Now that there’s a growing consensus that the Federal Reserve is done raising interest rates — a shift I predicted last month — it’s time to ponder when policymakers will consider cutting rates and by how much.
It’s important not to gloss over this reality because a number of signs point to a continuing deterioration so long as the Federal Reserve keeps interest rates at a level that restrains the economy.
The inflation scare is barely behind us, and it is already time for the Federal Reserve to focus on recession risks. The recent trajectory of job growth means policymakers can no longer rule out unemployment snowballing in 2024, which should force a shift in how they think about managing their dual mandate.
One consistent overhang in an otherwise pretty good year for the US economy has been tightening credit standards at banks.
For the first time since the Federal Reserve started raising interest rates, every part of the housing market is now poised to worsen.
Market pricing, verbal cues from Federal Reserve members and the likely evolution of the economic data over the next couple of months all point in the same direction — the central bank is likely done raising interest rates.
Economists, policymakers and politicians are used to there being two variables that serve as a scorecard for how the public feels about the economy — unemployment and inflation. A year ago, when inflation was at 40-year highs, public unhappiness made sense.
Home prices are once again on the rise following a brief decline.
Consumers might still be benefiting from inflation pressures abating, but the same is no longer true for corporations.
Arguably, the biggest question about the US economy right now is whether consumers can maintain their pace of spending. Student loan payments resume in October.
There’s a growing consensus that we need more housing and less office space as cities move forward with plans to transform themselves in a post-pandemic world.
The hope for the US resale housing market a year ago was that inflation would peak, interest rates would fall, and lower mortgage rates would help unfreeze the buying and selling of existing homes. That hasn't happened.
Halfway through the third quarter, the economy is looking surprisingly strong. A tracker from the Atlanta branch of the Federal Reserve has real gross domestic product growth, based on the limited data we've gotten so far, tracking at 5.8%, which would be the fastest for a non-pandemic quarter in 20 years.
Signs of slowing price pressures and wage growth have generated a lot of excitement about a soft landing for the US economy, where inflation glides back toward 2% without a painful recession.
In the spring of 2022, the US economy went through an abrupt shift as consumer spending moved from goods to services. Travel boomed. Retailers slumped. Warehouses overflowed with inventory no one wanted to buy, and factories and the freight industry went through a recessionary adjustment.
The story of US housing for hopeful buyers in 2023 has been one of frustration. A lack of supply has stabilized a market where affordability remains challenging.
Signs of abating inflation have lifted the spirits of investors, the White House and the general public this month. While a welcome relief, inflation tends to be a lagging rather than a leading economic indicator.
The housing market is full of surprises. Sentiment among homebuilders has been perking up, their stocks are surging, and new home sales are at the strongest since early 2022. All in the face of persistently high mortgage rates.
Regardless, the rental boom that began in the aftermath of the 2008 financial crisis is likely over, having peaked in the middle of 2022.
The spring of 2022 was rough for the US economy. Markets plunged while inflation spiked. “Stagflation” was the word of the day, and for a period of time, there was some merit to that outlook.
Homebuilders continue to finish homes faster than they’re starting new ones. Improved supply chains are allowing them to work through backlogs built up during the pandemic when they couldn’t keep up with demand.
We’ve been watching slumps ripple through various parts of the economy over the past 18 months: technology startups and stocks, regional banks and growing concern about commercial real estate. Yet we’re still waiting for the wider labor market to feel the downturn.
After 30-year mortgage rates surged past 7% in October, a decline to near 6% in recent weeks has made the start of 2023 look less awful than some had feared.
One of the main questions for the US economy in 2023 is how the trajectory of inflation will unfold.
For most of the past year, investment risk in the housing market has been focused on the for-sale segment.
Inflation was the bogeyman of 2022.
While remote work trends have persisted, recent data released by the US Census Bureau showed that more people were going back to the office in 2022 than in 2021 — yet the great southern migration hasn't slowed.
The Battery Belt is taking shape, and it’s creating a new economic development model where a college degree won’t be the ultimate qualification for jobs.
Surging mortgage rates have brought the housing market down from its giddy highs earlier this year.
The red-hot labor market is cooling. Monthly US job growth has slowed to around 270,000 from more than 500,000 at the start of the year.
There's a new twist in the fast-moving housing market with welcome news for renters: After an 18-month period of red-hot rent growth, the apartment market has turned ice cold over the past few months.
The past three years have shown us the downsides of depending too much on low interest rates, and how a better balance of fiscal and monetary policy can achieve a stronger economy.
Historically, soaring oil prices have been bad for the US economy because they squeeze US consumers and producers, and often are happening when the Federal Reserve is raising interest rates to rein in inflation.
Right now, investors are getting worried because the yield curve has gotten very inverted — more inverted than it was in the lead-up to either the 2001 or 2008 recessions.
Slumping stock prices and slowing growth has the biggest technology companies — and investors — thinking about what it will take to reverse their fortunes.
If you had to point to one culprit holding back the economy over the past 18 months, it would be the auto industry.
Higher interest rates are no doubt causing pain to investors and consumers, but the economy has been able to handle them better than anyone thought possible six months ago.
As we approach the end of 2022, investors are hoping that inflation will fall in 2023 and lead the Federal Reserve to pause and perhaps reverse some of its interest-rate hikes. The looser financial conditions would then allow for accelerating economic growth and a better year for financial markets.
After a widely expected fourth straight 0.75% interest-rate increase next week, there's a growing view that the Federal Reserve will step down to a 0.50% bump at their December meeting.
Surging mortgage rates and uncertainty about the economy have put the housing market on ice.
Mortgage rates above 7% have put the housing market on ice as affordability challenges put off a lot of buyers. Newer, younger homeowners who locked in their mortgage at a low interest rate — and whose next move probably would be trading up — are content to stay where they are until mortgage rates fall.
The biggest puzzle in the US economy this year has been two straight quarters of negative real economic growth accompanied by booming job growth.
Trying to forecast inflation is a hazardous occupation when there's so much volatility in markets, supply chains and energy prices. But we can get some sense of where inflation is likely to go by tracking the profit margins of companies that make goods and services that go into the consumer prices basket.
While everybody's been sweating over the housing and labor markets, the office market has been streaking toward a hard landing.
The 2008 financial crisis created of a set of real estate winners and losers -- both at the household and geographic level -- based on how they were positioned in the housing market at the time.
Tuesday's hotter-than-expected inflation report pours cold water on the possibility of lower interest rates from the Federal Reserve any time soon, and by extension, the prospect of lower mortgage rates.
It's been three months since the elevated May consumer prices report led the Federal Reserve to adopt a "whatever it takes" mentality to fight inflation.
An improvement in buyer psychology is helpful, but what’s really needed is improved affordability, and the question is how we get that.
The stores ended up with too many goods that consumers didn’t buy as they shifted their spending to travel and leisure, or got squeezed by inflation.
From stagflation to cost relief in six months — that's the new picture of the housing market that has emerged in just the last few weeks.