SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Getting hotter. The economy is expanding, home prices are hitting records, confidence is climbing and one Fed policy maker says the case is strengthening for a rate hike.
TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Prescription for reform. Donald Trump picked a vocal critic of Obamacare for his cabinet, signaling an aggressive overhaul of that landmark health law.
HERERA: Deal or no deal. What happens if OPEC does not reach an agreement to cut oil output? We’ll soon find out.
Those stories and more tonight on NIGHTLY BUSINESS REPORT, for Tuesday, November 29th.
MATHISEN: Good evening, everyone. And welcome.
We begin tonight with the economy. New reports today that show a pickup in momentum. Growth, the broadest measure of U.S. output, is finally picking up. Gross domestic product expanded in the third quarter, ending September 30th at an annual rate of 3.2 percent, that it’s strongest growth in two years, helped by solid consumer spending.
The report also showed that corporate profits rebounded for a third straight quarter. Separately, there was a surge in consumer confidence this month. Closely watched index rose to a nine-year high and expectations for the next six months were the most optimistic since June of last year. Later this week comes the jobs report, which most economists think will show a nation at or close to full employment.
The bottom line: the U.S. economy for all the campaign trail hand-wringing is a far cry from where it stood when the White House last changed occupants. And that’s not all. Home prices at the national level are higher than ever before.
Diana Olick takes a look at that key pillar of the economy.
DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Home price gains gaining and one measure just hit a new record. The much-watched S&P Core Logic Case-Shiller National Home Price Index surpassed its last peak, which was in 2006 at the height of the last housing boom. Low supply and high demand are fueling competition, which in turn fueled prices.
Home prices in September jumped 5.5 percent annually. That’s bigger than the 5.1 percent gain in August. And that again is a national record.
But we all know, all real estate is local, so let’s dig in. The 20 largest markets were up 5.1 percent, which was unchanged from August. Top gainers continue to be Seattle, Portland and Denver, which are all taking the runoff from people moving out of San Francisco.
All in all, seven cities reached new price peaks, adding to those three are Dallas, Boston, Charlotte, San Francisco. Markets hardest hit by the housing crash, that’s Miami, Tampa, Phoenix and Las Vegas have seen big price gains but are still well below prerecession peaks.
Now, here’s a big caveat — all price gains were recorded before mortgage rates shot up in November. The average rate on the 30-year fixed jumped from 3.5 percent to around 4.25 percent today.
We are already seeing a drop-off in the number of people looking for homes and requesting showings, that according to Redfin. Prices always lag sales — but no question — higher rates give buyers less buying power.
For NIGHTLY BUSINESS REPORT, I’m Diana Olick in Washington.
HERERA: And a Fed official today said the case has strengthened for an interest rate hike since the central bank’s last meeting. Federal Reserve Governor Jerome Powell said the economy is growing at a healthy pace, inflation is gradually moving higher and the job market is strong.
Powell also warned that moving too slowly to increase rates could mean that policymakers would have to catch up and raise them at a faster pace to keep the economy from overheating.
MATHISEN: Stocks resumed their climb today, helped by a string of economic reports that came out. We just talked about, with the major indexes closing near their all-time highs.
But a decline in the price of oil pressured energy stocks. That capped the day’s gains. The Dow Jones Industrial Average advanced 23 points to 19,121. NASDAQ added 11. The S&P 500 was up nearly three points.
HERERA: The Trump administration’s cabinet is starting to take shape. Congressman Tom Price, an Obamacare critic, has been picked to be the secretary of Health and Human Services. More on him in just a moment.
Elaine Chao, the former labor secretary under President Bush, is reported to be the new transportation secretary.
And private equity investor, Wilbur Ross, who is reportedly being considered for commerce secretary, was at Trump Tower today. Take a listen.
(BEGIN VIDEO CLIP)
WILBUR ROSS, WL ROSS & CO. CHAIRMAN & CEO: It was a good enough meeting. They gave me a proper rain hat. Thank you.
REPORTER: Shall we take that as confirmation that you’re going to be commerce secretary?
ROSS: Talk to you later.
(END VIDEO CLIP)
HERERA: John Harwood is outside Trump Tower in New York City.
Good to see you, John.
Let’s start with Ms. Chao. She will play a crucial role in shaping the president’s-elect big infrastructure agenda, and she is no stranger to Washington. Tell us more about her.
JOHN HARWOOD, NIGHTLY BUSINESS REPORT CORRESPONDENT: Well, she’s been around in Washington a long time, as you mentioned. She served as labor secretary under President George W. Bush. She is married to Mitch McConnell, who’s the Senate majority leader. That serves only to underscore Donald Trump’s ties with the Republican Congress, just like Tom Price does.
One potential conflict she may have is with her family’s shipping company. Her father founded and her sister now runs a shipping company. That’s one of the issues that’s under the purview of the Department of Transportation. But I would expect an easy confirmation for Elaine Chao, nevertheless.
MATHISEN: All right. Now moving to industrials and turnaround artist Wilbur Ross. He certainly knows about steel. He knows about manufacturing. He will probably be involved in renegotiating trade deals. But his business interests could pose conflicts, no?
HARWOOD: Well, exactly. And the issue I just mentioned was Elaine Chao, of course, is an issue with the president-elect himself. Donald Trump, not the least of which is the hotel he has in Washington that foreign dignitaries are now saying they’re going to stay in. So, yes.
The business interests of Wilbur Ross range across what the Commerce Department oversees, and trade, of course, is one of the things he’s been very critical of trade deals like Donald Trump has. And so, you can expect very close attention to the overlap between his investments and the new stance that the administration is going to take.
HERERA: Before I turn you to secretary of state, the “New York Times” just reporting late this evening that Steve Mnuchin maybe the treasure secretary.
Do we know anything more about that? There were several candidates. But he has been the frontrunner for quite a while.
HARWOOD: That’s right. He’s been the frontrunner. He’s been the expected choice. There has been talk of others, from Jeb Hensarling who’s the Financial Services Committee chairman in the House of Representatives. John Allison, former chair of BB&T. But Steven Mnuchin, former Goldman Sachs partner, active in fund-raising for Donald Trump during the campaign, has been the expected choice, and I was told earlier today that there is a good possibility that that could come this week, if not tonight.
HERERA: All right. John, thank you so much. Get out of that rain. John Harwood in New York City.
HARWOOD: I will.
MATHISEN: Now to you to Tom Price, whom Donald Trump apparently has picked to be his top health official. In that role, he will run the department that oversees the Affordable Care Act.
And as Bertha Coombs reports, it’s no secret that Price wants to make big changes to the health law.
BERTHA COOMBS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Six-term Georgia Congressman Tom Price is an orthopedic surgeon by training, and as House budget committee chairman, he was a key opponent of President Barack Obama’s Affordable Care Act.
And Donald Trump’s pick for health and human services secretary will play a key role in acting the president-elect’s vision to repeal and replace the ACA.
IPSITA SMOLINSKI, CAPITOL STREET MANAGING DIR. & HEALTHCARE ANALYST: He’s a known entity. He’s had leadership positions, House budget committee, also in the conference. So, as far as Trump’s major idea on health care repealing and replacing Obamacare, Price will be the one to do that.
COOMBS: Price’s own prescription for replacement includes measures to get insurers to bring down plan costs, like selling across state lines for consumers. He supports age-based tax credits and health savings accounts, rather than the ACA’s income-based credits. While it may bring down costs, according to the RAND study, those GOP proposals would not extend coverage to as many people as the ACA did.
CHRISTINE EIBNER, RAND CORPORATION SR. ECONOMIST: We found that, you know, we can get more people insured than we had in the pre-ACA state the world. But we have seen only, you know, 2 million to 9 million people more, not the full 20 million people more.
COOMBS: Part of the reason, the Republican plan to rollback the expansion of Medicaid under ACA, and would restructure the program through block grants to the state. Analysts say that would give more spending power to states, but less federal funding. States would likely continue to turn to insurers to keep costs under control, but it would put pressure most likely on hospitals.
DAVID PEKNAY, S&P GLOBAL HEALTHCARE RATINGS DIR.: It does appear to be a more aggressive way to get costs under control, and hospitals being at the top of the food chain. It is the highest level of most intense health care spending. They would be hurt. It would be a negative for hospitals.
COOMBS: But as HHS secretary, Price would also have discretion to roll back some regulations that are now pressuring hospitals in doctors under the ACA. Already in Congress, he has pushed for easing deadlines on providers to meet new electronic health record requirements.
For NIGHTLY BUSINESS REPORT, I’m Bertha Coombs, New York.
MATHISEN: Let’s turn now to Sherry Glied for more on Tom Price and the changes we could see to the existing health care laws.
Sherry, thank you very much. She is a health care policy expert, currently dean of NYU’s Robert Wagner Graduate School of Public Service.
What would Tom Price do? How would he tinker with or replace Obamacare?
SHERRY GLIED, NYU’S ROBERT WAGNER SCHOOL OF PUBLIC SERVICE: Well, Price would be Donald Trump’s main adviser as Congress decides how to replace Obamacare and he’s put his own proposals forward. So, he would be the architect of the compromise, presumably that Trump would negotiate with the Republican Congress around how to replace Obamacare.
He’d also be responsible for implementing the regulations around whatever new legislation was passed and for implementing whatever aspects of the Affordable Care Act remain in place.
HERERA: Bertha Coombs in her piece just mentioned that she thought given what we know of what’s going to be proposed, that the hospitals would be big losers and maybe the insurance companies.
Do you agree with that, given what we know so far?
GLIED: I think that’s right. I mean, I think hospitals are losers on a number of fronts here. One is a lot of people who currently have insurance will lose it. And many people who will lose it will be the least healthy of those people who now have insurance.
Price’s plan is more favorable to young, healthy people than it is to older, sicker people and, of course, hospitals are going to wind up bearing the brunt in terms of uncompensated care. That will also be true with respect to Medicaid cutbacks.
He’s also not in favor a lot of the delivery system reforms that have really been pushed by the Obama administration and hospitals have invested a lot in those reforms, as well.
MATHISEN: I was going ask you a question about his tax credits that he would give to people to buy insurance in the private market. They’re based on age. In other words, you get more the older you are, and presumably the more expensive your insurance would be. They begin at $1,200 a year.
Talk to me about that. You can’t buy much insurance for $1,200 a year.
GLIED: That’s right. These are much lower than the ones available, especially to lower-income people under the Affordable Care Act. So, these tax credits would really only help very — relatively high-income purchasers of coverage. In fact, I think one of the concerns here is that they would essentially get displaced private money. People who could afford coverage on their own would find that $1,200 an attractive bonus. But it’s not really enough money for somebody who couldn’t afford coverage in the first place.
HERERA: What about employers who provide insurance for their employees, employer-sponsored plans? How would they be affected?
GLIED: So, Price’s plan, essentially, plans to fund those tax credits by rolling back the tax treatment of employer-sponsored insurance. It’s kind of like the Cadillac tax and Affordable Care Act that’s really drawn a lot of concern and has been responsible for a long time. But the proposal that Price has is actually much more draconian than the Cadillac tax. It comes in at $8,000 per person.
So, if an employer is spending more than $8,000 on health insurance for one of their employees, all of the rest of the cost of that health insurance would become taxable to the employer.
MATHISEN: So, they lose that as a deduction, as a write-off, right?
MATHISEN: Sherry, thank you. You’ve been really helpful. Thank you.
It’s a complicated thicket and you’ve really explained it well. Appreciate it.
Sherry Glied with NYU’s Robert Wagner Graduate School of Public Service. Thanks again.
GLIED: Thank you.
HERERA: As we mentioned a bit earlier, oil prices lower today on reports that OPEC members are struggling to agree on a production cut that the group outlined back in September. Domestic crude tumbled 4 percent, just a day ahead of the official meeting.
And as Steve Sedgwick reports from Vienna, the stakes are high.
STEVE SEDGWICK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Late Tuesday in Vienna, still a lot of question marks about whether OPEC, which controls up to 40 percent of global oil supplies, will actually come forth with the deal which they promised us from Algiers in September, i.e., to cut production to 1 million barrels a day.
It’s the old questions that still remain, will the likes of Iran, will the likes of Iraq get an exemption or will they be forced to take a cut, as well, in order to get a unanimous decision throughout the grouping?
I spoke to one oil minister, the minister for the UAE, and he said it needs to be unanimous. There can’t be exceptions to participation in a round of cuts.
SUHAIL AL MAZROUI, UAE OIL MINISTER: The expectation that if we own something, we would like to agree on something that is sustainable and that benefit everyone and also get everyone need to be participating, on one level and for all. But don’t ask me how, who, and when before we meet.
SEDGWICK: And, of course, the concern is that the kingpin of OPEC, Saudi, would just walk away if they don’t get cuts from all members, including Iraq and Iran. These are some of the big questions that remain for the market with the oil price falling around 4 percent on Tuesday, as traders got very nervous about the prospects of a cut.
Where the oil price will go if there isn’t a cut or some are talking us down to the low $30 barrel level. And if there is a cut, some are saying it could go as high as $55, $60 a barrel later this year or perhaps early this 2017.
For NIGHTLY BUSINESS REPORT, this is Steve Sedgwick, in Vienna.
MATHISEN: Still ahead, stop the presses. Why demand for real news is increasing as fake news spreads.
MATHISEN: Senator Elizabeth Warren is criticizing Wells Fargo’s decision to seek arbitration for customers affected by its fake accounts scandal, rather than allowing them to sue. In a Facebook post, the senator said Wells Fargo’s promised to treat customers better in light of the scandal is meaningless, as long as it insists on arbitration. As we reported last week, the bank asked a court to uphold contract clauses that mandate arbitration — something commonly used by financial firms to protect against litigation.
HERERA: The nation’s commercial banks and savings institution reported record profits in the third quarter. According to the FDIC, revenue and net income increased from a year ago. Loan balances increased, and asset quality improved, and the number of unprofitable and problem banks fell.
MATHISEN: After years of falling numbers, the “New York Times” is seeing a surge in subscribers, both print and digital, since the presidential election. For years, print media has suffered from a decline in readership, and these better numbers come as fake news spreads across social media.
Julia Boorstin has our story.
JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: News organizations have seen a surge in subscriptions and stock prices. “New York Times” shares are up more than 16 percent since Election Day, while shares of both “USA Today” parent Gannett and Tronc, which opens the “L.A. Times” and “Chicago Tribune” are up by double digits.
And though Donald Trump has repeatedly called the “New York Times” failing, tweeting, “Wow, the NYTimes is losing thousands of subscribers because of their very poor and highly inaccurate coverage of the Trump phenomena.”
“New York Times” CEO Mark Thompson tells us the paper has added 132,000 subscribers since the election.
MARK THOMPSON, NEW YORK TIMES CEO: Subscriptions have been up ten times on the same period last year. So, we’re seeing a 10x net increase in subscriptions. So, you know, far from failing, we’re seeing a remarkable response by new subscribers who like the kind of journalism, independent, without fear or favor journalism “The Times” represents.
BOORSTIN: And “The Times” isn’t alone. Tronc Publication saw an average increase of 29 percent in paid digital subscriptions during election week, with one of its publications, “The L.A. Times” growing its digital subscriptions 61 percent during election week.
The journalism at publications such as the “New York Times” and the “L.A. Times” stands in contrast with the spread of fake news, which Facebook and others are trying to crack down on. Many say the spread of fake news on social media influenced voters this campaign season.
In fact, a “BuzzFeed” study found the top 20 fake news stories generated more engagement likes and shares than the top stories from major real news outlets, including the “New York Times.”
THOMPSON: Social media benefits legitimate, professional fact-check journalism, as well. We’re very, very present on Facebook and Twitter and other social platforms. But clearly, it’s true that these new platforms, these relatively new platforms, make it possible for almost anyone to publish almost anything they want.
BOORSTIN: As for Mr. Trump’s repeated threat that he’s going to sue the “New York Times” and change libel laws, Thompson says Mr. Trump told them in a meeting last week, quote, “I don’t think you’ll have any anything to worry about.”
For NIGHTLY BUSINESS REPORT, I’m Julia Boorstin in Los Angeles.
HERERA: Tiffany posts its first sales increase in two years, and that’s where we begin tonight’s “Market Focus”.
The luxury jeweler topped analyst’ expectations, thanks to an increase in foot traffic and its Asia locations. The company which has a flagship store right next to Trump Tower in New York City said traffic there has been negatively impacted due to the ongoing road closures and the protests. But despite that slow down in customers, Tiffany maintained its guidance for the year. The shares rose 3 percent to $80.60.
Industrial gases company, Praxair, wants to restart talks with its rival, Lind, regarding a potential tie-up. The two companies were in merger talks earlier this year, but they fell apart after the parties could not agree on where the headquarters should be located. Praxair shares rose nearly 3 percent to $122.18.
MATHISEN: Shares of Shoe Carnival got battered today, following lower results after the bell yesterday. The shoe retailer attributed those disappointing numbers to weak demand for boots and other seasonal items. The company also cuts its earnings forecast for the year. Shares down more than 13 percent at $26.15.
And the business software maker, Splunk — yes, that’s name, Splunk, beat analysts’ estimates for profit and revenue. The company also gave earnings guidance above forecast. Shares initially rose in after hours trading. But they went splunk in the section, down a fraction at $57.38.
HERERA: There were nationwide demonstrations today. Low wage workers took to the street to demand higher pay and health benefits. The protests were part of the union-backed Fight for 15 campaign. Its first since Donald Trump was elected president. Uber drivers in more than a dozen cities participated, as well.
MATHISEN: Some workers at Chicago’s O’Hare Airport also demanding $15 in hourly wages. Janitors, baggage handlers, cabin cleaners, wheelchair attendants went on strike as part of a broader day of disruption planned by the Fight for 15 activist group. The strike was not expected to affect flights in or out of the nation’s second busiest airport.
HERERA: Coming up, hitting the road. What’s behind the resurgence in sales of RVs?
MATHISEN: Massachusetts is adopting strict background checks for Uber and Lyft drivers. The new rules are the toughest in the country and they go into effect next year. Independent drivers will have to undergo a state criminal background check, as well as a biannual commercial background check conducted by the company.
HERERA: New numbers from the RV industry show Americans have rediscovered the great outdoors. In fact, RV sales this year are the strongest since 1976.
Phil LeBeau tells us why demand is climbing.
PHIL LEBEAU, NIGHTLY BUSINESS REPORT CORRESPONDENT: RVs are on a roll. From campers to motor homes, Americans are snapping up these travel rigs in big numbers. This year, the industry expects to sell almost 420,000 RVs. The seventh straight year sales have increased after bottoming out in the recession.
What’s driving the resurgence in sales? Well, the stronger economy combined with low gas prices and attractive interest rates are convincing people this is the time to buy.
FRANK HUGELMEYER, RECREATION VEHICLE INDUSTRY ASSN.: When you think about the accessibility of being able to find an affordable rig and not only that, the quality of the product is at an all-time high. And these are really the glory days of the RV lifestyle.
LEBEAU: The rebound in RVs is welcome news in places like Forest City, Iowa, where Winnebagos are built. In 2009 when Winnebago sales slowed down, unemployment in that area jumped to more than 13 percent.
Today, thanks to the RV boom, unemployment has dropped to 4 percent, well below the national average. Ironically, the number of Americans camping is roughly the same as it was just a few years ago. So, why are new campers and trailers in demand? Partially because many people held on to their old RV during the recession, and now they want a newer model.
There’s also a shift in the people who are buying a camper or motor home. They tend to be younger and more active. Making hitting the road in an RV more popular than ever before.
Phil LeBeau, NIGHTLY BUSINESS REPORT, Chicago.
HERERA: I’ve got one.
MATHISEN: You love it, right?
HERERA: I do. I really love it. It’s so much fun.
MATHISEN: We have so many people out west this summer, so many people RV-ing. It looked fun.
HERERA: I can drive it, I just can’t back up.
That’s NIGHTLY —
HERERA: I can’t.
That’s NIGHTLY BUSINESS REPORT for tonight, I’m Sue Herera. Thanks for joining us.
And we want to remind you that this is the time of year your public television station seeks your support.
MATHISEN: And I’m Tyler Mathisen. Thanks so much for your support.
Have a greet evening, everybody. See you tomorrow.
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