percent this week from 4.55 last week, the average rate for a 30-year mortgage rate has continued to grow rapidly, the Wall Street Journal reports. Mortgage rates have spiked after being down so long following the financial crisis, with rates as low as low as 3.31 percent in late 2012. Economists are concerned higher rates will stop homeowners from trading up to get better deals on better properties. Coupled with higher home prices, economists believe first-time and moderate-income borrowers could be affected the most. “The problem in today’s market is there aren’t many affordable homes on the market. Buyers have less wiggle room,” said Nela Richardson, chief economist at Redfin.

British businesses benefit from Royal Wedding

The financial impact of the royal wedding is big for Britain’s tourism industry, reports NPR. VisitBritain said the royal family is crucial to the tourism industry, with about $6 billion spent annually by people who go to the U.K for its culture and heritage. Mike Drummond, who works at a London souvenir shop, said, “For our business, they’re absolutely essential.” Many businesses are expecting to cash in during the royal wedding by selling trinkets and other things like commemorative plates, kitchen towels and key rings, which sell for $16 and $4 each respectively. The most popular memorabilia is said to be a mug with a picture of Prince Harry and Meghan Markle.