<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

Economy

Federal Reserve

Inflation

Interest Rates

Recession

U.S.

<a href="http://dailywire.com/topic/elon-musk" target="_blank" rel="noopener">Elon Musk</a> warned that a significant <a href="http://dailywire.com/topic/recession" target="_blank" rel="noopener">recession</a> would occur in the United States if policymakers at the <a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> do not adjust their current approach to interest rates.
The central bank has <a href="https://www.dailywire.com/news/what-the-federal-reserves-changing-approach-toward-rate-hikes-could-mean-for-the-economy" target="_blank" rel="noopener">increased</a> target federal funds rates by 0.75% on four consecutive occasions, marking the most aggressive rollback of loose monetary policy in decades. Interest rates across the economy, such as mortgage rates and the premiums faced by businesses and consumers to borrow money, have quickly risen as a result.
Vincent Yu, the founder of Tesla accessories provider Tesmanian, predicted a “real economic recession” next year, leading Musk to <a href="https://twitter.com/elonmusk/status/1597878869910253569" target="_blank" rel="noopener">call</a> the present direction of the economy “concerning.” He added that the Federal Reserve is “massively amplifying the probability of a severe recession” and “needs to cut interest rates immediately.”
Some analysts, including Wharton School finance professor Jeremy Siegel, 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 central bank amid the return to a contractionary monetary regime, contending that officials who were slow in their response to rising price levels are now causing harm through their excessive zeal to manage inflation. Musk, who <a href="https://www.dailywire.com/news/elon-musk-has-a-super-bad-feeling-about-the-economy-wants-a-massive-layoff-at-tesla" target="_blank" rel="noopener">said</a> over the summer that he has a “super bad feeling” about the economy, <a href="https://twitter.com/elonmusk/status/1573624036957065217" target="_blank" rel="noopener">commented</a> on social media that Siegel is “obviously correct.”
In an attempt to stimulate the economy, policymakers at the Federal Reserve had <a href="https://www.dailywire.com/news/federal-reserve-releases-plan-to-more-urgently-address-high-inflation" target="_blank" rel="noopener">pegged</a> a 0% target interest rate and began acquiring government bonds from the marketplace immediately following the onset of the lockdown-induced recession.
The stock market generally dislikes rate hike decisions because of their negative implications for future economic activity. However, investors <a href="https://www.dailywire.com/news/federal-reserve-hikes-interest-rates-three-quarters-of-a-point" target="_blank" rel="noopener">reacted positively</a> in the immediate aftermath of the most recent announcement since a statement from the Federal Reserve Board of Governors affirmed that officials “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.” The new language had not been included in previous releases.
Musk, who serves as the chief executive of SpaceX, Tesla, and Twitter, also <a href="https://www.dailywire.com/news/elon-musk-predicts-how-long-global-recession-will-last" target="_blank" rel="noopener">predicted</a> that a global recession could last through 2024. He remarked that the former two companies are in “good positions” to weather the economic headwinds.
In an <a href="https://www.dailywire.com/news/elon-musk-makes-bold-predictions-about-tesla-performance-global-recession-twitter-deal" target="_blank" rel="noopener">earnings call</a> for Tesla last month, the world’s richest man said that China is experiencing “a recession of sorts” while Europe is likewise seeing “a recession of sorts driven by energy.” He believes that North America is in “pretty good health” and forecasted that the Federal Reserve would eventually pivot toward a more moderate approach to inflation.
Twitter was among several technology firms that recently eliminated a significant portion of staffers. Musk <a href="https://www.dailywire.com/news/read-it-elon-musk-tells-twitter-staff-to-work-long-hours-at-high-intensity-or-hit-the-road" target="_blank" rel="noopener">told</a> remaining employees that they must be prepared to work “long hours at high intensity” to keep their positions and will “be much more engineering-driven.” Some investors have <a href="https://www.dailywire.com/news/meta-shares-fall-to-lowest-level-since-2016-as-company-burns-billions-on-metaverse-inflates-payrolls" target="_blank" rel="noopener">voiced criticism</a> of Silicon Valley for ballooning headcounts, arguing that the current macroeconomic climate presents an opportunity to reduce costs by reconfiguring staff.
Though the labor market has generally remained strong over the past two years, central bankers warned that their actions might increase unemployment. Federal Reserve Chair Jerome Powell <a href="https://www.dailywire.com/news/jerome-powell-vows-to-restore-price-stability-even-though-federal-reserve-must-first-bring-some-pain" target="_blank" rel="noopener">vowed</a> that policymakers are committed to returning the economy to a 2% inflation rate, which had been largely maintained over the past three decades.

SpaceX And T-Mobile Hold Joint Event In Texas

Elon Musk Warns A ‘Severe Recession’ Will Be More Likely If Federal Reserve Doesn’t Take Action On Rate Hikes

Elon Musk Urges Federal Reserve To Take Action On Rate Hikes

Elon Musk

The Bureau of Labor Statistics is expected to release Consumer Price Index data Thursday morning that will indicate whether <a href="http://dailywire.com/topic/interest-rates" target="_blank" rel="noopener">rate hikes</a> from the <a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> have had a meaningful impact on <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">inflation</a>.
As of two months ago, prices had been rising year-over-year at an 8.2% rate, 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. Core inflation, which factors out food and energy, rose 6.6% during the same period, reaching the highest pace in more than four decades.
Bankrate Chief Financial Analyst Greg McBride called the most recent data “disastrous” in remarks provided to The Daily Wire. “It isn’t just the ongoing pace of increase that is troublesome but the pervasiveness of surging prices across various spending categories that has scarred household budgets,” he said. “Food and shelter continue to exert outsized pressure on the inflation rate and consumers’ pocketbooks. Energy has been a mixed bag, with gasoline prices having declined in recent months but electricity and natural gas still rising at a whopping pace. As weather turns cold, the cost of heating homes will further strain household budgets.”
Indeed, the average household primarily using natural gas for space heating will spend $931 on power from October to March, marking a $206 increase since last year, according to the most recent <a href="https://www.dailywire.com/news/heres-how-much-power-bills-could-rise-this-winter" target="_blank" rel="noopener">winter fuels outlook</a> from the Energy Information Administration. Meanwhile, expected growth between 6% and 8% in holiday season retail sales are expected to be entirely eclipsed by rising price levels, 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.
The Federal Reserve raised the target federal funds rate by 0.75% this month for the <a href="https://www.dailywire.com/news/what-the-federal-reserves-changing-approach-toward-rate-hikes-could-mean-for-the-economy" target="_blank" rel="noopener">fourth consecutive time</a>. McBride noted that “any broad-based, significant, and sustained easing of inflation pressures remains elusive” despite the moves, noting that Federal Chair Jerome Powell has said there is “a ways to go” in rolling out the contractionary monetary regime.
President Joe Biden responded to the most recent inflation data by claiming that his legislative agenda has helped reduce cost pressures. “Today’s report shows some progress in the fight against higher prices, even as we have more work to do,” he said in a <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/10/13/statement-by-president-joe-biden-on-the-september-consumer-price-index-report/" target="_blank" rel="noopener">statement</a>. “But even with this progress, prices are still too high. Fighting the global inflation that is affecting countries around the world and working families here at home is my top priority.”
The midterm elections were expected by many pundits to be a referendum on the Biden administration’s economic performance, although Republicans lost a number of high-profile statewide races in what many conservative commentators attributed to poor candidate quality. The economy and inflation were key issues among voters preparing to cast ballots, with 84% considering the former to be a top factor on their minds, according to a <a href="https://www.dailywire.com/news/new-midterm-poll-spells-bad-news-for-democrats-on-the-economy" target="_blank" rel="noopener">poll</a> from ABC News and The Washington Post.
Households have been spending beyond their means amid elevated price pressures. The total level of consumer loans increased from $1.5 trillion at the beginning of the Biden administration 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.

Jerome Powell

All Eyes Are On Thursday’s Inflation Data Dump After Aggressive Federal Reserve Moves

Last Month’s Inflation Data Is Coming Out Thursday. Here's What To Expect.

The <a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> raised the target <a href="http://dailywire.com/topic/interest-rates" target="_blank" rel="noopener">federal funds</a> rate by 0.75% on Wednesday, but indicated that officials will avoid an overly zealous contractionary policy even as economists warn of a lagged effect that could reach into next year.
The <a href="https://www.dailywire.com/news/federal-reserve-hikes-interest-rates-three-quarters-of-a-point" target="_blank" rel="noopener">fourth consecutive</a> 0.75% increase occurs as inflation remains elevated at four-decade highs. Target interest rates are now set between 3.75% and 4%.
“In the face of stubbornly high inflation, the Federal Reserve raised interest rates aggressively once again,” Bankrate Chief Financial Analyst Greg McBride remarked in a statement provided to The Daily Wire. “Unfortunately, we’re likely to feel the pain of a slower economy before we see the gain of lower inflation.”
The stock market reacted positively in the immediate aftermath of the rate hike announcement since a statement from the Federal Reserve Board of Governors affirmed that officials “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.” The new language had not been included in previous announcements.
McBride affirmed that the central bank does not intend to pause or reverse their contractionary monetary policy. “Upcoming meetings will bring smaller rate hikes, but a higher eventual stopping point and for a longer period once we get there,” he continued. “They want interest rates to be an economic headwind, but they want to be guarded about overdoing it. If only inflation will cooperate.”
Policymakers at the Federal Reserve had <a href="https://www.dailywire.com/news/federal-reserve-releases-plan-to-more-urgently-address-high-inflation" target="_blank" rel="noopener">pegged</a> a near-zero target interest rate immediately following the onset of the lockdown-induced recession, also moving to acquire government bonds in order to increase the money supply and stimulate economic activity. Many leading analysts have more recently <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 central bank amid the return to a contractionary regime, contending that officials who were lackluster in their response to rising price levels are now causing undue harm through their zeal to manage inflation.
Target interest rate decisions carry impacts across every corner of the economy. The 30-year fixed mortgage rate, for instance, rose above 7% after remaining 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 lagged effect of all these interest rate hikes means a rapidly slowing economy in 2023,” McBride said. “The abrupt slowdown in the housing market is a harbinger of broader economic slowing to come.”
Federal Reserve officials have indeed <a href="https://www.dailywire.com/news/top-federal-reserve-official-reveals-consequence-of-higher-interest-rates" target="_blank" rel="noopener">warned</a> on multiple occasions that economic growth will be “essentially flat” in the second half of the year following two consecutive quarters of negative growth, implying that the United States had entered a <a href="https://www.dailywire.com/news/economy-turns-positive-in-third-quarter-biden-takes-credit" target="_blank" rel="noopener">technical recession</a>. A recent <a href="https://www.imf.org/en/Publications/WEO" target="_blank" rel="noopener">report</a> from the International Monetary Fund projected that the global economy will grow at a meager 2.7% in 2023, following 3.2% growth in 2022 and 6% growth in 2021, marking the weakest expansion in two decades.
Federal Reserve Vice Chair Lael Brainard <a href="https://www.dailywire.com/news/federal-reserve-hikes-interest-rates-three-quarters-of-a-point" target="_blank" rel="noopener">cautioned</a> last month that the “moderation in demand due to monetary policy tightening is only partly realized” so far, with particularly interest-sensitive sectors like housing anticipated to see the greatest detriment first. “In other sectors, lags in transmission mean that policy actions to date will have their full effect on activity in coming quarters, and the effect on price setting may take longer,” she said. “The moderation in demand should be reinforced by the concurrent rapid global tightening of monetary policy.”

Biden Open To Options On Spending As Congress Takes Over

What The Federal Reserve’s Changing Approach Toward Rate Hikes Could Mean For The Economy

What The Federal Reserve's Changing Approach Toward Rate Hikes Could Mean For The Economy

The <a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> raised their target <a href="http://dailywire.com/topic/interest-rates" target="_blank" rel="noopener">federal funds</a> rate by three-quarters of a percentage point, with markets spiking as officials hinted that they could slow down the pace at which they tighten monetary policy.
The move comes after the central bank raised target rates in June, July, and September, meaning that the current federal funds rate is now set between 3.75% and 4%.
“Recent indicators point to modest growth in spending and production,” the Federal Reserve’s Board of Governors said in a <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20221102a.htm">statement</a>. “Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.”
The Dow Jones Industrial Average rose 300 points in the immediate aftermath of the announcement, which implied a future slowdown in rate hikes by saying that officials “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.” 
The rate hike comes after 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 showed that the Consumer Price Index rose 8.2% year-over-year as of September, with the 0.4% month-to-month increase exceeding analysts’ forecasts. Despite energy costs falling in some categories, a 0.8% surge in food prices and a 0.7% increase in shelter prices contributed to the headline number.
Policymakers at the Federal Reserve had <a href="https://www.dailywire.com/news/federal-reserve-releases-plan-to-more-urgently-address-high-inflation" target="_blank" rel="noopener">pegged</a> a near-zero target interest rate and acquired government bonds to stimulate the economy over much of the past two years to mitigate the effects of the lockdown-induced recession. Many leading economists have more recently <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 central bank amid the return to a contractionary monetary regime, contending that officials who were slow in their response to rising price levels are now inflicting undue harm through their zeal to handle inflation.
Fallout from the rising interest rates has especially impacted the housing market as elevated mortgage rates decrease affordability. The 30-year fixed mortgage rate has 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. Since the beginning of the year, however, the rate has surged from just over 3% to surpass 7%, including a jump of nearly 1% in less than one month.
Federal Reserve officials have <a href="https://www.dailywire.com/news/top-federal-reserve-official-reveals-consequence-of-higher-interest-rates" target="_blank" rel="noopener">repeatedly warned</a> markets that economic growth will be “essentially flat” in the second half of the year following two consecutive quarters of negative growth, implying that the United States had entered a <a href="https://www.dailywire.com/news/economy-turns-positive-in-third-quarter-biden-takes-credit" target="_blank" rel="noopener">technical recession</a>.
“The moderation in demand due to monetary policy tightening is only partly realized so far. The transmission of tighter policy is most evident in highly interest-sensitive sectors like housing, where mortgage rates have more than doubled year to date and house price appreciation has fallen sharply over recent months and is on track to soon be flat,” Federal Reserve Vice Chair Lael Brainard commented last month during a conference in Chicago. “In other sectors, lags in transmission mean that policy actions to date will have their full effect on activity in coming quarters, and the effect on price setting may take longer. The moderation in demand should be reinforced by the concurrent rapid global tightening of monetary policy.”
In a similar speech delivered over the summer, Federal Reserve Chair Jerome Powell affirmed that the central bank remains committed to stable inflation. “Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy,” he said. “Without price stability, the economy does not work for anyone. In particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all. The burdens of high inflation fall heaviest on those who are least able to bear them.”

Federal Reserve Chair Powell Holds Press Conference On Interest Rate Announcement

Federal Reserve Hikes Interest Rates Three-Quarters Of A Point, Markets Spike As Officials Hint At New Approach

Federal Reserve Hikes Interest Rates By 0.75%

Two of the major players in the financial industry warned that the U.S. is on the verge of a recession and that the Federal Reserve might well raise the interest rate from its current 3-3.25% all the way to 4.5-4.75%.
David Solomon, CEO of Goldman Sachs, and Jamie Dimon, the chairman and chief executive of JPMorgan Chase, <a href="https://www.dailymail.co.uk/news/article-11359191/Goldman-Sachs-JPMorgan-CEOs-predict-Fed-raise-rates-4-75-expect-recession.html">spoke</a> on Tuesday at a conference in Saudi Arabia.
“If they don&#8217;t see real changes — labor is still very, very tight, they are obviously just playing with the demand side by tightening — but if they don&#8217;t see real changes in behavior, my guess is they will go further,” Solomon said of the Fed. “And I think generally when you find yourself in an economic scenario like this where inflation is embedded, it is very hard to get out of it without a real economic slowdown. The U.S. is most likely going to have a recession.”
“American consumers, eventually the excess money they have is running out,” Dimon predicted. “That will probably happen sometime mid-year next year, and then we will know more about what is going on with oil and gas prices and that kind of thing, so we will find out. &#8230; there is a lot of stuff on the horizon which is bad, and could — not necessarily, but could — put the United States in a recession.”
In early September Fed Chair Jerome Powell declared, “We’ve got a dual mandate—maximum employment and price stability—and it comes down to: Is nominal income [GDP] targeting the best way to promote that? We don’t think it is; I don’t think it is.”
“The basic idea behind nominal income targeting is that the central bank would establish a target growth rate for nominal income in the economy (as measured by, for example, nominal GDP),” Joshua Hendrickson of George Mason University stated.   “When nominal income is below its target, the central bank would engage in expansionary monetary policy by increasing the money supply.”
“Powell is concerned that estimates of the trend growth of output are ‘highly uncertain’ and that a decline in trend growth would require higher inflation,” James A. Dorn of the Cato Institute <a href="https://www.cato.org/blog/case-nominal-gdp-targeting-reply-fed-chair-powell">explained</a>. “Thus, under a nominal gross domestic product (NGDP) target, he thinks there would be communication issues’ as well as ‘big chances of policy error because we just don’t know any of the starred variables’ (e.g., the equilibrium values of real output, employment, and interest rates).”
Clive Crook of Bloomberg opined, “The Fed can’t control how much growth in NGDP is from higher real output and how much is from higher prices, the quantities it cares about. Using NGDP as an intermediate target to guide monetary policy recognizes this,” Dorn noted.

Major Financiers Warn Fed May Spike Interest Rates

Goldman Sachs

JP Morgan

<a href="http://dailywire.com/topic/housing" target="_blank" rel="noopener">Mortgage rates</a> reached their highest levels since 2001, according to <a href="https://www.mba.org/news-and-research/newsroom/news/2022/10/26/mortgage-applications-decrease-in-latest-mba-weekly-survey" target="_blank" rel="noopener">data</a> released on Wednesday by the Mortgage Bankers Association.
The 30-year fixed rate mortgage rose for the tenth consecutive week, reaching 7.16% as purchase applications fell. The increase occurs after the <a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> thrice increased the target <a href="http://dailywire.com/topic/interest-rates" target="_blank" rel="noopener">federal funds</a> rate by 0.75% increments, marking the fastest rollback of expansionary monetary policy in decades.
“The ongoing trend of rising mortgage rates continues to depress mortgage application activity, which remained at its slowest pace since 1997,” Mortgage Bankers Association Vice President and Deputy Chief Economist Joel Kan said in a <a href="https://www.mba.org/news-and-research/newsroom/news/2022/10/26/mortgage-applications-decrease-in-latest-mba-weekly-survey" target="_blank" rel="noopener">statement</a>. “Refinance applications were essentially unchanged, but purchase applications declined 2% to the slowest pace since 2015 — over 40% behind last year’s pace.”
Amid the rise in mortgage rates, which began to accelerate when the Federal Reserve hiked interest rate targets in both June and July, the ratio between average total monthly payments and median income surged to 43.3% as of August, exceeding levels witnessed ahead of the 2008 housing crisis, according to <a href="https://www.atlantafed.org/center-for-housing-and-policy/data-and-tools/home-ownership-affordability-monitor.aspx">data</a> from the Federal Reserve Bank of Atlanta’s National Home Ownership Affordability Monitor Index. Some findings nevertheless indicate that housing prices are <a href="https://www.dailywire.com/news/home-prices-are-dropping-at-fastest-pace-ever-recorded-by-key-index" target="_blank" rel="noopener">falling</a> due to plummeting demand.
“Rising rates are already greatly impacting affordability,” Heritage Foundation economic research fellow Joel Griffith told The Daily Wire. “A mortgage payment today on a median-priced home costs $3,000 — more than double the typical payment just two years ago as mortgage interest rates soared from under 3% to more than 7% even as home prices jumped 36% to all-time record highs, even when adjusted for overall inflation.”
Griffith said that higher interest rates will place upward pressure on mortgage payments even as prices for residential real estate begin to decline. “For instance, even if home prices tumble by 20%, a mortgage on a median-priced home will be close to $2,400 — still far higher than the $1,400 mortgage payment on the identical home just two years ago,” he remarked.
The Federal Reserve, which typically slashes or raises target rates at 0.25% increments, is pivoting away from a monetary stimulus regime intended to boost economic activity during the lockdown-induced recession. Contractionary policy, however, restrains economic activity by increasing borrowing costs for consumers and businesses. Many economists 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 policymakers</a> in recent months for suddenly reverting to a hawkish posture toward inflation.
“The Federal Reserve anticipated the rise in mortgage rates. Low interest rates were a natural consequence of the Federal Reserve printing money — more than doubling its balance sheet from just $4.2 trillion in March 2020 to more than $8.8 trillion today,” Griffith added. “The Federal Reserve specifically meddled in the housing market by purchasing $1.2 trillion of mortgage-backed securities from Fannie Mae, Freddie Mac, and Ginnie Mae — doubling the amount of securities it owned. This drove home prices higher by driving down mortgage rates — enabling borrowers to take out ever bigger loans.”
Economic issues are top-of-mind for Americans preparing to cast ballots in the midterm elections. One recent <a href="https://www.dailywire.com/news/new-midterm-poll-spells-bad-news-for-democrats-on-the-economy">poll</a> from ABC News and The Washington Post painted a generally dismal picture for the Democratic Party as 84% of voters indicated that the economy was the top issue on their minds, yet skewed 16% toward Republicans with respect to trust in handling the issue.

Aerial view of suburban neighborhood

Mortgage Rates Jump To Highest Level Since 2001

Mortgage Rates Surge Past 7%

Biden Administration

Housing

<a href="http://dailywire.com/topic/housing" target="_blank" rel="noopener">Home</a> prices are falling at a record pace, according to data from S&amp;P Global released Tuesday.
Prices are still up for the year, but the percentage keeps dropping each month. The S&amp;P CoreLogic Case-Shiller Index, which tracks national home prices, reported annual gains at 13% in August, marking a decline from 15.6% in the previous month and the largest plummet in housing costs since the metric was created in 1987.
“As the Federal Reserve moves interest rates higher, mortgage financing becomes more expensive and housing becomes less affordable,” S&amp;P Managing Director Craig Lazzara said in an <a href="https://www.spglobal.com/spdji/en/documents/indexnews/announcements/20221025-1457029/1457029_cshomeprice-release-1025.pdf" target="_blank" rel="noopener">analysis</a>. “Given the continuing prospects for a challenging macroeconomic environment, home prices may well continue to decelerate.”
The central bank <a href="https://www.dailywire.com/news/heres-what-the-federal-reserves-recent-rate-hike-means-for-the-economy" target="_blank" rel="noopener">raised</a> the target federal funds rate by 0.75% in both June and July before hiking rates by the same amount in September. Policymakers, who conventionally raise and slash rate targets by 0.25% increments, are combating inflation which has reached four-decade highs.
The 30-year fixed mortgage rate has 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. Since the beginning of the year, however, the rate has surged from just over 3% to reach 6.9% amid the Federal Reserve’s actions, including a jump of nearly 1% in less than one month.
S&amp;P also reported that the 10-City Composite annual increase fell from 14.9% in July to 12.1% in August, while the 20-City Composite annual increase fell from 16.0% to 13.1%. The largest declines in housing prices came from San Francisco, Seattle, and San Diego.
Many cities on the West Coast are witnessing price increases in <a href="https://www.dailywire.com/news/rental-market-remains-brutal-nationwide-cools-in-some-large-cities" target="_blank" rel="noopener">rental markets</a> as would-be homebuyers search for apartments to avoid contending with elevated real estate prices. For example, the average rent for a one-bedroom apartment is presently $3,100 in San Francisco.
“These data show clearly that the growth rate of housing prices peaked in the spring of 2022 and has been declining ever since,” Lazzara added.
Despite the nationwide trend of falling home prices, the cities of Miami, Tampa, and Charlotte saw the highest price increases among the 20 cities analyzed by the S&amp;P index. Home prices in Miami have increased 28.6% year-over-year, while prices in the latter two cities have respectively increased 28.0% and 21.3%.
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 numeric decline. Analysts have pointed to the speed at which state governments <a href="https://www.dailywire.com/news/new-study-reveals-florida-and-gop-led-states-dominate-covid-19-best-responses-democrat-led-states-rank-among-worst" target="_blank" rel="noopener">rescinded lockdown orders</a> over the past two years as a factor behind varying degrees of resilience in local economies.
Rising housing prices derive from persistent supply chain issues and labor shortages, both of which have contributed to inflationary pressures. In the second quarter of 2022, the median sale price of a home was $440,300, according to <a href="https://fred.stlouisfed.org/series/MSPUS" target="_blank" rel="noopener">data</a> from the Department of Housing and Urban Development, marking a 36% rise from $322,600 in the second quarter of 2020.
The National Association of Home Builders recently <a href="https://www.dailywire.com/news/housing-affordability-plummets-trade-group-calls-out-biden-for-ignoring-the-problem" target="_blank" rel="noopener">admonished</a> President Joe Biden for <a href="https://www.dailywire.com/news/shows-some-progress-biden-responds-to-another-dismal-inflation-report" target="_blank" rel="noopener">claiming</a> that his administration has made “some progress” in the battle against rising price levels. “If President Biden is truly serious about fighting inflation, he needs to address the nation’s growing housing affordability crisis,” National Association of Home Builders Chairman Jerry Konter said earlier this month.

‘For Sale’ sign in front of house (focus on sign)

Home Prices Are Dropping At Fastest Pace Ever Recorded By Key Index

Home Prices Falling At Fastest Rate In Decades, Index Says

<a href="http://dailywire.com/topic/federal-reserve?_gl=1*58e3sm*_ga*OTAwNTI1NTYwLjE2MTM5NzIxMzI.*_ga_CZKR9ZYKJP*MTY2NTQ0NTMwNS4xMzMyLjEuMTY2NTQ0NTQ4Ni4xMS4wLjA." target="_blank" rel="noopener">Federal Reserve</a> Vice Chair Lael Brainard said on Monday that the central bank increasing federal funds <a href="http://dailywire.com/topic/interest-rates" target="_blank" rel="noopener">rate</a> targets will have dramatic effects on <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">economic</a> activity.
Policymakers <a href="https://www.dailywire.com/news/heres-what-the-federal-reserves-recent-rate-hike-means-for-the-economy">raised</a> target interest rates by 0.75% last month, a move which followed two identical hikes in June and July, in an attempt to relieve elevated inflationary pressures. Brainard warned during a <a href="https://www.federalreserve.gov/newsevents/speech/brainard20221010a.htm">conference</a> in Chicago that economic growth will be “essentially flat” in the second half of this year.
“The moderation in demand due to monetary policy tightening is only partly realized so far. The transmission of tighter policy is most evident in highly interest-sensitive sectors like housing, where mortgage rates have more than doubled year to date and house price appreciation has fallen sharply over recent months and is on track to soon be flat,” Brainard commented. “In other sectors, lags in transmission mean that policy actions to date will have their full effect on activity in coming quarters, and the effect on price setting may take longer. The moderation in demand should be reinforced by the concurrent rapid global tightening of monetary policy.”
Indeed, 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">data</a> from government-backed mortgage company Freddie Mac. Since the beginning of the year, however, the rate has surged from just over 3% and reached 6.7% as of last week — marking a 1% rise over the course of only five weeks.
The Federal Reserve had initially <a href="https://www.dailywire.com/news/federal-reserve-releases-plan-to-more-urgently-address-high-inflation">pegged</a> a near-zero target interest rate and acquired government bonds in order to stimulate the economy during the lockdown-induced recession. Many leading economists 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">criticized</a> the central bank amid the return to a contractionary monetary regime, claiming that officials who were slow in their response to rising price levels over the past two years are now inflicting harm through their excessive zeal to combat inflation.
Price levels between August 2021 and August 2022 rose 8.3%, according to <a href="https://www.bls.gov/news.release/cpi.nr0.htm">data</a> from the Bureau of Labor Statistics, marking a slight moderation from an 8.5% year-over-year increase in July and a 9.1% year-over-year increase in June. The M1 money supply, which includes liquid forms of money such as demand deposits and checking accounts, rose from $4.8 trillion to $16.2 trillion between April 2020 and May 2020 alone, according to <a href="https://fred.stlouisfed.org/series/M1SL">data</a> from the Federal Reserve. The metric peaked at $20.7 trillion in March 2022 and has since declined slightly.
“Monetary policy will be restrictive for some time to ensure that inflation moves back to target over time,” Brainard continued. “It will take time for the cumulative effect of tighter monetary policy to work through the economy broadly and to bring inflation down.”
In a <a href="https://www.dailywire.com/news/jerome-powell-vows-to-restore-price-stability-even-though-federal-reserve-must-first-bring-some-pain">hawkish speech</a> delivered two months ago, Federal Reserve Chair Jerome Powell said that policymakers still intend to reduce inflation to 2%, the rate largely maintained by the central bank for the past three decades, and emphasized that the institution ought to revive its mandate to take responsibility for stable inflation.
“While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” Powell cautioned. “These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”

President Biden Announces Board Of Governors Of Federal Reserve Nominees

Top Federal Reserve Official Reveals Consequence Of Higher Interest Rates

Federal Reserve Official Warns Of Economic Pain To Follow Attempts To Cut Inflation

Humankind is heading towards extinction. This fact has attracted the attention of eccentric billionaire Elon Musk who is sounding the alarm.
“Population collapse due to low birth rates is a much bigger risk to civilization than global warming,” Musk <a href="https://twitter.com/elonmusk/status/1563020169160851456" target="_blank" rel="noopener">tweeted</a> earlier this year.
But it’s not just Elon Musk who foresees our collective demise. Numerous sociologists and researchers are predicting that, absent substantial changes in family formation and the fertility rate, our global population will begin to decline this century.
And then it will never stop.
Darrell Bricker, a leading international social researcher, and John Ibbitson, an award-winning journalist, published the book Empty Planet: The Shock of Global Population Decline in 2019.
“The great defining event of the twenty-first century … will occur in three decades, give or take, when the global population starts to decline. Once that decline begins, it will never end,” they write. “We do not face the challenge of a population bomb but of a population bust – a relentless, generation-after-generation culling of the human herd.”
Clearly, something has gone wrong. The fertility rate in the United States, and in nearly all of the Western world, is below the replacement rate. Many in the younger generations – Millennials and Gen Z – have lost the will to continue or see no future for the next generation. They are no longer producing enough children to replace themselves.
Unless something changes, the decline of our species is just a few short decades away.
Certainly, there’s no singular cause behind this fact. The decline of religion, the delaying and redefinition of marriage, and the rise of couples who have no desire to create children are obvious factors.
But one of the more overlooked contributing causes may be the rising cost of purchasing a home. If young people of reproductive age can’t afford a home to house a growing family, they will stop growing that family.
<h3>The Rising Cost of Housing</h3>
<a href="https://www.longtermtrends.net/home-price-median-annual-income-ratio/" target="_blank" rel="noopener">According to</a> data provided by the U.S. Federal Reserve, following the burst of the housing bubble in the mid-2000s, home prices began to increase substantially in 2012 when compared to the median household income. This increase has continued ever since.
During the housing bubble, the highest the home price to median income ratio reached was 7.03 on November 30, 2005. This means the average price of a home was 7.03 times more than the median income.
But as of May 31, 2022, the average price of a house in the U.S. cost 7.79 times the yearly household income. This was the largest number ever recorded in the last eight decades, since such data was first collected beginning in 1946 – including the peak of the housing bubble.
Data website Longtermtrends.net <a href="https://www.longtermtrends.net/home-price-median-annual-income-ratio/">shares a chart highlighting</a> the home price to median household income ratio from 1946 &#8211; 2022.
Between 1960 and 2000, the home price to median income ratio varied between roughly four and five. The two spikes in the ratio to seven or eight (during the housing bubble, and now, respectively) are anomalies in U.S. history.
This data demonstrates the price of housing in the 21st century is substantially greater than it ever was in the 20th century. This is not a sustainable trendline for families.
While the rising price of housing benefits Baby Boomers and Generation Xers, who are more likely to own homes, it harms Millennials and young families who have no equity and are trying to buy their first homes.
In addition, a number of studies have confirmed the trend of rising real estate prices over the past several decades.
The online brokerage Clever Real Estate <a href="https://www.cnbc.com/2021/11/10/home-prices-are-now-rising-much-faster-than-incomes-studies-show.html#:~:text=A%20common%20rule%20of%20thumb,2.5%20times%20your%20annual%20salary." target="_blank" rel="noopener">recently reported</a> that while the dramatic rise in home prices worsened following the COVID pandemic, 2020 was not the start of the incongruence. Rather, the disparity between home prices and median household income has been growing for 50 years.
“After accounting for inflation, home prices have jumped 118% since 1965, while income has only increased by 15%,” Clever Real Estate found. “To afford a home in 2021, Americans need an average income of $144,192 — far more than the median household income of $69,178.”
<a href="https://anytimeestimate.com/research/housing-prices-vs-inflation/" target="_blank" rel="noopener">According to another estimate</a>, housing is currently far more expensive for Millennials than it was for Baby Boomers several decades ago.
“If home prices grew at the same rate as inflation since 1970, the median home price today would be just $177,788 – rather than $408,100,” Anytime Estimate, a data research entity, reports. “Compared to the average baby boomer entering their 30s in 1985, the average millennial entering their 30s in 2019 faced a 31% higher home-price-to-income ratio.”
Clearly, Millennials today face a much more difficult time entering the housing market than their parents did in the 20th century.
<h3>Wither the Starter Home?</h3>
Another phenomenon presenting a negative impact on younger people is the disappearance of the “starter home.”
<a href="https://www.nytimes.com/2022/09/25/upshot/starter-home-prices.html">According to a recent article</a> in The New York Times, “The nation has a deepening shortage of housing. But, more specifically, there isn’t enough of this housing: small, no-frill homes that would give a family new to the country or a young couple with student debt a foothold to build equity.”
Or start a family.
“Nationwide, the small, detached house has all but vanished from new construction. Only about 8 percent of new single-family homes today are 1,400 square feet or less. In the 1940s, according to CoreLogic, nearly 70 percent of new houses were that small,” The Times writes.
The type of less expensive, smaller houses young couples who desire to have children would be able to afford are all but vanishing.
Today, starter homes are disappearing. The homes being built and resold are far more expensive. The cost of housing has far exceeded inflation and wage increases. And the losers in that equation are younger people and families.
Stereotypically, older generations like regaling younger people with the difficulties of life “back in their day.” But what if it’s really the younger generations who have it hardest? What if Millennials should start saying, “Now in our day.”
Considering these statistics, should we really be surprised younger generations are struggling to make it on their own, much less marry and have children?
<h3>Millennials Delaying Family Formation</h3>
The above information isn’t esoteric. It’s having a real-world effect on young people and family formation.
A <a href="https://justthenews.com/nation/economy/survey-majority-young-adults-who-moved-back-parents-during-pandemic-still-live-there" target="_blank" rel="noopener">recent survey</a> from LendingTree found that “nearly a third (32%) of millennials and Gen Zers moved back home with their parents during the pandemic … Two-thirds of young adults who moved back home remain with their parents [and are] focused on paying down debt and saving for a home.”
Young adults feel forced to pick between saving up for a home and moving on with their lives.
An important 2013 <a href="https://www.econstor.eu/bitstream/10419/95429/1/737808942.pdf" target="_blank" rel="noopener">study</a> was the first to look at the role of housing in young adults’ decisions regarding family size. It was conducted by the LIS Cross-National Data Center, a non-profit economic data organization and found that the cost of housing “influences fertility by shaping transition decisions into parenthood.”
The study found that when it comes to decisions regarding family size, “housing costs are directly related to fertility. Children and housing are competing goods, and thus there is a tradeoff between the two.”
Additionally, “Housing costs are indirectly related to fertility through transition decisions of young adults. If housing is expensive enough to delay key transition decisions, fertility is also delayed, and sometimes lowered.”
Another 2009 <a href="https://www.sciencedirect.com/science/article/abs/pii/S0166046208000823" target="_blank" rel="noopener">study</a> found that higher rent prices negatively impact fertility rates. And a <a href="https://www.nber.org/digest/feb12/impact-real-estate-market-fertility" target="_blank" rel="noopener">third study</a> from the National Bureau of Economic Research published in 2012 found “housing prices have a significant impact on a family’s decision to have children&#8230;&#8221;
<h3>Where We Go from Here</h3>
There is no single, easy solution to help younger people get married, buy homes, and have children. But our society, including government authorities, must consider what practices and policies could be implemented to foster family formation.
It can be all too easy to turn to the government to solve our problems. But as former President Ronald Reagan said during his 1981 inaugural <a href="https://www.reaganfoundation.org/ronald-reagan/reagan-quotes-speeches/inaugural-address-2/" target="_blank" rel="noopener">address</a>, “Government is not the solution to our problem, government is the problem.”
Following the bursting of the housing bubble in the mid-2000s, the U.S. Federal Reserve lowered the federal funds rate to near-zero, kept it there for nearly a decade, and <a href="https://www.washingtonpost.com/business/the-feds-damage-to-the-housing-market-may-last-years/2022/08/11/fa4e8f4c-1964-11ed-b998-b2ab68f58468_story.html" target="_blank" rel="noopener">purchased</a> trillions of dollars in mortgage-backed securities. These actions had as their purpose, and consequence, the artificial boosting of asset prices, including stocks and real estate.
The federal government and unaccountable central bankers may not be able to solve our housing-affordability crisis, but maybe they can reverse their decades long easy money policies and stop contributing to it.
In addition, as the Brookings Institution <a href="https://www.brookings.edu/policy2020/bigideas/to-improve-housing-affordability-we-need-better-alignment-of-zoning-taxes-and-subsidies/#:~:text=City%2Dwide%20zoning%20reforms%20that,accessible%20to%20many%20more%20families." target="_blank" rel="noopener">suggests</a>, local zoning reform could open up neighborhoods to more townhomes and duplexes, helping to increase the supply of more affordable housing – especially the kind of “starter homes” that the U.S. is in desperate need of.
Other policies, like expanding tax credits for first time home buyers, should also be considered.
Whatever the approach, helping younger generations purchase affordable homes, and start families, should be one of the main priorities of the federal, state and local governments.
Because without an increase in family formation and fertility rates, we face the dire prospect of an empty planet.
Zachary Mettler is a staff writer for Focus on the Family&#8217;s Daily Citizen. Mettler earned his bachelor&#8217;s degree from William Jessup University and is an alumnus of the Young Leaders Program at the Heritage Foundation.
The views expressed in this piece are those of the author and do not necessarily represent those of The Daily Wire.

Human Hand Placing A Coin On Increasing Coin Stacks

‘Largest Disparity In Eight Decades’: Millennials Face Unprecedented Hurdles Buying First Home, Starting Family

Millennials

Population

Readers Pass

Mortgage rates are approaching 7% as the <a href="http://dailywire.com/topic/housing" target="_blank" rel="noopener">housing</a> market continues to experience turmoil.
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. Since the beginning of the year, however, the rate has surged from just over 3% and reached 6.29% as of last week — marking a 0.25% increase from the preceding week alone.
“The housing market continues to face headwinds as mortgage rates increase again this week,” Freddie Mac Chief Economist Sam Khater said in a <a href="https://freddiemac.gcs-web.com/news-releases/news-release-details/30-year-fixed-rate-mortgage-increased-quarter-percent-week" target="_blank" rel="noopener">press release</a> last week. “Impacted by higher rates, house prices are softening, and home sales have decreased. However, the number of homes for sale remains well below normal levels.”
Contributing to the soaring mortgage rates are actions from the Federal Reserve to <a href="https://www.dailywire.com/news/heres-what-the-federal-reserves-recent-rate-hike-means-for-the-economy" target="_blank" rel="noopener">raise</a> the target federal funds rate by 0.75%, a move which followed two identical hikes in June and July, in an attempt to relieve elevated inflationary pressures. The policy provoked a stock market <a href="https://www.dailywire.com/news/if-hes-elected-the-stock-market-will-crash-trumps-2020-warning-about-biden-comes-true" target="_blank" rel="noopener">selloff</a>.
Mortgage applications have therefore fallen 3.7% in a single week, according to <a href="https://www.mba.org/news-and-research/newsroom/news/2022/09/28/mortgage-applications-decrease-in-latest-mba-weekly-survey" target="_blank" rel="noopener">data</a> from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey. The portion of mortgage activity attributable to refinancing dropped from 32.5% to 30.2%.
Meanwhile, the National Association of Realtors’ Pending Home Sales Index fell 2% in August and 24.2% year-over-year. &#8220;The direction of mortgage rates — upward or downward — is the prime mover for home buying, and decade-high rates have deeply cut into contract signings,&#8221; National Association of Realtors Chief Economist Lawrence Yun remarked in a <a href="https://www.nar.realtor/newsroom/pending-home-sales-dropped-2-0-in-august" target="_blank" rel="noopener">statement</a>. &#8220;If mortgage rates moderate and the economy continues adding jobs, then home buying should also stabilize.&#8221;
In the second quarter of 2022, the median sale price of a home in the United States was $440,300, according to <a href="https://fred.stlouisfed.org/series/MSPUS" target="_blank" rel="noopener">data</a> from the Department of Housing and Urban Development, marking a 36% rise from $322,600 in the second quarter of 2020. Home prices are <a href="https://www.dailywire.com/news/home-prices-mortgage-rates-expected-to-stay-elevated-through-next-year" target="_blank" rel="noopener">expected to increase</a> another 4% in 2023 — a relative slowdown from 17.8% in 2021 and 12.8% in 2022.
The western portion of the United States has witnessed the most severe slowdown in purchase activity amid the high prices, with the region’s Pending Home Sales Index falling year-over-year by 31.3%. &#8220;Home prices are the least affordable in the West and, consequently, the region suffered deeper annual declines in contract signings due to rising interest rates when compared to other areas of the country,&#8221; Yun added. &#8220;However, the recent increases of the last two months, though small, are encouraging.&#8221;
The pressures in the housing market are also <a href="https://www.dailywire.com/news/rental-market-remains-brutal-nationwide-cools-in-some-large-cities" target="_blank" rel="noopener">impacting conditions</a> in the rental space, particularly in large cities on the west coast. In Seattle, Washington, expensive real estate is compelling would-be homebuyers to search for apartments, prompting the city council to unanimously greenlight a special election that will determine whether officials should create more affordable housing, as detailed in an <a href="https://www.zumper.com/blog/rental-price-data/" target="_blank" rel="noopener">analysis</a> from Zumper.
Six of the 10 cities with the most expensive rental rates for one-bedroom apartments are located in California. Although the national average for one-bedroom rent reached $1,503 in September, some rental markets — such as San Jose, California; Miami, Florida; and Nashville, Tennessee — saw moderate month-over-month decreases in average one-bedroom rent.

Houses on suburban block, Apopka, Florida

Mortgage Rates Near An Astonishing 7%

Mortgage Rates Climb Near 7% As Housing Market Sees Turmoil

After finance professor Jeremy Siegel passionately argued on Friday that the <a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> has neglected to maintain an even hand with monetary policy, Tesla and SpaceX CEO <a href="http://dailywire.com/topic/elon-musk" target="_blank" rel="noopener">Elon Musk</a> concurred that the central bank’s policies do not make sense.
Policymakers at the central bank increased the target federal funds <a href="https://www.dailywire.com/topic/interest-rates" target="_blank" rel="noopener">rate</a> by 0.75% on Wednesday afternoon, sending the Dow Jones Industrial Average <a href="https://www.dailywire.com/news/federal-reserve-announces-rate-hike-of-0-75">tumbling</a> more than 500 points. After stagnating on Thursday, the index fell another 900 points by early Monday afternoon to reach 29,300.
The Federal Reserve had initially <a href="https://www.dailywire.com/news/federal-reserve-releases-plan-to-more-urgently-address-high-inflation">pegged</a> a near-zero target interest rate and acquired government bonds in order to stimulate the economy during the lockdown-induced recession. During an <a href="https://www.cnbc.com/video/2022/09/23/powells-decision-overlooks-monetary-and-financial-indicator-argues-wharton-prof-jeremy-siegel.html">interview</a> with CNBC, the University of Pennsylvania Wharton School professor acknowledged he was “very upset” and said the Federal Reserve’s sudden hawkishness makes “absolutely no sense.&#8221;
“It’s like a pendulum. They were way too easy… through 2020, 2021,” Siegel said, observing that no members of the media were willing to ask Federal Reserve Chair Jerome Powell tough questions during the most recent rate hike announcement. “And now… ‘We’re going to be real tough guys until we crush the economy’ … Poor monetary policy would be an understatement.”
The M1 money supply, which includes liquid forms of money such as demand deposits and checking accounts, rose from $4.8 trillion to $16.2 trillion between April 2020 and May 2020 alone, according to <a href="https://fred.stlouisfed.org/series/M1SL">data</a> from the Federal Reserve. The metric peaked at $20.7 trillion in March 2022 and has since fallen slightly.
Musk, who <a href="https://www.dailywire.com/news/elon-musk-has-a-super-bad-feeling-about-the-economy-wants-a-massive-layoff-at-tesla">said</a> three months ago that he has a “super bad feeling” about the economy, commented on <a href="https://twitter.com/elonmusk/status/1573624036957065217">social media</a> that Siegel is “obviously correct.”
The rollback of the monetary stimulus occurs as inflation rises at the fastest rate in four decades. Price levels between August 2021 and August 2022 rose 8.3%, according to <a href="https://www.bls.gov/news.release/cpi.nr0.htm">data</a> from the Bureau of Labor Statistics, marking a slight moderation from an 8.5% year-over-year increase in July and a 9.1% year-over-year increase in June.
Central bankers, who also increased interest rate targets by 0.75% in June and July, have indeed pivoted in recent months toward an aggressive tone. “Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy,” Powell asserted at a <a href="https://www.dailywire.com/news/jerome-powell-vows-to-restore-price-stability-even-though-federal-reserve-must-first-bring-some-pain">speech</a> last month. “Without price stability, the economy does not work for anyone. In particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all.”
During a separate CNBC <a href="https://www.cnbc.com/2022/09/26/whartons-siegel-says-jerome-powell-owes-the-american-people-an-apology-for-poor-fed-policy.html">interview</a>, Siegel argued that Powell “should offer the American people an apology” for the “poor monetary policy” which marked the past few years. “It seems to me wrong for Powell to say we’re going to crush wage increases, we’re going to crush the worker, when that is not the cause of the inflation,” he said. “The cause of the inflation was excessive monetary accommodation.”
A relative bright spot in an otherwise bleak economic landscape has been the labor market, which is maintaining unemployment rates well below historic norms. Yet <a href="https://www.dailywire.com/news/unemployment-rate-edges-upward-for-the-first-time-in-months-as-more-americans-return-to-work">joblessness rose</a> last month to 3.7% even as more Americans returned to work, according to a <a href="https://www.bls.gov/news.release/empsit.nr0.htm">release</a> from the Bureau of Labor Statistics.

Collage Maker-26-Sep-2022-05.31-PM

Elon Musk Agrees With A Furious Jeremy Siegel That Fed Actions Which Blew Up The Stock Market Make ‘Absolutely No Sense’

Elon Musk And Jeremy Siegel Agree: Federal Reserve Approach To Inflation Makes 'Absolutely No Sense'

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