If you look back through history, even back to biblical times, there have been two main ways for people to accumulate wealth: Through acquiring precious metals or real estate. While the precious metals wealth basket has evolved, property, as a store of wealth, has largely remained the same.
In modern times, owning property — for example, a home — has become an aspirational goal for most Americans. So much so that owning a home is now an integral part of the classic <a href="https://www.investopedia.com/terms/a/american-dream.asp#:~:text=American%20Dream-,Understanding%20the%20American%20Dream,according%20to%20ability%20or%20achievement.%22">American Dream</a>.
From rural farmhouses to urban high-rise condos, Americans, for generations, have parked some or nearly all of their <a href="https://www.pewresearch.org/social-trends/2012/08/22/chapter-7-income-and-wealth-by-income-tier/">wealth</a> in their homes.
Given the emotional significance of the American Dream, the housing market gets substantial attention in the media. As someone who has covered the industry for decades, I have had a front-row seat throughout several economic cycles. From the Savings and Loan Crisis of the 1980s to the Global Financial Crisis of 2008, real estate — and housing in particular — has seen its ups and downs.
With that historical perspective in mind and today’s economically challenging climate, I find myself asked (often on live television) if we are headed for another crash. I say no. As a student of history, I compare where we are today to the past boom-bust cycles I have witnessed. If I have learned anything about history, it’s that it repeats itself. So where better than history to find the answers about the future?
Stagflation Period Of The 1970s And 1980s 
The current economic climate, for those of us old enough to remember, is eerily reminiscent of the <a href="https://www.federalreservehistory.org/essays/great-inflation">environment in the ’70s and early ’80s</a> — spiking gasoline prices, record levels of inflation, and rising interest rates. The big difference between then and now, however, is unemployment. For much of the <a href="https://historyinpieces.com/research/us-unemployment-rates-president#:~:text=The%20first%20two%2Dand%2Da,to%20just%20under%208%20percent.">Jimmy Carter administration</a>, the unemployment rate was just under 8%, whereas <a href="https://www.bls.gov/news.release/pdf/empsit.pdf">today</a>, it sits below 4%.
To combat runaway inflation at the time, former Federal Reserve Chairman Paul Volcker aggressively increased the Federal Funds Rate, which <a href="https://fred.stlouisfed.org/series/FEDFUNDS">peaked</a> at a high of 20% in June of 1981. The Fed’s hawkish actions were designed to fight inflation by essentially putting the U.S. economy in a self-induced coma. One would think a stagnant economy coupled with high interest rates (and mortgage rates) would cool the housing market. While housing transition activity slowed, surprisingly, <a href="https://fred.stlouisfed.org/series/MSPUS">median home prices </a>rose considerably from $38,100 in the first quarter of 1975 to $78,200 in the first quarter of 1984. Inflation played a part in this, as costs for materials  spiked, however, the economics of supply and demand for homes was the primary driver of higher prices. With <a href="https://www.khanacademy.org/humanities/us-history/postwarera/postwar-era/a/the-baby-boom#:~:text=Following%20World%20War%20II%2C%20the,year%20between%201946%20and%201964.">population growth</a> from the baby boom, there was an<a href="https://scholar.harvard.edu/files/mankiw/files/baby_boom.pdf"> increased demand</a> for homes during a time when inflation made it more costly to build them.
Housing Boom And Financial Crisis
When analyzing the housing market today, one can’t avoid looking in the rear-view mirror at the most recent boom-bust cycle over the last two decades. I would note that not all rapid rises in prices are alike. Many factors contribute to higher home prices. Some are fundamental Econ 101 concepts, such as high demand in the face of low supply. 
However, in 2008 the housing market exploded due to an external factor: the reckless availability of <a href="https://mitsloan.mit.edu/ideas-made-to-matter/how-credit-conditions-affect-housing-prices-lessons-00s">credit</a>. Mortgage underwriting standards had deteriorated to the point where anyone could get a loan and buy a house. This “free money” artificially drove demand, and higher prices followed. It is worth noting that during that period, the inventory of existing homes stood at more than 14 months’ supply, whereas <a href="https://cdn.nar.realtor/sites/default/files/documents/ehs-06-2022-overview-2022-07-20.pdf">today</a> it stands at a paltry three months. 
What About Now? 
Mortgage rates have <a href="https://www.yahoo.com/video/mortgage-rates-nearly-doubling-since-130000514.html#:~:text=The%20average%20rate%20on%20a,%2C%20according%20to%20Realtor.com.">nearly doubled</a> in the past year. Inflation is wreaking havoc on the economy, and by some measures we are already in a recession. Given the circumstances, some may be thinking: This has to be a bad omen for housing. While that’s a seemingly logical thought, it’s a conclusion that I, for one, am not jumping to.
Let’s pretend for a moment that we are freshmen in college. In between playing Pong &#8211; either the video game of my day, or the red solo cup variety of today &#8211; let’s pretend we’re studying history and economics. 
As mentioned above, the housing climate today feels a lot like it did in the ’70s and early ’80s — and remember, at that time, home prices rose (history). Why? Basic supply and demand (economics). 
Currently, there is a cumulative <a href="https://www.realtor.com/research/us-housing-supply-gap-expands/">deficit</a> between household formations and housing starts of 5.8 million homes. In other words, demand for homes greatly exceeds supply. Moreover, supply constraints are expected to continue, as inflation has made it more difficult for builders to build. 
If we look at history, and consider the similar economic conditions 40 years ago, it’s fair to say that home prices could once again rise. While the pace of price gains will likely slow somewhat as the economy slows, I personally do not see a crash looming — more likely, we will experience the elusive soft landing.
Mitch Roschelle is the founding partner of Macro Trends Advisors LLC, a real estate investment and macro market strategy firm. Additionally, Mitch is an adjunct faculty member at University of San Diego’s Burnham-Moores Center for Real Estate.
The views expressed in this piece are those of the author and do not necessarily represent those of The Daily Wire.

Readers Pass – Johnson – Is The U.S. Headed For A Recession in 2022_ Here’s What The Experts Say_2216x9

Rising Mortgage Rates, Inflation, Put The Brakes On Housing Market

Federal Reserve

Housing

Inflation

Readers Pass

The Federal Reserve <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20220727a.htm">announced</a> on Wednesday that it raised interest rates by 75 basis points for the second straight month in an effort to help slow <a href="https://www.dailywire.com/topic/inflation">inflation</a>.
&#8220;The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run,&#8221; the Fed <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20220727a.htm">said</a> in a press release. &#8220;In support of these goals, the Committee decided to raise the target range for the federal funds rate to 2-1/4 to 2-1/2 percent and anticipates that ongoing increases in the target range will be appropriate.&#8221;
The Fed also noted that &#8220;recent indicators of spending and production have softened&#8221; but added, &#8220;job gains have been robust in recent months, and the unemployment rate has remained low.&#8221;
It also claimed that Russia&#8217;s war in Ukraine is partly to blame for the ongoing economic woes.
&#8220;Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures,&#8221; the group noted. &#8220;Russia&#8217;s war against Ukraine is causing tremendous human and economic hardship. The war and related events are creating additional upward pressure on inflation and are weighing on global economic activity. The Committee is highly attentive to inflation risks.&#8221;
While the Fed may say that Russia&#8217;s war is to blame, Federal Reserve Chairman Jerome Powell has previously <a href="https://www.dailywire.com/news/fed-chairman-we-now-understand-better-how-little-we-understand-about-inflation">testified</a> that &#8220;inflation was high before, certainly before the war in Ukraine broke out&#8221; and that the violence wasn&#8217;t the main driver of inflation.
The move comes as the Consumer Price Index (CPI) <a href="https://www.dailywire.com/news/inflation-soars-to-new-high-of-9-1">reported</a> in July that inflation increased 9.1% between June 2021 and June 2022.
In June, the Fed also <a href="https://www.dailywire.com/news/federal-reserve-takes-most-aggressive-action-to-fight-inflation-in-three-decades">hiked</a> interest rates by 0.75% — which was then the boldest action since 1994 — after inflation rose 8.6% in May.
The central bank had already increased rates by 0.5% in May — the largest increase since 2000 — after a 0.25% rate hike from near-zero levels in March.
Powell has previously <a href="https://www.dailywire.com/news/fed-chairman-we-now-understand-better-how-little-we-understand-about-inflation">said</a> that his team had failed to see inflation coming because they were using outdated models to forecast the economy.
During the European Central Bank forum, host Francine Laqua asked panelists, “Hindsight is a beautiful thing, I know…but going forward…how do we need to look at inflation differently? So, for example, in the U.S. — the stimulus. Did we circulate the impact this would have on inflation?”
“I think we now understand better how little we understand about inflation,” Powell responded.
The Bloomberg TV anchor responded with a chuckle, “That’s not very reassuring.”
“No, honestly, this was unpredicted. I was looking at the time of our June meeting one year ago, of the 35 people who filed with a survey of professional forecasters, 34 of them had inflation below four percent for the last year. And of course, it was way above four percent.”
“So really, everyone had the same model — which was the <a href="https://www.investopedia.com/terms/p/phillipscurve.asp">Phillips curve</a> model — and it just was not capable of producing high inflation,&#8221; he added. &#8220;But what it was missing was something that’s been completely missing in the data for 40 years, which is basically the collapse of the supply-side.”
A portion of the exchange can be seen here:
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
Jerome Powell: &quot;I think we now understand better how little we understand about inflation.&quot;
Host: &quot;That&#39;s not very reassuring&quot;
Jerome : &quot;This was unpredicted&quot;
Only the &quot;experts&quot; and the media didn&#39;t see this coming. Just about everyone else did.
Sound ON <a href="https://t.co/6Gv35rXPrW">pic.twitter.com/6Gv35rXPrW</a>
&mdash; Wall Street Silver (@WallStreetSilv) <a href="https://twitter.com/WallStreetSilv/status/1542214066218774528?ref_src=twsrc%5Etfw">June 29, 2022</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
&nbsp;
&nbsp;

Stock photo

Federal Reserve Hikes Interest Rates Again To Combat Bidenflation

Federal Reserve Hikes Interest Rates Again To Combat Inflation

Interest Rates

<a href="http://dailywire.com/topic/federal-reserve">Federal Reserve</a> Chair Jerome Powell responded to a report from Senate Republicans claiming that the central bank failed to combat a <a href="http://dailywire.com/topic/china">Chinese</a> government information theft campaign by calling it “unfair, unsubstantiated, and unverified.”
The Federal Reserve, charged with executing a <a href="https://www.federalreserve.gov/monetarypolicy/monetary-policy-what-are-its-goals-how-does-it-work.htm#:~:text=The%20Federal%20Reserve%20Act%20mandates,for%20monetary%20policy%20is%20commonly">dual mandate</a> of maximum employment and stable prices, is presently determining policy to navigate the United States economy through the <a href="https://www.dailywire.com/news/federal-reserve-takes-most-aggressive-action-to-fight-inflation-in-three-decades">highest inflation rates</a> in four decades. Yet the report found that China, which <a href="https://www.cnbc.com/2022/07/18/china-holdings-of-us-debt-fall-below-1-trillion-for-the-first-time-since-2010.html">holds</a> nearly $1 trillion in Treasury securities, has used talent recruitment plans and promises of academic positions in an effort to glean classified information from central bank employees.
Powell disputed the findings in a Monday letter to Sen. Rob Portman (R-OH), the lawmaker who spearheaded the report. &#8220;We are deeply troubled by what we believe to be the report&#8217;s unfair, unsubstantiated, and unverified insinuations about particular individual staff members,&#8221; Powell wrote, per <a href="https://lite.cnn.com/en/article/h_daeba08130347dac08751e1b01943047">CNN</a>.
The report detailed that various Federal Reserve officials — some of whom still have their jobs at the central bank — maintained close ties with Chinese officials and known links to the Thousand Talents Program, through which Western academics are drawn to China such that nationals can access their innovations for economic and military advancements. Powell, however, expressed confidence in the central bank’s officials and their ability to safeguard their work.
“We are confident that Federal Reserve staff understand their obligations and are committed to maintaining both the confidentiality of sensitive information and the integrity of our workforce,” Powell continued. “Because we understand that some actors aim to exploit any vulnerabilities, our processes, controls and technology are robust and updated regularly. We respectfully reject any suggestions to the contrary.”
The report also revealed that Chinese officials forcibly detained a Federal Reserve employee on four separate occasions during a trip to Shanghai in 2019. In addition to threatening the individual’s family, the Chinese officials claimed that the person had committed crimes against China and needed to “share sensitive, non-public economic data” with the nation’s government or else face imprisonment.
The report argued that the Federal Reserve “has been unable to counter China’s malign influence and collection campaign effectively,” revealing that employees with known ties to talent recruitment programs “retain access to confidential information.”
Powell nevertheless encouraged Federal Reserve officials to continue dealing with foreign counterparts. &#8220;We encourage and support staff participation in multilateral organizations, and sponsor conferences together with other central banks,&#8221; he wrote, adding that &#8220;information security considerations also shape this engagement.&#8221;
Recruitment plans like the Thousand Talents Program have created various high-level security breaches at American universities and corporations conducting classified, government-funded research.
Earlier this year, the Department of Justice announced that Xiaoqing Zheng — who worked at GE Power from 2008 to 2018 — was <a href="https://www.dailywire.com/news/ge-engineer-aided-by-chinese-government-to-steal-trade-secrets-convicted-of-conspiracy-to-commit-economic-espionage">convicted of conspiring</a> to “steal GE’s trade secrets surrounding GE’s steam and gas turbine technologies, knowing or intending to benefit the People’s Republic of China and one or more foreign instrumentalities, including China-based companies that research, develop, and manufacture parts for turbines.”
Last year, Harvard University chemistry and engineering professor Charles Lieber was indicted and convicted of <a href="https://www.justice.gov/usao-ma/pr/harvard-university-professor-convicted-making-false-statements-and-tax-offenses">making false statements</a> to federal authorities about his participation in the Thousand Talents Program. Lieber had overseen nanotechnology research with more than $15 million in grants from the National Institutes of Health and the Department of Defense, yet earned $50,000 per month as a “Strategic Scientist” at the Wuhan Institute of Technology.
RELATED: <a href="https://www.dailywire.com/news/top-federal-reserve-officials-with-known-links-to-china-still-have-their-jobs-senate-republican-report-says">Top Federal Reserve Officials With Known Links To China Still Have Their Jobs, Senat Republican Report Says</a>

Jerome Powell

‘Unfair, Unsubstantiated, And Unverified’: Federal Reserve Dismisses Bombshell Claims Of Chinese Breaches

Federal Reserve Reacts To Report Of Chinese Breaches

China

Economy

Spying

The <a href="http://dailywire.com/topic/china">Chinese</a> government carried out a decade-long information theft campaign against the <a href="http://dailywire.com/topic/federal-reserve">Federal Reserve</a>, a <a href="https://www.hsgac.senate.gov/imo/media/doc/HSGAC%20Report%20-%20China%20Threat%20to%20the%20Fed.pdf">report</a> released Tuesday from Republican members of the Senate Committee on Homeland Security and Governmental Affairs revealed.
The Federal Reserve, charged with executing a <a href="https://www.federalreserve.gov/monetarypolicy/monetary-policy-what-are-its-goals-how-does-it-work.htm#:~:text=The%20Federal%20Reserve%20Act%20mandates,for%20monetary%20policy%20is%20commonly">dual mandate</a> of maximum employment and stable prices, is presently determining policy to navigate the United States economy through the <a href="https://www.dailywire.com/news/federal-reserve-takes-most-aggressive-action-to-fight-inflation-in-three-decades">highest inflation rates</a> in four decades. The report found that China — which <a href="https://www.cnbc.com/2022/07/18/china-holdings-of-us-debt-fall-below-1-trillion-for-the-first-time-since-2010.html">holds</a> nearly $1 trillion in Treasury securities — has used talent plan recruitment and promises of academic positions in an effort to gain influence and glean information from the central bank.
“The Chinese government makes no secret of wanting to be the world superpower,” the report said. “No sector or institution is off limits, and China has shown that it will use any means necessary to achieve its goals.”
China has been conducting its campaign against the Federal Reserve since at least 2013, according to the report, with investigators identifying 13 “persons of interest” at eight of the 12 regional Federal Reserve Banks as of 2015, based on their international travel patterns and other factors. The report details five more recent case studies of China seeking sensitive information from American economists, with four of the mentioned individuals retaining their employment at the central bank, a committee aide told <a href="https://www.cnn.com/2022/07/26/politics/federal-reserve-republicans-china-report/index.html">CNN</a>.
An official who had previously held positions at the People’s Bank of China and maintained other links to the Chinese monetary system was forcibly detained on four occasions during a 2019 trip to Shanghai, with Chinese officials allegedly tapping his phones and computers while threatening his family. The Chinese officials claimed that the individual had committed crimes against China and needed to “share sensitive, non-public economic data” with the nation’s government.
According to the report, the Federal Reserve is “not aware” of other instances of Chinese officials forcibly detaining its employees.
Another individual likewise maintained close contacts with Chinese nationals, including government officials, and provided modeling code to advance research at Peking University’s National School of Development. The official also has ties to academic organizations affiliated with the Thousand Talents Program — a Chinese initiative that <a href="https://www.dailywire.com/news/harvard-professor-indicted-for-allegedly-lying-about-ties-to-wuhan-university-program-aimed-at-advancing-chinas-science-and-technological-development">draws</a> Western scientists to China to access their work for economic and military advancements.
A third individual, a senior economist at a Federal Reserve Bank, was observed assisting Chinese government news agencies with publications. Two other individuals are likely linked to the Thousand Talents Program.
The report also noted that the Federal Reserve “has been unable to counter China’s malign influence and collection campaign effectively.” It revealed that officials with known ties to talent recruitment programs “retain access to confidential information” — meaning that the central bank ought to improve relationships with members of the intelligence community and federal law enforcement.
The report recommended passing the <a href="https://www.hsgac.senate.gov/media/minority-media/portman-carper-rubio-applaud-committee-passage-of-bipartisan-safeguarding-american-innovation-act-to-stop-theft-of-us-research-and-intellectual-property-by-global-competitors">Safeguarding American Innovation Act</a> — a bill sponsored by Sen. Rob Portman (R-OH) and aimed at stopping “foreign governments, particularly China, from stealing American taxpayer-funded research and intellectual property” by introducing fines and prison sentences for those who “intentionally fail to disclose foreign support on federal grant applications.”
“We cannot continue to allow our adversaries to steal taxpayer-funded research and innovation to the detriment of hard-working Americans,” Portman <a href="https://www.hsgac.senate.gov/media/minority-media/portman-carper-rubio-applaud-committee-passage-of-bipartisan-safeguarding-american-innovation-act-to-stop-theft-of-us-research-and-intellectual-property-by-global-competitors">remarked</a> last year.

Solar Eclipse Observed in Asia

Chinese Officials Forcibly Detained Federal Reserve Official, Pressured Him To Release Sensitive Information, Senate Republicans Claim

The <a href="http://dailywire.com/topic/housing">housing market</a> is expected to cool as demand moderates, according to a Wednesday report from government-backed mortgage enterprise Freddie Mac.
The company’s most recent <a href="https://www.freddiemac.com/research/forecast/20220720-quarterly-forecast-market-slowdown-will-continue-high-rates-and-prices-exacerbate">Quarterly Forecast</a> predicts that 30-year fixed-rate mortgages will average 5.0% in 2022 and 5.1% in 2023, while total home sales will slow from 6 million to 5.4 million.
“The Federal Reserve’s action to help manage inflation has created significant volatility in mortgage rates and, by extension, the housing market,” Freddie Mac Chief Economist Sam Khater said in a <a href="https://freddiemac.gcs-web.com/news-releases/news-release-details/freddie-mac-market-slowdown-will-continue-high-rates-and-prices?_ga=2.144200565.1999635517.1658409327-1899122076.1653489074">press release</a>. “Although house price appreciation will grow at a more moderate rate, home prices remain high relative to homebuyer incomes. Taken together, these factors are exacerbating affordability challenges and causing a slowdown in the housing market.”
Indeed, Freddie Mac predicts that home prices will grow at 4% in 2023 — a relative slowdown from 17.8% in 2021 and 12.8% in 2022. In the first quarter of 2022, the median sale price of a home in the United States was $428,700, according to <a href="https://fred.stlouisfed.org/series/MSPUS">data</a> from the U.S. Department of Housing and Urban Development, marking a 33% rise from $322,600 in the second quarter of 2020.
“The housing market has gone through booms and busts before,” Heritage Foundation research fellow Joel Griffith told The Daily Wire. “However, home costs now — in terms of inflation-adjusted prices and prices to median household income — are at all-time record highs. With interest rates more than doubling this past year, mortgage payments on a typical home have gone up more than 50% in many parts of the nation.”
Indeed, the 30-year fixed-rate mortgage began <a href="https://www.dailywire.com/news/pending-home-sales-unexpectedly-surge-even-as-mortgage-rates-near-6">climbing</a> at the beginning of 2022, according to <a href="https://fred.stlouisfed.org/series/MORTGAGE30US">data</a> from Freddie Mac. Beginning at slightly over 3% in January, mortgage rates neared 6% in June and moderated to 5.5% as of Thursday.
Griffith pointed to monetary stimulus from the Federal Reserve as a driver behind housing market disruptions. In response to COVID and the lockdown-induced recession, the central bank lowered interest rate targets and ramped up its purchase of <a href="https://www.dailywire.com/news/watch-powell-admits-that-fed-policies-are-behind-high-home-prices">mortgage-backed securities</a>, leading to a decline in mortgage costs even as home prices continued to rise.
“The current plunge in home affordability is largely the result of continued heavy government subsidies of the housing market — thanks to mortgage giants Fannie Mae and Freddie Mac — combined with trillions of dollars of mortgage-backed securities purchased by the Federal Reserve,” Griffith continued. “To restore housing affordability, the government and central bank footprints must be diminished and regulations for new housing supply diminished. Otherwise, expect home prices to remain out of reach for far too many families.”
On the supply side, construction of new long-term housing had <a href="https://www.dailywire.com/news/is-the-housing-market-about-to-crash">already been slowing</a> over the past several decades — resulting in 6 million too few homes on the market. As costs for lumber, steel, copper, and other raw materials began to rise amid pervasive supply chain issues induced by global lockdowns, labor shortages diminished the number of builders and contractors available to work on housing projects.
“Housing inventory has rebounded somewhat from the lows earlier this year. However, future inventory will depend on housing permits being granted on the local level, borrowers retaining access to credit, and prices becoming more affordable,” Griffith remarked. “Affordability works two ways: enabling new buyers to enter the market and making it possible for sellers to purchase a new home — often larger — at a reasonable price.”

Suburban homes photo

Home Prices, Mortgage Rates Expected To Stay Elevated Through Next Year

Housing Demand Expected To Cool As Mortgage Rates Soar And Rents Rise

<a href="http://dailywire.com/topic/federal-reserve">Federal Reserve</a> Governor Christopher Waller said on Thursday that he would support an <a href="https://www.dailywire.com/topic/interest-rates">interest rate</a> hike of 0.75% or higher in reaction to high <a href="http://dailywire.com/topic/inflation">inflation</a>.
The remarks came after two reports released this week by the U.S. Bureau of Labor Statistics showed that the Consumer Price Index (CPI) <a href="https://www.dailywire.com/news/inflation-soars-to-new-high-of-9-1">rose</a> 9.1% between June 2021 and June 2022, while the Producer Price Index (PPI) <a href="https://www.dailywire.com/news/producer-price-index-hits-11-3-in-another-dismal-inflation-reading">rose</a> 11.3% during the same period.
In a <a href="https://www.federalreserve.gov/newsevents/speech/waller20220714a.htm">speech</a> at the Rocky Mountain Economic Summit in Idaho, Waller indicated that he supports another 0.75% rate hike, matching an <a href="https://www.dailywire.com/news/federal-reserve-takes-most-aggressive-action-to-fight-inflation-in-three-decades">identical increase</a> in June that marked the largest increment since 1994. He could also support a larger rate hike if other data show strong economic activity.
“We have important data releases on retail sales and housing coming in before the July meeting,” Waller said. “If that data comes in materially stronger than expected it would make me lean towards a larger hike at the July meeting to the extent it shows demand is not slowing down fast enough to get inflation down.”
Rate hikes are meant to discourage inflation, but they carry the side effect of increasing borrowing costs and thereby dampening economic activity. Yet Waller noted that the labor market is currently “very strong” with an unemployment rate “below the median of policymakers&#8217; expected longer-run level” — a reality that allows the Fed to increase rates while likely avoiding severe economic consequences.
Waller said he will be “looking for signs” that inflation is moving toward policymakers’ 2% long-term target “on a sustained basis.” He also expressed concern that American consumers and businesses will come to anticipate higher inflation in the long run — an expectation that hinges upon “whether they believe the Fed is sufficiently committed to its inflation target.”
Indeed, the Federal Reserve Bank of New York’s most recent <a href="https://www.newyorkfed.org/newsevents/news/research/2022/20220711">Survey of Consumer Expectations</a> revealed that Americans <a href="https://www.dailywire.com/news/americans-inflation-forecasts-hit-another-record-high">foresee</a> one-year-ahead inflation hitting 6.8% — an increase from 6.6% in May and the highest level since the survey began in 2013. However, inflation expectations for the next three years fell from 3.9% to 3.6%, while five-year-ahead forecasts declined from 2.9% to 2.8%.
Other key officials are nodding to another significant rate hike. Federal Reserve Bank of St. Louis President James Bullard — who serves alongside Waller as one of the 12 members of the Federal Open Market Committee — <a href="https://www.wsj.com/articles/feds-christopher-waller-supports-another-0-75-point-rate-rise-in-july-11657216604">said</a> to reporters that “it would make a lot of sense” to choose a 0.75% rate hike such that rates increase to around 3.5% by the end of this year.
Also on Thursday, Treasury Secretary and former Federal Reserve Chair Janet Yellen <a href="https://www.dailywire.com/news/janet-yellen-addresses-unacceptably-high-inflation-tells-what-biden-administration-will-do-next">affirmed</a> that she would endorse any actions taken by monetary policymakers to quell rising prices. “We’re first and foremost supportive of the Fed’s efforts; what they deem to be necessary to get inflation under control,” she remarked.
Meanwhile, President Joe Biden <a href="https://www.dailywire.com/news/biden-dismisses-record-high-inflation-news-as-out-of-date">asserted</a> on Wednesday that the most recent inflation news is “unacceptably high,” yet outdated. “Energy alone comprised nearly half of the monthly increase in inflation. Today’s data does not reflect the full impact of nearly 30 days of decreases in gas prices,” he said in a <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/07/13/president-biden-statement-on-cpi-inflation-in-june/">statement</a>, noting that gas prices have fallen by $0.40 since June. “Those savings are providing important breathing room for American families.”

Federal Reserve Lowers Key Rate By Three Quarters Of A Point

Federal Reserve Officials Nod Toward Massive Interest Rate Hike After Bad Inflation News

Two Key Federal Reserve Officials Open To Large Rate Hikes

Treasury Secretary <a href="https://www.dailywire.com/topic/janet-yellen">Janet Yellen</a> on Thursday said that <a href="http://dailywire.com/topic/inflation">inflation</a> is “unacceptably high” after another dismal price level report.
The Consumer Price Index (CPI) <a href="https://www.dailywire.com/news/inflation-soars-to-new-high-of-9-1">rose</a> 9.1% between June 2021 and June 2022, a Wednesday morning report from the U.S. <a href="https://www.bls.gov/news.release/cpi.nr0.htm">Bureau of Labor Statistics</a> showed. Yellen reacted to the news ahead of a meeting with other finance ministers in Bali, Indonesia, according to <a href="https://www.cnbc.com/2022/07/14/yellen-warns-inflation-in-the-us-is-unacceptably-high.html">CNBC</a>.
“We are taking our own steps which we believe will be supportive in the short term to get inflation down — particularly what we’re doing on energy prices and the Strategic Petroleum Reserve,” Yellen told the press.
Indeed, rising energy costs were responsible for roughly half of consumer inflation last month, during which national average gas prices surged to <a href="https://www.dailywire.com/news/gas-prices-hit-grim-national-average-of-5-per-gallon">$5.00 per gallon</a>. Another <a href="https://www.bls.gov/news.release/ppi.nr0.htm">Bureau of Labor Statistics</a> report released on Thursday showed that the Producer Price Index (PPI) rose 11.3% from June 2021 to June 2022 — a phenomenon driven almost entirely by higher energy costs.
Alongside Yellen, President Joe Biden pointed to the “historic release of oil” from the Strategic Petroleum Reserve in response to the inflation news. Although releasing one million barrels of oil per day was marketed by the White House as an “unprecedented” move to “provide a historic amount of supply” to Americans facing high prices, a report from <a href="https://www.reuters.com/business/energy/oil-us-reserves-head-overseas-gasoline-prices-stay-high-2022-07-05/">Reuters</a> recently <a href="https://www.dailywire.com/news/stunning-amount-of-oil-released-by-biden-found-its-way-to-china-other-countries">showed</a> that at least five million barrels of oil were exported to European and Asian nations during the month of June — including to a Chinese firm with <a href="https://www.dailywire.com/news/biden-admin-sold-nearly-1-million-barrels-of-oil-to-chinese-state-owned-company-tied-to-hunter-biden">links</a> to Hunter Biden.
Yellen also said that she would endorse any actions taken by monetary policymakers at the <a href="http://dailywire.com/topic/federal-reserve">Federal Reserve</a> — an entity she led from 2014 to 2018 — to quell rising prices. “We’re first and foremost supportive of the Fed’s efforts; what they deem to be necessary to get inflation under control,” she remarked.
The central bank has recently opted to <a href="https://www.dailywire.com/news/federal-reserve-takes-most-aggressive-action-to-fight-inflation-in-three-decades">raise interest rates</a> at large increments — most recently, by a 0.75% rate hike that represented the boldest move to combat inflation in nearly three decades — after moving rates to near-zero levels in response to COVID and the lockdown-induced recession. The current target interest rate is now between 1.5% and 1.75%.
In response to the most recent inflation report, many analysts believe that the Fed could hike rates by 1% later in July. The market appeared to price in a 0.93% rate hike by Wednesday afternoon, according to <a href="https://www.cnbc.com/2022/07/13/traders-bet-the-fed-could-raise-interest-rates-by-1percent-this-month.html">CNBC</a>. Because there is a historical <a href="https://www.dailywire.com/news/expect-higher-unemployment-as-federal-reserve-tackles-inflation-warns-top-policymaker">tradeoff</a> between unemployment and inflation, further moves to battle rising prices will likely lead to higher degrees of joblessness.
Yellen recognized that higher interest rates could also impact other nations. “On the one hand, it can strengthen their ability to export which is good for their growth,” she said. “On the other hand, to the extent that countries have dollar-denominated debt, it can make those debt problems — which already are very severe — more difficult.”
Over the past year, the exchange rate between the dollar and the euro has <a href="https://www.dailywire.com/news/global-turmoil-makes-euro-cheap-for-americans">dropped</a> from $1.22 per euro to $1.00 per euro, according to <a href="https://www.bloomberg.com/quote/EURUSD:CUR">Bloomberg Markets</a>. Higher interest rates cause more demand for a nation’s currency on foreign exchange markets while making other nations’ exports less expensive.

Janet Yellen Testifies On 2023 Budget In House Hearing

Janet Yellen Addresses ‘Unacceptably High’ Inflation, Tells What Biden Administration Will Do Next

Janet Yellen Responds To Record Inflation

Janet Yellen

Americans’ short-term <a href="http://dailywire.com/topic/inflation">inflation</a> expectations continue to rise, according to June survey results released on Monday by the <a href="http://dailywire.com/topic/federal-reserve">Federal Reserve</a> Bank of New York.
According to the central bank’s <a href="https://www.newyorkfed.org/newsevents/news/research/2022/20220711">Survey of Consumer Expectations</a>, Americans foresee one-year-ahead inflation hitting 6.8% — an increase from 6.6% in May and the highest level since the survey began in 2013. In the medium-term, however, inflation expectations for the next three years fell from 3.9% to 3.6%, while five-year-ahead forecasts declined from 2.9% to 2.8%.
“Disagreement across respondents in their five-year ahead inflation expectations has been trending up during this period and increased again in June,” according to the New York Fed. “Median inflation uncertainty — or the uncertainty expressed regarding future inflation outcomes — increased at the one-year ahead horizon to a new series high, but remained unchanged at the three-year ahead horizon. Uncertainty at the five-year ahead horizon increased.”
Nearly 70% of the United States’ economic output hinges upon consumer spending, according to the U.S. <a href="https://fred.stlouisfed.org/series/DPCERE1Q156NBEA">Bureau of Economic Analysis</a>, and a drop in consumer sentiment often occurs alongside a recession. Indeed, as other signs appear to point toward an economic downturn, the University of Michigan’s benchmark Survey of Consumers reached its <a href="https://www.dailywire.com/news/consumer-sentiment-plummets-to-lowest-level-since-1950s">lowest level</a> since 1952 in May.
Beyond expected increases in price levels, the median expected change in home prices one year from now fell from 5.8% to 4.4%. The change occurs as <a href="https://www.dailywire.com/news/home-builders-have-trouble-selling-properties-as-mortgage-rates-rise-prices-stay-elevated">mortgage rates</a> continue to rise and sentiment among home builders plummets.
Meanwhile, consumers foresee paying 0.1% more for gas, rent, medical care, and college education. As gas and food prices increase at their <a href="https://www.dailywire.com/news/here-are-the-products-gutting-your-bank-account-as-inflation-soars">highest paces</a> in decades, inflation continues to surpass nominal wage growth — leading to a 3% year-over-year <a href="https://www.bls.gov/news.release/realer.nr0.htm">drop</a> in real wages as of May.
Americans are therefore relying upon savings to make ends meet. The <a href="https://www.dailywire.com/news/americans-dip-into-savings-as-inflation-soars">personal saving</a> rate — the portion of disposable income Americans devote to savings — was 5.4% as of May, according to a report from the U.S. <a href="https://www.bea.gov/news/2022/personal-income-and-outlays-may-2022">Bureau of Economic Analysis</a>. Remaining below 6% for every month of 2022, the measure is far from the typical 7% to 9% seen over the previous decade.
National average gas prices have seen a decline from above <a href="https://www.dailywire.com/news/gas-prices-hit-grim-national-average-of-5-per-gallon">$5.00 per gallon</a> in early June to $4.68 per gallon as of Monday, according to <a href="https://gasprices.aaa.com/">AAA</a>. On the day of President Joe Biden’s inauguration, gas cost <a href="https://www.dailywire.com/news/the-cost-of-gas-has-more-than-doubled-since-the-day-biden-took-office">$2.39 per gallon</a>.
With respect to the labor market, 40.4% of Americans anticipate unemployment one year from now to be higher than current levels — an increase of 1.8% since May. Though the mean perceived probability of losing one’s own job over the next year rose from 11.1% to 11.9%, the metric remains below the 13.8% level in February 2020. Unemployment <a href="https://www.dailywire.com/news/americans-continue-to-opt-out-of-the-workforce">remained</a> at 3.6% for the fourth month in a row, the U.S. <a href="https://www.bls.gov/news.release/empsit.nr0.htm">Bureau of Labor Statistics</a> said on Friday.
President Biden has touted low unemployment as a silver lining amid a troubled economic landscape. “The historic strength of our job market is one reason our economy is uniquely well positioned to tackle a range of global economic challenges — from global inflation to the economic fallout from Putin’s war,” Biden <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/07/08/statement-by-president-biden-on-the-june-jobs-report/">said</a> last week. “No country is better positioned than America to bring down inflation, without giving up all of the economic gains we have made over the last 18 months.”

Consumer Prices See Largest Increases In 30 Years

Americans’ Inflation Forecasts Hit Another Record High

Americans Think Inflation Will Be 6.8% In A Year

Recession

A key data tracker used by a branch of the <a href="https://www.dailywire.com/topic/federal-reserve">Federal Reserve</a> indicates that the United States <a href="https://www.dailywire.com/topic/economy">economy</a> is showing the negative growth seen in the first quarter continued, meaning the U.S. economy is already in a recession.
On Friday, CNBC <a href="https://www.cnbc.com/2022/07/01/atlanta-fed-gdp-tracker-shows-the-us-economy-is-likely-in-a-recession.html">reported</a> that the Atlanta Federal Reserve&#8217;s <a href="https://www.atlantafed.org/cqer/research/gdpnow">GDPNow tracker</a> — a tool that monitors and reports <a href="https://www.dailywire.com/topic/economics">economic</a> data in-real time  — estimated that U.S. second-quarter growth shrank by 2.1%. On Thursday, GDPNow estimated that growth in the second quarter shrunk by 1.6%. A recession is defined as two consecutive quarters of negative GDP growth.
“GDPNow has a strong track record, and the closer we get to July 28th’s release [of the initial Q2 GDP estimate], the more accurate it becomes,” Nicholas Colas, co-founder of DataTrek Research said, according to CNBC.
&#8220;Coupled with the first-quarter’s decline of 1.6%, that would fit the technical definition of recession,&#8221; the business media outlet added.
Former Treasury Secretary Lawrence Summers <a href="https://www.yahoo.com/lifestyle/larry-summers-says-risk-2022-143147135.html">told</a> the media on Friday that there is an increasingly likely risk of a recession.
“The risks of a 2022 recession are significantly higher than I would have judged six or nine weeks ago,” Summers <a href="https://www.yahoo.com/lifestyle/larry-summers-says-risk-2022-143147135.html">said</a> during an interview on Bloomberg Television’s &#8220;Wall Street Week.&#8221;  “If the economy did go into recession in the next six to nine months, then you’d probably see a reduction in inflationary pressures,&#8221; he added.
The predictions come as the U.S. is <a href="https://www.dailywire.com/news/federal-reserve-chairman-says-fixing-inflation-highly-likely-to-involve-some-pain-for-the-american-people">experiencing</a> record-high inflation alongside unprecedented monetary policy by the Federal Reserve in an effort to get surging prices under control. A recession compounded by inflation is known as &#8220;stagflation.&#8221;
In May, inflation rose to 8.6% in the U.S. In an effort to tame rising prices, the Federal Reserve began <a href="https://www.dailywire.com/news/federal-reserve-takes-most-aggressive-action-to-fight-inflation-in-three-decades">hiking interest rates</a> — most recently through a 0.75% increment that represented the boldest move to battle inflation in nearly three decades. Rate hikes increase the cost of borrowing capital, thereby tightening business investment and consumer activity. Earlier in June, Federal Reserve Governor Christopher Waller warned that efforts from the central bank to tackle higher price levels would lead to higher unemployment.
On Wednesday, <a href="https://www.dailywire.com/topic/federal-reserve">Federal Reserve</a> Chairman Jerome Powell said that fixing <a href="https://www.dailywire.com/topic/inflation">inflation</a> will “highly likely” involve some pain for the American people, but said failing to address it would be even worse for the nation and the <a href="https://www.dailywire.com/topic/economy">economy</a>.
During a panel at the European Central Bank forum, host Francine Laqua asked Powell, “If you’re speaking out to the American people to try and help them understand how long it will take for, you know, monetary policy to go back to something that resembles normalcy … what would you tell them?”
“I would say that we fully understand and appreciate … the pain people are going through dealing with higher inflation, that we have the tools to address that and the resolve to use them, and that we are committed to and will succeed in getting inflation down to two percent,” he responded.
“The process is likely, highly likely to involve some pain, but the worst pain would be from failing to address this high inflation and allowing it to become persistent,” Powell added.
<iframe loading="lazy" title="ECB Forum on Central Banking 2022 - Wednesday 29 June - Policy Panel" width="500" height="281" src="https://www.youtube.com/embed/0Yh4Bzpnet4?start=5028&#038;feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>
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America, downard trend

We May Already Be In A Recession, Key Fed Tracker Shows

Atlanta Federal Reserve's GDPNow Tracker Estimates That The Second-Quarter Growth Contracted By 2.1%

Economics

Money

<a href="https://www.dailywire.com/topic/federal-reserve">Federal Reserve</a> Chairman Jerome Powell said on Wednesday that fixing <a href="https://www.dailywire.com/topic/inflation">inflation</a> will &#8220;highly likely&#8221; involve some pain for the American people, but claimed that failing to address it would be even worse for the nation and the <a href="https://www.dailywire.com/topic/economy">economy</a>.
During a panel at the European Central Bank forum, host Francine Laqua asked Powell, &#8220;If you&#8217;re speaking out to the American people to try and help them understand how long it will take for, you know, monetary policy to go back to something that resembles normalcy &#8230; what would you tell them?&#8221;
&#8220;I would say that we fully understand and appreciate &#8230; the pain people are going through dealing with higher inflation, that we have the tools to address that and the resolve to use them, and that we are committed to and will succeed in getting inflation down to two percent,&#8221; he responded.
&#8220;The process is likely, highly likely to involve some pain, but the worst pain would be from failing to address this high inflation and allowing it to become persistent,&#8221; Powell added.
<iframe loading="lazy" title="ECB Forum on Central Banking 2022 - Wednesday 29 June - Policy Panel" width="500" height="281" src="https://www.youtube.com/embed/0Yh4Bzpnet4?start=5027&#038;feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>
The United States experienced record inflation in May as it skyrocketed to 8.6%.
In an effort to manage high inflation, monetary policymakers at the Federal Reserve are <a href="https://www.dailywire.com/news/federal-reserve-takes-most-aggressive-action-to-fight-inflation-in-three-decades">hiking interest rates</a> — most recently through a 0.75% increment that represented the boldest move to battle inflation in nearly three decades. Rate hikes increase the cost of borrowing capital, thereby tightening business investment and consumer activity. Earlier in June, Federal Reserve Governor Christopher Waller warned that efforts from the central bank to tackle higher price levels would lead to higher unemployment.
The Fed&#8217;s chairman&#8217;s answer came shortly after <a href="https://www.dailywire.com/news/fed-chairman-we-now-understand-better-how-little-we-understand-about-inflation">admitting</a> that his understanding of inflation was more limited than he thought.
Laqua had previously posed to the panel, “Hindsight is a beautiful thing, I know … but going forward … how do we need to look at inflation differently? So, for example, in the U.S. — the stimulus. Did we circulate the impact this would have on inflation?”
“I think we now understand better how little we understand about inflation,” Powell responded.
The Bloomberg TV anchor responded with a chuckle, “That’s not very reassuring.”
“No, honestly, this was unpredicted. I was looking at the time of our June meeting one year ago, of the 35 people who filed with a survey of professional forecasters, 34 of them had inflation below four percent for the last year. And of course, it was way above four percent.”
Powell also clarified that experts were using an outdated model to predict inflation, which is why none of our nation&#8217;s supposed-brightest economic minds saw the inflation coming.
“So really, everyone had the same model — which was the <a href="https://www.investopedia.com/terms/p/phillipscurve.asp">Phillips curve</a> model — and it just was not capable of producing high inflation. But what it was missing was something that’s been completely missing in the data for 40 years, which is basically the collapse of the supply-side.”
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
Jerome Powell: &quot;I think we now understand better how little we understand about inflation.&quot;
Host: &quot;That&#39;s not very reassuring&quot;
Jerome : &quot;This was unpredicted&quot;
Only the &quot;experts&quot; and the media didn&#39;t see this coming. Just about everyone else did.
Sound ON <a href="https://t.co/6Gv35rXPrW">pic.twitter.com/6Gv35rXPrW</a>
&mdash; Wall Street Silver (@WallStreetSilv) <a href="https://twitter.com/WallStreetSilv/status/1542214066218774528?ref_src=twsrc%5Etfw">June 29, 2022</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
The data indicate that the American people are already feeling &#8220;pain&#8221; from inflation and directly blaming President <a href="https://www.dailywire.com/topic/joe-biden">Joe Biden</a> for it.
Recently, CNN&#8217;s senior data reporter Harry Enten explained that the University of Michigan&#8217;s consumer sentiment survey &#8220;is the worst consumer sentiment ever measured by the University of Michigan going all the way back since 1952.”
“And in terms of why are consumers feeling this bad?” the senior analyst continued. “Well, it’s pretty clear why they’re feeling this bad, and that is because the Consumer Price Index is the worst it’s ever been in a midterm cycle since ’74; it’s the worst it’s been in any presidential cycle or midterm cycle since 1980. So, it’s not much of a surprise. You can see it, it’s literally off the charts on the table on your screen.”
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
CNN&#39;s Harry Enten on Biden&#39;s &quot;awful&quot; approval rating on inflation: Biden is &quot;doing WORSE than Jimmy Carter&quot; <a href="https://t.co/2vbBx4tLvE">pic.twitter.com/2vbBx4tLvE</a>
&mdash; RNC Research (@RNCResearch) <a href="https://twitter.com/RNCResearch/status/1536879096147460096?ref_src=twsrc%5Etfw">June 15, 2022</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
Evidence also shows that Americans have <a href="https://www.dailywire.com/news/even-millionaires-cut-back-on-buying-homes-restaurant-food-gas-thanks-to-surging-inflation">changed</a> their eating habits, vacation plans, and more as they struggle to make ends meet in Biden&#8217;s economy.
Ben Zeisloft contributed to this report.

Federal Reserve Chairman Says Fixing Inflation ‘Highly Likely To Involve Some Pain’ For The American People

Federal Reserve Chairman Jerome Powell Says Fixing Inflation 'Highly Likely To Involve Some Pain' For American People

Joe Biden

Federal Reserve Chairman Jerome Powell has reflected on why the economic experts failed to predict surging inflation, and his findings didn&#8217;t exactly imbue much confidence in those who heard them.
During the European Central Bank forum, host Francine Laqua asked panelists, &#8220;Hindsight is a beautiful thing, I know&#8230;but going forward&#8230;how do we need to look at inflation differently? So, for example, in the U.S. — the stimulus. Did we circulate the impact this would have on inflation?&#8221;
&#8220;I think we now understand better how little we understand about inflation,&#8221; Powel responded.
The Bloomberg TV anchor responded with a chuckle, &#8220;That&#8217;s not very reassuring.&#8221;
&#8220;No, honestly, this was unpredicted. I was looking at the time of our June meeting one year ago, of the 35 people who filed with a survey of professional forecasters, 34 of them had inflation below four percent for the last year. And of course, it was way above four percent.&#8221;
The exchange can be seen here:
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
Jerome Powell: &quot;I think we now understand better how little we understand about inflation.&quot;
Host: &quot;That&#39;s not very reassuring&quot;
Jerome : &quot;This was unpredicted&quot;
Only the &quot;experts&quot; and the media didn&#39;t see this coming. Just about everyone else did.
Sound ON <a href="https://t.co/6Gv35rXPrW">pic.twitter.com/6Gv35rXPrW</a>
&mdash; Wall Street Silver (@WallStreetSilv) <a href="https://twitter.com/WallStreetSilv/status/1542214066218774528?ref_src=twsrc%5Etfw">June 29, 2022</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
Powell also clarified that experts were using an outdated model to predict inflation.
&#8220;So really, everyone had the same model — which was the <a href="https://www.investopedia.com/terms/p/phillipscurve.asp">Phillips curve</a> model — and it just was not capable of producing high inflation. But what it was missing was something that&#8217;s been completely missing in the data for 40 years, which is basically the collapse of the supply-side.&#8221;
&#8220;You know the U.S. economy is famously adaptable&#8230; and yet here they are,&#8221; he continued. &#8220;So, what you had was very strong demand, but hitting effectively a vertical supply curve. So ordinarily when people want to buy cars — which they really did, because they didn&#8217;t want to ride on public transportation, rates were low, they had all these savings — the car companies would make more cars and they might raise prices, too. In this case, they couldn&#8217;t make as many cars so what you got was, straight up the vertical supply curve, a big price increase.&#8221;
Powell theorized that the process could happen in reverse and help lower inflation.
The Consumer Price Index (CPI) rose 8.6% between May 2021 and May 2022, meaning that <a href="https://www.dailywire.com/topic/inflation">inflation</a> surpassed <a href="https://www.dailywire.com/topic/economy">record highs</a>, according to the <a href="https://www.bls.gov/news.release/cpi.nr0.htm">U.S. Bureau of Labor Statistics</a>. President Joe Biden has blamed COVID-19, Russian President Vladimir Putin&#8217;s invasion of Ukraine, MAGA-Republicans in Congress, and energy companies for soaring costs of goods.
While inflation is a global problem, <a href="https://www.oecd.org/sdd/prices-ppp/consumer-prices-oecd-06-2022.pdf">data</a> from the Organization for Economic Cooperation and Development (OECD) shows that the United States <a href="https://www.dailywire.com/news/pretty-bleak-international-economic-organization-issues-new-warning-about-soaring-inflation-famine">boasts higher inflation rates</a> than many other developed countries. The 8.3% inflation rate seen in the United States as of April was higher than the 7.8% rate in the United Kingdom, the 7.4% rate in Germany, the 6.8% rate in Canada, the 6% rate in Italy, the 4.8% rate in South Korea, and the 2.5% rate in Japan.
Powell&#8217;s comments in full can be seen here:
<iframe loading="lazy" title="Fed Chairman Jerome Powell talks about economy and interest rates at ECB forum — 6/29/22" width="500" height="281" src="https://www.youtube.com/embed/xgmLC63Yv-U?start=3306&#038;feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>

Monetary policy

Fed Chairman: ‘We Now Understand Better How Little We Understand About Inflation’

Federal Reserve Chairman Jay Powell 'We Now Understand Better How Little We Understand About Inflation'

Pending <a href="http://dailywire.com/topic/housing">home sales</a> inched higher last month despite seeing declines for most of the past year.
The National Association of Realtors’ Pending Home Sales Index rose 0.7% in May — even as transactions fell year-over-year by 13.6%.
&#8220;Despite the small gain in pending sales from the prior month, the housing market is clearly undergoing a transition,&#8221; NAR Chief Economist Lawrence Yun said in a <a href="https://www.nar.realtor/newsroom/pending-home-sales-edge-higher-0-7-in-may">press release</a>. &#8220;Contract signings are down sizably from a year ago because of much higher mortgage rates.&#8221;
Indeed, the 30-year fixed rate mortgage <a href="https://www.dailywire.com/news/mortgage-rates-hit-highest-level-in-over-a-decade">began climbing</a> precipitously at the beginning of 2022, according to data from government-backed mortgage company <a href="https://fred.stlouisfed.org/series/MORTGAGE30US">Freddie Mac</a>. Beginning at slightly over 3% in January, the mortgage rate surpassed 5.75% earlier in June.
The rise in mortgage rates corresponds with the Federal Reserve <a href="https://www.axios.com/2022/05/18/fed-mortgage-portfolio">tapering</a> its aggressive monetary stimulus. In response to COVID-19 and the lockdown-induced <a href="http://dailywire.com/topic/recession">recession</a>, the central bank ramped up its purchase of <a href="https://www.dailywire.com/news/watch-powell-admits-that-fed-policies-are-behind-high-home-prices">mortgage-backed securities</a>, leading to a decline in mortgage costs. In addition to discharging the securities, monetary policymakers are <a href="https://www.dailywire.com/news/federal-reserve-takes-most-aggressive-action-to-fight-inflation-in-three-decades">hiking interest rates</a> — most recently, by a 0.75% increment that represented the boldest move to combat <a href="http://dailywire.com/topic/inflation">inflation</a> in nearly three decades.
Monthly mortgage payments for the median single-family home have increased by $800 since the beginning of the year, according to the National Association of Realtors. The organization noted that the housing market differs in various regions of the United States. While the West — where real estate is the priciest — saw the largest drop in contract activity, the Northeast and South saw increases. All four regions saw year-over-year decreases in pending sales.
Existing home sales fell by 3.4% in May, according to more National Association of Realtors <a href="https://www.nar.realtor/newsroom/existing-home-sales-fell-3-4-in-may-median-sales-price-surpasses-400000-for-the-first-time">data</a>, even as the median national sale price surpassed $400,000 for the first time.
Among other factors, high prices are driven by persistent mismatches between the supply and demand for new homes. As of last summer, the United States had an <a href="https://www.nar.realtor/newsroom/once-in-a-generation-response-needed-to-address-housing-supply-crisis">underbuilding gap</a> of 5.5 million to 6.8 million units.
&#8220;There is a strong desire for homeownership across this country, but the lack of supply is preventing too many Americans from achieving that dream,&#8221; Yun said at the time. &#8220;It&#8217;s clear from the findings of this report and from the conditions we&#8217;ve observed in the market over the past few years that we&#8217;ll need to do something dramatic to close this gap.&#8221;
Even amid the long-term shortages, analysts from the Federal Reserve Bank of Dallas <a href="https://www.dailywire.com/news/unhinged-and-abnormal-fed-warns-of-housing-bubble-as-average-cost-of-new-homes-hits-record-high">forecasted</a> a housing bubble due to “market exuberance” that is “unhinged from fundamentals” — a warning that has not been issued since the housing market crash of 2008.
“An asset — in this case, housing — is in the primary expansionary phase of a bubble when price rises are out of step with market fundamentals,” they wrote. “Rapid real house-price appreciation, such as that observed now, does not in itself signal a bubble… But real house prices can diverge from market fundamentals when there is widespread belief that today’s robust price increases will continue. If many buyers share this belief, purchases arising from a ‘fear of missing out’ can drive up prices and heighten expectations of strong house-price gains.”

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