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‘This isn’t what we were promised’: Amid GM closures, Trump’s economic policies are coming home to roost

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At one time, Donald Trump’s words sounded reassuring to Tommy Wolikow. Now more than a year later, they just torment him.

“Don’t move, don’t sell your house,” the U.S. president urged a cheering crowd in Youngstown, Ohio, in July 2017, promising to resurrect the region’s dwindling manufacturing jobs. “They’re all coming back.”

Wolikow, a 36-year-old father of three, was standing there listening, hopeful. The former General Motors quality control worker at the GM Lordstown Complex had been laid off months earlier, and bought a two-storey home for $110,000 US with his wife, Rochelle, located just three kilometres from the factory.​ He was hoping to soon return to work.

Wolikow voted for Trump in 2016, inspired by his pledge to reinvigorate the manufacturing economy. He was a believer. So when Trump encouraged supporters not to sell their homes, to trust his economic stewardship, Wolikow accepted it.

But as 14,000 layoffs were announced by GM on Monday, it became clear that Trump has not lived up to being the manufacturing messiah he claimed to be.

Among other factors, many economists are faulting his trade policy and confirming their doubts that a tax-reform package benefiting corporations would save factory workers.

After nine years at GM, Trump’s inauguration day, Jan. 20, 2017, turned out to be Wolikow’s last day on the job. Once a diehard Trump supporter, Wolikow’s faith has waned. Over the last two years, he has seen only job losses in Ohio — including both his and Rochelle’s, who was a GM employee on the door line at the Lordstown plant.

“The information we got is devastating,” he said about the new layoffs and GM’s plan to idle five factories in Ohio, Michigan, Maryland and Oshawa, Ont.

Tommy Wolikow is shown with his wife, Rochelle, and their daughters Ali, 6, and Natalie, 11. Wolikow and his wife were both laid off last year by GM. Rochelle has found work as a waitress, while Wolikow is still seeking work. He says the couple has maxed out their credit cards. (Tommy Wolikow )

The couple worry about the value of their home diminishing. “How are you going to sell a house in the area when nobody wants to live there anymore?” Rochelle said.

Economists like Steve Bell predicted this outcome. 

Consumer preferences are changing. Only 30 per cent of American automobiles sold today are cars, like the Chevrolet Cruze compact, manufactured in Lordstown. Trucks and SUVs make up the remaining 70 per cent.

Yet Trump’s vow in Ohio last year seemed to disregard that fact, as well as the shift toward autonomous and electric cars, in favour of crowd-pleasing pledges to build new plants and reverse manufacturing job losses.

“The moment that was said, it was literally an impossibility,” said Bell, a former senior director of economic policy at the Washington-based Bipartisan Policy Center who now does consulting work. “It’s like saying we’re going to make coal have a huge comeback. We’re not.”

The Wolikows bought this house in Youngstown, Ohio, shortly before they were laid off. Tommy Wolikow attended the local rally last July when Trump told his supporters not to sell their homes, promising to revive the manufacturing economy in Ohio. (Tommy Wolikow)

Trump’s apparent lack of understanding for global supply chains and his insistence of imposing 25 per cent tariffs on imported aluminum and steel likely exacerbated GM’s challenges, he said. Hiking the price of those metals simply passes the costs onto consumers, hurting the automaker’s bottom line.

And it’s not just people wanting to buy cars who would be adversely impacted, said former U.S. trade representative Carla Anderson Hill.

“If you put a 25 per cent tax on steel, aluminum, washing machines and a tax on solar panels, you’re going to price out a number of people who would otherwise want those products.”

Take, for example, the Missouri-based Mid Continent Nail Corp., the largest nail manufacturer in the U.S. It’s now clinging to life, unable to price its steel competitively.

While Trump sold the metal tariffs as necessary for saving the U.S. steel industry, it has been a net negative for job creation, Hills noted. The Trade Partnership, a Washington-based economics research firm, found that there would be 16 jobs lost for every one job created by the Trump-imposed tariffs.

Wolikow, second from left, has been attending Trump rallies with a coalition called Good Jobs Nation, which has worked to bring attention to the struggles of workers in the U.S. manufacturing sector. (Tommy Wolikow)

North America’s auto and motor vehicle supply chain was once the most competitive in the world, Hills said. Now she believes the Trump economy is experiencing the unpleasant human cost of some of his economic policies.

“Tariffs,” she said, “are just not an effective mechanism to improve the trade relationship.”

To win re-election in 2020, Trump will likely have to once again take the manufacturing states of Wisconsin, Ohio, Pennsylvania and Michigan. Tariffs could become a sore point.

GM had already seen it coming. The company warned back in the summer that the tariffs could lead to “a smaller GM,” including job cuts in the U.S. and abroad. The company also said Trump’s tariffs have already cost it $1 billion US, prompting Democratic congressman Tim Ryan to accuse Trump of being “asleep at the wheel” and demanding he keep his vow to revive Ohio’s manufacturing sector.

“This isn’t what we were promised,” said Albert Sumell, an economics professor at Ohio’s Youngstown State University.

“I would say that when Trump was campaigning, he was the emperor that wears no clothes, making promises that any objective analysis would prove false — to the extent that most of the jobs that were lost were not lost due to China, they were lost due to automation.”

Americans are also witnessing how slashing the corporate tax rate may have pleased shareholders, but failed to fulfil its premise of incentivizing companies to reinvest in workers and spur manufacturing growth.

That hasn’t been borne out in reality — despite GM posting a $2.5 billion third-quarter profit at the end of last month.

“Look at it from a business perspective,” Sumell said. “All of a sudden, you have millions of more dollars than you expected to have. There’s no rule that you have to use those dollars to invest in new plants and new jobs.”

A survey of 42 economists last year found every expert, except for one, doubted the tax bill would help the economy result in substantially higher GDP. All those surveyed agreed it would increase the debt.

Dwayne Killingbeck bolts parts to a Camaro on the assembly line at the GM plant in Oshawa, Ont. The facility is one of five the automaker says it will soon mothball. (Norm Betts/Bloomberg)

Michael Graetz, a former U.S. Treasury official and tax law expert, agrees the tariffs should blare a “caution sign about trade wars.” But he isn’t so quick to criticize the president’s tax-reform policies, believing it’s still too early to tell whether the lower tax rate will ultimately produce more jobs in the U.S. — even though he says “there’s no question” most of the savings have gone into stock buybacks.

Much as it might be convenient to blame the president, Charlie Chesbrough, a senior economist with Cox Automotive, said the biggest driver was shifting consumer tastes.

“I don’t think we can hang this one around the president’s neck,” he said.

The cuts on Monday could be GM trying to play catchup to Fiat Chrysler, which announced in the summer it would cease making cars in the U.S. to focus entirely on pickups and SUVs. Ford made a similar announcement.

After he was laid off, Wolikow went back to school to earn his diesel technician’s degree. He’s still looking for work. Rochelle is scraping by as a waitress at Cracker Barrel, earning $4.15 an hour, plus tips.  

In the meantime, he’s waiting for the president to respond to a letter from his United Auto Workers president — a letter he hand-delivered to Trump’s 2020 campaign chief operating officer at a recent rally, pleading for help for autoworkers.

“I’m still holding on hope Trump is going to do something,” he said. “But how do you support someone when you know they’re not supporting you?”

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7 Tips For First-Time Home Buyers In Calgary

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Buying a house for the first time can be overwhelming to say the least. If you’re wondering what neighbourhood to go with, what you can afford, or even how to just get started on the process, let us take some stress off your hands! We’ve teamed up with Hopewell Residential to give you 7 tips to ensure the home you end up with is everything you dreamed of.

Hopewell Residential is a five-time Developer of the Year award winner, so their expertise is second-to-none in Calgary and beyond. Who better to learn home-buying tips from than the homebuilders themselves?

Create a checklist of needs & wants

This is a biggie. When you’re buying your very first home, you’ll want to weigh your needs vs. your wants. Ensuring you have what you love in your first home is a big, big deal.

What should you do? Easy. Set up a list of needs and a list of wants, but be pretty strict with yourself, and make sure you take your lifestyle into consideration. With the increase in remote work over the past year, it’s important to keep in mind that a home office or flex room might just be the key to maximizing at home happiness. Especially if you’re thinking you might be expanding your family later on, spare rooms and extra space is key (but more on that later!).

Or for instance, you might need a home in an area with a high walkability score, but you want to be close to certain amenities. Set yourself up with the right level of compromise and the number of homes that actually fit your ‘perfect’ idea will skyrocket.

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‘Don’t give up’: Ottawa Valley realtors share statistics, tips for homebuyers in ‘extreme’ sellers market

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The real estate market in the Ottawa Valley can be summed up this way: people from far and wide are in a buying frenzy, but there’s hardly anything to buy at the “store,” and the limited inventory is overpriced.

This “stampede” — as one realtor described it — will affect rural towns as residents grapple with finding affordable housing and agonize over their inability to purchase homes in their price range.

“We are seeing a lack of inventory in all price ranges,” said Laura Keller, a real estate agent from Carleton Place.

Helen Vincent, a Renfrew realtor, said she’s never seen a market like this in her 36 years of practice. “We postpone offers for four to five days in order to get all the buyers,” she said.

Multiple offers — between seven and 10 — became the norm, with cash offers and no conditions, as buyers faced bidding wars. “In Ottawa, they have up to 50 (offers),” she added.

“It’s very stressful. You’re going to get nine (people) ticked off, and one happy. So many people are disappointed,” Vincent said.

Terry Stavenow, an Arnprior realtor for 40 years, said that “the pent-up need took over with inventory going low. It made a stampede on everything that was available.“

“Brand new housing — it’s very much gone. Several building developers are rushing to get inventory. They usually don’t do construction in the winter months,” said Stavenow.

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10 Tips For First-Time Home Buyers

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Buying a home for the first time is exciting and a commitment to the future. It’s often challenging, too, and the process requires a lot of steps, many of which can be tricky to navigate as a first-time home buyer.

What are some things you should keep in mind as a first-time home buyer?

First-Time Home Buyer Tips

Here are 10 tips to keep in mind as you begin your journey toward homeownership.

1. Have Your Finances in Order

It’s wise to begin saving as early as possible once you’ve made the decision to purchase a house. You’ll need to consider the down payment, closing costs (which often range from 2% to 5% of the down payment), as well as move-in expenses.

You also need to understand the other costs of homeownership, such as mortgage insurance. property taxes, utilities, homeowner’s insurance, and more.

2. How Much Can You Afford?

Knowing how much you can realistically afford in a home is another important financial consideration. Look for the home of your dreams that fits your budget.

One way to avoid future financial stress is to set a price range for your home that fits your budget, and then staying within that range. Going through the preapproval process will help you understand what price range is realistic for your budget.

3. Make Sure Your Credit is Good

Another thing to keep in mind as a first-time home buyer is your credit score because it determines whether you qualify for a mortgage and affects the interest rate that lenders offer. 

You can check your credit score from the three credit bureaus – Experian, Equifax, and TransUnion.

This is another good reason for getting preapproved before you start your search. Learn more about the preapproval process and your credit score.

4. Choose The Right Real Estate Agent

A good real estate agent guides you through the process every step of the way. He or she will help you find a home that fits your needs, help you through the financial processes, and help ease any first-time buyer anxiety you may have.

Interview several agents and request references.

5. Research Mortgage Options

A variety of mortgages are available, including conventional mortgages – which are guaranteed by the government – FHA loans, USDA loans, and VA loans (for veterans).

You’ll also have options regarding the mortgage term. A 30-year fixed-rate mortgage is popular among many homebuyers and has an interest rate that doesn’t change over the course of the loan. A 15-year loan usually has a lower interest rate but monthly payments are larger.

6. Talk to Multiple Lenders

It’s worth your time to talk to several lenders and banks before you accept a mortgage offer. The more you shop around, the better deal you’re liable to get – and it may save you thousands of dollars.

7. Get Preapproved First

Getting a mortgage preapproval (in the form of a letter) before you begin hunting for homes is something else to put on your checklist. A lender’s preapproval letter states exactly how much loan money you can get.

Learn more about the preapproval process and how preapproval provides you with a significant competitive advantage in our article How Preapproval Gives You Home Buying Power.

8. Pick the Right House and Neighborhood

Make sure to weigh the pros and cons of the different types of homes based on your budget, lifestyle, etc. Would a condominium or townhome fit your needs better than a house? What type of neighborhood appeals to you?

9. List Your Needs and Must-Haves

The home you purchase should have as many of the features you prefer as possible. List your needs in order of priority; some things may be non-negotiable to you personally.

10. Hire an Inspector

Hiring an inspector is another crucial step in the home buying process. An inspector will tell you about existing or potential problems with the home, and also what’s in good order. You can learn more about home inspections and how to find a home inspector through the American Society of Home Inspectors website.

Buying a home for the first time is a challenge, but it’s one you can handle with the right planning and preparation.

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