President Joe Biden and the rest of the Biden regime continue to claim “Bidenomics,” has saved the U.S. economy.  
It is painfully obvious that none of these people live in the reality of the American working man and working woman. For them, the economy is teetering on the brink and Bidenomics has been a disaster.
At a Labor Day celebration in <a href="https://www.foxbusiness.com/politics/biden-touts-america-strongest-economy-lowest-inflation-world-despite-soaring-prices" target="_blank" rel="noopener">Philadelphia</a>, the president claimed Bidenomics “is working,” and that Bidenomics is a “blue-collar blueprint for America … It’s for you.” I am not sure what economic data the president and his team were looking at, because last week’s inflation news was not good. According to the <a href="https://www.bls.gov/news.release/pdf/cpi.pdf">Bureau of Labor Statistics</a>, the Consumer Price Index (CPI), the measure of inflation to the American consumer, rose more than expected, to an annual rate of 3.7%. The rise in inflation was primarily <a href="https://www.bls.gov/news.release/pdf/cpi.pdf" target="_blank" rel="noopener">driven</a> by gasoline prices, the “shelter” index meaning rent and housing costs, and food — the basic necessities that impact working-class Americans the hardest. The shelter index alone has been on the rise for 40 consecutive months.
Considering that the CPI in August 2022 was at 8.3%, consumers are paying 12% more for goods and services in 2023 than they were in 2021. In fact, things are so bad that an April 2023 <a href="https://www.heritage.org/debt/commentary/how-americans-have-taken-pay-cut-every-month-biden-took-office">study</a> from The Heritage Foundation, determined that Americans had lost around $7,100 in spending power since Biden’s inauguration in January 2021. It has only gotten worse.
Per <a href="https://gasprices.aaa.com/are-we-there-yet-gas-prices-may-slowly-dip-as-fall-arrives/" target="_blank" rel="noopener">AAA</a>, the national average for a gallon of gas rose by $0.05 last week, reaching $3.85. The primary culprit is the surge in oil costs, which have jumped several dollars to hover around $90 per barrel. This at a time when domestic demand for oil dropped by 1 million barrels a day.
Americans are seeing the same thing at the grocery store. Per the <a href="https://thekrazycouponlady.com/tips/money/average-cost-of-groceries-per-month" target="_blank" rel="noopener">USDA</a>, the average family of four was paying $89-132 more per month for the same groceries in January 2023 than in January 2022.
The loss of purchasing power is forcing more and more Americans to take-on debt in order to pay for necessities.
Credit card <a href="https://www.cnn.com/2023/08/08/economy/us-household-credit-card-debt/index.html" target="_blank" rel="noopener">debt</a> in America has surpassed $1 trillion for the first time, according to data released in August 2023 by the Federal Reserve Bank of New York. People are not using their credit cards for vacations and new televisions, they’re paying for essentials such as gas, rent, and food, incurring debt at a current interest rate of 28.02%, per <a href="https://www.forbes.com/advisor/credit-cards/average-credit-card-interest-rate/" target="_blank" rel="noopener">Forbes</a>.
Driven by credit card debt and auto loan balances, overall <a href="https://www.newyorkfed.org/microeconomics/hhdc" target="_blank" rel="noopener">household</a> debt levels are at $17.6 trillion. Overall household debt has spiked by $2.9 trillion since the end of 2019.
At a time when, sadly, working Americans need credit to simply exist, credit is getting more difficult to obtain. <a href="https://www.cnbc.com/2023/09/11/credit-crunch-worries-at-10-year-plus-high-new-york-fed-survey-says.html" target="_blank" rel="noopener">Sixty percent</a> of respondents to the New York Fed’s Survey of Consumer Expectations for August 2023 indicated that “the ability to get loans, credit cards and mortgages is harder now than it was a year ago, the highest level in a data series that goes back to June 2013.”
Per <a href="https://www.bankrate.com/loans/auto-loans/auto-loan-rejections-at-record-levels-fed-says/" target="_blank" rel="noopener">Bankrate</a>, the rejection rate for all credit applicants, including those applying for car loans, mortgages, credit limit increases, new credit cards and more, increased to 21.8 percent,” and are at their highest levels since 2018.
<a href="https://www.realtor.com/news/trends/foreclosures-continue-to-surge-with-more-homeowners-now-in-danger-of-losing-their-properties/" target="_blank" rel="noopener">Foreclosures</a> continue to rise, with foreclosure starts up 15% in the first half of 2023 and nearly 186,000 properties have received foreclosure filings.
And if you’ve noticed more and more tow trucks on the road these days, your eyes are not deceiving you. As far back as February 2023, <a href="https://www.yahoo.com/lifestyle/car-repossessions-rise-120000818.html" target="_blank" rel="noopener">Cox Automotive</a> reported that the rate of vehicle repossessions had increased more than 20%.
Inflation is here to stay, and apparently, so are high interest rates. Remember the wonderful economy of the 1970s?
As he seeks reelection, Joe Biden may want to find something else to highlight rather than the economy.
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Jim Nelles is a Navy veteran and supply chain consultant based in Chicago. His articles have appeared in the Washington Examiner, Newsweek, Foxnews.com, and the Daily Wire. He has served as a chief procurement officer, chief supply chain officer, and chief operations officer for multiple companies.
The views expressed in this piece are those of the author and do not necessarily represent those of The Daily Wire.

Price Of Gas In Southern California Rises Over 6 Dollars A Gallon

Gas, Food, And Lodging: How ‘Bidenomics’ Is Crushing The Little Guy

Gas, Food, And Lodging: How 'Bidenomics' Is Crushing The Little Guy

Automobiles

Economy

finance

Inflation

Interest Rates

Joe Biden

Readers Pass

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

Global financial crisis

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

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

Banking

Biden Administration

Federal Reserve

Gas Prices

Real estate

The average age of <a href="https://www.dailywire.com/topic/cars" target="_blank" rel="noopener">cars</a> and light-duty trucks on American roads has reached 12.5 years, according to a <a href="https://www.prnewswire.com/news-releases/average-age-of-light-vehicles-in-the-us-hits-record-high-12-5-years-according-to-sp-global-mobility-301824463.html" target="_blank" rel="noopener">report</a> from S&amp;P Global, a phenomenon that comes as bottlenecked <a href="https://www.dailywire.com/topic/supply-chain" target="_blank" rel="noopener">supply chains</a> and elevated <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">inflation</a> continue their toll on households.
The financial analytics firm noted that 2023 marked the sixth consecutive year of increased average vehicle ages. The three-month rise between 2022 and 2023 constituted the largest year-over-year increase since the recession which struck the United States between 2008 and 2009, during which consumers likewise tightened their budgets in response to economic turmoil.
&#8220;We expected the confluence of factors impacting the fleet coming out of 2021 would provide further upward pressure on average vehicle age. But the pressure was amplified in the back half of 2022 as interest rates and inflation began to take their toll,&#8221; said Todd Campau, associate director of aftermarket solutions for S&amp;P Global Mobility. &#8220;While pressure will remain on average age in 2023, we expect the curve to begin to flatten this year as we look toward returning to historical norms for new vehicle sales in 2024.”
There are presently more than 284 million vehicles in operation on American roads; continual increases in popularity for light-duty trucks will cause the number of passenger vehicles to decline below 100 million for the first time in nearly five decades. Firms in the aftermarket repair sector are slated to experience windfalls as the number of cars between six and 14 years old is forecasted to increase by 10 million in the next five years.
S&amp;P Global linked the higher average vehicle ages in 2022 to “supply constraints that caused low levels of new vehicle inventory” in the first half of the year, followed by “slowing demand as interest rates and inflation reduced consumer demand” in the second half.
Lockdowns and public health mandates imposed over the past three years by governments across the world fostered unpredictable supply chain shocks, contributing to inflation in many countries. Sectors impacted most severely by foreign bottleneck exposure, such as automotive manufacturing, textiles, and basic metals, also witnessed the most extreme inflationary pressures, according to an <a href="https://research.stlouisfed.org/publications/economic-synopses/2022/05/12/supply-chain-disruptions-and-inflation-during-covid-19" target="_blank" rel="noopener">analysis</a> from the Federal Reserve Bank of St. Louis.
Persistent labor shortages that followed the lockdown-induced recession continue to produce difficulties for American companies seeking to hire more workers. There exist roughly 9.6 million job openings and 6.0 million unemployed individuals across the American economy, according to a <a href="https://www.bls.gov/news.release/jolts.nr0.htm" target="_blank" rel="noopener">report</a> from the Bureau of Labor Statistics, reflecting a labor market that has further worsened inflationary pressures as firms increase compensation to attract and retain workers.
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Officials at the Federal Reserve have meanwhile <a href="https://www.dailywire.com/news/federal-reserve-unveils-quarter-point-target-interest-rate-hike-as-banking-system-reels" target="_blank" rel="noopener">increased</a> the target federal funds rate to combat the inflationary pressures: target rates now sit between 5.0% and 5.25%, increasing borrowing costs for consumers, including those who finance their car purchases with debt.
American economic growth slowed to a 1.1% annualized rate in the first quarter, marking a significant decline from previous quarters as the economic headwinds slow recovery from the recession and the interest rate hikes decrease demand, according to an advance <a href="https://www.dailywire.com/news/american-economic-growth-slows-to-1-1-in-first-quarter" target="_blank" rel="noopener">estimate</a> from the Bureau of Economic Analysis.

Cars

Americans Delay Buying New Cars As Long As Possible To Avoid High Prices

Americans Hit By Inflation Delay Buying New Cars As Long As Possible

Supply Chain

U.S.

Officials at the <a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> announced a 0.25% increase in the target <a href="http://dailywire.com/topic/interest-rates" target="_blank" rel="noopener">federal funds</a> rate on Wednesday, marking a slowdown from previous rate hikes meant to combat <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">inflation</a>, even as the financial sector contends with the collapse of three medium-sized regional <a href="http://dailywire.com/topic/banks" target="_blank" rel="noopener">banks</a>.
Rate hikes increase the cost of borrowing money, decreasing inflationary pressures as consumers and businesses assume less debt but simultaneously slowing the economy. Federal Reserve officials formerly set interest rate targets as low as 0.0% during the lockdown-induced recession to stimulate economic activity; rate targets now sit between 5.0% and 5.25%.
The Federal Open Market Committee said in a <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20230503a.htm" target="_blank" rel="noopener">statement</a> that officials will &#8220;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&#8221; as they consider future actions to decrease price pressures.
Central bankers <a href="https://www.dailywire.com/news/breaking-federal-reserve-hikes-target-interest-rates-half-a-percentage-point" target="_blank" rel="noopener">raised</a> rates by 0.75% on four occasions before implementing a 0.5% hike at the end of last year. Officials also <a href="https://www.dailywire.com/news/federal-reserve-hikes-target-interest-rates-by-quarter-point-as-officials-balance-fighting-inflation-and-protecting-banks" target="_blank" rel="noopener">hiked</a> rates 0.25% two months ago.
The most recent target rate increase occurs after inflation reached 5.0% two months ago, according to <a href="https://www.dailywire.com/news/headline-inflation-edges-downward-even-as-costs-for-many-key-items-continue-to-soar" target="_blank" rel="noopener">data</a> from the Bureau of Labor Statistics, marking relief from the 9.1% rate seen last summer even as costs for many items remain elevated and wage increases fail to keep pace with price levels. Record inflation coincides with supply chain bottlenecks and labor shortages, which have forced firms to increase prices on consumers over the past two years.
American economic growth meanwhile slowed to a 1.1% annualized rate in the first quarter, marking a significant decline from previous quarters as the headwinds slow recovery from the recession, according to an advance <a href="https://www.dailywire.com/news/american-economic-growth-slows-to-1-1-in-first-quarter" target="_blank" rel="noopener">estimate</a> from the Bureau of Economic Analysis.
The rate hike announcement also comes days after First Republic Bank collapsed, passed into Federal Deposit Insurance Corporation receivership, and was <a href="https://www.dailywire.com/news/jpmorgan-chase-the-nations-largest-bank-acquires-first-republic-bank-after-government-takeover" target="_blank" rel="noopener">sold</a> by regulators to JPMorgan Chase. Several other regional banks, including PacWest, Zions, Comerica, and Western Alliance, faced <a href="https://www.dailywire.com/news/several-regional-banks-face-market-turmoil-after-first-republic-collapse" target="_blank" rel="noopener">turmoil</a> on the stock market this week as the sector continues to reel from the sudden collapses of Silicon Valley Bank and Signature Bank two months ago.
Interest rate hikes contributed to the substantial loss incurred by Silicon Valley Bank as executives liquidated a long-term bond portfolio to cover withdrawals. Assets in the banking system are $2 trillion lower than their book value as a result of Federal Reserve efforts to implement the current rollback in monetary stimulus, according to a recent <a href="https://www.dailywire.com/news/banking-system-is-sound-and-government-will-back-deposits-at-smaller-banks-yellen-promises" target="_blank" rel="noopener">study</a> from analysts at the National Bureau of Economic Research.
Officials at the Federal Reserve <a href="https://www.dailywire.com/news/federal-reserve-officials-reveal-when-they-expect-a-recession-to-strike" target="_blank" rel="noopener">concluded</a> that the volatility in the financial system warrants a recession forecast for the end of the year, followed by a predicted recovery over the course of the subsequent two years. Policymakers also estimated that the historically low unemployment rate would rise toward the beginning of next year.
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“If the effects of the recent developments in the banking sector on macroeconomic conditions were to abate quickly, then the risks around the baseline would be tilted to the upside for both economic activity and inflation,” minutes from a recent meeting said. “If banking and financial conditions and their effects on macroeconomic conditions were to deteriorate more than assumed in the baseline, then the risks around the baseline would be skewed to the downside for both economic activity and inflation, particularly because historical recessions related to financial market problems tend to be more severe and persistent than average recessions.”

Federal Reserve Unveils Quarter-Point Target Interest Rate Hike As Banking System Reels

Federal Reserve Unveils Quarter-Point Rate Hike As Financial Sector Reels

Banks

Recession

Recent data shows America’s residential housing market is in trouble. The <a href="https://www.economist.com/finance-and-economics/2023/03/01/americas-property-market-suggests-recession-is-on-the-way" target="_blank" rel="noopener">Economist</a> believes that the situation in the U.S. housing market suggests that a recession is on the way. Many other economists believe the housing market is already in a <a href="https://thehill.com/business/housing/3764226-economists-a-us-housing-recession-has-already-arrived/" target="_blank" rel="noopener">recession.</a>
According to <a href="https://www.redfin.com/us-housing-market" target="_blank" rel="noopener">Redfin.com</a>, U.S. home prices were down in March “3.3% compared to last year, selling for a median price of $400,698. On average, the number of homes sold was down 19.5% year over year.” The number of homes for sale was up 7.1% year-over-year and the number of newly listed homes was down 22.5%. Houses are staying on the market longer — 44 days for homes sold in March — up 23 days year-over-year, per the same report. Fewer homes are coming on to the market and those that are for sale are remaining so for longer periods of time.
In addition, housing starts are down, indicating a future dearth of inventory. Privately-owned housing units authorized by “building permits in March were at a seasonally adjusted annual rate of 1,413,000. This is 8.8 percent below the revised February rate of 1,550,000 and is 24.8 percent below the March 2022 rate of 1,879,000,” per the <a href="https://www.census.gov/construction/nrc/current/index.html" target="_blank" rel="noopener">U.S. Census Bureau</a>. Privately-owned housing starts in March were at a seasonally adjusted “annual rate of 1,420,000 … 17.2 percent below the March 2022 rate of 1,716,000,” per the same report.
A housing market collapse similar to the Great Recession is not likely. The majority of mortgages are fixed rate and are locked in at 5% interest or below, and the credit of <a href="https://www.bankrate.com/real-estate/is-the-housing-market-about-to-crash/#crash" target="_blank" rel="noopener">homeowners</a> is much stronger than that of homeowners in 2008.
But we are seeing a significant uptick in foreclosure activity. In January 2023, there were a “total of 31,557 U.S. properties with <a href="https://www.attomdata.com/news/market-trends/foreclosures/attom-january-2023-u-s-foreclosure-market-report/" target="_blank" rel="noopener">foreclosure</a> filings – default notices, scheduled auctions or bank repossessions – up 36 percent from a year ago,” according to property data company ATTOM.
In addition to the increasing number of foreclosures, more and more people are backing out of their contracts to purchase a home, with approximately <a href="https://www.yahoo.com/now/homebuyer-remorse-thousands-americans-backing-210000693.html" target="_blank" rel="noopener">65,000</a> home purchase agreements falling through in December 2022.
However, we are seeing a tale of two housing markets. While cities like Phoenix, Seattle, San Jose, and San Francisco all saw home <a href="https://www.businessinsider.com/where-to-buy-home-cities-house-prices-plummeted-2023-2#5-austin-texas-10" target="_blank" rel="noopener">prices</a> decline by double digits in 2022, a number of markets saw their housing market heat up to new record levels of pricing and activity. The top five areas with the largest <a href="https://www.fhfa.gov/Media/PublicAffairs/Pages/US-House-Prices-Rise-8pt4-Percent-over-the-Last-Year-Up-0pt3-Percent-from-Q3.aspx" target="_blank" rel="noopener">price increases</a> in 2022 were Florida (15.2%), North Carolina (13.4%), South Carolina (12.9%), Hawaii (12.8%), and Maine (12.2%).
A new variable that will likely have an impact on home sales is the new <a href="https://www.dailywire.com/news/state-treasurers-urge-biden-to-end-mortgage-policy-that-penalizes-stable-buyers-to-give-risky-buyers-a-discount" target="_blank" rel="noopener">Biden administration rule</a> that will force people with good credit and a large down payment for a home to subsidize the mortgage and fees paid by people with poor credit and a low down payment.
State treasurers and finance officials from 27 states urged the Biden administration to rescind the rule, which took effect on May 1. <a href="https://www.foxbusiness.com/politics/27-states-ask-biden-end-his-disaster-policy-forcing-good-credit-borrowers-subsidize-risky-mortgages" target="_blank" rel="noopener">They wrote</a> to the administration, “the policy will take money from the people who played by the rules and did things right – including millions of hardworking, middle-class Americans who built a good credit score and saved enough to make a strong down payment. Incredibly, those who make down payments of 20 percent or more on their homes will pay the highest fees – one of the most backward incentives imaginable.”
What will happen to the U.S. housing market over the next several months? It will depend on several factors, including what the Federal Reserve does with interest rates during its May meeting. But, if we continue to see a mass migration of Americans fleeing blue states such as California, New York, and Illinois, we will see a tale of two housing markets – collapsing markets in states people leave and white-hot markets in the states to which people move.
Jim Nelles is a Navy veteran and supply chain consultant based in Chicago. His articles have appeared in The Washington Examiner, Newsweek, Foxnews.com, and The Daily Wire. He has served as a chief procurement officer, chief supply chain officer, and chief operations officer for multiple companies.
The views expressed in this piece are those of the author and do not necessarily represent those of The Daily Wire.

Home For Sale Real Estate Sign and House

Housing Market Stalls As Interest Rates Remain High, Inventory Falls

Census Bureau

Florida

Housing

San Francisco

Huw Pill, the chief <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">economist</a> for the Bank of England, contended that citizens and businesses in the <a href="https://www.dailywire.com/topic/united-kingdom" target="_blank" rel="noopener">United Kingdom</a> need to “accept” that they are now poorer due to <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">inflation</a>.
The central banker said in a <a href="https://open.spotify.com/episode/6rfXYRAR9ekjQBZRLaiLSd?go=1&amp;sp_cid=874da004c720870a0c2231264936a87d&amp;utm_source=embed_player_p&amp;utm_medium=desktop&amp;nd=1" target="_blank" rel="noopener">podcast</a> interview with Columbia Law School recorded earlier this month and released on Tuesday that economic actors are seeking to “pass the parcel” with respect to elevated inflation, resulting in higher prices across the board. He noted that higher <a href="http://dailywire.com/topic/energy" target="_blank" rel="noopener">energy</a> expenses driven by the severance of Russian natural gas shipments amid the invasion of Ukraine have especially contributed to the inflationary pressures.
“If the cost of what you’re buying has gone up compared to what you’re selling, you’re going to be worse off,” he remarked. “Someone needs to accept that they’re worse off and stop trying to maintain their real spending power by bidding up prices, whether higher wages or passing the energy costs through on to customers.”
Pill said that the cycle of consumers and businesses raising prices for one another would increase the extent to which inflation continues. “What we’re facing now is that reluctance to accept that, yes, we’re all worse off, and we all have to take our share,” he added.
Price levels in the United Kingdom increased 12.7% year-over-year as of last month, according to <a href="https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/march2023#:~:text=The%20CPIH%20inflation%20rate%20is,down%20from%2013.4%25%20in%20February." target="_blank" rel="noopener">data</a> from the British Office of National Statistics. Inflation in the United States meanwhile reached 5.0% last month, according to <a href="https://www.dailywire.com/news/headline-inflation-edges-downward-even-as-costs-for-many-key-items-continue-to-soar" target="_blank" rel="noopener">data</a> from the Bureau of Labor Statistics, even as prices for items such as food and shelter remain elevated for households.
Pill was not the only senior British monetary official to bluntly evaluate the nation’s dire financial straits: Ben Broadbent, the deputy governor of the Bank of England, said in a <a href="https://www.bankofengland.co.uk/speech/2023/april/ben-broadbent-speech-hosted-by-national-institute-of-economic-and-social-research" target="_blank" rel="noopener">speech</a> on Tuesday that there is “no getting round the impact on real incomes” as prices increase.
“Thanks to the significant hit to real incomes they involved, these shocks have also had sizable second-round effects on domestic wages and prices,” he continued. “As an explanation for the inflation we’ve experienced I think this fits the actual data better than the single fact of strong household money growth during the pandemic.”
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The combined effect of robust labor markets and elevated inflation in both the United Kingdom and the United States has created scenarios in which rising prices eclipse rising pay: the former nation saw a 3.2% year-over-year decrease in real wages, according to more <a href="https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/averageweeklyearningsingreatbritain/march2023" target="_blank" rel="noopener">data</a> from the Office of National Statistics, while the latter nation saw a 1.6% year-over-year decline, according to more <a href="https://www.bls.gov/news.release/realer.nr0.htm" target="_blank" rel="noopener">data</a> from the Bureau of Labor Statistics.
Recent headline inflation downticks in the United States come as policymakers at the Federal Reserve <a href="https://www.dailywire.com/news/cleveland-fed-president-expects-target-interest-rates-to-rise-above-5" target="_blank" rel="noopener">increase</a> target federal funds rates, a move which mitigates price level rises but inhibits economic activity due to the increased cost of borrowing capital for consumers and businesses. Officials had established near-zero interest rates three years ago to stimulate the economy during the lockdown-induced recession.
President Joe Biden has repeatedly asserted that his policies are responsible for the cooling price level increases in certain product categories, even as inflation rates remain between three times and four times higher than those seen at the start of his administration. “We are making progress in the fight against inflation,” he commented in one <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/31/statement-from-president-joe-biden-on-february-pce-report/" target="_blank" rel="noopener">statement</a>. “The fight against inflation isn’t over, and every day my administration is working to give families more breathing room.”

Bank of England Chief Economist Huw Pill

Brits Must ‘Accept’ They Are All Poorer Now, Bank Of England Economist Says

Brits Must 'Accept' They Are All Poorer Now, Economist Says

United Kingdom

World

<a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> Bank of Cleveland President Loretta Mester said on Thursday that she expects policymakers will increase the target <a href="http://dailywire.com/topic/interest-rates" target="_blank" rel="noopener">federal funds</a> rate beyond 5.0% as <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">inflationary</a> pressures continue to impact the <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">economy</a>.
Rate hikes increase the cost of borrowing money, lowering inflation but stifling economic activity as consumers and businesses assume less debt. Mester said in a <a href="https://www.clevelandfed.org/collections/speeches/2023/sp-20230420-progress-and-prudence" target="_blank" rel="noopener">speech</a> before the Akron Roundtable that target interest rates, which currently remain between 4.75% and 5.0%, will “move somewhat further into restrictive territory this year.”
“We have moved interest rates up significantly over the past year and it is yielding progress. Yet demand is still outpacing supply in both product and labor markets and inflation remains too high,” she remarked. “Precisely how much higher the federal funds rate will need to go from here and for how long policy will need to remain restrictive will depend on economic and financial developments.”
Headline inflation was charted at 5.0% in March 2023, according to <a href="https://www.dailywire.com/news/headline-inflation-edges-downward-even-as-costs-for-many-key-items-continue-to-soar" target="_blank" rel="noopener">data</a> from the Bureau of Labor Statistics, marking a decline from the 9.1% rate charted in June 2022. Real wages, which consider the effect of inflation on nominal pay increases, nevertheless fell 1.3% year-over-year as of March 2023, according to more <a href="https://www.bls.gov/news.release/realer.nr0.htm" target="_blank" rel="noopener">data</a> from the Bureau of Labor Statistics.
Rate hike deliberations at the Federal Reserve have been complicated more recently by the implosion of Silicon Valley Bank and Signature Bank last month, as well as broader international volatility in the financial sector. Silicon Valley Bank was forced to sell a bond portfolio at a loss because of the high interest rate environment as depositors rushed to withdraw their funds.
Mester said that the “stresses experienced in the banking system” last month have since “eased” but affirmed that the Federal Reserve will “take further steps as necessary to ensure financial stability.” She affirmed that the financial tumult would complicate policy decisions.
“Given that some of the increases in rates and tightening in financial conditions have yet to be felt in the economy, we need to be prudent in assessing all of the incoming economic and financial information when determining the appropriate path of monetary policy going forward,” she continued. “We are much closer to the end of the tightening journey than the beginning, and how much further tightening is needed will depend on economic and financial developments.”
Assets in the overall banking system are $2 trillion lower than their book value due to the elevated interest rates, according to a <a href="https://www.dailywire.com/news/nearly-200-other-banks-vulnerable-to-svb-style-collapse-study-says" target="_blank" rel="noopener">study</a> from analysts at the National Bureau of Economic Research. The Federal Open Market Committee and the Federal Reserve Board of Governors predicted in a meeting last month that the volatility in the financial system warrants a recession forecast for the end of the year, followed by a recovery over the course of the subsequent two years, according to <a href="https://www.dailywire.com/news/federal-reserve-officials-reveal-when-they-expect-a-recession-to-strike" target="_blank" rel="noopener">minutes</a> released last week.
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The release of the dire prediction from Federal Reserve officials comes shortly after Treasury Secretary Janet Yellen <a href="https://twitter.com/cspan/status/1645848771174060038" target="_blank" rel="noopener">asserted</a> that she is “not anticipating a downturn in the economy” and after President Joe Biden <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2023/04/12/statement-from-president-joe-biden-on-the-march-consumer-price-index/" target="_blank" rel="noopener">claimed</a> that his policies created a “more dynamic economy for the long haul.” Both officials have also been criticized for downplaying the <a href="https://www.dailywire.com/news/so-far-so-good-treasury-secretary-janet-yellen-says-inflation-is-coming-down" target="_blank" rel="noopener">severity</a> of inflationary pressures over the last two years.

Biden Open To Options On Spending As Congress Takes Over

Cleveland Fed President Expects Target Interest Rates To Rise Above 5%

Stocks slid after officials at the <a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> announced a 0.25% increase in the target <a href="http://dailywire.com/topic/interest-rates" target="_blank" rel="noopener">federal funds</a> rate on Wednesday, continuing a slowdown from previous rate hikes meant to combat <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">inflation</a> and marking caution from policymakers given recent tumult in the <a href="http://dailywire.com/topic/banks" target="_blank" rel="noopener">banking</a> sector.
Rate hikes increase the cost of borrowing money, lowering inflationary pressures as consumers and businesses assume less debt. Federal Reserve officials previously set interest rates targets between 0.0% and 0.25% during the lockdown-induced recession to stimulate economic activity; target interest rates now sit between 4.75% and 5.0%.
“Recent indicators point to modest growth in spending and production,” members of the Federal Open Market Committee said in a <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20230322a.htm">statement</a>. “Job gains have picked up in recent months and are running at a robust pace; the unemployment rate has remained low. Inflation remains elevated.”
The Dow slid more than 500 points on Wednesday and closed 1.6% lower than market open, with regional bank shares leading the decline.
As inflation remained elevated and rose to levels as high as 9.1% in June 2022, policymakers at the Federal Reserve <a href="https://www.dailywire.com/news/breaking-federal-reserve-hikes-target-interest-rates-half-a-percentage-point" target="_blank" rel="noopener">raised rates</a> by 0.75% on four occasions before implementing a 0.5% hike at the end of last year. Inflation rates were <a href="https://www.dailywire.com/news/biden-says-economy-will-continue-to-make-progress-after-another-dismal-inflation-report" target="_blank" rel="noopener">charted</a> at 6.0% as of February 2023.
The decision to hike interest rates announced on Wednesday was complicated by the implosion of Silicon Valley Bank and Signature Bank earlier this month, as well as broader international volatility in the financial sector. Silicon Valley Bank had been forced to sell a long-term bond portfolio at a loss because of the higher interest rate environment as account holders whose balances exceeded the $250,000 threshold insured by the Federal Deposit Insurance Corporation rushed to withdraw their funds; the government-backed company nevertheless insured all accounts to discourage bank runs at other firms.
Federal Open Market Committee members added in the statement that they believe the financial system is resilient. “Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation,” the body added. “The extent of these effects is uncertain.”
One recent <a href="https://www.dailywire.com/news/nearly-200-other-banks-vulnerable-to-svb-style-collapse-study-says" target="_blank" rel="noopener">study</a> from National Bureau of Economic Research analysts revealed that more restrictive monetary policy from the Federal Reserve has caused the value of bank assets to decrease by 10%, indicating that the overall financial system’s assets are $2 trillion lower than their book value. The “substantial losses in the value of banks’ long-duration assets” indicate that “banks are much more fragile” to runs from uninsured depositors.
Federal Reserve Chair Jerome Powell had said days before the turmoil in the financial sector that robust labor market data and persistent inflation in some product categories meant that policymakers would continue to <a href="https://www.dailywire.com/news/federal-reserve-chair-jerome-powell-tells-congress-more-rate-hikes-are-on-the-way" target="_blank" rel="noopener">increase</a> target interest rates. Despite the low unemployment rates, household wages have declined over the past two years when adjusted for inflation.
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“We continue to anticipate that ongoing increases in the target range for the federal funds rate will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive,” he said in remarks before members of the Senate Banking Committee. “We are seeing the effects of our policy actions on demand in the most interest-sensitive sectors of the economy. It will take time, however, for the full effects of monetary restraint to be realized, especially on inflation.”

Jerome Powell Testifies On Federal Reserve’s Response To Coronavirus Pandemic

Stocks Slide After Federal Reserve Hikes Target Interest Rate, Balances Fighting Inflation And Protecting Banks

Federal Reserve Hikes Target Interest Rates By Quarter Point

Massachusetts Democratic Senator <a href="https://www.dailywire.com/topic/elizabeth-warren" target="_blank" rel="noopener">Elizabeth Warren</a> called for a new Federal Reserve Chairman on Sunday as she lashed out at Jerome Powell&#8217;s job performance.
Appearing on several Sunday talk shows, Warren accused Powell of taking a &#8220;flamethrower&#8221; to regulations on big banks and failing to control inflation. In the wake of the <a href="https://www.dailywire.com/topic/silicon-valley-bank" target="_blank" rel="noopener">Silicon Valley Bank</a> collapse, Warren called for the Federal Reserve and Congress to impose more regulations. She also said that Powell should not be chairman of the Fed.
&#8220;Donald Trump ran for president saying he would lighten the regulations on these banks,&#8221; Warren said on CBS News&#8217;s &#8220;Face the Nation.&#8221; &#8220;And then Jerome Powell just literally took a flamethrower to these regulations in order to make them less and less effective.&#8221;
&#8220;Jerome Powell has said that all he wants to do is lighten regulations on the banks,&#8221; she added. &#8220;I opposed him as Chairman of the Federal Reserve Bank precisely for that reason. I said he was a dangerous man to have in this position.&#8221;
Warren went on to call for &#8220;accountability&#8221; from Powell and the financial regulators who &#8220;clearly fell down on the job&#8221;; and from financial executives who she says enabled the SVB collapse with risky investments.
<blockquote class="twitter-tweet">
“We need accountability for our regulators who clearly fell down on the job,” <a href="https://twitter.com/SenWarren?ref_src=twsrc%5Etfw">@SenWarren</a> tells <a href="https://twitter.com/margbrennan?ref_src=twsrc%5Etfw">@margbrennan</a> on the Silicon Valley Bank collapse, adding that it “starts with” Federal Reserve Chairman Jerome Powell, who she says “was a dangerous man to have in this position.” <a href="https://t.co/B2VYr0uZYM">pic.twitter.com/B2VYr0uZYM</a>
— Face The Nation (@FaceTheNation) <a href="https://twitter.com/FaceTheNation/status/1637447666903777281?ref_src=twsrc%5Etfw">March 19, 2023</a></blockquote>
Warren echoed similar sentiments on NBC&#8217;s &#8220;<a href="https://www.nbcnews.com/meet-the-press/video/full-warren-calling-data-privacy-a-tiktok-issue-by-itself-misses-the-elephant-in-the-room-165659205854" target="_blank" rel="noopener">Meet the Press</a>.&#8221;
“He has a dual mandate,&#8221; she said. &#8220;Yes he is responsible for dealing with inflation, but he is also responsible for employment. And what Chair Powell is trying to do– and he has said fairly explicitly– is that they are trying to, in effect, slow down the economy so that – this is, by the Fed’s own estimate – two million people will lose their jobs. And I believe that is not what the chair of the Federal Reserve should be doing.”
NBC&#8217;s Chuck Todd then asked Warren whether Powell should be fired.
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&#8220;My views on Jay Powell are well known at this point,&#8221; Warren responded. &#8220;He has had two jobs. One is to deal with monetary policy. One is to deal with regulation. He has failed at both.&#8221;
&#8220;Look, I don&#8217;t think he should be chairman of the Federal Reserve,&#8221; she concluded. &#8220;I have said it as publicly as I know how to say it. I&#8217;ve said it to everyone.&#8221;

US-POLITICS-VOTE-WARREN

‘I Don’t Think He Should Be Chairman’: Elizabeth Warren Blows Up At Jerome Powell Over Inflation, Bank Failures

Elizabeth Warren Blasts Jerome Powell Over Inflation, Bank Failures

Congress

Elizabeth Warren

Face The Nation

Meet the Press

Politics

Silicon Valley Bank

<a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> Chair Jerome Powell warned lawmakers on Tuesday that the central bank would continue to increase the target <a href="https://www.dailywire.com/topic/interest-rates" target="_blank" rel="noopener">federal funds rate</a> as <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">inflationary</a> pressures remain elevated.
Policymakers gradually hiked interest rates 4.5% over the past year amid a rollback in monetary stimulus implemented during the lockdown-induced recession. A robust labor market and persistent inflation in some product categories necessitate further rate hikes, Powell commented in <a href="https://www.federalreserve.gov/newsevents/testimony/powell20230307a.htm" target="_blank" rel="noopener">prepared remarks</a> before the Senate Banking Committee.
“We continue to anticipate that ongoing increases in the target range for the federal funds rate will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive,” he said. “We are seeing the effects of our policy actions on demand in the most interest-sensitive sectors of the economy. It will take time, however, for the full effects of monetary restraint to be realized, especially on inflation.”
The Dow Jones Industrial Average fell 1.2% and the S&amp;P 500 Index fell 1% after the release of the prepared remarks.
Rate hikes tend to increase borrowing costs for consumers and businesses, applying downward pressure to economic activity and price levels. Officials at the Federal Reserve <a href="https://www.dailywire.com/news/federal-reserve-raises-target-interest-rates-by-quarter-point-marking-slowdown-of-aggressive-hikes" target="_blank" rel="noopener">announced</a> a 0.25% increase in the target federal funds rate last month, marking a slowdown from the previous 0.75% and 0.5% rate hikes. Target interest rates presently sit between 4.5% and 4.75%.
Powell affirmed that the Federal Reserve intends to encourage a 2% inflation rate, which had been largely maintained in the three decades preceding the lockdown-induced recession. The Personal Consumption Expenditures Price Index, the price level metric favored by the central bank, rose 5.4% between January 2022 and January 2023, while the version of the measure excluding more volatile food and energy categories rose 4.7% over the same time horizon, according to <a href="https://www.bea.gov/news/2023/personal-income-and-outlays-january-2023#:~:text=Personal%20consumption%20expenditures%20(PCE)%20is,and%20personal%20current%20transfer%20payments." target="_blank" rel="noopener">data</a> from the Bureau of Economic Analysis.
“As supply chain bottlenecks have eased and tighter policy has restrained demand, inflation in the core goods sector has fallen,” Powell said in response to the data. “And while housing services inflation remains too high, the flattening out in rents evident in recently signed leases points to a deceleration in this component of inflation over the year ahead.”
Food prices have especially pressured American households in recent months: expenses for food at home increased 11.3% between January 2022 and January 2023, according to Consumer Price Index <a href="https://www.dailywire.com/news/inflation-rises-more-than-expected-in-january-after-biden-claimed-prices-are-coming-down" target="_blank" rel="noopener">data</a> released by the Bureau of Labor Statistics, while costs for food away from home rose 8.2% over the same period. A recent <a href="https://www.dailywire.com/news/crying-fowl-government-warns-of-turkey-shortage-ahead-of-thanksgiving" target="_blank" rel="noopener">bout</a> of the avian flu has <a href="https://www.dailywire.com/news/the-price-of-eggs-soaring-138-is-no-coincidence" target="_blank" rel="noopener">decreased</a> the size of poultry flocks, raising costs for chicken and turkey while causing a severe increase in egg prices.
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Real wages, which account for the effect of inflationary pressures, decreased 1.5% between January 2022 and January 2023. “Strong wage growth is good for workers but only if it is not eroded by inflation,” Powell told lawmakers.
President Joe Biden, who entered office when price levels were rising at a 1.4% rate, has <a href="https://www.dailywire.com/news/biden-claims-families-have-a-little-bit-more-breathing-room-after-another-dismal-inflation-report" target="_blank" rel="noopener">reflected</a> economic confidence over the past several months as headline inflation declined.  “When I travel the country, I see optimism for this year and the years ahead,” the commander-in-chief said in a <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2023/02/24/statement-from-president-joe-biden-on-january-pce-report/" target="_blank" rel="noopener">statement</a> from the White House. “We must finish the job in transitioning to stable and steady growth that benefits all Americans, while laying the foundation for strong and shared growth for years to come.”

Fed Chair Jerome Powell Delivers Semiannual Monetary Report At Senate Hearing

Federal Reserve Chair Jerome Powell Tells Congress More Rate Hikes Are On The Way

Jerome Powell Tells Congress More Rate Hikes Are On The Way

Median <a href="https://www.dailywire.com/topic/housing" target="_blank" rel="noopener">home</a> prices fell year-over-year for the first time since February 2012, but elevated <a href="http://dailywire.com/topic/interest-rates" target="_blank" rel="noopener">mortgage rates</a> are still rendering properties less affordable for prospective buyers.
The typical home in the United States sold for approximately $350,200 in February 2023, marking a 0.6% decline since the same month last year, according to <a href="https://www.redfin.com/news/housing-market-update-home-sale-prices-fall-first-time/" target="_blank" rel="noopener">data</a> released on Thursday by real estate brokerage Redfin. The typical monthly mortgage payment has nevertheless surpassed $2,500 as interest rates rise across the <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">economy</a>.
“Prices falling from a year ago is a milestone because it hasn’t happened since the housing market was recovering from the 2008 subprime mortgage crisis. But it’s not surprising and in many ways, it’s welcome,” Redfin Deputy Chief Economist Taylor Marr commented. “Home prices skyrocketed so much over the last few years that they were likely to come down once rates rose from historic lows. Mortgage rates rising to the 7% range was the straw that broke the camel’s back, dampening homebuying demand and leading to sellers asking less for their home.”
Rates for a 30-year fixed mortgage approached 6.7% as of March 2023 after nearing 7.1% in November 2022, according to <a href="https://fred.stlouisfed.org/series/MORTGAGE30US" target="_blank" rel="noopener">data</a> from government-backed mortgage company Freddie Mac. Mortgage rates generally remained below 3% during the lockdown-induced recession but started to rise as the Federal Reserve hiked the target federal funds rate to combat inflationary pressures, thereby applying upward pressure to interest rates.
Median home sale prices previously increased from $322,600 in the second quarter of 2020 to $467,700 in the fourth quarter of 2022, according to <a href="https://fred.stlouisfed.org/series/MSPUS" target="_blank" rel="noopener">data</a> from the Department of Housing and Urban Development. Costs plateaued in the second half of last year as mortgage rates soared.
Homeowners who acquired mortgages at low rates over the past several years have reason to avoid selling their properties, a phenomenon which could further limit the number of houses on the market and decrease affordability for buyers. Redfin noted that mortgage applications have now declined to their lowest levels in three decades.
“Prices will probably decline a bit more in the coming months, but first-time buyers hoping to score a major deal this year are likely out of luck,” Marr continued. “That’s because so few homeowners are listing their homes for sale. Limited inventory and continued interest in turnkey homes in desirable neighborhoods will keep prices somewhat propped up, and high rates will continue to be a hit on affordability.”
The housing market had witnessed a shortage of 3.8 million houses as of 2019, according to <a href="https://www.fanniemae.com/research-and-insights/perspectives/us-housing-shortage" target="_blank" rel="noopener">data</a> from government-backed mortgage company Fannie Mae. The National Association of Realtors <a href="https://www.nar.realtor/newsroom/once-in-a-generation-response-needed-to-address-housing-supply-crisis" target="_blank" rel="noopener">estimates</a> that homebuilders should have constructed between 5.5 million and 6.8 million more houses over the past two decades to match current demand.
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Members of the Senate Banking Committee drew attention to the phenomenon during their first <a href="https://www.dailywire.com/news/senators-call-to-increase-housing-supply-as-affordability-plummets" target="_blank" rel="noopener">hearing</a> of the new Congress last month, calling for federal action to remove barriers that prevent home construction. “There just isn’t enough quality housing at prices that people can afford,” Sen. Sherrod Brown (D-OH) said in his <a href="https://www.banking.senate.gov/newsroom/majority/brown-housing-expensive-families-seniors" target="_blank" rel="noopener">opening statement</a>. “And because there aren’t enough homes, renters, and homeowners are stuck paying more every month or living with peeling lead paint or leaks.”

Houses on suburban block, Apopka, Florida

Home Prices Fell Year-Over-Year For The First Time In A Decade, But There’s A Massive Catch

Home Prices Fell Year-Over-Year For The First Time In A Decade

Officials at the <a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> announced a 0.25% increase in the target <a href="http://dailywire.com/topic/interest-rates" target="_blank" rel="noopener">federal funds</a> rate, marking a slowdown from previous 0.75% and 0.5% rate hikes meant to combat <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">inflation</a>.
Price levels declined slightly last month amid a decrease in energy prices: year-over-year inflation fell from 7.1% in November to 6.5% in December, marking the largest overall decline in nearly three years even as food and shelter prices continue to increase, according to a <a href="https://www.dailywire.com/news/the-tide-has-turned-inflation-sees-largest-drop-since-2020-lockdowns" target="_blank" rel="noopener">report</a> from the Bureau of Labor Statistics. Members of the Federal Open Market Committee said in a <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20230201a.htm" target="_blank" rel="noopener">statement</a> on Wednesday that &#8220;ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive.&#8221;
Federal Reserve Chair Jerome Powell previously <a href="https://www.dailywire.com/news/federal-reserve-chair-jerome-powell-discusses-future-slowdown-of-rate-hikes" target="_blank" rel="noopener">confirmed</a> that officials would “moderate the pace of our rate increases.” Target interest rates now sit between 4.5% and 4.75%.
“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.”
Rate hikes increase the cost of borrowing money for consumers and businesses, decreasing inflationary pressures as a result of lower aggregate demand. The effects of higher interest rates are especially noticeable in the housing sector, where 30-year fixed mortgage rates soared from 3% at the beginning of last year to 7% in October before decreasing to roughly 6%, according to <a href="https://fred.stlouisfed.org/series/MORTGAGE30US" target="_blank" rel="noopener">data</a> from government-backed mortgage company Freddie Mac.
Monetary policymakers are seeking to reverse nearly three years of aggressive monetary stimulus, including near-zero target federal funds rates. Officials <a href="https://www.dailywire.com/news/breaking-federal-reserve-hikes-target-interest-rates-half-a-percentage-point" target="_blank" rel="noopener">raised rates</a> by 0.75% on four consecutive occasions before implementing a 0.5% increase at the end of last year.
The Federal Open Market Committee expects that efforts to achieve 2% inflation, the benchmark largely maintained for three decades before the lockdown-induced recession, will take “some time,” as revealed by <a href="https://www.federalreserve.gov/monetarypolicy/fomcminutes20221214.htm" target="_blank" rel="noopener">minutes</a> from their December meeting. “Participants generally observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path,” a summary said. “In view of the persistent and unacceptably high level of inflation, several participants commented that historical experience cautioned against prematurely loosening monetary policy.”
Inflation has diminished buying power among American households and increased the extent to which they <a href="https://www.dailywire.com/news/some-consumers-financed-holiday-spending-with-record-amounts-of-debt" target="_blank" rel="noopener">utilize</a> debt to make purchases. Rising price levels have outpaced nominal wage increases, producing a 1.7% year-over-year decline in real average hourly earnings as of December, according to <a href="https://www.bls.gov/news.release/realer.nr0.htm" target="_blank" rel="noopener">data</a> from the Bureau of Labor Statistics.
The latest rate hike comes after the economy <a href="https://www.dailywire.com/news/economy-grew-in-fourth-quarter-as-recession-fears-loom-for-2023" target="_blank" rel="noopener">grew</a> at a 2.9% annualized rate in the fourth quarter of 2022, surpassing expectations even as recessionary concerns loom. Economists are divided on whether the nation will soon witness a contraction: Bank of America Chief Investment Strategist Michael Hartnett said in a <a href="https://business.bofa.com/en-us/content/year-ahead-2023/investment-market-outlook-forecasts.html" target="_blank" rel="noopener">report</a> that a recession would occur in the first half of the year before markets attain a “much more solid footing,” while an <a href="https://www.dailywire.com/news/economists-predict-whether-2023-will-see-a-recession" target="_blank" rel="noopener">outlook</a> from Goldman Sachs Chief Economist Jan Hatzius noted analysts at the company believe “there are strong reasons to expect positive growth in coming quarters.”

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