The news at a glance

Economy: Home prices and confidence rise

The housing market’s upswing looks more solid than ever, said Robbie Whelan in The Wall Street Journal. The Commerce Department reported this week that home prices are hitting record highs, with the average new-home price reaching $330,800. Sales were up 29 percent compared with the same time last year, and builders were on pace to sell 454,000 homes this year. Experts say sale volume would look even better if builders weren’t “deliberately holding back sales as a way to control supply and maximize prices.” Many builders have intentionally slowed the pace of sales in pursuit of stronger prices, since costs for land, labor, and materials are rising.

Consumer confidence picked up, too, said Leah Schnurr in Reuters.com, hitting its highest point in more than five years. The most obvious factors behind that burst of good feeling are the persistent stock market rally and lower gas prices. Both consumer confidence and housing have shown strength despite the sequester cuts and higher payroll taxes that are “starting to bite into the broader economy.” But some experts remain cautious in their optimism. While consumer activity accounts for about two thirds of the economy, said Wells Fargo economist Sam Bullard, higher confidence “does not necessarily translate into more spending.”

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Mergers: Chinese firm to buy Smithfield Foods

China’s Shuanghui International will pay $4.7 billion to acquire American meat processor Smithfield Foods, said Michael J. de la Merced and Mark Scott in NYTimes.com. Shuanghui, China’s largest pork processor, will pay $34 a share for the Virginia-based ham producer. The merger is expected to help Smithfield establish a foothold in China as growth in other markets slows, but the sale “will likely draw close government scrutiny over Chinese food standards,” even though the deal is aimed at exporting American pork to China rather than importing Chinese products.

Loans: Sallie Mae announces split

Sallie Mae will split into two companies, said Saabira Chaudhuri in The Wall Street Journal. The country’s largest student loan creditor last week announced a plan to divide into an education-loan management business and a consumer-banking operation. The education-loan business will own 95 percent of Sallie Mae’s assets, including about $150 billion in federal and private education loans. Sallie Mae, originally set up as the government-sponsored Student Loan Marketing Association, has been a publicly traded company with no ties to the government since 2004.

Telecoms: Sprint, SoftBank get security clearance

Sprint Nextel and SoftBank have received U.S. national security clearance for their proposed merger, said Roger Yu in USA Today, allowing the Japanese firm to proceed with its plans to pay $20 billion for 70 percent of Sprint. The announcement is a blow for rival bidder Dish Network, which has argued that selling Sprint to a foreign company “will weaken the security of the United States.” SoftBank has already agreed to cut loose a supplier with alleged ties to the Chinese military.

Banking: Moody’s raises banking outlook

Moody’s Investors Service lifted its outlook for U.S. banks to “stable” after five years of deeming it “negative,” said Zeke Faux in Bloomberg.com. The upgrade came as the result of stronger GDP growth and increased bank capital. But Moody’s brighter view of the banking sector didn’t improve the credit ratings of two individual lenders—Bank of America and Citigroup—both of which are rated just two levels above junk. Moody’s said it would decide whether to downgrade or raise the outlooks for the biggest U.S. banks by the end of the year.