U.S. home price growth slows, Medicare's extended life span and a big acquisition in the dollar store market top our roundup of the day's top business news stories.
U.S. Home Price Growth Slows: Case-Shiller
The closely-watched S&P/Case Shiller composite index of 20 metropolitan areas declined 0.3 percent in May on a seasonally adjusted basis, Reuters reports. Home prices in the 20 cities surveyed rose 9.3 percent year-over-year, the slowest yearly gain since February 2013 and short of economists’ expectations for a 10 percent climb.
Better Prognosis for Medicare Hospital Fund
A slowdown in health care spending has extended the life expectancy Medicare’s hospital trust fund, the government announced Monday. The program won’t be exhausted until 2030, four years later than last year’s estimate. Social Security is expected to remain solvent until 2034, but its disability benefits are projected to run out in just two years, The Associated Press reports. At that point, unless lawmakers act, the program will collect only enough payroll taxes to pay 81 percent of benefits. Medicare and Social Security are the government’s two largest benefit programs and accounted for 41 percent of all federal spending last year. Treasury Secretary called the programs “fundamentally secure," but added that the programs must be reformed “if we want to keep them sound for future generations."
Billion “Dollar” Baby
Dollar Tree announced Monday it is buying discounter rival Family Dollar for $8.5 billion, The Associated Press reports. The acquisition strengthens Dollar Tree’s roots in the dollar store segment with its more than 13,000 combined locations eclipsing current leader Dollar General Corp., which has about 11,300. Dollar stores, which grew during the recession, have seen harder times as target customers struggle with job instability and low wages, the AP notes. They have also faced competition from big box retailers such as Kroger and Wal-Mart, which plans to open up to 300 outlets that cater to low-income customers. Dollar Tree offers a fixed price of $1 for all of its items, while Family Dollar prices are more flexible, allowing the brand to sell a wider variety of items.
Zillow and Trulia Setting Up Joint Housekeeping
In an acquisition that will join the two biggest names in online house hunting, Zillow is adding on by purchasing Trulia, a stock deal valued at $3.5 billion, The Chicago Tribune reports. Zillow and Trulia combined attract more than 130 million visitors a month. Both companies post detailed listings of homes for sale, and charge agents to post their names alongside their listings. Some agent teams spend $20,000 a month with Zillow, Trulia, or both, the story said. Zillow will continue to operate two separate websites, where consumers can search listings of homes for sale. Zillow and Trulia have been game-changing websites that have transformed the housing market by making the process more transparent and accessible. Realtor.com, Homes.com as well as websites from such established real estate brokers as Coldwell Banker, Re/Max, and Century 21 are competitors.
Consumer Reports Accelerates Demands for Camry Recall
Consumer Reports magazine on Monday called Toyota Motor Corp to recall about 177,500 older Camry hybrid sedans to address potential power brake defects, The Chicago Tribune reports. CR, one of the most popular new auto consumer guides, said that the automaker’s response to consumer complaints about braking performance was inadequate. The Japanese automaker has called for a service campaign, which means that an automaker repairs cars as they are brought back to dealers by consumers. They also called for a warranty extension on different problems for cars from model years 2007 to 2011.
SEC Takes Aim at Smith & Wesson
The Securities and Exchange Commission charged Smith & Wesson for making “improper payments to foreign officials” as a way to score contracts to sell firearms to overseas military and police, The Associated Press reports. The gunmaker agreed to pay a $1.9 million penalty for violating anti-bribery rules, as well as pay $107,852 to disgorge gains. The alleged violations occurred between 2007 and early 2010, during which the company aggressively tried to boost the caliber of its overseas business. The company cooperated with the SEC during the investigation. It halted international sales and beefed up its internal controls, the SEC says. Smith & Wesson also fired its “entire international sales staff, the story notes.