An economist at the Federal Reserve reportedly said that the U.S. Central Bank worked against former President Donald Trump and is prepared to do so again.
Aurel Hizmo, a principal economist at the Federal Reserve, was reportedly caught on a hidden camera sting by a self-proclaimed guerilla journalist from James O’Keefe’s O’Keefe Media Group (OMG). An OMG “swiper” interviewed Hizmo across several pseudo-dates that the swiper went on with the Fed economist.
Over the course of the dates, Hizmo said he believes Trump is “a crazy person” that the Fed needs to keep in check when he “messes up.” Hizmo also suggested that Fed chairman Jerome Powell hates the former president and wants to be remembered as someone who “held the line” against Trump.
“Trump is just a crazy person,” Hizmo told his date. “It’s very clear. I mean, he’s a dumb guy.”
Trump and Powell hated each other, according to Hizmo. On the other hand, Powell has a good relationship with President Joe Biden and his administration, he said.
Hizmo stated that Powell is motivated by a desire to preserve his legacy “as a savior.”
“[Powell] is doing it for the legacy. He wants to be remembered in history … as somebody who held the line against, like, Trump and helped the economy out of COVID,” Hizmo said on hidden camera. “There’s all kinds of stuff that comes to his desk that he says, ‘No, because this is going to jeopardize the legacy of the Fed or my legacy as chair.’”
Trump nominated Powell to lead the Federal Reserve in 2017. Hizmo suggested that Powell used his authority as the chairman of the U.S. Central Bank to curb Trump’s deregulatory agenda. Hizmo suggested to his date that Powell and the Federal Reserve are willing to act again should Trump win the White House in 2024.
“So the feeling is this: we don’t want Trump to be in the government, but if he comes, we’re still going to try to the best we can for the country,” Hizmo said to his date. “Now, if he messes up, if he does something stupid, then we have to fix it.”
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Hizmo explained: “So, he, like, removed a lot of regulations and stripped that, and made that entity really weak … so now the Fed has to be like oh we have to kind of, like, do something more to regulate …”
The Fed economist went on to say that Powell generally has a good relationship with Democrats because Powell is “responsive.”
“Like under Powell, the Fed has changed to think about equity issues, like racial issues, think about wealth inequality as part of the mandate, as part of the things we are following, think about climate change,” Hizmo said in the OMG undercover video.
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
BREAKING, INSIDE THE FEDERAL RESERVE: Hidden Camera captures Principal Economist <a href="https://twitter.com/federalreserve?ref_src=twsrc%5Etfw">@federalreserve</a> talking about Jerome Powell’s legacy as “somebody who held the line against like, Trump.” The influential agency responsible for maintaining a stable monetary system appears to not… <a href="https://t.co/5CqZX2LhwT">pic.twitter.com/5CqZX2LhwT</a>
&mdash; James O&#39;Keefe (@JamesOKeefeIII) <a href="https://twitter.com/JamesOKeefeIII/status/1778157381907513802?ref_src=twsrc%5Etfw">April 10, 2024</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

Jerome Powell

Fed Economist On Hidden Camera: Central Bank Worked To Counter Trump

Donald Trump

Federal Reserve

James O'Keefe

Politics

Washington D.C.

Last week’s jobs report, combined with Wednesday’s <a href="https://www.wsj.com/livecoverage/cpi-report-today-inflation-stock-market-04-10-2024">inflation number</a>, shows that we are living in two economies. One, in which the macroeconomic, top line numbers, combined with the stock market points to a robust economy. The second, in which the microeconomic numbers point to Americans struggling to make ends meet.
The United States labor market added more than 300,000 <a href="https://www.cnbc.com/2024/04/05/heres-where-the-jobs-are-for-march-2024-in-one-chart-in-one-chart.html" target="_blank" rel="noopener">jobs</a> in March, which on the surface is excellent news. Unfortunately, the top sectors for gains — health care, social assistance, government jobs, and leisure and hospitality — drove the growth, accounting for more than 60% of the gains for the month. 
Conservatives, of course, want the government to be shrinking in size, not growing.
Beneath the surface, the numbers spell bad news for working Americans.
The growth in employment came from part-time, not full-time jobs.
An additional 525,000 part-time jobs were added in <a href="https://pro.thestreet.com/market-commentary/theres-a-serious-catch-in-the-jobs-report-and-no-one-is-talking-about-it" target="_blank" rel="noopener">March</a> and full-time jobs decreased by 222,000, according to The Street.
The <a href="https://www.newsweek.com/immigrants-get-100000-new-jobs-one-month-1887354#:~:text=Diane%20Swonk%2C%20KPMG%27s%20chief%20economist,she%20said%20in%20a%20note." target="_blank" rel="noopener">growth</a> in employment is primarily being driven by foreign-born workers, who have filled more than 1.25 million jobs over the last two months while the number of newly employed native-born Americans only increased by 435,000 over the same time period. As The New York Post noted, this helps to explain why <a href="https://nypost.com/2024/04/05/business/us-employers-add-303k-jobs-in-march-unemployment-ticks-lower/" target="_blank" rel="noopener">wages</a> increased at a modest 4.1% from a year ago, the smallest increase since June of 2021.
It is getting harder to make ends meet.
At the start of 2024, 8.7 million people were working <a href="https://finance.yahoo.com/news/8-7-million-americans-now-193011733.html?guccounter=1&amp;guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&amp;guce_referrer_sig=AQAAAMdnvpG6jLSb5Ete-vfg-p37rW6obahlKfRMwpoebJ5JKHMbbX3YihV55W49tAb2huZGSKGbHCEyqQ2lBA6_TrVSbGdxxJXLmBleJ6l_k5iSJdNragzOV-lgdRcKxs7KeKLYo2AFzjoFeSGCLQvDYAqdBvEa9SdqyCSa2e4OE8MK" target="_blank" rel="noopener">multiple</a> jobs in the United States, in order to fill their cars with gas and put food on the table. A report in USA Today found that at the start of 2024 there were 4.2 million people working <a href="https://www.usatoday.com/story/money/2024/01/25/part-time-jobs-hit-record-high/72331112007/" target="_blank" rel="noopener">part-time</a>, not by choice, but because their employers reduced hours or they could not find full-time work.
This combination of the growth in part-time work and depressed wages point to a weak job market, not a strong job market. The number of people working multiple jobs also artificially inflates the job numbers, as each job counts, not each person.
The rising tide of a “hot” jobs market and a soaring stock market is not lifting all boats. The <a href="https://www.morningstar.com/markets/is-stock-market-expensive-right-now" target="_blank" rel="noopener">stock market</a> rose nearly 8% in the first quarter of 2024 and is up more than 25% since its October 2023 lows, according to Morningstar.
However, there&#8217;s a marked increase in emergency 401(k) withdrawals, auto repossessions, and record numbers of people backing out of agreements to purchase a home.
Nearly 3.6% of workers who have a 401(k) <a href="https://www.foxbusiness.com/economy/401k-hardship-withdrawals-surge-another-record-high-inflation-stings" target="_blank" rel="noopener">retirement</a> plan made a hardship withdrawal in 2023, a major increase from the 2.8% in 2022. The pre-pandemic average was 2%. The Federal Reserve <a href="https://www.foxbusiness.com/economy/401k-hardship-withdrawals-surge-another-record-high-inflation-stings" target="_blank" rel="noopener">Bank</a> of New York reported that “the annual rate for car owners behind a month or more on their payments was 7.7%, the highest rate since 2010.” And in November 2023, nearly 17% of potential home buyers backed out of their agreement to purchase a home for which they had signed a contract.
Perhaps this explains why Americans are skipping meals to afford housing. A study from Redfin, as reported by <a href="https://www.foxbusiness.com/economy/401k-hardship-withdrawals-surge-another-record-high-inflation-stings" target="_blank" rel="noopener">CBS News</a> shows that half of homeowners and renters have had to make sacrifices to afford their mortgage or rent payment. Homeowners report selling belongings, working overtime, canceling vacations, taking on a second job, and skipping meals in order to make a mortgage payment.
The March 2024 <a href="https://www.foxbusiness.com/economy/401k-hardship-withdrawals-surge-another-record-high-inflation-stings" target="_blank" rel="noopener">Consumer Price Index</a>, the common measure of inflation, was at 3.5%, above expectations, driven by energy, food, and shelter; the basket of needs for all Americans. Core CPI, which excludes volatile variables such as fuel and food was at 3.8%. Both numbers were hotter than expected. 
Dow futures immediately <a href="https://www.foxbusiness.com/economy/401k-hardship-withdrawals-surge-another-record-high-inflation-stings" target="_blank" rel="noopener">dropped</a> over 500 points upon the release of March&#8217;s inflation numbers.
<a href="https://www.foxbusiness.com/economy/401k-hardship-withdrawals-surge-another-record-high-inflation-stings" target="_blank" rel="noopener">Cumulative</a> inflation since January 2021, when Joe Biden took office, is 18%, 6% per year — three times the Federal Reserve’s target of 2%.
Working Americans do not care about The Fed’s inflation target, they care that, since Biden took office, it now takes nearly $120 to buy what $100 would buy you at the end of the Trump presidency.
Americans are also seeing <a href="https://www.foxbusiness.com/economy/401k-hardship-withdrawals-surge-another-record-high-inflation-stings" target="_blank" rel="noopener">inflation</a> at the pump, according to NerdWallet. Oil is at $85 per barrel, and the average regular gas price in the United States, as of April 5, was $3.582 per gallon, 22 cents higher than March’s average. The price of a gallon of gas has increased 49 cents since the start of 2024.
Commodity prices are rising, with <a href="https://www.foxbusiness.com/economy/401k-hardship-withdrawals-surge-another-record-high-inflation-stings" target="_blank" rel="noopener">gold</a> at record highs, signaling that people are bearish on the U.S. economy and the U.S. Dollar.
It is no wonder credit card <a href="https://www.foxbusiness.com/economy/401k-hardship-withdrawals-surge-another-record-high-inflation-stings" target="_blank" rel="noopener">debt</a> is at record highs, topping $1.13 trillion. Working Americans are not maxing out their credit cards in order to fly to Paris, pay for massages, or by that 75-inch TV. No, they are buying groceries, gas, and paying their utility bills, and paying nearly 25% <a href="https://www.foxbusiness.com/economy/401k-hardship-withdrawals-surge-another-record-high-inflation-stings" target="_blank" rel="noopener">interest</a> for the privilege of doing so.
More than 33% of Americans have more credit card <a href="https://www.foxbusiness.com/economy/401k-hardship-withdrawals-surge-another-record-high-inflation-stings" target="_blank" rel="noopener">debt</a> than emergency savings and 56 million Americans have been in credit card debt for at least a year.
Nearly one-third of residents in the country’s largest 100 metropolitan cities were behind on at least one debt payment in Q3 2023, and more than 25% had delinquencies of 90-days or more. 
Americans are working more part-time jobs, making less money, losing their cars, and unable to purchase a home. If they can afford a home, lunch becomes a forgotten meal.
Commodity prices are rising, gas is more expensive, and inflation is certainly not transitory. None of the indicators point towards an interest rate cut by the Federal Reserve in 2024. In fact, one could argue that we need another quarter-point increase in rates.
Will the Fed play a political role and give Joe Biden the gift of interest rate cuts, or will the Fed fulfill its apolitical charter and guide the economy?

Shopping Trolley Growth

Inflation And The Two Sides Of The American Economy

finance

Inflation

Readers Pass

Stock Market

Lisa Cook, governor of the US Federal Reserve. Photographer: Al Drago/Bloomberg

Trouble At The Fed: Investigation Into Lisa Cook’s Academic Record Raises Questions

Critical Race Theory

Economics

Plagiarism

Failed public policies are undermining the institution of <a href="https://www.dailywire.com/topic/marriage" target="_blank" rel="noopener">marriage</a> in America. Rates of both marriage and child births have been trending down for decades, but the current cost-of-living crisis is poised to accelerate these declines. If you can’t afford a place to live, chances are you won’t get married and have kids.
That’s precisely the calculus for millions of young Americans today who can’t make ends meet despite a record number of them holding second or even third jobs. Sixty percent are living paycheck to paycheck. Americans have accumulated a record-high $1.1 trillion in credit-card debt as many can’t cover even necessities.
But Americans aren’t just falling into debt — they’re falling behind on payments too. Defaults and delinquencies are rising at the fastest pace since the Great Recession when there was a mortgage meltdown and a global financial crisis.
The financial strain on American families explains why people view current economic conditions so unfavorably in polling. Perhaps nothing illustrates this pessimism better than the housing market.
The monthly mortgage payment on a median-price home has doubled in the last three years. Unless your income has also doubled, you’re falling behind when it comes to buying a house.
The median price of a new home has shot up to a stratospheric $435,000. Even the median price of an existing home, at about $387,000, would have been inconceivable three years ago.
The typical family buying a home today will have a monthly cost of homeownership around $3,000. That’s about half the median household income — before income taxes. It’s no wonder that the Federal Reserve Bank of Atlanta’s <a href="https://www.atlantafed.org/center-for-housing-and-policy/data-and-tools/home-ownership-affordability-monitor" target="_blank" rel="noopener">homeownership affordability index</a> is at a record low today.
The index even shows that the cost to own a median price home in several major metropolitan areas requires more than 100% of the median household after-tax income. In only a single metropolitan area with at least 500,000 people is the median price home affordable in America.
<div id="attachment_695083" style="width: 874px" class="wp-caption alignnone"><img aria-describedby="caption-attachment-695083" decoding="async" loading="lazy" class="size-large wp-image-695083" src="https://dw-wp-production.imgix.net/2024/02/GettyImages-1400734918-864x576.jpg" alt="Catherine McQueen. Getty Images. home for sale real estate sign ~ shot with canon eos rp" width="864" height="576" srcset="https://dw-wp-production.imgix.net/2024/02/GettyImages-1400734918-864x576.jpg 864w, https://dw-wp-production.imgix.net/2024/02/GettyImages-1400734918-300x200.jpg 300w, https://dw-wp-production.imgix.net/2024/02/GettyImages-1400734918-768x512.jpg 768w, https://dw-wp-production.imgix.net/2024/02/GettyImages-1400734918-1536x1024.jpg 1536w, https://dw-wp-production.imgix.net/2024/02/GettyImages-1400734918-2048x1365.jpg 2048w, https://dw-wp-production.imgix.net/2024/02/GettyImages-1400734918-1800x1200.jpg 1800w, https://dw-wp-production.imgix.net/2024/02/GettyImages-1400734918-1200x800.jpg 1200w" sizes="(max-width: 864px) 100vw, 864px" />Catherine McQueen. Getty Images.</div>
While homeownership is normally a great tool for building wealth, it is also often a precursor to major milestones in life, like starting a family. But with the American dream of homeownership having turned into a nightmare, nearly an entire generation of young people can’t buy a home and are delaying family formation because of it. 
And this isn’t simply theory – <a href="https://www.federalreserve.gov/econres/feds/monetary-policy-and-birth-rates-the-effect-of-mortgage-rate-pass-through-on-fertility.htm" target="_blank" rel="noopener">empirical research</a> published by Federal Reserve economists has already demonstrated that higher mortgage interest rates has a negative impact on the birth rate. That’s because those higher mortgage interest rates increase the cost of homeownership.
What caused this sad state of affairs? It was a deadly combination of impolitic public policies.
Since 2020, the federal government has been spending trillions of dollars it didn’t have, running massive deficits. The Federal Reserve covered these deficits by simply creating money for Congress to spend. That devalued the dollar, which fueled inflation as prices soared – including prices for housing.
But home prices got an extra boost from the Fed’s artificially low interest rates. What a homebuyer is really concerned about is the monthly payment on a home, not so much the home’s price. Lower interest rates allowed people to take on much larger mortgages for the same monthly payment, creating frenzied bidding wars for homes.
When interest rates finally rose to fight inflation, they pushed monthly mortgage payments through the roof, completely out of the reach of most Americans. It also trapped millions of Americans in their homes.
When a home is sold with a mortgage, the homeowner loses the loan and must get a new one, at current market rates. If someone bought a home just a few years ago, they are likely going from a 2-3% mortgage to a 7-8% one. That would cause their monthly payment to explode.
The options are to drastically downsize or not move at all — and millions have chosen the latter. That’s helped cause a severe shortage of homes for sale, the lowest level in decades. Consequently, home prices are staying high despite today’s higher interest rates.
While the failures of public policy are often measured in dollars, the unaffordability of housing today demonstrates that there can be even more far-reaching consequences: families never formed, and lives never lived.
* * * 
E.J. Antoni is a public finance economist at the <a href="https://www.heritage.org/staff/ej-antoni" target="_blank" rel="noopener">Heritage Foundation</a> and a senior fellow at the <a href="https://committeetounleashprosperity.com/" target="_blank" rel="noopener">Committee to Unleash Prosperity</a>. 

The views expressed in this piece are those of the author and do not necessarily represent those of The Daily Wire.

Real Estate Agent Adjusts For Sale Sign in Front Yard

Why The Housing Crunch Is Causing Americans To Delay Marriage And Children

Gen Z

Heritage Foundation

Housing

Interest Rates

Marriage

Prices

The fact that our entire economy is run by a small cabal of human beings who preside over a massive, enormous global economy with regard to central banking is despicable. The gold standard used to take this directly out of the hands of bureaucratic “experts.”
The system of incentives is uniquely bad. The Federal Reserve has been tasked with simultaneously keeping inflation low and keeping employment high; that used to be the job of legislatures. But now, when you hand it off to the Federal Reserve, their job is to continue to backfill all the bad legislation coming out of Washington, D.C. Fiscal responsibility can only happen when you don&#8217;t have a bunch of central bankers manipulating the switches behind the scenes.
Over the weekend, Federal Reserve Chairman Jerome Powell gave a speech about inflation and interest rates. Many people are concerned that the Federal Reserve and central banks across the world are going to continue to raise interest rates in an effort to quell inflation, which would clamp down on the ability of lenders to lend. The banks would increase standards for lenders because the money will not be easy to recoup and they&#8217;re afraid that will tip us over into recession.
Powell said over the weekend that 2% was the inflation target. That&#8217;s always the target rate for the Federal Reserve, which is immoral. A 2% inflation rate over the course of 50 years is a 100% inflation rate, which is why everything is much more expensive in pure dollar terms than it used to be. The fact that we deliberately inflate the currency in order to artificially jog consumer spending in this country is shameful. We should not be doing this. We are actively degrading people&#8217;s savings in order to jog fake consumer spending, which does not actually generate innovation.
What generates innovation is investment. What generates innovation is Research and Development.
What generates innovation is not you buying an additional hamburger today. It doesn&#8217;t generate the new products and services that make the world a better place.
<h4><a href="https://www.dailywire.com/show/the-ben-shapiro-show" target="_blank" rel="noopener">WATCH: The Ben Shapiro Show</a></h4>
Powell’s guidance consisted of, “We don&#8217;t know. You don&#8217;t know. Nobody knows.”
“As is often the case, we are navigating by the stars under cloudy skies,” he stated. “In such circumstances, risk management considerations are critical. At upcoming meetings, we will assess our progress based on the totality of the data and the evolving outlook and risks.” The fact that everybody is now sitting around and reading chicken entrails as to what a bunch of central bankers are going to do with the rates is absurd.
There is a natural rate of inflation. The natural rate of inflation occurs based on products, services, and productivity. There&#8217;s a natural rate to lending. Natural interest rates exist. They are different from economy to economy. They are not consistent. They should not be set by any central point.
It is amazing that many of the same free market economic thinkers who understand that no one cadre of people is capable of setting prices in any other area of the American economy believe that there is a cadre of people who should be setting the price of debt. That&#8217;s totally insane. The perverse incentive is, if you&#8217;re a member of the legislature, you spend endlessly, hoping the Federal Reserve is going to come in like mommy and kiss the boo-boo, which is basically Jerome Powell’s job.
The problem is that everyone else out here who&#8217;s trying to invest doesn’t have any idea what Powell is going to do tomorrow. You&#8217;re sitting around waiting for this guy to figure out exactly what the plan is for all the rest of our lives. And you don&#8217;t have a say in it because it&#8217;s not an elected position. The fact that there is not more hue and cry about the outsized powers of the Federal Reserve is absolutely beyond me, especially because it&#8217;s not as though the central bankers know what the hell they&#8217;re doing.
Whenever we have a small cadre of experts who say that they know exactly what they&#8217;re doing, that is almost never the case.
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1 Ben Shapiro Editorial Series 03 2COPY2 copy

Stop Depending On The Fed To Save The Day

Banking

Ben Shapiro

Economy

Opinion

Chairman of the <a href="https://www.dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> Jerome Powell hinted that more interest rate hikes may be coming during a speech in Jackson Hole, <a href="https://www.dailywire.com/topic/wyoming" target="_blank" rel="noopener">Wyoming</a>, on Friday.
Powell along with other central bank officials and finance and economics experts met for the annual Jackson Hole Economic Symposium last week to discuss the state of the economy and the Federal Reserve’s efforts to curb inflation. He said the U.S. may not have hit its interest rate peak yet.
“We have tightened policy significantly over the past year. Although inflation has moved down from its peak — a welcome development — it remains too high,” Powell <a href="https://www.federalreserve.gov/newsevents/speech/powell20230825a.htm" target="_blank" rel="noopener">said</a>, according to a transcript of his remarks. “We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”
In order to rein in inflation to the Federal Reserve’s 2% target rate, the central bank has hiked the federal funds rate to 5.5%, the highest rate in over two decades. The Fed has also used its economic levers to pull money out of circulation in order to tamp down on economic activity and slow inflation. Despite its efforts, the economy continues to hum faster than expected, Powell said.
“So far this year, GDP growth has come in above expectations and above its longer-run trend, and recent readings on consumer spending have been especially robust. In addition, after decelerating sharply over the past 18 months, the housing sector is showing signs of picking back up,” the chairman said. “Additional evidence of persistently above-trend growth could put further progress on inflation at risk and could warrant further tightening of monetary policy.”
Powell’s uncertainty about the future of the American economy was seconded by other top central bank officials and experts at the conference.
Kristin Forbes, a professor at the Massachusetts Institute of Technology, said that the Fed’s current position is similar to a hiker attempting to summit a mountain when the trail has disappeared.
“You know where you want to go. You know where the summit is, but there are no more markers and you have to feel your way,” Forbes told <a href="https://www.wsj.com/economy/central-banking/why-central-bankers-are-unsure-whether-theyve-raised-rates-enough-aa57c648" target="_blank" rel="noopener">The Wall Street Journal</a>. “And even though you’ve covered most of the distance, that can be the hardest part. It’s steeper. It’s rockier.”
Cleveland Fed President Loretta Mester said the central bank is close, but it may need to raise interest rates at least one more time before it hits the peak.
“We are very close to a good point, and then we’ll let the economy tell us” when interest rates can start to come back down again, she told WSJ.

Inflation Still ‘Too High’ To Consider Cutting Interest Rates, Fed Chair Says

Wyoming

The <a href="https://www.dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> hiked interest rates to the highest level in 22 years on Wednesday, despite easing inflationary pressures.
After two days of deliberation, the Federal Reserve raised the federal funds rate from 5% to a target of 5.25% to 5.5%, explaining in a statement that “additional policy firming (rate increases)” will depend on economic and inflationary indicators allowing the Fed to both hit its 2% inflation goal while maintaining economic growth.
“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 5-1/4 to 5-1/2 percent. The Committee will continue to assess additional information and its implications for monetary policy,” the statement continued.
The hike received unanimous support from the Federal Reserve Board and is in keeping with the 11 hikes since March of 2022, despite a short pause in June, per <a href="https://www.cnbc.com/2023/07/26/fed-meeting-july-2023-.html">CNBC</a>. Fed Chair Jerome Powell said in late June that — despite the lack of a rate increase that month — inflation was still too high, and that its persistent rate above the target of 2% would likely lead to more “restriction” on monetary policy.
Inflation has been slightly cooling off in the past several months, with the consumer price index, according to CNBC, settling at 3% on a yearly basis in June, down from 9.1% in June 2022. Despite this, the Fed has maintained the most aggressive consecutive hike in interest rates since the 1980s, which featured even higher inflation rates.
Although inflation has relatively decreased since its meteoric peaks in the past three years, the Fed is committed to bringing it all the way down to the target of 2%, with the FOMC hinting at further rate hikes in the months of September and November to further bring down inflation.
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Greg McBride, senior vice president and chief financial analyst for Bankrate, concurs with the Fed’s sentiment, telling <a href="https://www.nbcnews.com/business/economy/interest-rate-hike-july-2023-how-much-higher-federal-reserve-rcna96210">NBC</a>, &#8220;Inflation remains stubbornly high.&#8221;
&#8220;The economy has been remarkably resilient, the labor market is still robust, but that may be contributing to the stubbornly high inflation,&#8221; he said. &#8220;So, Fed has to pump the brakes a bit more.”

Chairman Jerome Powell Holds A Press Conference At The Federal Reserve

Fed Raises Interest Rates To Highest Level In Two Decades

U.S.

Unemployment

A majority of small business owners are concerned that the state of the <a href="https://www.dailywire.com/topic/economy" target="_blank" rel="noopener">economy</a> will drive them to close their doors.
Nearly two-thirds, 64%, of small business owners said they were concerned that economic conditions could force them to close, <a href="https://sbiqpoll.jcnf.org/app/uploads/2023/06/JCN-SBIQ-MAY-PPT-05-30-23-MASTER.pdf" target="_blank" rel="noopener">according to</a> the May edition of the Job Creators Network Foundation’s (JCNF) Small Business IQ Poll. Two of the top concerns among small business owners are the rate of inflation and upheaval in the banking sector.
“While the plague of inflation has largely fallen out of the headlines, concern among small business owners about rising prices has hit a two-year peak. Now, pile on banking instability and the threat it poses to accessing credit, and the U.S. small business community is uneasy,” foundation president Elaine Parker said in a statement.
Parker touted the Job Creators Network’s American Small Business Prosperity Plan, which calls for a series of reforms, including making former President Donald Trump’s tax cuts permanent and cutting government spending, to “supercharge Main Street.”
“Passing the Prove It Act would be a good first step. The bill — introduced by Sen. Joni Ernst in May — would help address the federal regulatory burden strangling our country’s small business job creators,” Parker said.
The poll is a national survey of 400 small business employers conducted between May 5-30. Responses were received through randomly distributed invitations online. The poll’s margin of error is 4.9% with a 95% confidence interval.
Concerns about the economy have risen over the past several months after hitting 57% in February. The high in the past year hit in November and December at 65%.
A majority of small business owners, 66%, reported being “very” or “somewhat” concerned about rising interest rates and how that could impact their access to loans. And 71% of small business owners reported being “very” or “somewhat” concerned about new banking regulations.
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The failures of Signature Bank, Silicon Valley Bank, and First Republic Bank earlier this year sent a tremor through regional banks as investors worried about the safety and stability of their own accounts.
The string of bank failures is the <a href="https://www.nytimes.com/interactive/2023/business/bank-failures-svb-first-republic-signature.html" target="_blank" rel="noopener">worst</a> since the Great Recession in 2008. The assets of those three banks, worth $532 billion, are worth more, when adjusted for inflation, than the assets of the 25 banks that failed in 2008.
In addition to the bank failures, inflation continues to burn hot over the Federal Reserve’s 2% target rate. The annualized inflation rate <a href="https://www.cnbc.com/2023/06/13/heres-the-inflation-breakdown-for-may-2023-in-one-chart.html" target="_blank" rel="noopener">rose</a> at 4% in May, according to data released Tuesday by the Bureau of Labor Statistics.

Closed store

Two-Thirds Of Business Owners Concerned Biden Economy May Force Them To Close, Poll Finds

Poll: Two-Thirds Of Business Owners Concerned Biden Economy May Force Them To Close

U.S. inflation continues to dog both the American and, more importantly, the American consumer. The year-over-year inflation rate in April 2023 was 4.9%, per the U.S. Bureau of Labor <a href="https://www.bls.gov/news.release/cpi.nr0.htm" target="_blank" rel="noopener">Statistics</a>. Many television economists and talking heads celebrated the slowing of inflation’s rate of growth. What these so-called experts fail to realize is that April’s inflation rate was 4.9% higher than the rate in <a href="https://www.bls.gov/news.release/archives/cpi_05112022.pdf" target="_blank" rel="noopener">April 2022</a>, which was 8.3%. This means that the inflation rate was 13.2% when compared to April 2021 – hardly a number worth celebrating.
Journalists have written extensively about the impact of inflation on America’s collective pocketbook. Higher gas prices, higher food prices, and higher prices for items such as used cars and trucks have dominated the headlines. But there are hidden costs to inflation, inflicting pain on the middle class and poorest Americans.
The U.S. real estate market is already in a recession. Through the first quarter of 2023, “U.S. <a href="https://finance.yahoo.com/news/fannie-mae-housing-market-recession-172217493.html" target="_blank" rel="noopener">housing</a> market activity as measured by private residential fixed investment has declined, on a nominal basis, for four straight quarters … Fannie Mae’s forecast model thinks declines in the U.S. housing market will spill over and help to push the U.S. economy into a recession.”  
The housing market is in a vicious cycle. <a href="https://www.marketwatch.com/story/buckle-in-30-year-mortgage-rates-are-back-above-7-heres-how-many-extra-dollars-home-buyers-will-have-to-pay-6fe3101f" target="_blank" rel="noopener">Interest rates</a> are above 7% for the third time this year. This is driving a lack of inventory as people with fixed rate mortgages below 5% are loath to sell their homes and purchase a new home at a higher interest rate. The lack of inventory is driving bidding wars in some areas, making first-time homeownership more difficult. It also makes it harder to recruit people to fill roles in companies that require relocation. Simply put, not many people want to venture into the housing market at this time.
It is not just housing. The U.S. auto market is quietly suffering, but not in a manner that many think. Prices are slowly <a href="https://finance.yahoo.com/news/best-month-buy-car-2023-231008486.html#:~:text=There%20is%20good%20news%20on,is%20poised%20to%20keep%20easing." target="_blank" rel="noopener">dropping</a>, as supply chain issues are abated, with new car prices expected to fall 2.5 &#8211; 5% and used vehicle prices expected to decrease 10 &#8211; 20%.
However, the typical interest rate on a new car loan rose to 8.95% in March, up from 5.66% in March of 2022. For used cars, the rate was 11.3% in March, up from 7.7% a year ago. A one percentage point increase on an auto <a href="https://www.cbsnews.com/news/auto-loan-interest-rate-march-2023/" target="_blank" rel="noopener">loan</a> “adds roughly $20 a month to a car note and thousands of dollars extra over the life of the loan.”
The higher interest rates for cars are not calculated in the inflation rate, just the drop in MSRP. The hidden cost is found in higher interest rates causing more drivers to fall behind on their car payments. In January 2023, the percentage of auto borrowers who were at least 60 days late on their bills climbed “2% from December and 20.4% from the previous year,&#8221; according to <a href="https://www.foxbusiness.com/money/car-debt-piles-up-more-americans-struggle-make-payments">Fox Business</a>. &#8220;The percentage of severe delinquencies surged to the highest level since 2006. Loan defaults increased 6.2% over the course of January 2023 and were up 33.5% from a year earlier. Car repossessions were up 11% in 2022.”
Another hidden cost of inflation is the grossly expanding credit card debt of American citizens. U.S. consumers now owe $986 billion on their credit cards, according to data from the <a href="https://www.newyorkfed.org/newsevents/news/research/2023/20230515">Federal Reserve Bank of New York.</a> That is a 17% increase from a year ago and a record high, as more households are forced to use their credit cards to pay monthly expenses such as food and utilities.
The final hidden cost of inflation is the increase in hardship withdrawals from retirement plans. In 2022, 401(k) <a href="https://money.usnews.com/money/retirement/401ks/articles/401k-hardship-withdrawals-hit-record-high#:~:text=Under%20the%20new%20rules%20related,usual%2010%25%20early%20withdrawal%20penalty." target="_blank" rel="noopener">hardship</a> withdrawals rose by 24%, not only demonstrating how people are struggling to make ends meet, but also signaling a pending retirement crisis, as people will have less money on which to depend during retirement.
Joe Biden’s inflation is destroying the American dream. At a time when 57% of <a href="https://www.wsbtv.com/news/local/many-americans-cant-afford-cover-emergency-expense-with-savings-survey-shows/IFNMZQ5WFNEQTCZIPQVTW7UMWA/" target="_blank" rel="noopener">Americans</a> cannot afford an emergency expense of $1,000 or more from their savings, Democrats want to not only increase the debt limit, but also raise taxes so they can spend more money, which will drive more inflation. Americans are hurting, and their pain is not covered in today’s financial headlines.
Jim Nelles is a Navy veteran and supply chain consultant based in Chicago. His articles have appeared in The Washington Examiner, Newsweek, Foxnews.com, and The Daily Wire. He has served as a chief procurement officer, chief supply chain officer, and chief operations officer for multiple companies.
The views expressed in this piece are those of the author and do not necessarily represent those of The Daily Wire.

Global financial crisis

The Hidden Costs Of Biden’s Inflation Are Destroying The American Dream

The Hidden Costs Of Biden's Inflation Are Destroying The American Dream

Automobiles

Biden Administration

Gas Prices

Real estate

Former executives from <a href="https://www.dailywire.com/topic/silicon-valley-bank" target="_blank" rel="noopener">Silicon Valley Bank</a> and Signature Bank told members of the <a href="https://www.dailywire.com/topic/u-s-senate" target="_blank" rel="noopener">Senate</a> on Tuesday that their <a href="http://dailywire.com/topic/banks" target="_blank" rel="noopener">institutions</a> failed as a result of panic from depositors.
The implosion of Silicon Valley Bank, where the vast majority of account balances exceeded the $250,000 threshold backed by the Federal Deposit Insurance Corporation (FDIC), prompted the government-backed company to <a href="https://www.dailywire.com/news/financial-authorities-announce-buyer-for-collapsed-silicon-valley-bank" target="_blank" rel="noopener">secure</a> insured and uninsured accounts in early March to prevent additional bank runs. Signature Bank nevertheless collapsed days later, while other regional financial institutions continued to languish, and First Republic Bank, a third medium-sized institution, was <a href="https://www.dailywire.com/news/jpmorgan-chase-the-nations-largest-bank-acquires-first-republic-bank-after-government-takeover" target="_blank" rel="noopener">sold</a> earlier this month in a deal brokered by regulators.
Former Silicon Valley Bank CEO Greg Becker said in <a href="https://www.banking.senate.gov/imo/media/doc/Becker%20Testimony%205-16-23.pdf" target="_blank" rel="noopener">remarks</a> before the Senate Banking Committee that the firm was “adequately capitalized” before the sale of a portfolio that had diminished in value due to Federal Reserve actions to increase the target federal funds rate, which in turn raised interest rates across the economy. He added that withdrawals started as Silvergate Bank, a company that served cryptocurrency users, decided to “voluntarily wind down and liquidate,” inducing fears among Silicon Valley Bank depositors.
The comments differed from a landmark <a href="https://www.dailywire.com/news/federal-reserve-reveals-why-silicon-valley-bank-collapsed" target="_blank" rel="noopener">report</a> published last month by the Federal Reserve, which concluded that the implosion of the bank was a “textbook case of mismanagement” as senior leadership “failed to manage basic interest rate and liquidity risk” and board members “failed to oversee senior leadership and hold them accountable.”
Former Signature Bank President Eric Howell meanwhile <a href="https://www.banking.senate.gov/imo/media/doc/Howell%20Testimony%205-16-23.pdf" target="_blank" rel="noopener">insisted</a> to lawmakers that his firm was “well-capitalized, solvent, and had sufficient borrowing capacity” before the FDIC seized control of the company. Former Signature Bank Chairman Scott Shay <a href="https://www.banking.senate.gov/imo/media/doc/Shay%20Testimony%205-16-23.pdf" target="_blank" rel="noopener">added</a> that the volatility in the cryptocurrency sector likewise translated to panic among the company’s depositors and prompted the rapid withdrawals despite a “solid plan to continue in operation.”
Lawmakers referenced the analysis from the Federal Reserve as they contended that Becker and the other executives should return their executive compensation. Sen. Elizabeth Warren (D-MA) said she filed legislation that would <a href="https://twitter.com/SenWarren/status/1658529112737079296" target="_blank" rel="noopener">confiscate</a> payment from executives who “blow up their banks,” while Sen. Tim Scott (R-SC) noted that Silicon Valley Bank had several <a href="https://twitter.com/SenatorTimScott/status/1658532908775223298" target="_blank" rel="noopener">open</a> risk management positions at the time of the company’s failure, asserting that managers were “more focused on chasing profitability than stability.”
President Joe Biden previously <a href="https://www.dailywire.com/news/biden-calls-for-crackdown-on-senior-bank-executives" target="_blank" rel="noopener">said</a> that members of Congress should increase federal authority to “hold senior management accountable when their banks fail” or enter into the control of regulators. Current law allows the FDIC to prohibit bank executives from receiving new positions at other banks if they engage in “willful or continuing disregard for the safety and soundness” of their institution; administration officials called on lawmakers to “strengthen this tool by lowering the legal standard for imposing this prohibition,” as well as expand authorization for the FDIC to collect fines “when their actions contribute to the failure of their firms.”
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Other regional banks, such as PacWest and Western Alliance, have witnessed significant turmoil in the stock market and increased withdrawal levels in recent weeks. Nearly half of Americans are presently concerned about the security of their bank deposits, according to a recent <a href="https://www.dailywire.com/news/confidence-in-american-banks-is-low-amid-continued-financial-sector-tumult" target="_blank" rel="noopener">survey</a> from Gallup, even as the FDIC will continue backing small accounts.

Elizabeth Warren

Executives Behind Failed Banks Tell Lawmakers Why The Companies Collapsed

Executives Behind Failed Banks Give Their Account Of Why The Companies Collapsed

Banks

Congress

Senate

Silicon Valley Bank

American households currently have nearly $17.1 trillion in consumer debt, with <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">balances</a> standing $2.9 trillion higher than before the lockdown-induced <a href="http://dailywire.com/topic/recession" target="_blank" rel="noopener">recession</a>, according to <a href="https://www.newyorkfed.org/newsevents/news/research/2023/20230515" target="_blank" rel="noopener">data</a> released on Monday from the <a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> Bank of New York.
Household debt in the first quarter of 2023 increased $1.2 trillion from the first quarter of 2022. Mortgage debt, typically the largest category of consumer loans maintained by households, now surpasses $12.0 trillion, a phenomenon that comes as the elevated interest rate environment forces prospective homebuyers to assume considerably higher mortgage rates. Student and automotive debt are each $1.6 trillion, while credit card debt neared $1.0 trillion.
Shares of mortgage debt in serious delinquency doubled from 0.3% to 0.6% over the past year, while automobile debt in serious delinquency rose from 1.6% to 2.3%, and credit card debt in serious delinquency rose from 3.0% to 4.6%.
Mortgage debt, which rose $864 billion over the past year, composed 71.7% of the overall household debt increase. Automobile debt rose $93 billion, and credit card debt rose $145 billion, marking 7.7% and 12.0% shares of the broader debt increase, while student loan debt was comparatively flat.
High mortgage rates, caused by actions from the Federal Reserve meant to combat inflation, have significantly decreased affordability for potential homebuyers in recent months. The 30-year fixed mortgage rate was below 3% in the two years after the lockdowns, according to <a href="https://fred.stlouisfed.org/series/MORTGAGE30US" target="_blank" rel="noopener">data</a> from government-backed mortgage company Freddie Mac, but the rate has risen to 6.4% as of last week, with the increases coming after the Federal Reserve hiked interest rates.
“The pandemic boom in purchase originations was driven by many factors: low mortgage rates, strong household balance sheets, and an increased demand for housing,” analysts from the Federal Reserve said in an <a href="https://libertystreeteconomics.newyorkfed.org/2023/05/the-great-pandemic-mortgage-refinance-boom/" target="_blank" rel="noopener">analysis</a>. “Homeowners who refinanced in 2020 and 2021 benefitted from historically low interest rates and will be enjoying low financing costs for decades ­to come.”
Median home sale prices increased from $322,600 in the second quarter of 2020 to $467,700 in the fourth quarter of 2022, according to <a href="https://fred.stlouisfed.org/series/MSPUS" target="_blank" rel="noopener">data</a> from the Department of Housing and Urban Development, followed by a moderate decline to $436,800 in the fourth quarter of 2023. Lower home prices in recent months come as a result of the high mortgage rates, which apply downward pressure on demand as families delay new home purchases.
Wage increases have failed to keep pace with inflation over the past two years, pressing consumers to finance more of their household expenditures with debt. The average age of cars and light-duty trucks on American roads has reached record levels as buyers likewise delay new purchases over elevated price levels and interest rates, according to a <a href="https://www.dailywire.com/news/americans-delay-buying-new-cars-as-long-as-possible-to-avoid-high-prices" target="_blank" rel="noopener">report</a> from S&amp;P Global.
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Americans are more pessimistic about their finances than at any time since the Great Recession: half of the respondents in a February <a href="https://www.dailywire.com/news/more-americans-say-they-are-worse-off-financially-than-any-other-time-since-the-great-recession" target="_blank" rel="noopener">survey</a> from Gallup said they are “financially worse off” compared to one year ago, while low-income Americans were the most likely to say they have less robust finances since last year.
Economic growth declined to a 1.1% annualized rate in the first quarter, marking a significant decrease as economic headwinds slow recovery from the recession and the interest rate hikes decrease consumer demand, according to an <a href="https://www.dailywire.com/news/american-economic-growth-slows-to-1-1-in-first-quarter" target="_blank" rel="noopener">estimate</a> from the Bureau of Economic Analysis.

Household Debt

American Consumer Debt Hits Record Level, Rises Nearly $3 Trillion Since Lockdowns

American Consumer Debt Hits Record Level

Recession

<a href="http://dailywire.com/topic/stock-market" target="_blank" rel="noopener">Shares</a> for PacWest plummeted on Thursday after the <a href="http://dailywire.com/topic/banks" target="_blank" rel="noopener">bank</a> revealed that deposits fell considerably last week amid broader <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">concerns</a> with the financial sector.
PacWest, which is based in Beverly Hills, California, and also serves clients in Arizona, Utah, and Texas, witnessed deposits fall 17% between the end of December and the end of March, from $34.0 billion to $28.0 billion, according to a first quarter earnings <a href="https://www.pacwestbancorp.com/news-market-data/news/news-details/2023/PacWest-Bancorp-Announces-Results-for-the-First-Quarter-2023/default.aspx#:~:text=March%2031%2C%202023-,ADJUSTED%20EARNINGS,the%20first%20quarter%20of%202023." target="_blank" rel="noopener">report</a> from the company. Another securities <a href="https://www.sec.gov/ix?doc=/Archives/edgar/data/1102112/000162828023017382/pacw-20230331.htm" target="_blank" rel="noopener">release</a> published on Thursday indicated that deposits declined another 9.5% last week, with most of the decreases occurring after news stories on May 4 and May 5 discussed the company’s troubles.
The document noted, however, that the bank maintains immediately available liquidity of $15.0 billion, far exceeding the $5.2 billion in uninsured deposits held at the financial institution.
News of the robust coverage ratio nevertheless failed to prevent investor concerns over the declining deposits: shares for PacWest tumbled more than 25% on Thursday as of the early afternoon, trading at $4.49 relative to $6.08 at market close on Wednesday. Stock prices for the company have therefore dropped more than 83% from the $26.68 seen on March 8, the day before the financial sector tumult.
The renewed pressure on PacWest came in the days after the <a href="https://www.dailywire.com/news/jpmorgan-chase-the-nations-largest-bank-acquires-first-republic-bank-after-government-takeover" target="_blank" rel="noopener">implosion</a> of First Republic Bank, a development which occurred weeks after Silicon Valley Bank and Signature Bank similarly collapsed, as account holders with balances above the Federal Deposit Insurance Corporation threshold at the three medium-sized banks rushed to withdraw their funds.
PacWest said in a <a href="https://www.pacwestbancorp.com/news-market-data/news/news-details/2023/Pacific-Western-Bank-Issues-Update/default.aspx" target="_blank" rel="noopener">statement</a> on May 4 that the company “has not experienced out-of-the-ordinary deposit flows following the sale of First Republic Bank and other news.”
Federal Reserve Chair Jerome Powell insisted at a press <a href="https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20230503.pdf" target="_blank" rel="noopener">conference</a> last week that the banking system is “sound and resilient” even after the volatility in early March and the collapse of First Republic Bank. “We are committed to learning the right lessons from this episode and will work to prevent events like these from happening again,” he commented.
Interest rate hikes from the Federal Reserve contributed to the substantial losses incurred by Silicon Valley Bank as executives sold a long-term bond portfolio to cover withdrawals. Assets in the banking system are now $2 trillion lower than their book value as a result of the rate hikes, according to a <a href="https://www.dailywire.com/news/banking-system-is-sound-and-government-will-back-deposits-at-smaller-banks-yellen-promises" target="_blank" rel="noopener">study</a> from analysts at the National Bureau of Economic Research.
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Western Alliance, another regional bank based in Phoenix, Arizona, serves clients throughout the western part of the country and had likewise seen tumult on the stock market after the sale of First Republic Bank. Two people briefed on discussions at Western Alliance claimed in a <a href="https://www.ft.com/content/bf2bd5af-1e55-4be3-b29d-f5cae9533b29" target="_blank" rel="noopener">report</a> for the Financial Times that the firm was considering options such as a full or partial sale, an assertion that the bank called “absolutely false” as a spokesperson contended that the article was “an instrument of short sellers and as a conduit for spreading false narratives about a financially sound and profitable bank.”
Western Alliance confirmed in a <a href="https://www.businesswire.com/news/home/20230511005521/en/Western-Alliance-Bancorporation-Issues-Deposit-Update" target="_blank" rel="noopener">statement</a> on Thursday that deposits have slightly increased since the beginning of last week while “readily available liquidity is approximately double the amount of uninsured deposits” as of Tuesday. Share prices for the company were relatively flat on Thursday as of the early afternoon, trading at $27.60 relative to the $27.48 closing price on Wednesday, despite a 61% decline from $71.56 on March 8.

PacWest

Regional Bank Stock Plummets After Company Reveals Deposits Dropped Again

PacWest Stock Plummets After Company Reveals Deposits Dropped Again

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