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A2 | Wednesday, August 24, 2016
THE WALL STREET JOURNAL.
* *
U.S. NEWS
BY CAROL E. LEE
The increasing likelihood
that President Barack Obama
won’t secure a new trade
agreement with Asia before
leaving office in January could
leave a significant void in the
foreign-policy
legacy
he
sought after winning a second
term.
A failure by Mr. Obama to
achieve the trade pact, the
Trans-Pacific Partnership, with
11 Asian nations also would
add a foreign-policy dilemma
to his successor’s agenda.
The dim prospect of Congress approving the deal after
the November election is a
dramatic shift from the optimism felt by the White House
earlier this year about the
agreement’s path.
When Democratic presidential candidate Hillary Clinton
announced her opposition to
TPP last fall, Mr. Obama believed she was making a political, not substantive, decision
that was designed to diminish
an advantage that her thenprimary opponent Vermont
Sen. Bernie Sanders, who opposed the trade deal, had with
Democratic voters.
White House officials at the
time believed she would soften
her opposition in a general
election. But the politics on
trade have significantly shifted
since then, leading Mrs. Clinton instead to harden her
stance.
With Republican nominee
Donald Trump breaking with
longtime GOP support for free
trade and vehemently opposing TPP, and with Democrats
fearing that he could peel
away white working-class voters in crucial states such as
Pennsylvania, aides to Mrs.
Clinton say she now plans to
tear up the pact and start over.
A new trade agreement
with Asia was one of four foreign-policy goals Mr. Obama
set for his second term in the
month after winning re-elec-
ROBYN BECK/AGENCE FRANCE-PRESSE/GETTY IMAGES
Trade Deal Clouds Obama Goals
The Trans-Pacific Partnership faces dwindling support.
tion in 2012. The other three
planks—an Iran nuclear deal,
an international climatechange agreement and restoring U.S. relations with Cuba—
have been achieved. Unlike the
trade deal, none of those required congressional approval.
The White House believed it
could win passage of TPP with
Republican votes, but GOP
leaders of both the House and
Senate have said the accord
faces dwindling support, given
lawmakers’ continuing concerns over various provisions
of the agreement. In the
months since the chances of
passage
diminished,
Mr.
Obama has yet to craft a strat-
egy to overcome the new political dynamics on trade.
The president is set to push
for TPP during a trip next
month to Asia. But it is a domestic audience that he needs
to convince, and to do so he
plans to lean heavily on the argument that a failure to approve TPP would expand the
influence of China.
White House press secretary Josh Earnest said Monday
that Mr. Obama is hopeful
Congress will pass TPP before
he leaves office and “is concerned that if the United
States doesn’t engage in this
way, that we’re only leaving a
vacuum for China to fill.”
“We know that China is actually in touch with other
countries who have signed on
to the Trans-Pacific Partnership, trying to negotiate their
own trade deals with them,”
Mr. Earnest said. “There is a
very real risk that the United
States gets cut out of the
deal.”
BY NICK TIMIRAOS
WASHINGTON—A
slowdown in tax receipts, especially from corporate profits,
will cause the U.S. federal budget deficit to widen this year
for the first time since 2009,
while other forces will contain
the growth rate of the national
debt in coming years, analysts
said Tuesday.
The Congressional Budget
Office expects the deficit for
the fiscal year that ends next
month to expand to $549 billion, or 3% of gross domestic
product, up from $500 billion,
or 2.7%, in its estimate earlier
this year. Both are up from
last year’s $438 billion deficit,
or 2.5%, the lowest since 2007.
At the same time, the CBO
made two major changes to its
long-term economic forecasts
that reduce projected deficits
by around $700 billion between now and 2026.
First, the nonpartisan budget office said it expects the
economy to grow more slowly
over the coming decade than
it did earlier this year, driven
by slower growth in the labor
force after 2020. The downward GDP revision reduces
government revenues by $400
billion through 2026.
But the CBO projected interest rates will remain lower
for longer, which is expected
to slash $1.1 trillion in projected spending over the next
decade from the earlier forecast. The CBO had forecast in
January, for example, the 10year Treasury note would
yield an average 2.8% this year
and 3.5% next year. It now
sees the yield averaging just
1.8% and 2.3%, respectively.
Lower borrowing costs will reduce debt payments by 8%
over the next two years and
16% over the coming decade
when compared with the January forecast.
The upshot is the U.S. will
run lower deficits over the next
decade because the savings
from lower borrowing costs
will more than offset the slowdown in revenues from weaker
growth. Still, the national debt
will rise to around 86% of GDP,
from its current 77%.
Tuesday’s figures peg the
budget deficit for this year at
a higher level because of a
slowdown in federal tax revenues, which are barely 1%
higher than a year ago while
outlays have risen 5%.
Most of the drag stems
from falling corporate profits.
Individual income taxes are
expected to rise around 1%
this year and payroll tax receipts are up around 5%. Corporate income tax payments,
on the other hand, are down
13%, due partly to the extension of a series of tax breaks.
The federal deficit soared
following the financial crisis
and the recession of 2007-09
as government spending
surged and receipts plunged.
Annual deficits have steadily
fallen since then as the government cut spending and revenues recovered, with last
year’s deficit hitting an eightyear low of 2.5% of GDP.
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D ISCOV ER A H IG HER L E V EL
OF PR I VAT E AV I AT ION AT SEN T IEN T.COM
8 7 7. 8 4 5 . 0 0 5 5
LUKE SHARRETT/BLOOMBERG NEWS
Deficit to Widen
As Tax Receipts Fall
A contractor moves lumber for a house under construction in Louisville, Ky.
Purchases of New Homes Soar
BY ERIC MORATH
WASHINGTON—Sales
of
newly built homes rose in July
to the highest level in nearly a
decade, a sign of solid momentum in the U.S. housing market.
Purchases of new singlefamily homes rose 12.4% in
July from a month earlier to a
seasonally adjusted annual
rate of 654,000, the Commerce
Department said Tuesday. That
was the highest level since October 2007.
“New-home sales soared
again,” said Ralph McLaughlin,
economist at real-estate website Trulia. “This is a continued sign that demand for new
homes remains solid in a low
interest rate, low unemploy-
STORES
Continued from Page One
Best Buy’s fiscal second
quarter profit jumped 20% to
$198 million as revenue edged
up a fraction to $8.53 billion.
It also raised its full-year sales
outlook to an increase of up to
1%, from flat.
Sales remain 20% below
their 2010 peak of $49 billion,
as the company has retreated
from Europe and struggled to
get customers into its U.S.
stores. But while store sales
have been shrinking, Best Buy
has carved web sales inroads.
Mark Huron, a retired electrical engineer from Arlington
Heights, Ill., uses Bestbuy.com
for smaller items like cable
modems and routers. Recently,
he bought an Apple TV
streaming device on the site.
He still heads to his local store
for big-ticket items, like a 75inch Sony television. “If there’s
a situation where I want to see
it or have a question, I’ll go” to
the store, the 60-year-old said.
Chief Executive Hubert Joly,
who joined Best Buy four years
ago, said the retailer has begun regaining lost business by
offering free two-day shipping
on orders of more than $35
and by improving its online
product reviews.
“We don’t see it as a zerosum game,” Mr. Joly said of
the trade off between online
and in-store sales. Both allow
the company a chance to sell
installation services, he said.
Best Buy said it logged more
visits to its website last quar-
ment environment.”
Economists surveyed by
The Wall Street Journal had
expected home sales in July to
slow to a pace of 580,000.
Sales in June were revised
down to 582,000 from an initially estimated 592,000.
Through the first seven
months of the year, new-home
sales rose 12.4% compared
with the year-earlier period.
The housing market has
been a bright spot in the economy this year. Historically low
mortgage interest rates, improving income growth and
steady job creation have supported buying of both new and
existing homes.
Sales of previously owned
homes rose to their strongest
pace in nearly a decade in
June, according to the National Association of Realtors.
The group will release July figures on Wednesday.
Sales of newly built homes
account for less than a tenth of
total U.S. home-buying activity. Data on such purchases are
volatile from month to month
and subject to later revision.
July’s increase came with a
margin of error of plus or minus 12.7 percentage points.
New-home sales in July
were up 31.3% from a year earlier. The latest figure brings
new-home sales back to the
level recorded just before the
recession. But the pace remains well below the peak of
1.39 million in July 2005.
ter, and the average size of its
online orders rose.
Analysts said the company
is benefiting from improvements to its website and
smartphone app, including
speeding the checkout process
and offering to match competitors’ prices. “It’s a combination of having a big market
along with making some
strides in e-commerce,” said
UBS analyst Michael Lasser.
The chain gets about 11% of
its domestic revenue, or $4
billion last year, from online
sales—an amount dwarfed by
Amazon, which sells a wider
assortment and had about
$100 billion from its e-commerce business last year.
Other large store chains are
grappling with a slowdown in
their e-commerce operations.
Target’s digital sales rose 16%
last quarter, down from 30% a
year earlier. At Wal-Mart,
global e-commerce growth
slowed for nine straight quarters before delivering last
quarter’s 12% gain. The company hopes to better that with
a deal to buy discount retailer
Jet.com Inc. for $3.3 billion.
One change in the latest
quarter was Best Buy’s decision to narrow the delivery
window for major appliances
to four hours, down from 12
hours. “Who wants to sit
CORRECTIONS 
AMPLIFICATIONS
A photo with a Page One
article Saturday about the
staffing shake-up at Donald
Trump’s presidential campaign
showed Trump security director Keith Schiller. The caption
incorrectly said it showed his
policy director, Stephen Miller.
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Best Buy’s gains
came despite a weak
period for consumer
electronics.
around and wait for the entire
day for the appliance to show
up?” Mr. Joly said, though the
change caused some disruptions in the quarter.
Domestic appliance sales
rose 8.2% on a comparablestore basis, the strongest category for the company. Home
Depot Inc. and other chains
also posted strong appliance
U.S.
Watch
EDUCATION
College-Readiness
Scores Disappoint
More high-school graduates
are taking the ACT college-entrance exam, as states push students to consider their options
for higher education. But the
test results show a growing portion aren’t ready for college.
Sixty-four percent of 2016
high-school graduates sat for the
standardized test, up from 49%
in 2012. The jump comes as
more states—including Mississippi, Nevada and South Carolina—require districts to administer the tests.
Yet as the wider pool of testtakers better reflects the population of high-school students
across America, it also reveals
shortcomings in their educational
achievement. According to the
Iowa-based nonprofit that produces and administers the ACT,
the percentage of 2016 graduates who met college readiness
benchmarks in English, reading,
math and science fell to 26%
from 28% among 2015 grads.
The number that met benchmarks in three areas remained
flat at 12%. But those who failed
to meet any of the benchmarks
rose to 34% from 31%.
Readiness measures are
based on results in subject-area
tests that represent the score
needed to have a 50% chance of
obtaining a B or higher, or a 75%
chance of getting a C or higher,
on a corresponding first-year college course.
—Melissa Korn
FLORIDA
Zika Case Probed
In Tampa Bay Area
Florida officials are investigating a possible case of locally
transmitted Zika in the Tampa
Bay area, raising the possibility
that the virus is spreading in areas far from Miami, where such
cases have been clustered.
The Florida Department of
Health is investigating the case
in Pinellas County, home to St.
Petersburg and some 270 miles
from Miami, Gov. Rick Scott said
Tuesday.
Mr. Scott also said four more
cases of locally transmitted Zika
have been confirmed in Miami,
part of an outbreak that officials
initially identified in late July.
Despite the new case in Pinellas County, Mr. Scott said the
state still believes mosquito
transmission is limited to the Miami area.
Among other potential complications, Zika can cause birth
defects in the fetuses of women
who get infected while pregnant.
A recent study also suggested it
could harm the brains of some
adults.
—Jennifer Levitz
sales recently as Americans
update their homes, and the
category has attracted new entrants like J.C. Penney & Co.
Best Buy forecasts revenue
will grow slightly in the second half of the year, helped by
new products such as the latest Apple Inc. iPhone. Last fiscal year, revenue fell 2% to
$39.53 billion, its sixth straight
year of declines.
Finance chief Corie Barry
said declines in tablet computers and mobile phones weren’t
as bad as projected for the period. Executives also played
down fears that rapid price declines for ultra high resolution
televisions and more selection
at retailers like Target and
Wal-Mart would hurt Best Buy.
Mr. Joly said wider product
assortment, close partnership
with vendors and better store
displays for home theaters
should help it outrun the competition.
—Joshua Jamerson
contributed to this article.
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