Institutional <a href="http://dailywire.com/topic/wall-street" target="_blank" rel="noopener">investors</a> are more concerned with <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">stagflation</a> than a <a href="http://dailywire.com/topic/recession" target="_blank" rel="noopener">recession</a> next year, according to a <a href="https://www.im.natixis.com/us/research/institutional-investor-survey-2023-outlook" target="_blank" rel="noopener">survey</a> conducted by Natixis.
The investment bank found that 65% of institutions see stagflation, which refers to economic stagnation combined with inflationary pressures, as a more significant threat than a recession. Rising price levels are still seen as the top overall risk for the year ahead; 69% of investors identified inflation as the greatest threat to their portfolios.
“The market scenario projected for 2023 may look vastly different from what institutions have experienced in the past decade, but few anticipate it leading to significant changes in allocation strategy,” the survey analysis explained. “While there is little planned in the way of large allocation shifts, many anticipate significant adjustments within asset classes to position portfolios for the year ahead.”
Despite the risk of stagflation, recession, and other economic calamities, investors retain a remarkably bullish outlook for most asset classes. A majority believe private equity, the bond and stock markets, and private debt hold upside potential as interest rates rise, while more significant majorities are bearish on both residential and commercial real estate, as well as cryptocurrencies.
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The companies, representing more than $20 trillion in combined assets under management, believe that war poses the greatest economic threat for next year. While 57% of overall respondents listed conflict as an issue, roughly 68% of European respondents listed war as the most salient threat.
JPMorgan Chase CEO Jamie Dimon likewise <a href="https://www.dailywire.com/news/jpmorgan-ceo-jamie-dimon-predicts-when-americans-savings-will-run-dry" target="_blank" rel="noopener">pointed</a> to geopolitical turmoil as an important consideration for economic actors during a recent interview. Members of the G7 and the European Union <a href="https://www.dailywire.com/news/russia-balks-as-g7-european-union-implement-oil-price-cap" target="_blank" rel="noopener">coordinated</a> this week to limit the sale price of Russian seaborne oil exports at $60 per barrel worldwide; many European nations have witnessed soaring energy prices as a result of nixed Russian natural gas shipments.
Strife between the United States and China is also worrying investors; 65% believe Chinese geopolitical ambitions will cause a bifurcation of the global economy between the two superpowers, while 74% believe such ambitions lower the appeal of investing in the nation.
“China is chief among emerging market concerns. Two-thirds of institutions globally think emerging market investments are overly dependent on China,” the Natixis analysis continued. “In an era in which China is flexing its political influence, institutions worry about how it will impact investments.”
Beyond risks induced by international conflict, respondents identified central bank policy errors as the second-largest threat. Institutions such as the Federal Reserve Bank of the United States and the Bank of England have been reversing loose monetary policy regimes established in the wake of the lockdown-induced recession. Federal Reserve officials have <a href="https://www.dailywire.com/news/federal-reserve-hikes-interest-rates-three-quarters-of-a-point" target="_blank" rel="noopener">raised rates</a> by three-quarters of a percentage point on four consecutive occasions, leading to volatility in the American housing market and raising the cost of borrowing money for consumers and businesses.
Roughly 53% of investors are examining trends related to consumer spending as a primary indicator of whether economic “growth is back on track.” Dimon also predicted that savings accumulated during the recession will deplete by the middle of next year. Beyond consumer spending, 49% of investors believe that business spending tops the list of growth indicators, while 47% and 43% respectively said the same about employment and productivity.

Times Square As U.S. Stocks Climb On Earnings

Stagflation Risk More Concerning Than An Outright Recession, Investors Believe

Investors Lay Out Biggest Economic Risks For Next Year

Economy

Inflation

Recession

Stock Market

U.S.

Wall Street

<a href="https://www.dailywire.com/topic/jp-morgan" target="_blank" rel="noopener">JPMorgan Chase</a> CEO <a href="https://www.dailywire.com/topic/jamie-dimon" target="_blank" rel="noopener">Jamie Dimon</a> predicted that robust consumer spending may run dry toward the middle of next year.
During a Tuesday <a href="https://www.youtube.com/watch?v=40Md3SQ6ZGs" target="_blank" rel="noopener">interview</a> with CNBC, the seasoned executive commented on a variety of market phenomena and noted that the United States <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">economy</a> is currently the strongest in the world. “If you look in the short run, the consumer is spending 10% more than last year and 40% more than pre-COVID,” he said. “That’s a tremendous sum of money, and they have a trillion and a half dollars in their checking accounts more than pre-COVID.”
Households have indeed been spending beyond their means as nominal wages rise more slowly than price levels. The total amount of consumer loans has increased by $300 billion since the beginning of last year, according to <a href="https://fred.stlouisfed.org/series/CONSUMER" target="_blank" rel="noopener">data</a> from the Federal Reserve. Meanwhile, the personal savings rate has dropped from 20% to nearly 2% over the same period, according to <a href="https://fred.stlouisfed.org/series/PSAVERT" target="_blank" rel="noopener">data</a> from the Bureau of Economic Analysis, marking a significant decline from typical rates witnessed before the lockdown-induced recession.
Consumers are therefore limited in their capacity to maintain current spending levels. “Inflation is eroding everything … and that trillion and a half dollars will run out sometime mid-year next year,” Dimon continued. “When you’re looking out forward, those things may very well derail the economy and cause a mild or hard recession that people worry about.”
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Dimon, widely regarded as one of the most powerful business leaders on Wall Street, made headlines earlier this year for admonishing fellow bankers to <a href="https://www.dailywire.com/news/top-banker-brace-yourself-for-looming-economic-hurricane" target="_blank" rel="noopener">brace themselves</a> for a looming economic “hurricane,” revealing that his financial institution took measures to be “very conservative” with its balance sheet.
Dimon also pointed to geopolitical turmoil such as the Russian invasion of Ukraine as an important consideration for economic actors. Members of the G7 and the European Union <a href="https://www.dailywire.com/news/russia-balks-as-g7-european-union-implement-oil-price-cap" target="_blank" rel="noopener">moved</a> to cap the price of Russian seaborne oil exports this week at $60 per barrel worldwide; many European nations have witnessed soaring energy prices as a result of nixed Russian natural gas shipments.
“You have this economy, but then you have oil, food, fertilizer, war, humanitarian crisis. We have not had a war in Europe like this since 1945,” Dimon remarked. “A lot of emerging market economies, that a lot of people don’t focus on, are going to pay a heavy price for the strong dollar, higher rates, and higher oil prices.”
Various protest movements have spread through the developing world as businesses and consumers grow increasingly constrained by rising fuel and energy costs. Farmers in nations such as Greece, Peru, and Sri Lanka launched <a href="https://www.dailywire.com/news/experts-warn-of-impending-global-food-shortage-that-could-lead-to-social-unrest-riots" target="_blank" rel="noopener">demonstrations</a> in cities as a result of high fertilizer prices, leading the government of the latter nation to flee abroad.
Dimon also cited the rollback of loose monetary policy from the Federal Reserve as a significant phenomenon. He predicted that the central bank would spend “three to six months” holding rates at 5% before continuing efforts to battle inflation.
Recent employment data showing <a href="https://www.dailywire.com/news/unemployment-down-robust-labor-market-as-holidays-approach-jobs-report-shows" target="_blank" rel="noopener">high demand</a> among businesses recruiting new workers will likely lead monetary policymakers to continue hiking interest rates. Some analysts have <a href="https://www.dailywire.com/news/elon-musk-agrees-with-a-furious-jeremy-siegel-that-fed-actions-which-blew-up-the-stock-market-make-absolutely-no-sense" target="_blank" rel="noopener">criticized</a> the Federal Reserve for causing undue harm through their zeal to manage inflation soon after a prolonged increase in the money supply.

Key Speakers At IIF Annual Membership Meeting

JPMorgan CEO Jamie Dimon Predicts When Americans’ Savings Will Run Dry

JPMorgan Chase CEO Makes A Number Of Predictions About The Economy

Jamie Dimon

Ukraine-Russia War

<a href="http://dailywire.com/topic/business" target="_blank" rel="noopener">Corporate</a> leaders have lackluster expectations for the new year as <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">macroeconomic</a> headwinds continue, according to data from Business Roundtable’s CEO Economic Outlook Survey.
Phenomena such as persistent <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">inflation</a> and bottlenecked <a href="http://dailywire.com/topic/supply-chain" target="_blank" rel="noopener">supply chains</a> caused the index to fall from 84 in the third quarter of 2022 to 73 in the fourth quarter of 2022, marking the first decline below long-run averages since the third quarter of 2020. Executives reported a 17-point decrease in hiring plans, a 7-point reduction in plans for capital investment, and an 8-point drop in expectations for sales.
“With continued supply chain challenges and inflation uncertainty, many CEOs remain cautious about domestic plans and expectations for the next six months,” Business Roundtable Chair and General Motors CEO Mary Barra said in a <a href="https://www.businessroundtable.org/media/ceo-economic-outlook-index" target="_blank" rel="noopener">press release</a>. “Sound policy action in the short term will yield long-term economic benefits and lay a solid foundation for our growth and competitiveness.”
When asked about the greatest cost pressures facing their companies, 49% identified labor costs, while 15% reported material expenses and 14% cited supply chain disruptions. Participation in the labor force has trailed levels seen before the lockdown-induced recession, contributing to <a href="https://www.dailywire.com/news/unemployment-down-robust-labor-market-as-holidays-approach-jobs-report-shows" target="_blank" rel="noopener">imbalances</a> between the supply and demand of workers. The number of positions available in the job market continues to exceed the number of workers available to fill them.
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Robust employment will likely cause Federal Reserve officials to persist with decisions to hike target interest rates. Some analysts have <a href="https://www.dailywire.com/news/elon-musk-agrees-with-a-furious-jeremy-siegel-that-fed-actions-which-blew-up-the-stock-market-make-absolutely-no-sense" target="_blank" rel="noopener">criticized</a> policymakers for causing harm through their excessive zeal to manage inflation soon after a prolonged increase in the money supply.
Business Roundtable CEO Joshua Bolten noted that the central bank “has been pumping the brakes to rein in inflation, and the survey results are unsurprising in that context.” He encouraged lawmakers to “undertake pro-growth policies” such as expanding research and development commitments and reforming the energy permitting system to catalyze infrastructure projects.
Executives forecasted gross domestic product to witness 1.2% growth in 2023, a figure well below the most recent pre-recession 2.3% growth in 2019. The <a href="https://www.businessroundtable.org/media/ceo-economic-outlook-index/ceo-economic-outlook-index-q4-2021" target="_blank" rel="noopener">survey</a> conducted by Business Roundtable during the fourth quarter of 2021 showed that executives had predicted 3.9% growth for this year; however, the economy contracted in the first two quarters of 2022, implying that the United States entered a technical recession.
Several companies have announced widespread dismissals in recent months. Technology conglomerates such as Amazon, Microsoft, and Tesla have announced <a href="https://www.dailywire.com/news/recession-fears-lead-big-tech-companies-to-pause-hiring-cut-jobs" target="_blank" rel="noopener">hiring pauses or layoffs</a> for their corporate offices, citing broader economic uncertainty and the probability of a prolonged contraction. Media and entertainment firms such as Disney and Gannett experienced a similar <a href="https://www.dailywire.com/news/entertainment-giants-and-media-companies-announce-massive-layoffs" target="_blank" rel="noopener">bout of dismissals</a>. Amazon and FedEx recently revealed efforts to <a href="https://www.dailywire.com/news/two-critical-companies-will-lay-off-furlough-employees-during-holiday-shopping-season" target="_blank" rel="noopener">dismiss workers</a> ahead of the holiday season, which is typically a busy time for companies involved in the sale and transportation of consumer goods.
The most recent <a href="https://www.dailywire.com/news/unemployment-down-robust-labor-market-as-holidays-approach-jobs-report-shows" target="_blank" rel="noopener">payroll and unemployment</a> data from the Bureau of Labor Statistics revealed that companies added positions in November even as average hourly earnings rose 5.1% year-over-year. The most recent price level <a href="https://www.bls.gov/news.release/cpi.nr0.htm" target="_blank" rel="noopener">report</a> from the Bureau of Labor Statistics, however, showed 7.7% headline inflation as of October. Inflation data has not yet been released for November.

5CFA1D23-E242-4828-BB61-7F26031CF749_1_201_a

CEOs Are Pessimistic Heading Into The New Year

Business Leaders Are Expecting A Somewhat Stagnant 2023

Business

Americans are now saving the smallest portion of their earnings in nearly two decades, according to <a href="https://www.bea.gov/news/2022/personal-income-and-outlays-october-2022" target="_blank" rel="noopener">data</a> released on Thursday by the Bureau of Economic Analysis.
Even as personal outlays increased by $154.2 billion in October, households only saved 2.3% of their disposable income — the lowest level since 2005.
Americans generally saved between 7% and 9% of their incomes in the years before the lockdown-induced recession in February 2020, according to <a href="https://fred.stlouisfed.org/series/PSAVERT" target="_blank" rel="noopener">data</a> from the Bureau of Economic Analysis. Following various stimulus measures intended to bolster economic activity, savings rates soared beyond 10% and at times above 30% between April 2020 and March 2021.
The more recent declines, however, occur as <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">price levels</a> rise faster than nominal wages, constituting an overall decrease in purchasing power. Americans have therefore turned to credit and savings to fuel their expenses. Even as savings rates fell, the total level of consumer loans increased by $300 billion between January 2021 and October 2022, according to <a href="https://fred.stlouisfed.org/series/CONSUMER" target="_blank" rel="noopener">data</a> from the Federal Reserve.
David Bahnsen, the founder of Manhattan-based wealth management firm The Bahnsen Group, told The Daily Wire that consumer spending has not declined historically until consumers see lower wages or lose access to credit. “Wages are increasing, not decreasing, so I do not imagine we are close to a real substantive threat to the consumer,” he remarked.
The most recent <a href="https://www.dailywire.com/news/unemployment-down-robust-labor-market-as-holidays-approach-jobs-report-shows" target="_blank" rel="noopener">payroll and unemployment</a> data from the Bureau of Labor Statistics revealed that companies added positions in November even as average hourly earnings rose 5.1% year-over-year. The most recent price level <a href="https://www.bls.gov/news.release/cpi.nr0.htm" target="_blank" rel="noopener">report</a> from the Bureau of Labor Statistics, however, showed 7.7% headline inflation as of October. Inflation data has not yet been released for November.
When asked whether the personal savings rate could turn negative, Bahnsen noted that such a phenomenon has not occurred either before or after the 2008 financial crisis. “Yet I think it is moot,” he commented. “A savings rate this low is awful because it exposes households to future distress, it indicates poor defense against tough times, and it removes the building block for future productive investment.”
An August <a href="https://www.dailywire.com/news/three-quarters-of-americans-say-they-are-tightening-their-belts-to-deal-with-recession" target="_blank" rel="noopener">survey</a> from Bankrate found that Americans are changing their behavior as various economic pressures persist. Among the 74% of respondents who are taking steps to prepare for a recession, 47% said they would reduce discretionary spending, 35% said they would save more for emergencies, and 30% said they would pay down credit card debt.
Despite the professed desire to tighten their belts, Americans participated in the most robust opening weekend for the holiday shopping season on record. As many as 196.7 million consumers shopped during the five days between Thanksgiving and Cyber Monday, according to <a href="https://www.dailywire.com/news/thanksgiving-weekend-holiday-shopping-shatters-expectations-despite-economic-headwinds" target="_blank" rel="noopener">data</a> released by the National Retail Federation, easily surpassing the group’s initial projection of 166.3 million shoppers. The typical consumer spent $325.44 on holiday-related purchases throughout the weekend, exceeding the $301.27 average recorded last year.
National Retail Federation CEO Matthew Shay remarked during a press call that many households have been “a bit more cautious” with their expenditures, while some families are “taking on additional debt” and “tapping into savings” to meet monthly expenses and cover additional spending during the holiday season.

Savings from broken piggy bank.

Personal Savings Rate Plummets To Lowest Level Since 2005

American Savings Rates Plummet To Lowest Level In Nearly Two Decades

<a href="http://dailywire.com/topic/new-york-city" target="_blank" rel="noopener">New York City</a> is now one of the two most expensive cities in the world, according to <a href="https://pages.eiu.com/rs/753-RIQ-438/images/worldwide-cost-of-living-2022-summary.pdf?mkt_tok=NzUzLVJJUS00MzgAAAGIciatp7-0KKsSdx3bkI5QhffDBl493C8hHzubgm5HHLHfmygVF7w38gn-SVZKpzj7qIFUqyo_hQ_YPcfYWKoXfsJ0JumrAXyB7pM4BCvZ0SkWeg" target="_blank" rel="noopener">data</a> released by the Economist Intelligence Unit.
The Big Apple, where the average resident <a href="https://www.dailywire.com/news/average-manhattan-rent-surges-past-5000-per-month" target="_blank" rel="noopener">pays</a> as much as $5,000 each month in rent, is tied with the city-state of Singapore, which has held the top position for eight of the last 10 years as <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">inflation</a> continues to grip metropolitan areas across the globe. The two cities were followed by Tel Aviv, Israel; Hong Kong; and Los Angeles, California.
“A stronger currency will tend to see a city rise in the rankings, as prices are higher when expressed in international common currency,” the Economist Intelligence Unit said of New York and Singapore, two of the planet’s most important financial hubs. “Structural factors such as competition or high demand play a key role in determining the cost of living as well.”
Rounding out the world’s most expensive cities are Zurich and Geneva, Switzerland; San Francisco, California; Paris, France; Copenhagen, Denmark; and Sydney, Australia. Beyond home and apartment rents, the outlet considered prices for food, utilities, clothing, transportation, schooling, and other essentials.
The largest upward movers in the rankings were the Russian cities of Moscow and St. Petersburg. Exchange rates for the ruble have increased precipitously because of suppressed imports, capital controls, and European nations making natural gas payments with the currency. For similar reasons, five of the biggest downward movers were cities in Europe; according to the outlet, “the energy crisis that has followed Russia’s invasion of Ukraine is tipping the continent into recession and depreciating currencies” against the dollar. Indeed, the euro <a href="https://www.dailywire.com/news/global-turmoil-makes-euro-cheap-for-americans" target="_blank" rel="noopener">reached parity</a> with the dollar this year as the continent’s economy struggles.
The cheapest metropolitan areas, however, were the Middle Eastern cities of Damascus, Syria; Tripoli, Libya; and Tehran, Iran. Cities in southern Asia, such as Colombo, Sri Lanka; Chennai, India; and Karachi, Pakistan, were also among the least expensive.
Cities in the United States &#8212; including Atlanta, Georgia, and Boston, Massachusetts &#8212; account for six of the top global movers. Apartment rental markets <a href="https://www.dailywire.com/news/rental-market-remains-brutal-nationwide-cools-in-some-large-cities" target="_blank" rel="noopener">remain heated</a> across the country, with the national average rent for a one-bedroom apartment surpassing $1,500 earlier this year.
Rising mortgage rates induced by efforts from the Federal Reserve to control inflation by hiking target federal funds rates have caused a spillover effect into rental markets. The National Association of Home Builders’ Housing Opportunity Index <a href="https://www.dailywire.com/news/housing-affordability-plummets-to-new-low-with-all-the-least-affordable-housing-markets-in-california" target="_blank" rel="noopener">shows</a> that a mere 42.2% of American families earning $90,000 annually were able to afford new and existing homes sold between the beginning of July and the end of September.
“The housing market and affordability conditions have continued to weaken throughout the year as rising mortgage rates, supply chain bottlenecks and a lack of skilled construction workers continue to push housing costs higher,” National Association of Home Builders Chairman Jerry Konter said in a <a href="https://www.nahb.org/news-and-economics/press-releases/2022/11/housing-affordability-falls-to-more-than-10-year-low-as-rising-interest-rates-take-a-toll" target="_blank" rel="noopener">statement</a>. “Entry-level buyers are particularly hurt, as more of them are getting priced out of the market.”

Aerial view of Loser Manhattan skyline, New York City, USA

New York Tops Ranking Of The World’s Most Expensive Cities To Live In

New York Tops Global Rankings Of Most Expensive Cities

Housing

New York City

Real estate

World

<a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> Chair Jerome Powell remarked during a Wednesday speech that central bankers will likely slow their implementation of contractionary monetary policy this month.
In an attempt to stimulate the <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">economy</a> after the onset of the lockdown-induced <a href="http://dailywire.com/topic/recession" target="_blank" rel="noopener">recession</a>, policymakers <a href="https://www.dailywire.com/news/federal-reserve-releases-plan-to-more-urgently-address-high-inflation" target="_blank" rel="noopener">established</a> a 0% target interest rate and began acquiring government bonds from market actors. Powell and other Federal Open Market Committee members have since raised rates by 0.75% on four consecutive occasions.
During a <a href="https://www.federalreserve.gov/newsevents/speech/powell20221130a.htm" target="_blank" rel="noopener">speech</a> at the Brookings Institution’s Hutchins Center, Powell said that policymakers will “moderate the pace of our rate increases” as soon as December. “Monetary policy affects the economy and inflation with uncertain lags, and the full effects of our rapid tightening so far are yet to be felt,” he said. “Given our progress in tightening policy, the timing of that moderation is far less significant than the questions of how much further we will need to raise rates to control inflation, and the length of time it will be necessary to hold policy at a restrictive level.”
Powell also acknowledged that officials still intend to maintain rates “at a restrictive level for some time,” as “history cautions strongly against prematurely loosening policy.” The Federal Reserve is charged with maintaining stable inflation and low unemployment.
Rate hikes from the central bank have the impact of decreasing macroeconomic demand, as Powell repeatedly emphasized. Interest rates across the economy, such as <a href="https://www.dailywire.com/news/pending-home-sales-plummet-as-housing-market-is-rocked-by-soaring-mortgage-rates" target="_blank" rel="noopener">mortgage rates</a> and the premiums faced by businesses and consumers to borrow money, have quickly risen amid the rollback of the quantitative easing regime.
Some analysts have <a href="https://www.dailywire.com/news/elon-musk-agrees-with-a-furious-jeremy-siegel-that-fed-actions-which-blew-up-the-stock-market-make-absolutely-no-sense" target="_blank" rel="noopener">criticized</a> monetary policymakers for causing harm through their excessive zeal to manage inflation soon after a prolonged increase in the money supply. Tesla and SpaceX CEO Elon Musk recently <a href="https://www.dailywire.com/news/elon-musk-warns-a-severe-recession-will-be-more-likely-if-federal-reserve-doesnt-take-action-on-rate-hikes" target="_blank" rel="noopener">said</a> that the Federal Reserve is “massively amplifying the probability of a severe recession” and “needs to cut interest rates immediately.”
Though Powell acknowledged that the October inflation <a href="https://www.dailywire.com/news/breaking-october-inflation-surges-but-less-than-expected-energy-prices-up-ahead-of-winter" target="_blank" rel="noopener">report</a> from the Bureau of Labor Statistics had an unexpected downside, he observed that the two preceding months contained upside surprises. “Despite the tighter policy and slower growth over the past year, we have not seen clear progress on slowing inflation,” he commented.
Among other concerns, Powell noted that <a href="https://www.dailywire.com/news/americans-continue-to-opt-out-of-the-workforce" target="_blank" rel="noopener">labor force participation</a> rates continue to lag following the lockdown-induced recession. He remarked that the “participation gap” is mostly a result of “excess retirements” that occurred beyond “what would have been expected from population aging alone,” even as younger individuals largely return to the workforce.
“In the labor market, demand for workers far exceeds the supply of available workers,” Powell continued, adding that nominal wages have grown faster than the rate expected under 2% inflation. “Thus, another condition we are looking for is the restoration of balance between supply and demand in the labor market.”
The logic behind recent rate hikes rests upon the intentional reduction in demand to match lower levels of supply, constituting an approach that some economists <a href="https://www.dailywire.com/news/sound-fiscal-policy-is-missing-from-the-battle-against-inflation-report-argues" target="_blank" rel="noopener">question</a>. Powell, recognizing that the Federal Reserve does not advocate for specific legislative measures approved or rejected by elected lawmakers, noted broadly that “policies to support labor force participation could, over time, bring benefits to the workers who join the labor force and support overall economic growth.”

Federal Reserve Chair Powell Speaks At The Brookings Institution

Federal Reserve Chair Jerome Powell Discusses Future Slowdown Of Rate Hikes

Jerome Powell Says Rate Hikes Will Slow Next Month

Federal Reserve

Interest Rates

The opening of the holiday shopping season was the most robust on record, even in the face of <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">inflationary</a> pressures, <a href="http://dailywire.com/topic/supply-chain" target="_blank" rel="noopener">supply chain</a> bottlenecks, and other <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">economic</a> headwinds.
A record 196.7 million Americans shopped online and in person during the five days between Thanksgiving and Cyber Monday, according to data released by the National Retail Federation, shattering the trade association’s initial projection of 166.3 million shoppers during the first weekend of the holiday season.
“The Thanksgiving holiday shopping weekend is a tradition treasured by many American families,” National Retail Federation CEO Matthew Shay remarked in a <a href="https://nrf.com/media-center/press-releases/record-1967-million-consumers-shop-over-thanksgiving-holiday-weekend" target="_blank" rel="noopener">press release</a>. “As inflationary pressures persist, consumers have responded by stretching their dollars in any way possible. Retailers have responded accordingly, offering shoppers a season of buying convenience, matching sales and promotions across online and in-store channels to accommodate their customers at each interaction.”
The typical consumer spent $325.44 on holiday-related purchases throughout the weekend, most of which was spent on gifts, exceeding the $301.27 average recorded last year. Americans were most likely to shop online or visit a department store.
Shay said during a press call attended by The Daily Wire that many households have generally been “a bit more cautious” with their expenditures, although they continue to spend on necessities. Some families are “taking on additional debt” and “tapping into savings” to meet monthly expenses and cover additional spending during the holiday season. He noted that overall retail sales have increased every month since May 2020, implying that the sector has “incredible resilience” despite multiple economic constraints.
A similar <a href="https://www.dailywire.com/news/black-friday-breaks-revenue-record-as-consumers-endure-high-inflation" target="_blank" rel="noopener">report</a> from Adobe Analytics found that households are projected to spend $210 billion this season, exceeding the $205 billion spent in 2021 and the $188 billion spent in 2020. Companies earned $9.1 billion this year on Black Friday alone.
Shay also expressed concern at the beginning of the call over a pending rail strike that could cripple supply chain operations ahead of the holidays. “Any slowdown, stoppage, or delay in rail transit of goods and people in this country would be devastating for our economy and for American households,” Shay continued. “We certainly encourage Congress… to move quickly to remove this uncertainty so we can all move on without this hanging over our heads as we get into the last few weeks of the year.”
Hundreds of business associations recently <a href="https://www.dailywire.com/news/business-groups-demand-congress-step-in-to-avoid-certain-economic-destruction-from-rail-strike-ahead-of-holiday-season" target="_blank" rel="noopener">asked</a> leaders of both major parties to intervene ahead of the holidays. President Joe Biden likewise <a href="https://www.dailywire.com/news/white-house-calls-for-congressional-intervention-to-avoid-potentially-crippling-rail-strike" target="_blank" rel="noopener">demanded</a> that Congress immediately move to “avert a potentially crippling national rail shutdown” in a Monday statement. “At this critical moment for our economy, in the holiday season, we cannot let our strongly held conviction for better outcomes for workers deny workers the benefits of the bargain they reached, and hurl this nation into a devastating rail freight shutdown,” he remarked.
SMART Transportation Division, a union representing rail conductors, announced last week that members <a href="https://www.dailywire.com/news/rail-strike-threat-returns-as-union-group-rejects-latest-offer" target="_blank" rel="noopener">rejected</a> the tentative agreement, which would produce the largest wage hike for the industry in four decades. Freight rail accounts for 40% of long-distance shipping volume, according to a <a href="https://rilastagemedia.blob.core.windows.net/rila-web/rila.web/media/media/pdfs/supply%20chain/rila-rail-labor-dispute.pdf" target="_blank" rel="noopener">report</a> from the Retail Industry Leaders Association, including products such as chemicals used to treat wastewater and ethanol used as a component in gasoline.

Black Friday in Costa Mesa, CA

Thanksgiving Weekend Holiday Shopping Shatters Expectations Despite Economic Headwinds

Holiday Shopping Spend Exceeds Forecasts During Thanksgiving Weekend

Black Friday

Railroads

Supply Chain

Thanksgiving

<a href="https://www.dailywire.com/topic/black-friday" target="_blank" rel="noopener">Black Friday</a> revenues topped previous records despite elevated <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">inflation</a> and other <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">economic</a> tensions, according to <a href="https://business.adobe.com/resources/holiday-shopping-report" target="_blank" rel="noopener">data</a> from Adobe Analytics.
Businesses earned $9.1 billion in revenues on Black Friday, according to the computer software company’s business product. Americans are slated to spend $210 billion this season, exceeding the $205 billion spent in 2021 and the $188 billion spent in 2020. Among the most popular Black Friday products were Apple Macbook computers and the Xbox Series X console, while shoppers could expect the best average discounts for computers, appliances, and televisions.
Purchasing activity during the holiday shopping season has continued to expand every year since the lockdown-induced recession, although growth rates are expected to fall from 32% in 2020 and 8.6% in 2021 to 2.5% this year.
Another <a href="https://www.dailywire.com/news/rise-in-holiday-spending-to-be-outpaced-by-inflation-forecast-says" target="_blank" rel="noopener">estimate</a> from the National Retail Foundation concluded that overall holiday retail sales in the United States are expected to grow between 6% and 8% since last year to possibly surpass $960 billion. “While consumers are feeling the pressure of inflation and higher prices, and while there is continued stratification with consumer spending and behavior among households at different income levels, consumers remain resilient and continue to engage in commerce,” National Retail Federation CEO Matthew Shay said in a <a href="https://nrf.com/media-center/press-releases/nrf-predicts-healthy-holiday-sales-consumers-navigate-economic" target="_blank" rel="noopener">press release</a>. “In the face of these challenges, many households will supplement spending with savings and credit to provide a cushion and result in a positive holiday season.”
Although the higher revenues could surpass the 4.9% annual increase typically seen over the past decade, the expansion will be largely eclipsed by inflation, which increased year-over-year at a 7.7% rate as of last month, according to a <a href="https://www.bls.gov/news.release/cpi.nr0.htm" target="_blank" rel="noopener">report</a> from the Bureau of Labor Statistics. Rising price levels also impacted families preparing Thanksgiving meals, which have risen 20% in cost since last year, according to <a href="https://www.dailywire.com/news/amber-waves-of-pain-thanksgiving-dinners-will-be-20-more-expensive-this-year" target="_blank" rel="noopener">data</a> from the American Farm Bureau Association.
Winners from the critical Black Friday shopping push include Lululemon, Victoria’s Secret, and American Eagle, according to an <a href="https://finance.yahoo.com/news/black-friday-retail-winners-and-losers-175200841.html" target="_blank" rel="noopener">investor note</a> shared by Morgan Stanley, while losing brands include Hollister and Banana Republic. Successful firms garnered the attention of shoppers by maintaining assortments that resonated with consumers.
Real average hourly earnings had declined 2.8% year-over-year as of last month, according to the Bureau of Labor Statistics, implying that many Americans are utilizing savings and credit schemes, such as buy-now-pay-later solutions, during the present holiday season. Boston Consulting Group indeed said in a <a href="https://www.dailywire.com/news/how-black-friday-is-different-this-year-because-of-record-inflation" target="_blank" rel="noopener">report</a> that as many as 47% of customers are “already spending their savings on day-to-day expenses” and 20% “expect their disposable income to deteriorate in the next six months.”
Approximately 39% of respondents to a survey published by the consulting firm will “buy more at discounters or value retailers,” while 51% plan to “cut back on nonessential purchases” and 48% may “go out less to save money.” The majority of respondents expressed an intent to participate in Black Friday and said they would more strongly emphasize bargain hunting.
The United States was the only developed country evaluated by Boston Consulting Group to increase spending despite economic woes. German and French shoppers were forecasted to spend 15% less, while their counterparts in the United Kingdom will spend 18% less as soaring <a href="https://www.dailywire.com/news/this-winter-will-be-bad-for-energy-prices-now-the-real-concern-is-next-winter" target="_blank" rel="noopener">energy prices</a> induced by low renewable power output and the Russian invasion of Ukraine scourge the continent’s economy.

Shoppers fill Long Island mall on Black Friday

Black Friday Breaks Revenue Record As Consumers Endure High Inflation

Black Friday Sees Increase In Spending From Last Year

<a href="http://dailywire.com/topic/housing" target="_blank" rel="noopener">Home</a> prices could fall between 15% and 20% in the wake of elevated <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">prices</a> induced by a variety of <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">economic</a> phenomena, according to a <a href="https://www.dallasfed.org/research/economics/2022/1115" target="_blank" rel="noopener">report</a> from the Federal Reserve Bank of Dallas.
Median home sale prices surged from $322,600 in the second quarter of 2020 to $454,900 in the third 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. The increased prices over the past two years reflect higher consumer demand spurred by cheap credit, pandemic-era lifestyle changes such as virtual work and migration between states, and stimulus measures from the lockdown-induced recession, according to Federal Reserve Bank of Dallas senior research economist Enrique Martínez-García.
Prices had already been steadily increasing over the past decade as a result of constrained housing supply, while lockdowns introduced logistics bottlenecks and higher labor costs that further restricted the number of available homes, according to the report, which added that soaring home prices produced a “fear of missing out” among buyers and investors who rushed to acquire properties.
“A housing boom — such as the pandemic-era run-up — becomes frothy when the belief becomes widespread that today’s robust price increases will continue unabated … This self-fulfilling mechanism leads to exponential price growth until a price correction inevitably occurs,” Martínez-García said. “Moreover, the latest statistics … closely parallel the preceding housing bubble, with the data once again showing evidence of explosive behavior in the price-to-rent and price-to-income ratios as well.”
A plummet in home prices might complicate efforts from policymakers at the Federal Reserve to cut inflation. Central bankers have increased the target federal funds rate at four consecutive 0.75% increments. “Achieving a soft economic landing … cannot be taken for granted given that further monetary policy tightening can increase the household mortgage debt servicing burden and boost the odds of a severe house price correction,” wrote Martínez-García.
Indeed, actions from the Federal Reserve have caused mortgage rates to witness one of the most significant sustained increases in decades. The 30-year fixed mortgage rate remained below 3% for much of the past two years, according to <a href="https://fred.stlouisfed.org/series/MORTGAGE30US" target="_blank" rel="noopener">data</a> from government-backed mortgage company Freddie Mac, before rising to more than 7% earlier this month.
Mortgage rates have, in turn, impacted housing affordability even as evidence of a <a href="https://www.dailywire.com/news/home-prices-are-dropping-at-fastest-pace-ever-recorded-by-key-index" target="_blank" rel="noopener">decline in home prices</a> continues to mount. According to an <a href="https://www.dailywire.com/news/americans-now-need-a-six-figure-salary-to-afford-a-median-priced-home" target="_blank" rel="noopener">analysis</a> from real estate brokerage Redfin, monthly mortgage payments on the typical home have surged more than 45% since the same time last year to reach $2,682, implying that the annual salary necessary to afford such a property has increased from $73,668 to $107,281. Four of the five metropolitan areas seeing the greatest cost increases are in the state of Florida, which has also seen the fastest influx of residents from other states over the past two years, while all five of the most expensive cities are in California, which is among the states witnessing the fastest population decline.
Demand among potential homebuyers across the country continues to <a href="https://www.dailywire.com/news/pending-home-sales-plummet-as-housing-market-is-rocked-by-soaring-mortgage-rates" target="_blank" rel="noopener">plummet</a> due to elevated mortgage rates. The Pending Home Sales Index from the National Association of Realtors declined 10.2% in September, exceeding the 3.8% consensus from analysts while pending transactions have fallen year-over-year by 31.0%.

Houses on suburban block, Apopka, Florida

Here’s How Much Home Prices Could Soon Plunge

Home Prices Could Fall As Much As 20%

Homebuyers in the United States must earn six-figure salaries in order to afford a median-priced home, according to an <a href="https://www.redfin.com/news/homebuyer-income-increase-october-2022/" target="_blank" rel="noopener">analysis</a> from <a href="http://dailywire.com/topic/housing" target="_blank" rel="noopener">real estate</a> brokerage Redfin.
As housing prices remain elevated and the monthly mortgage payment on the typical home surges more than 45% since the same time last year to reach $2,682, the annual salary required to afford such a property has increased from $73,668 to $107,281. Average hourly wages have nominally increased 5% over the same period as <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">inflation</a> continues to erode consumer purchasing power.
“High rates are making buyers rethink their priorities, as many of them can no longer afford the home they want in the location they want,” Redfin Agent Chelsea Traylor, who works in Washington, D.C., commented. “If you had a $900,000 budget a few months ago, rising rates mean it’s now around $700,000 — and sellers aren’t dropping their prices enough to make up for the change. So buyers are searching further away from the city in more affordable areas.”
Four of the five metropolitan areas with the most rapid increase in annual income required to afford a median-priced home are located in the state of Florida. Buyers in the city of North Port must earn $131,535 to afford a $3,288 monthly payment, while those in Miami, Tampa, and Cape Coral must likewise collect six-figure salaries.
Meanwhile, the five metropolitan areas requiring the highest income are all in California, with buyers in San Francisco needing a $402,821 salary to afford a $10,071 monthly payment. A previous <a href="https://www.dailywire.com/news/housing-affordability-plummets-to-new-low-with-all-the-least-affordable-housing-markets-in-california" target="_blank" rel="noopener">report</a> from the National Association of Home Builders likewise found that all of the least affordable real estate markets in the country are in the Golden State.
Florida saw the nation’s largest net domestic migration between July 2020 and July 2021, with more than 220,000 people moving to the state, according to <a href="https://www.census.gov/newsroom/press-releases/2021/2021-population-estimates.html" target="_blank" rel="noopener">data</a> from the Census Bureau. Florida was followed by Texas and Arizona, while New York, California, and Illinois led the nation in terms of population decline.
Traylor remarked that some buyers are waiting for prices or rates to decrease before they purchase a home. “I’m encouraging buyers to think long term,” she continued. “Prices are unlikely to fall drastically in the long run, so buying a home now — if you can afford the monthly payment — will still help you build wealth over time, especially if you plan to live in it for several years. Even though rates are high, another advantage of buying now is the lack of competition and opportunity to negotiate with sellers.”
As of one year ago, homebuyers only needed six-figure salaries to afford a median-priced home in 16 metropolitan areas considered by Redfin. Today, however, such conditions exist in 45 cities.
Recent declines in housing affordability occur as mortgage rates witness one of the largest sustained increases in decades. The 30-year fixed mortgage rate remained below 3% for much of the past two years, according to <a href="https://fred.stlouisfed.org/series/MORTGAGE30US" target="_blank" rel="noopener">data</a> from government-backed mortgage company Freddie Mac. The rate surged from approximately 3% earlier this year to more than 7% earlier this month, with most of the increases occurring after the Federal Reserve hiked target interest rates at four consecutive 0.75% increments.

Housing Subdivision

Americans Now Need A Six-Figure Salary To Afford A Median-Priced Home

California Has All Of The Nation's Most Expensive Real Estate. Florida Has The Most Growth In Housing Costs.

California

Florida

Americans currently recovering from the most expensive <a href="https://www.dailywire.com/news/here-are-the-states-with-the-highest-thanksgiving-turkey-prices" target="_blank" rel="noopener">turkey</a> comas in recent memory must now prepare for complications in <a href="http://dailywire.com/topic/christmas" target="_blank" rel="noopener">Christmas</a> tree markets that will lead to higher <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">prices</a>.
Families pining for a real tree to spruce up their living rooms should have no problem finding their desired conifer. Approximately 86% of individuals responding to a <a href="https://realchristmastreeboard.com/press-releases/wholesale-growers-of-real-christmas-trees-offer-a-market-forecast-with-few-surprises/" target="_blank" rel="noopener">survey</a> from the Real Christmas Tree Board said that they had no problems finding a place nearby to purchase a tree, representing a level comparable to last year.
“We expect this year to be no different,” Real Christmas Tree Board Executive Director Marsha Gray remarked. “The grower survey tells us demand is healthy. Retailers see steady consumer interest in real Christmas trees and right now supply is pretty well matched to that interest.”
Roughly 67% of wholesale growers expect to sell all of the trees they harvest, while 55% expect to sell the same number of trees as last year. With respect to input prices, however, the vast majority of wholesalers foresaw cost increases. Growers are therefore increasing prices for end buyers, with 71% planning to raise prices between 5% and 15%.
Supply chain bottlenecks and the impact of consumer demand upon sales are among the primary risk factors confronting growers. Roughly 44% of respondents identified the former issue as their greatest concern, while 35% mentioned the latter.
“There are no plot twists in the real Christmas tree story this year,” Gray continued. “While our grower survey tells us wholesale prices are likely to be higher for real Christmas trees this year, our consumer survey tells us people expected as much. The good news is fans of real Christmas trees say they believe the trees are worth the price and they are willing to pay more this year if necessary to get one — and that’s not a surprise either.”
The higher expected Christmas tree costs occur after Americans spent record amounts on Thanksgiving celebrations. The cost of the meal has risen 20% since last year, according to an <a href="https://www.dailywire.com/news/amber-waves-of-pain-thanksgiving-dinners-will-be-20-more-expensive-this-year" target="_blank" rel="noopener">analysis</a> from the American Farm Bureau Association.
“General inflation slashing the purchasing power of consumers is a significant factor contributing to the increase in average cost of this year’s Thanksgiving dinner,” Farm Bureau Chief Economist Roger Cryan remarked in a <a href="https://www.fb.org/newsroom/farm-bureau-survey-shows-thanksgiving-dinner-cost-up-20" target="_blank" rel="noopener">press release</a>. “Other contributing factors to the increased cost for the meal include supply chain disruptions and the war in Ukraine. The higher retail turkey cost at the grocery store can also be attributed to a slightly smaller flock this year, increased feed costs and lighter processing weights.”
The most recent inflation <a href="https://www.bls.gov/news.release/cpi.nr0.htm" target="_blank" rel="noopener">report</a> from the Bureau of Labor Statistics appears to indicate that contractionary moves from the Federal Reserve are causing price level increases to slow. President Joe Biden nevertheless claimed that the lower headline inflation number showed “a much-needed break” in rising price levels because of his aggressive legislative agenda.
“Today’s report shows that we are making progress on bringing inflation down, without giving up all of the progress we have made on economic growth and job creation,” he said in a <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/11/10/statement-by-president-joe-biden-on-the-october-consumer-price-index-report/" target="_blank" rel="noopener">statement</a> from the White House. “My economic plan is showing results, and the American people can see that we are facing global economic challenges from a position of strength.”

Christmas decorations background, fireplace christmas decoration, home decoration for Christmas, fireplaceб mantel decoration, christmas lights, gift box, candles, furtree

Price Levels And Supply Chains Will Impact Christmas Tree Prices This Year

Christmas

One year after Dollar Tree announced a controversial move to increase <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">prices</a> to $1.25, the variety store chain appears to be succeeding despite a challenging <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">macroeconomic</a> environment.
The company’s <a href="https://www.dailywire.com/news/dollar-tree-will-raise-prices-to-1-25" target="_blank" rel="noopener">first price hike</a> in nearly four decades came amid elevated inflation and permitted Dollar Tree, which also owns discount store chain Family Dollar, to expand merchandise offerings, even though share prices fell 11% upon the initial announcement of the pivot. According to the company’s <a href="https://corporate.dollartree.com/news-media/press-releases/detail/237/dollar-tree-inc-reports-results-for-the-third-quarter" target="_blank" rel="noopener">earnings report</a> for the third fiscal quarter, diluted earnings per share increased by 25% since the same period last year.
“Our third quarter sales performance reflects the timely execution of merchandising initiatives to drive our consumables business in this uncertain and inflationary environment,” Dollar Tree CEO Mike Witynski remarked. “Same-store sales for both segments improved from the prior quarter and delivered a sequential monthly improvement throughout the quarter. Shoppers are responding to our new value proposition at Family Dollar and Dollar Tree as we focus on driving both traffic and store productivity.”
Shares for Dollar Tree have risen more than 7% since the beginning of the year, while the Dow Jones Industrial Average and the S&amp;P 500 have respectively declined 6% and 16% over the same period. Dollar Tree plans to increase sales outlooks for the year.
“The efforts to evolve the assortment to drive consumables performance at Dollar Tree, combined with initiatives designed to improve the value proposition at Family Dollar, are working,” Witynski continued. “We believe we will continue to be part of the solution to millions of households seeking value at a time when they need us most.”
Consumers who solicit discount stores generally come from lower income households. Inflation has a <a href="https://www.dailywire.com/news/wharton-economist-warns-that-inflation-is-hitting-poor-americans-the-hardest" target="_blank" rel="noopener">greater impact</a> on such households, which generally allocate a greater portion of their monthly income to basic living expenses in comparison to wealthier families.
Price levels rose 7.7% year-over-year as of last month, according to a <a href="https://www.bls.gov/news.release/cpi.nr0.htm" target="_blank" rel="noopener">report</a> from the Bureau of Labor Statistics. Elevated inflation will have a salient impact on the holiday season; retail sales during the critical period for American retailers are expected to grow between 6% and 8% since last year to possibly surpass $960 billion, according to <a href="https://www.dailywire.com/news/rise-in-holiday-spending-to-be-outpaced-by-inflation-forecast-says" target="_blank" rel="noopener">data</a> from the National Retail Federation, meaning that the nominally higher sales will be largely eclipsed by rising price levels.
Americans are nevertheless among the only citizens of developed nations planning to increase spending on Black Friday, according to a recent <a href="https://www.dailywire.com/news/how-black-friday-is-different-this-year-because-of-record-inflation" target="_blank" rel="noopener">analysis</a> from Boston Consulting Group. While Americans are predicted to spend 6% more, German and French shoppers will spend 15% less, while their counterparts in Australia and the United Kingdom will spend 18% less.
Evidence suggests that many American households have been spending beyond their means amid inflationary headwinds. The total level of consumer loans increased from $1.5 trillion at the beginning of last year to $1.8 trillion as of two months ago, according to <a href="https://fred.stlouisfed.org/series/CONSUMER" target="_blank" rel="noopener">data</a> from the Federal Reserve. Meanwhile, the personal savings rate has dropped from 20% to slightly more than 3% over the same period, according to <a href="https://fred.stlouisfed.org/series/PSAVERT" target="_blank" rel="noopener">data</a> from the Bureau of Economic Analysis, marking a significant decline from typical rates witnessed before the lockdown-induced recession.

US-INFLATION-ECONOMY-SHOPPING

Dollar Tree’s Controversial New $1.25 Price Point Is Actually Working

Dollar Tree's $1.25 Prices Are Reaping Massive Rewards

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