Business

(NEW YORK) — Drivers have enjoyed relief at the gas pump this summer compared with eye-popping prices a year ago, but an alarming trend has emerged in recent weeks: Prices are rising once again.

Over the past month, the average price of a gallon of gas has jumped more than 8%, surpassing $3.80, AAA data showed. In California, the state with the highest gas prices, an average gallon costs more than $5.

An output cut imposed by OPEC+ has constrained supply during the summer travel season when demand peaks, sending the price of crude oil soaring and in turn bringing sticker shock to the pump, analysts told ABC News. Meanwhile, a heat wave across the U.S. has limited domestic oil refinery capacity.

Gas prices typically fall as travel slows in the autumn months, but analysts differed over the likelihood of such an outcome amid lingering questions about OPEC+ policy and the continuing oil needs of a resilient global economy.

Here’s what to know about why gas prices are rising and when they’ll come back down, according to experts.

What is causing the rise in gas prices?

The recent spike in gas prices owes primarily to a jump in the price of crude oil, which makes up the key input cost for the gasoline that ends up in U.S. cars, analysts said.

The rising price of oil marks the intended outcome of a policy enacted by OPEC+ to limit output and tighten supply. The move has sent the price of Brent crude oil up more than 11% over the past three months.

“The single most important factor is what’s going on with crude oil,” Peter McNally, a global sector leader for industrial materials and energy at Third Bridge, told ABC News. “The market has looked ahead and sees a tighter crude oil environment.”

U.S. crude oil production, meanwhile, is set to achieve record-high output this year, the U.S. Energy Information Administration said on Tuesday. But oil prices are set on a global market, where the OPEC+ cuts cannot be offset by a comparable short-term increase in U.S. oil output.

Some analysts also pointed to a recent heat wave that has limited the ability of U.S. refineries to operate at full capacity as they turn that crude oil into gasoline.

Exacerbating the supply crunch, a spike in demand amid summer travel also has contributed to the price increase, analysts said.

“Globally, August is the peak,” Richard Joswick, head of global oil at S&P Global Commodity Insights, told ABC News.

While defying gloomy forecasts for more than a year, the resilient global economy has kept business humming and demand for oil robust, Joswick added.

“All these forecasts of a recession haven’t come true,” Joswick said.

When will gas prices start to come down?

Gas prices typically drop in the autumn as travel settles down and demand ebbs, analysts said, but they disagreed about whether that easing of prices would come to pass this year.

Price movement will depend in large part on two hard-to-predict factors: the performance of the global economy and the policy approach undertaken by OPEC+, McNally said.

A reversal of price increases could take hold if economic activity slows and OPEC+ loosens supply restrictions, he added. Otherwise the elevated prices may persist.

Voicing pessimism about future prices, Ramanan Krishnamoorti, a professor of petroleum engineering at the University of Houston, told ABC News that he expects persistent economic growth and oil production cuts.

“Everything is pointing to upward pressure on the price of crude oil globally,” Krishnamoorti said, adding that he expects prices to remain elevated for the next six to 12 months.

In a sign of hope, the average price of a gallon of gas has remained stable for the past eight days, Andrew Gross, a spokesperson at AAA, told ABC News.

“Often with big moves either up or down, there will be a period of price stability before the national average begins to head in the opposite direction,” Gross said. “In this case, that will likely be lower.”

Joswick, of S&P Global Commodity Insights, said he expects prices to remain at current levels for the next four weeks but begin to come down in the latter half of September or October. He cited a slowdown in demand and a gradual easing of supply shortages.

The eventual decline of prices, however, requires the absence of a disruptive event, such as a major storm that damages infrastructure, he added.

“The wild card is a hurricane threat,” Joswick said. “If a hurricane comes barreling in and hits the U.S. gulf coast, prices will spike.”

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — Cadillac’s newest Escalade sport utility vehicle is more brash, commanding and luxurious than the current model. It’s also electric.

“The first word you get is ‘Wow,'” John Roth, vice president of Global Cadillac, told ABC News of the reaction to the Escalade IQ. “People say, ‘Boy, that’s an Escalade.'”

Twelve cubic feet of storage is now available in the vehicle’s “eTrunk.” A 55-inch curved diagonal LED display stretches across the dashboard. Adaptive air ride suspension softens the ride on 24-inch wheels.

The Escalade IQ also posts sports car-like performance — 750 horses, 785 lb-ft of torque — and sprints from 0-60 in less than 5 seconds.

More than 1 million Escalades have been sold since its launch in 1998 and one-third of all large luxury SUVs bought in the U.S. is an Escalade. Cadillac designers were instructed to deliver an EV that was modern, tech-focused and, above all, looked like a traditional Escalade.

“It’s such a critical nameplate to the industry,” Roth said. “The Escalade IQ has performance, style and tech — what Escalade has always stood for.”

With a starting price of $130,000, the Escalade IQ joins Cadillac’s growing battery-powered family: the Celestiq, a $340,000 chic fastback, and the Lyriq, a $58,590 posh crossover. It will be built at General Motors’ Factory ZERO Detroit-Hamtramck Assembly Center in Michigan next summer and arrive in showrooms as a 2025 model-year vehicle.

Cadillac says the Escalade IQ, which utilizes GM’s Ultium propulsion platform, gets an estimated 450 miles of range. When connected to an 800-volt DC fast charger, the vehicle can add 100 miles in less than 10 minutes. The Ultium platform also underpins the GMC Hummer EV pickup and SUV and the upcoming Chevrolet Silverado EV.

Cadillac, like Rolls-Royce and Bentley Motors, has committed to becoming an electric vehicle automaker by 2030.

Tyson Jominy, vice president of data and analytics at J.D. Power, got to see the Escalade IQ before its official unveiling on Wednesday. He called the interior “stunning” and underscored the vehicle’s impressive range.

“Most consumers will never be able to use the full 450 miles. It’s a remarkable distance,” he told ABC News.

The only drawback could be the cost, he noted. The Escalade IQ’s chief competitors — the Rivian R1S SUV and Tesla Model X — are priced much lower.

“Cadillac remains the pinnace of GM,” Jominy said. “It has defined the brand for decades.”

Escalade accounted for 30% of Cadillac’s sales in 2022, with more than 40,200 units sold, according to Ivan Drury, senior manager of insights at Edmunds. The average transaction price was $109,365 versus $69,990 for the marque. A high MSRP and rising fuel prices have not slowed down demand for the Escalade.

“People who buy Escalades don’t care about electrification,” Drury told ABC News. “You want to be showy: ‘I don’t care that I have the biggest footprint of a vehicle.’ A different consumer will buy the electric version.”

Drury argued the excitement around EVs may be slipping even with new models making their way to dealers.

“Tesla has cut prices in a move to buy back market share,” he said. “EVs are sitting on lots longer. These vehicles are not invincible to market dynamics.”

Robin Krieg, lead exterior designer of the Escalade IQ, said customers will be very pleased with the latest version of the SUV.

“It has a grand sense of scale and presence and an ultra-refined interior,” he told ABC News. “There’s effortless power … and a sense of arrival. All the designers wanted this to be an Escalade.”

Craig Sass, interior design manager of the Escalade IQ, noted how the driver and passenger experience has greatly improved: A floating center console to amplify the vehicle’s spaciousness. An extended panoramic roof that spans all three rows. The ability of front-row passengers to stream and watch videos on the LED screen. Plus, the vehicle tows up to 8,000 lbs and offers one-pedal driving to conserve range.

“You’re not giving up anything by going electric,” Sass told ABC News. “It has all the things you’d expect in a luxury vehicle.”

Jominy said Cadillac has to resolve its production problems, which have hampered the rollout of the Lyriq, to be truly competitive in the luxury EV space. Added Drury: “Cadillac has not had a smooth launch toward electrification.”

Software challenges in the Lyriq are now corrected and volume has ramped up along with sales, according to Roth. Cadillac will also continue to build the Escalade-V, a beast of an SUV that makes 682 hp from a 6.2-liter supercharged V8 engine, for the foreseeable future.

Right now all eyes are on the Escalade IQ.

“We’re sending a bold message on how Cadillac thinks about electric vehicles,” Roth said.

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — A single ticket sold in Florida won the estimated $1.58 billion jackpot in Tuesday night’s Mega Millions drawing, a record high for the lottery and among the largest-ever U.S. drawings, the lottery said.

The winning ticket was purchased at a Publix Super Market on Atlantic Boulevard in Neptune Beach, Florida, local lottery officials said.

The winning numbers were 13, 19, 20. 32, 33 and gold Mega Ball 14. The cash payout option is estimated at $783.3 million, the lottery said.

“We congratulate our newest jackpot winner, as well as the more than 43.7 million winners at all prize levels throughout this jackpot run,” Georgia Lottery President and CEO Gretchen Corbin, lead director of the Mega Millions Consortium, said in a statement. “We also celebrate the funds generated for the many good causes supported by our participating lotteries.”

The drawing broke Mega Millions’ previous high of $1.537 billion, according to the lottery. A single ticket sold in South Carolina had won that prize in 2018.

The jackpot is larger than all but two other U.S. lottery drawings, a $1.586 billion Powerball in January 2016 and a $2.04 billion Powerball jackpot in November 2022.

The official jackpot size in Tuesday’s drawing wouldn’t be available until all final sales were recorded, the lottery said. Earlier in the week, officials had said that “at this level, jackpots are hard to predict with complete accuracy.”

There had been 31 drawings held since the Mega Millions jackpot was last won in New York on April 18, according to the lottery.

“It’s exciting to watch Mega Millions grow,” Corbin, lead director of the Mega Millions Consortium, in a a statement before the drawing.

She added, “As the jackpot climbs ever higher, we thank our players and retailers for their support, which benefits the many good causes funded by our participating lotteries.”

The previous four $1 billion Mega Million jackpots were won in 2018, 2021, 2022 and January 2023.

Mega Millions is played in 45 states, Washington, D.C., and the U.S. Virgin Islands. Tickets are $2 for one play.

Players must match all five numbers plus the Mega Ball number to claim the jackpot. The odds of winning the jackpot are 1 in 302,575,350.

The next drawing will take place Friday, Aug. 11, at 11 p.m. ET. The prize is estimated at $20 million, the lottery said.

ABC News’ Meredith Deliso and Victoria Arancio contributed to this story.

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — Federal prosecutors in New York on Tuesday signaled their intention to hold embattled crypto executive Sam Bankman-Fried accountable for alleged campaign finance violations despite dropping the charge last month on a technicality.

Bankman-Fried, the former founder and CEO of cryptocurrency FTX, was slapped with a host of charges last year focused on an alleged multi-billion dollar fraud against company investors, which could land him in prison for decades.

Among those allegations, the charges included campaign finance violations accusing Bankman-Fried of seeking influence in Washington and in state capitals by improperly using customer and investor money to make political donations.

The campaign finance charge was dropped after officials in the Bahamas, where Bankman-Fried was arrested, said they had not agreed to extradite him based on that count.

In a letter to the judge on Tuesday, however, prosecutors said they intend to file a superseding indictment next week that will seek to incorporate Bankman-Fried’s alleged campaign finance scheme into seven other existing charges.

“The superseding indictment will make clear that Mr. Bankman-Fried remains charged with conducting an illegal campaign finance scheme as part of the fraud and money laundering schemes originally charged,” the letter said.

“The defendant’s use of customer deposits to conduct a political influence campaign was part of the wire fraud scheme charged in the original indictment. And as part of the originally charged money laundering scheme, the defendant also concealed the source of his fraudulent proceeds through political straw donations,” the letter added.

In response to an inquiry from ABC News, Bankman-Fried’s attorneys Mark Cohen and Christian Everdell declined to comment.

Bankman-Fried has pleaded not guilty to all charges he faces, including defrauding customers and lenders of FTX. The trial is scheduled for October.

Bankman-Fried stepped down from his role at FTX in November 2022 amid a rapid collapse that ended with the company declaring bankruptcy. Prosecutors charged Bankman-Fried the following month with an array of alleged crimes centered on a scheme to defraud investors.

Soon after, Bankman-Fried agreed to waive his right to deny extradition to the U.S., clearing the way for his trial in U.S. court. Since then, Bankman-Fried has stood under house arrest at his parents’ Palo Alto, California, home as he awaits trial.

Bankman-Fried has pleaded not guilty to 13 charges, including fraud, conspiracy and bribery, after federal prosecutors said he misappropriated billions of dollars from FTX before it went bankrupt.

Prosecutors allege he used the money to cover losses at his hedge fund, Alameda Research, to buy lavish real estate and to make political donations.

Bankman-Fried, in an interview with ABC News’ George Stephanopoulos in November, denied knowing “there was any improper use of customer funds.”

“I really deeply wish that I had taken like a lot more responsibility for understanding what the details were of what was going on there,” Bankman-Fried told Stephanopoulos. “A lot of people got hurt, and that’s on me.”

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — The Campbell Soup Company is expanding its presence on grocery store shelves with a new deal to acquire Sovos Brands Inc., the maker of Rao’s pasta sauces and noosa yogurt.

At $23 per share, the total enterprise value of the acquisition is approximately $2.7 billion, the companies announced in a joint press release on Monday.

The premium pasta sauces first hit shelves in 1992 to bring home cooks a signature taste of the legendary 10-table New York City restaurant.

The Campbell’s meals and beverages division made the “strategic decision” to add a “high-growth, market-leading premium portfolio” to include more soups, dry pasta, frozen products and yogurts from the brand names Rao’s, Michael Angelo’s and noosa.

Rao’s represented approximately 69% of Sovos Brands, the companies stated, which has had 34.9% organic growth in sales compared to last year.

“We’re thrilled to add the most compelling growth story in the food industry and welcome the talented employees who have built a nearly $1 billion portfolio,” Campbell’s President and CEO Mark Clouse said in a statement. “This acquisition fits perfectly with and accelerates our strategy of focusing on one geography, two divisions and select key categories that we know well.”

In addition to strengthening the meals and beverages division, Clouse said it adds to their “faster-growing and differentiated snacks division.”

Todd Lachman, Founder, President and CEO of Sovos Brands, Inc. called it a “momentous occasion” for the company.

“Our success would not have been possible without the incredibly talented and passionate team at Sovos Brands, which has been instrumental in building one of the fastest-growing food companies of scale in the industry today,” Lachman said. “This transaction is expected to create substantial value for our shareholders, resulting in a 92% increase from our 2021 IPO price.”

Lachman said he’s “confident in Campbell’s ability to continue bringing our products to more households and further building on our track record of growth and success for years to come.”

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — While some tech giants neared or imposed widespread layoffs last year, compensation for their CEOs climbed as much as tens of millions of dollars, according to an ABC News analysis of data released by research firm Equilar in May and June.

Alphabet CEO Sundar Pichai was awarded compensation worth more than $225 million in 2022, which marked a staggering 3,474% increase from the previous year, making him the nation’s highest-paid CEO, according to Equilar data.

Near the outset of 2023, Alphabet announced plans to lay off 10,000 workers.

At Microsoft, which initiated plans to lay off 10,000 workers in January, CEO Satya Nadella received compensation worth nearly $55 million in 2022 — a 10% jump from the prior year, the data showed.

Meta, Uber and Salesforce are also among more than a dozen tech companies that gave their CEOs a compensation increase last year, despite announcing layoffs at some point since the start of 2022, according to the ABC News analysis of the Equilar data.

Roughly 389,000 tech workers have been laid off since the beginning of 2022, according to Layoffs.fyi, a site that tracks layoffs. The job cuts have befallen some of the nation’s most well-known and large companies.

Alphabet, Meta, Uber and Salesforce did not respond to ABC News’ requests for comment.

The rise of CEO pay amid a cascade of job losses at some household-name tech firms draws attention to the divergent fates of executives and workers in one of the nation’s most lucrative fields, which matches an economy-wide trend of a widening gap between the pay of CEOs and workers, analysts told ABC News.

CEO compensation often includes a base salary and a performance bonus but is typically made up in large part by stock awards that align the CEO primarily with shareholders, analysts added. The incentive structure can push a CEO to safeguard the health of a company but also reward short-term cost cuts that imperil workers, they said.

The disparate outcomes for CEOs and workers at some tech firms heightens an ongoing dispute about whether companies should shift consideration toward other stakeholders beyond investors, such as employees and customers, David Larcker, a professor of accounting, Emeritus, at Stanford University who researches corporate governance, told ABC News

“It’s a huge question,” Larcker said. “From a CEO’s perspective, if you have to shut down something that isn’t profitable, you can obviously increase the stock price and earnings and get a big bonus out of that.”

From workers’ point of view, meanwhile, “companies have a lot to say about how employees are their most important assets and sometimes actions seem a lot more shareholder-friendly,” Larcker added.

To be sure, Equilar calculated the value of CEO compensation packages when they were awarded at the outset of last fiscal year. For many companies, the stock price had dropped by the end of the year, leaving the CEO’s compensation lower than the figure listed by Equilar. The value of Pichai’s compensation package, for instance, fell to about $205 million by the end of fiscal year 2022, according to a follow-up Equilar analysis shared with ABC News.

Under the terms of Pichai’s compensation package, he will not receive the full value unless the company achieves a set of goals, including strong stock performance relative to other large companies, a government filing shows.

Meanwhile, the ultimate value of the compensation package received by Nadella is dependent on a range of company performance metrics that “are intended to be difficult but attainable,” Microsoft told shareholders in December.

Months earlier, in May 2022, Microsoft announced an increase in its budget devoted to pay and stock compensation for employees that year. The company will not provide raises for salaried employees in 2023, according to a company memo first reported by Insider in May.

In response to ABC News’ request for comment, a Microsoft spokesperson noted that the compensation awarded to Nadella last year preceded the layoff plans announced in January.

The vast majority of the compensation awarded to Zuckerberg in 2022 is devoted to his security and use of a private plane, Meta told shareholders. Since 2013, Zuckerberg has received an annual salary of $1.

The value of a stock award made up 70% of the typical compensation package for the 100 highest-paid CEOs last year, Amit Batish, director of content at Equilar, told ABC News. Company performance thresholds often found in CEO compensation packages include stock performance, sales growth and product user totals.

Job losses in the relatively well-paid industry, meanwhile, have coincided with otherwise robust hiring across the economy, which boasts an unemployment rate hovering near a 50-year low.

“Especially in tech, I think it’s a shock to tech workers who have always been in such high demand to be experiencing these layoffs,” Lisa LaViers, a professor at Tulane University’s Freeman School of Business who studies executive pay and its effect on workers, told ABC News.

At tech firms where CEOs received an increase in compensation alongside layoffs, the divergent fortunes likely exacerbated worker dismay, LaViers added.

“If you gave the CEO a large bonus and you laid off a lot of workers, I can’t imagine a scenario under which that wouldn’t upset employees,” she said.

Key attributes of executive and worker compensation complicate the moral outrage, however, LaViers said.

Executive compensation sometimes includes stock options that cannot be sold within a year of when a CEO receives them, meaning that compensation received in a given year does not necessarily equate to money brought in by an executive. Meanwhile, many non-executive level tech employees receive stock options as part of their compensation, tying their income to that of shareholders, she said, though employee stock options are a fraction of what CEOs receive.

Uber, which has laid off hundreds of employees this year, gave CEO Dara Khosrowshahi compensation worth about $24 million in 2022, which amounted to a 22% increase from the previous year, Equilar data showed.

A corporate worker laid off by Uber this year, who requested anonymity for fear of negative consequences if they spoke publicly, described the dynamic of job cuts alongside pay increases as “very frustrating.”

Responding to Khosrowshahi’s push for a “culture change” that focused on the mission-based aspirations of Uber, the laid-off worker asked, “Did Dara really care about doing the right thing?”

“There’s a lot of lip service paid to ‘Oh, we want to have a culture’ but it’s all in the service of profitability,” the laid-off worker added.

After imposing a round of layoffs last month that affected up to 50 employees at Uber’s trucking subsidiary, Uber Freight, a company spokesperson told outlet Freight Waves in a statement: “On the back of efficiency gains realized across the business and to ensure continued alignment between our cost structure and the current market realities, we are reducing the workforce in our Brokerage business across a small number of roles.”

The full compensation package awarded to Khosrowshahi is dependent upon the company’s fulfillment of key objectives, Uber told shareholders.

Similarly, a worker interviewed by ABC News who was laid off this year by data-storage firm Western Digital expressed disappointment after finding out that CEO David Goeckeler received a 42% pay increase in 2022, according to Equilar data.

“I was making money for this guy instead of making money for myself,” said the worker, who requested anonymity due to the terms of a severance agreement. “It’s the sickness of the whole system.”

To receive the full value of his compensation package, Goeckler must achieve a variety of short- and long-term company performance goals, Western Digital told investors.

Western Digital did not immediately respond to a request for comment.

Larcker, of Stanford University, said that a corporate shift in focus away from shareholders and toward other constituencies could limit instances of egregious divergence between the outcomes of CEOs and workers. Though layoffs, he added, are unavoidable, especially in tech.

“Tech is a risky business,” Larcker said. “But companies can be better off when they change course in a way that doesn’t crush workers.”

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — Disgraced crypto executive Sam Bankman-Fried deserves to have his bail revoked and to be detained before he is tried for fraud and conspiracy charges stemming from the collapse of FTX, federal prosecutors in New York said in a new court filing.

Prosecutors balked at Bankman-Fried’s sharing with The New York Times excerpts from the personal documents of Caroline Ellison, Bankman-Fried’s former girlfriend, who led his Alameda Research hedge fund and who has pleaded guilty and agreed to cooperate.

Bankman-Fried considered those private writings of Ellison “detrimental to her” and accused him of sharing them with the newspaper “in order to affect the public’s perception of her,” prosecutors said.

The defense accused the government of drawing conclusions “without any evidence whatsoever” and relying “heavily on assumptions, unsupported inferences, and innuendo.”

Prosecutors accused Bankman-Fried of witness tampering.

“The record here establishes that the defendant went beyond benignly exercising a constitutional right to speak to the press—he took covert steps intended to improperly discredit a trial witness and taint the jury pool,” prosecutors said. “[T]he Government seeks the only appropriate relief consistent with the defendant’s escalating evasions of his bail conditions: that bail be revoked and the defendant be detained pending trial.”

Bankman-Fried pleaded not guilty to 13 charges, including fraud, conspiracy and bribery, after federal prosecutors said he misappropriated billions of dollars from FTX before it went bankrupt. Prosecutors allege he used the money to cover losses at his hedge fund, Alameda Research, to buy lavish real estate and to make political donations.

Ellison pleaded guilty in December to two counts of wire fraud, two counts of conspiracy to commit wire fraud, conspiracy to commit securities fraud and conspiracy to commit money laundering, according to the court documents.

 

Copyright © 2023, ABC Audio. All rights reserved.

(NEW JERSEY)– The lack of available homes on the market is near historic lows, sparking fierce bidding wars in cities across the country – and prompting many buyers to get creative with their offers.

In June, 1.08 million homes were for sale nationwide, according to the National Association of Realtors (NAR), down 13.6% from a year ago, when 1.22 million homes were available.

“It’s still a seller’s market, and we won’t see that change anytime soon,” Sarah Drennan, a realtor with Terrie O’Connor Realtors, in northern New Jersey, tells ABC News. “Some of our homes are selling with anywhere from 10 to 50 offers, and within the first week the home is going under contract.”

Housing experts say the biggest challenge for home buyers right now is competition, and cash is still king. One-third of U.S. homebuyers are paying in cash, the highest share in nearly a decade, according to real estate broker Redfin.

Too many buyers chasing too few properties is pushing home prices out of reach for a growing number of Americans. Data compiled by the NAR found roughly one third of homes sold in June sold for above the list price, when the national median sale price was $410,200, the second-highest number on record and 0.9% less than the all-time high from one year ago of $413,800.

Undeterred by the highest mortgage rates in more than a decade, some buyers are finding creative ways to win a home and outmaneuver the competition.

Dylan and Shannon McCarty describe their home search in Ramsey, New Jersey as “brutal.” When their rent in Hoboken, New Jersey went up again in January, the couple decided it was time to stop renting and start building equity in their first home. Yet despite being pre-approved for a mortgage, the McCartys were outbid for five different homes over five months.

For their sixth time, they decided to employ a different tactic and appeal to the sellers’ human side. Shannon McCarty’s best friend happened to know the neighbors of the home they wanted to buy. On the day of the open house, those neighbors walked through the home with the McCartys to give off the “good family vibe” they knew the sellers were interested in.

It also didn’t hurt that the couple bid $50,000 above the asking price, but in this competitive market, they knew even that might not be enough. The McCartys believe what made the difference was writing a “love letter” to the seller.

“We showed them our desire and eagerness to get into the home. We described how we loved the charm of the house and how we would be thrilled if they would select us to move into their home and start our family,” Dylan McCarty says. “There were multiple offers, including some that were all cash, but we were told by our agent that the sellers went with an emotional decision, and they went with us.”

If your persuasive letter-writing skills aren’t quite up to snuff, there are other ways to sweeten your offer. Motivated buyers looking for an advantage are throwing all sorts of extras at sellers, like agreeing to non-refundable deposits. “It shows that you have skin in the game and that you are going to move forward because you don’t want to lose that deposit,” Drennan says.

Additionally, some buyers are limiting their inspections to only structural or environmental issues, or scrapping inspections altogether. Depending on the market, buyers are also waiving home appraisals or agreeing to pay the difference and ‘bridge the gap’ in the event a home is appraised for less than the asking price. Yet another popular strategy is allowing the seller to live in the house rent-free or at a dramatically reduced rate after the closing, to give them time to buy a home for themselves.

The lack of inventory has been made worse by homeowners who are reluctant to sell and part with their low mortgage rates.

With their first baby on the way, Sarah and Ryan Locurto would like a larger home in Ridgewood, New Jersey, but their 2.5% mortgage rate is less than half the current national average, which as of early August is closing is on 7% for a 30-year fixed-rate.

“If we did find something that we loved and we felt like we weren’t overpaying, we would move but, you know, the mortgage rates are a big factor,” Sarah Locurto tells ABC News.

Instead of giving up their low mortgage rate, Drennan says some buyers are pouring the money they would have spent on buying another home into renovations on their current house.

“We’re seeking sellers willing to divorce their current rates,” Drennan says. “You marry your house, but you date your mortgage. You can always refinance for a more attractive rate, which many lenders are doing now, fee-free.”

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — CVS Health is laying off 5,000 employees as part of an effort to shed costs, the retail and pharmacy chain confirmed on Tuesday.

The layoffs will primarily affect “non-customer facing positions” such as corporate roles, the company said, adding that it does not expect the move to impact brick-and-mortar stores, pharmacies and clinics.

“Our industry is evolving to adapt to new consumer health needs and expectations,” CVS told ABC News in a statement. “As part of an enterprise initiative to reprioritize our investments around care delivery and technology, we must take difficult steps to reduce expenses.”

Laid-off workers will receive severance pay and benefits, the company said, including access to “outplacement services” to help find a job elsewhere.

“We’re committed to supporting impacted colleagues,” the company said.

As of December, CVS employed roughly 300,000 workers worldwide, according to a securities filing. The just-announced layoffs will eliminate less than 2% of the company’s workforce.

The Rhode Island-based company operates more than 9,000 retail locations and 1,100 walk-in medical clinics, the securities filing said. It also owns one of the nation’s largest health insurers, Aetna, as well as the country’s largest pharmacy-benefit manager, CVS Caremark.

The move to slash workers comes as CVS pivots toward expanded healthcare services, and away from the magazine and snack aisles.

In May, the company closed a $10.6 billion acquisition of Oak Street Health, a Chicago-based primary care provider that operates more than 150 healthcare centers in 21 states.

Two months earlier, the company closed an $8 billion deal to acquire Signify Health, a New York-based home healthcare company.

In 2021, CVS announced plans to close roughly 900 stores over the ensuing three years as it evaluated population shifts, consumer buying patterns and projected needs. As part of this “strategic review” of its retail business, the company said it would “reduce store density” in certain locations.

“We do not anticipate there will be any impact to our clients and customers as we remain focused on our mission – continuing to provide the exceptional care and support our customers, patients and communities deserve and depend on,” the company said in Tuesday’s statement.

“Throughout our company’s history, we’ve continuously adapted to market dynamics to lead the industry,” the statement added. “The difficult decision we are making will set the company up for long-term success.”

CVS is set to hold their next quarterly earnings call Wednesday morning. Shares of CVS ticked down 1% in early trading on Tuesday.

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — The Federal Reserve raised interest rates to a 22-year high this week — a milestone that carries major implications for the finances of everyday people, experts told ABC News.

The move escalated an aggressive series of rate hikes that has helped dramatically reduce inflation from a peak last summer.

But the historically high interest rates are bad news for borrowers, who will face even higher costs for things like car loans to credit card debt to mortgages.

The high interest rates do deliver benefits for savers, however, who stand to gain from an uptick in the interest yielded by accounts held at banks as well as bonds and high-yield savings accounts.

“It depends what side of the ledger you find yourself on,” James Cox, a financial advisor and managing partner of Virginia-based Harris Financial Group, told ABC News.

“If you’re a saver and you have money in the bank, this is fantastic,” he added. “For people who borrow money, it’s way more expensive.”

Here’s what to know about how the sky-high interest rates affect people’s personal finances:

What do historically high interest rates mean for borrowers?

The high interest rates make borrowing more expensive.

So any purchase that requires a loan — for a home, car, or higher education — could be affected. Credit card rates are also highly sensitive to Federal Reserve moves, so card holders should expect even higher payments. As of Wednesday, average credit card interest rates stood at a staggering 20.5%, Bankrate data showed.

“Borrowers are negatively affected,” Christine Benz, the director of personal finance at Morningstar. “Higher rates mean higher interest payments on loans.”

Mortgages, for instance, show how much more costly borrowing has become.

The 30-year fixed-rate mortgage reached more than 7% in October, achieving heights last seen more than 20 years ago, Freddie Mac data showed. The rate has fallen slightly below 7% but remains highly elevated, Freddie Mac said on Thursday.

At the start of 2022, by comparison, the mortgage rate on a 30-year fixed mortgage stood at 3.22%.

For homebuyers, each single percentage point increase in a mortgage rate can add thousands or tens of thousands in additional costs each year, depending on the price of the house, according to Rocket Mortgage.

However, the jump in interest rates comes with a silver lining: The elevated cost of loans should slash demand and cut home prices, Benz said.

“We haven’t seen it yet but there might be a chilling effect on home prices,” she said, citing a supply shortage that she believes could slacken over time.

What does the elevated interest rate mean for savers?

As much as high interest rates hammer borrowers, they benefit savers.

“If you’re a saver right now, it’s pretty darn good,” Derek Horstmeyer, a finance professor at George Mason University’s School of Business, told ABC News.

The yields on savings accounts have climbed as the Federal Reserve has lifted its interest rates, since banks accrue additional revenue in a high-interest rate environment and pass along some of that income to depositors.

Meanwhile, an array of high-yield savings accounts has emerged as firms seek to entice depositors with high returns.

The average annual yield on a savings account has more than doubled since April but still stands at just 0.52%, meaning that a typical customer earns a fraction of a percentage point of interest each year for his or her savings deposit, Bankrate data showed.

High-yield savings accounts, however, offer customers as much as about 5% annual percentage yield, a Bankrate analysis said.

Moreover, the simultaneous presence of high interest rates alongside declining inflation means that savers can avoid the elevated consumer prices that previously ate away at savings, said Cox, of Harris Financial Group.

“It’s massively beneficial,” Cox said, noting his expectation that inflation will continue to fall. “It only gets better from here.”

Copyright © 2023, ABC Audio. All rights reserved.