How Trump’s Policies Could Ripple Through the Housing Market

Summary

WSJ What’s News: How Trump’s Policies Could Ripple Through the Housing Market

Release Date: December 5, 2024
Host: Kate Bullivant
Produced by: The Wall Street Journal

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1. Violent Incident in Manhattan: United Healthcare CEO Shot Dead

The episode opens with a breaking news update on the tragic shooting of United Healthcare CEO Brian Thompson outside a Manhattan hotel. Kate Bullivant reports:

"The hunt for a suspect continues after United Healthcare CEO Brian Thompson was shot dead yesterday outside a hotel in New York City in what police are calling a targeted attack." (00:47)

Shelby Holliday adds details on the ongoing investigation:

"Police tell us they're also looking backward to see if there's footage of the suspect canvassing this area before the shooting. They also say they're analyzing a cell phone that was found at the scene." (01:23-01:33)

The New York Police Department has intensified its search efforts, seeking any leads that could identify the perpetrator.

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2. Trump's Key Personnel Picks and Policy Directions

Donald Trump's administration is making significant appointments signaling a return to his previous policy stances:

• Peter Navarro has been selected as a senior adviser on trade and manufacturing, reaffirming Trump's intention to impose tariffs on U.S. imports. Navarro, a strong advocate of Trump's tariff policies during his first term, is expected to lead efforts to protect American industries.

• Billy Long, former Representative, is poised to take over as the Commissioner of the Internal Revenue Service (IRS). If confirmed by the Senate, Long will replace Danny Wirfel, who was appointed by President Biden and was set to remain until November 2027. Kate Bullivant notes:

  "Trump has said he would nominate former Representative Billy Long to run the Internal Revenue Service... Trump's decision to pick a new commissioner could signal a significant change in direction for the tax agency." (02:00)

• Pete Hegseth, Trump's nominee for Defense Secretary, faces scrutiny amid personal life allegations. Despite mounting concerns among Republican senators, Hegseth remains steadfast:

  "Hegseth said he spoke to Trump yesterday morning and that he had his full support." (02:30)

These appointments indicate Trump's commitment to reshaping key government sectors in line with his administration's priorities.

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3. Bipartisan Legislation on Corporate Bankruptcy Protections

A bipartisan initiative led by Illinois Democrat Dick Durbin and Missouri Republican Josh Hawley aims to safeguard employees during corporate bankruptcies. WSJ Pro bankruptcy reporter Alicia McElheny elaborates:

"The bill would double the priority claim for employees' wages from $10,000 to $20,000 per employee and extend the timeframe for these claims. Additionally, it would restrict companies in bankruptcy from giving bonuses or payouts to executives and insiders while ensuring employees retain their retirement and health benefits." (03:29-04:16)

This legislation addresses the surge in corporate bankruptcies, which increased by over a third in the year leading up to September. The proposed measures prioritize workers' wage claims, providing them with greater financial security during company restructurings.

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4. Ukrainian Talks with Trump Team on War with Russia

Ukrainian officials have initiated high-level discussions with the incoming Trump administration regarding the cessation of hostilities with Russia. Key points include:

• A senior aide to Ukrainian President Volodymyr Zelensky met with Keith Kellogg, Trump's designated special envoy for Russia and Ukraine, Mike Waltz, the incoming National Security Adviser, and J.D. Vance, the vice president elect.

• Significant disagreements persist, particularly over Ukraine's potential NATO membership. Zelensky has indicated willingness to consider a ceasefire if NATO membership is secured, a stance met with limited enthusiasm from the Trump team.

Kate Bullivant summarizes:

"Zelensky has recently signaled Ukraine could agree to a ceasefire if Ukraine were permitted to join NATO, something the Trump team has shown little interest in supporting." (04:16-04:30)

The negotiations highlight the complexities of ending the conflict, with geopolitical interests and strategic alliances at play.

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5. Political Developments in South Korea

South Korea is experiencing political turbulence as President Yoon Suk Yeol replaces the country’s Defense Minister amid impeachment efforts. The context includes:

• Opposition parties are pushing for the impeachment of both President Yoon and the Defense Minister following the brief imposition of martial law, which deployed armed troops in Seoul.

• The outgoing Defense Minister has apologized for ordering troop deployments related to martial law.

This political shift underscores the domestic pressures and governance challenges faced by South Korea’s leadership.

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6. Corporate News: Airbus Job Cuts and Bitcoin Surge

• Airbus announced plans to cut approximately 2,000 jobs within its defense and space divisions, representing about 5% of the workforce in these sectors. The reductions will primarily affect operations in Germany, France, the UK, and other international markets. This move is part of Airbus’s strategy to reduce costs amidst a challenging economic environment.

• Bitcoin has surpassed the $100,000 mark for the first time, buoyed by a 40% increase in value since Election Day. This surge is attributed to investor optimism following Donald Trump’s nomination of Paul Atkins, a crypto-friendly former regulator, to lead the Securities and Exchange Commission (SEC). Kate Bullivant remarks:

  "The world's largest digital currency has risen more than 40% in the four weeks since Election Day, setting one record after another amid hopes that Trump will turn US Government policy into a growth engine for crypto." (05:00-05:30)

These developments reflect shifting dynamics in both the aerospace industry and the cryptocurrency market.

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7. OPEC Meetings and US Job Data

• OPEC is convening with its allies to deliberate on oil production levels, with expectations of delaying the planned increase in output. Brent crude futures remain relatively stable in response to these discussions.

• US initial weekly jobless claims are scheduled for release at 8:30 AM Eastern Time, following robust job openings data that indicated a resilient labor market earlier in the week.

These economic indicators provide insights into the current state of global energy markets and the US economy.

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8. Impact of Trump’s Immigration and Trade Policies on the Housing Market

The centerpiece of the episode delves into how President-Elect Donald Trump’s proposed immigration and trade policies could significantly impact the construction industry and, by extension, the housing market. Kate Bullivant engages with WSJ reporter Elizabeth Findell to explore these implications.

Key Concerns:

• Immigration Policies:

  Elizabeth Findell explains:

  "Immigrants have always made up a significant portion of folks who work in construction, and many of them are undocumented... Builders are very concerned about finding workers. Even when they're paying good wages and unemployment is high, most native-born Americans just aren't willing to take the most physically difficult jobs." (08:18-11:38)

  Trump's promise to deport millions of undocumented immigrants poses a threat to the workforce, with estimates suggesting that 13% of the construction industry relies on undocumented labor. Past deportation efforts have led to substantial disruptions:

  "A study found that when about 300,000 undocumented immigrants were deported between 2008 and 2013, the affected counties lost about a year's worth of construction on average, and new home prices went up 20%." (10:05-10:28)

• Trade Policies:

  On the trade front, Trump's proposal of 25% tariffs on imports from Canada and Mexico could increase the cost of construction materials, such as wood and steel, which are heavily imported. Elizabeth highlights:

  "About 7.3% of home building materials are imported... Causing the cost of housing to go up, which is problematic because actually lowering the cost of housing was a large part of the campaign." (08:18-09:00)

Potential Outcomes:

• Increased Housing Costs: The combined effect of a reduced workforce and higher material costs could lead to significant increases in home prices, exacerbating the existing housing shortages in growing regions like Texas.

• Slowed Construction Industry: Builders may struggle to complete projects on time or may need to raise wages to attract workers, further elevating costs.

Elizabeth Findell underscores the irony in Trump's stance on immigration:

"Trump frequently claimed on the campaign trail that immigrants are taking jobs from American workers. And yet... builders are already struggling to fill jobs." (11:24-12:01)

Conclusion:

Trump’s immigration and trade policies, while aimed at protecting American jobs and reshoring industries, may inadvertently strain the construction sector and drive up housing costs. This outcome contradicts one of the key campaign promises to make housing more affordable, highlighting the complex interplay between policy intentions and economic realities.

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Closing Remarks

Kate Bullivant wraps up the episode by thanking Elizabeth Findell for her insights and reiterates the significant challenges the construction and housing markets may face under Trump’s proposed policies. The discussion underscores the importance of carefully balancing immigration and trade strategies to avoid unintended economic repercussions.

Notable Quotes:

• "Trump has said he would nominate former Representative Billy Long to run the Internal Revenue Service." – Kate Bullivant (02:00)

• "Builders are very concerned about finding workers." – Elizabeth Findell (11:38)

• "The world's largest digital currency has risen more than 40% in the four weeks since Election Day." – Kate Bullivant (05:00)

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This summary captures the key discussions, insights, and conclusions from the WSJ What’s News episode titled "How Trump’s Policies Could Ripple Through the Housing Market." For the full transcript and additional updates, visit WSJ.com.

Transcript

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[Kate Bullivant]

A manhunt continues after an executive is shot dead in Manhattan. Plus, Ukraine opens talks with Donald Trump's team over halting the war with Russia and how the president elects proposed immigration and trade policies could rip through the housing market.

[Elizabeth Findell]

Construction leaders are bracing for this, causing the cost of housing to go up, which is problematic because actually lowering the cost of housing was a large part of the campaign.

[Kate Bullivant]

It's Thursday, December 5th. I'm Kate Bullivant for the Wall Street Journal, filling in for Luke Vargas, and here is the AM edition of what's news, the top headlines and business stories moving your world today. The hunt for a suspect continues after United Healthcare CEO Brian Thompson was shot dead yesterday outside a hotel in New York City in what police are calling a targeted attack. Journal video correspondent Shelby Holliday filed this update from downtown New York as the New York Police Department ramps up its search.

[Shelby Holliday]

Now with a manhunt underway, police tell us they're also looking backward to see if there's footage of the suspect canvassing this area before the shooting. They also say they're analyzing a cell.

[Elizabeth Findell]

Phone that was found at the scene.

[Kate Bullivant]

For the latest updates on this developing story, you can visit WSJ.com Donald Trump has chosen Peter Navarro as a senior adviser on trade and manufacturing, signaling his determination to follow through on imposing tariffs on U.S. imports. Navarro, who also advised Trump on those areas during his first term, is a strong supporter of the president elect's tariff pledge. Trump has said he would nominate former Representative Billy Long to run the Internal Revenue Service. If confirmed by the Senate, he would replace Danny Wirfel, who was appointed by President Biden and was due to stay on until November 2027. Trump's decision to pick a new commissioner could signal a significant change in direction for the tax agency. Meanwhile, Pete Hegseth, Trump's pick for defense secretary, said yesterday that he was not going anywhere as he fights to salvage his nomin amid snowballing allegations around his personal life that have raised concerns among Republican senators. Hegseth said he spoke to Trump yesterday morning and that he had his full support. A bipartisan duo of senators is expected to propose legislation today to protect employees during corporate bankruptcies, the number of which rose by more than a third in the 12 months through September. If passed, companies in bankruptcy would find it more difficult to give bonuses and other payouts to CEO senior execs and consultants and company insiders would be prevented from receiving retirement and health benefits if other employees lose those in bankruptcy. WSJ Pro bankruptcy reporter Alicia McElheny told us why Illinois Democrat Dick Durbin and Missouri Republican Josh Hawley chose now to put forward the bill, which they say would prioritize workers wage claims.

[Shelby Holliday]

What they're saying is that while the pace of bankruptcy has increased for corporations to restructure debt and continue operating, laws that protect employees have not kept pace. Right now what happens is employees are able to have priority claim of $10,000 worth of their wages. This bill would double that. So 20,000 per employee is a priority claim and then they could get paid back more beyond that. It also makes it so that the claims don't have to be earned within 180 days of the bankruptcy. So if they've earned it before then they can still get paid back.

[Kate Bullivant]

Ukrainian officials have begun high level talks with the incoming Trump administration on halting the war with Russia, according to a Trump transition official and several people familiar with the discussions. A top aide to Ukrainian President Volodymyr Zelensky met yesterday with Keith Kellogg, Trump's choice as special envoy for Russia and Ukraine, as well as incoming National Security Adviser Mike Waltz and vice president elect J.D. vance. However, there are wide differences between the two sides on what a deal to end the war should look like. Zelensky has recently signalled Ukraine could agree to a ceasefire if Ukraine were permitted to join NATO, something the Trump team has shown little interest in supporting. In South Korea, President Yoon Suk Yeol has replaced the country's defense minister as opposition parties moved to impeach both men over the brief imposition of martial law earlier this week, which saw armed troops on the streets of Seoul. The departing defense minister earlier apologized, saying he ordered troops to carry out duties related to martial law. The main liberal opposition Democratic Party is pushing for an impeachment vote on Saturday. Airbus says it will cut around 2,000 jobs from its defence and space divisions as the aerospace giant seeks to reduce costs. The cuts amount to around 5% of the division's workforce and will mostly take place in Germany, France and the UK and in markets news today. Bitcoin is trading above $100,000 for the first time. It follows another surge after Donald Trump announced Paul Atkins, a crypto friendly former regulator, as his pick to lead the SECUR and Exchange Commission yesterday. The world's largest digital currency has risen more than 40% in the four weeks since Election Day, setting one record after another amid hopes that Trump will turn US Government policy into a growth engine for crypto. Members of the OPEC are meeting today with the oil cartel and its allies, expected to further delay a planned increase in output. Brent crude futures, the international oil benchmark, a little changed this morning, and US initial weekly jobless claims are due out at 8:30am Eastern following Jolt's job openings, data that pointed to a solid labour market earlier this week. Coming up, the construction industry could face a double whammy from Trump's immigration and trade policies. We take a look at how serious the blow could be after the break.

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[Kate Bullivant]

The construction industry is bracing for a one two punch if President Elect Donald Trump makes good on his promise to deport millions of undocumented immigrants and to introduce a new wave of tariffs on imports. To help us unpack what this means for builders and for an already tight housing market, we're joined by Journal reporter Elizabeth Findell. Elizabeth, why are people within the construction industry particularly worried about the immigration and trade policies that have been outlined by Trump?

[Elizabeth Findell]

Right? Yeah, people are worried because immigrants have always made up a significant portion of folks who work in construction, and many of them are undocumented. There are official estimates of some 13% of the construction industry being undocumented workers. Many of the builders that I've talked to said that by far the majority of workers who do a lot of the sort of basic work of things like framing houses and laying pipe are people who don't have documentation. And so if those folks were deported or even frightened enough that they weren't able to work, constructors would have a difficult time filling those positions building houses. On the tariff side, Trump has proposed 25% tariffs on Canada and Mexico, which could impact construction materials. A lot of wood is imported from Canada. There's a lot of steel that is imported. Overall, about 7.3% of home building materials are imported, according to the national association of Home Builders. So construction leaders are bracing for this, causing the cost of housing to go up, which is problematic because actually lowering the cost of housing was a large part of the campaign.

[Kate Bullivant]

So have Trump and his team said anything about the impact of these policies?

[Elizabeth Findell]

Not specifically. They have just said that they are going to work quickly to restore the economy. They've talked about reshoring American jobs, lowering inflation, raising wages, lowering taxes, cutting regulations.

[Kate Bullivant]

And can we look to the past for any examples of how similar policies have played out before?

[Elizabeth Findell]

Well, we've seen deportation efforts before. A study by the Universities of Utah and Wisconsin found that when about 300,000 undocumented immigrants were deported between 2008 and 2013, the counties that were affected lost about a year's worth of construction on average, and new home prices went up 20%.

[Kate Bullivant]

Okay, so what could this mean for the housing market? Trump has pledged to deport millions this time around.

[Elizabeth Findell]

Yes, it's fairly clear from the builders that I talked to that if millions of people are deported and they include some of those construction workers or their family members, that is going to mean higher home prices and it will just cool the industry overall. At a time when there has been a real push to get more housing built because there are shortages in many parts of the country and places where we're seeing a lot of growth, particularly in Texas, housing prices have already gone up significantly. And so if you add to that by making the materials more expensive, reducing the workforce so that you can't build houses as quickly or you have to pay higher wages, all of that makes housing more expensive.

[Kate Bullivant]

And Elizabeth, Trump frequently claimed on the campaign trail that immigrants are taking jobs from American workers. And yet when it comes to construction, at least you report that builders are already struggling to fill jobs.

[Elizabeth Findell]

Yeah, builders are very concerned about finding workers. And most builders told me that even when they're paying good wages and even when unemployment in the country is very high, most native born Americans just aren't willing to take the most physically difficult jobs, particularly in areas of the country when they're doing them outside in over 100 degree heat.

[Kate Bullivant]

That was Journal reporter Elizabeth Findell. Elizabeth, thanks so much for your time.

[Elizabeth Findell]

Thank you. I appreciate it.

[Kate Bullivant]

And that's it for what's news for Thursday morning. Today's show was produced by Daniel Bach with supervising producer Christina Rocker. And I'm Kate Bullivant for the Wall Street Journal filling in for Luke Vargas. We'll be back tonight with a new show. Until then, thanks for listening.

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