More than 150 million American adults are living <a href="http://dailywire.com/topic/economy">paycheck-to-paycheck</a> amid soaring <a href="http://dailywire.com/topic/inflation">inflation</a>, a poll from LendingClub and PYMNTS revealed earlier this month, a drastic increase from levels reported at the same time last year.
The <a href="https://www.pymnts.com/wp-content/uploads/2022/05/PYMNTS-New-Reality-Check-June-2022.pdf">survey</a> of more than 4,000 Americans showed that “consumers in all income brackets — including those who make more than $100,000 annually&#8221; — are devoting nearly all of their salaries to paying their expenses, with little to nothing left over for savings.
In April 2021, when year-over-year consumer price <a href="https://www.usinflationcalculator.com/inflation/historical-inflation-rates/">inflation reached 4.2%</a>, and the economy continued to rebound from the previous year’s recession, roughly 52% of consumers were living paycheck-to-paycheck, according to the survey. In April 2022, when consumer inflation was 8.3%, that figure rose to 61%.
“Inflation will most likely be part of the economic picture for many months to come, and consumers living paycheck to paycheck of all income brackets will need to review their financial situations and plan their spending accordingly,” the survey report concluded.
As of May 2022, consumer inflation reached <a href="https://www.dailywire.com/news/inflation-reaches-8-6-setting-new-four-decade-high">8.6%</a>, while inflation faced by producers remained elevated at <a href="https://www.dailywire.com/news/inflation-for-businesses-continues-at-double-digit-pace">10.8%</a>.
Nearly 80% of Americans earning less than $50,000 reported living paycheck-to-paycheck — 36% “with difficulty” and 44% remaining “comfortable.” Among Americans earning between $50,000 to $100,000, more than 63% said they were living paycheck-to-paycheck. Struggles with making monthly costs extended to higher income brackets, with 36% of those earning over $250,000 reporting the same tight financial lifestyle.
High inflation in the month of May was <a href="https://www.dailywire.com/news/here-are-the-products-gutting-your-bank-account-as-inflation-soars">largely driven</a> by soaring energy costs. The price of fuel oil rose 107% year-over-year, gasoline rose 49%, utility gas service rose 30%, and electricity rose 12%. Likewise, food prices continued to increase, with the cost of meat, poultry, and fish rising 14.2% year-over-year.
Rising price levels are a significant factor behind consumer sentiment plummeting to its lowest level in seven decades, according to the University of Michigan’s benchmark Survey of Consumers. Because the United States economy largely centers upon consumer spending, the economic pessimism could point toward a looming <a href="http://dailywire.com/topic/recession">recession</a>.
“Consumers across income, age, education, geographic region, political affiliation, stockholding and homeownership status all posted large declines,” Survey of Consumers Director Joanna Hsu said in a statement, per <a href="https://www.cnn.com/2022/06/24/economy/consumer-sentiment-final-read-june/index.html">CNN</a>. “About 79% of consumers expected bad times in the year ahead for business conditions, the highest since 2009.”
President Joe Biden has deflected on the issue of rising price levels, <a href="https://www.dailywire.com/news/biden-claims-inflation-is-worse-everywhere-but-here-thats-not-even-close-to-true">claiming</a> that “Putin’s Price Hike” is the primary cause of skyrocketing inflation.
“High gas prices at the pump, energy, and food prices accounted for around half of the monthly price increases, and gas pump prices are up by $2 a gallon in many places since Russian troops began to threaten Ukraine,” Biden said. “Even as we continue our work to defend freedom in Ukraine, we must do more — and quickly — to get prices down here in the United States.”
President Biden also recently <a href="https://www.dailywire.com/news/thats-not-true-peter-doocy-throws-cold-water-on-white-house-claim-inflation-is-worse-everywhere-but-here">alleged</a> that inflation is “worse everywhere but here.” Indeed, several other developed countries — including Germany, the United Kingdom, Canada, Italy, and South Korea — are enduring higher inflation than the United States, according to recent data from the Organization for Economic Cooperation and Development (OECD). The international organization recently hiked its inflation forecasts for the United States from 4.4% to 5.9% — a level exceeding expected rates for Australia, France, South Korea, Norway, Switzerland, and Japan.

Savings from broken piggy bank.

Soaring Inflation Has Made Living Paycheck-To-Paycheck The ‘Main Financial Lifestyle’ In America

More Than 150 Million Americans Living Paycheck-To-Paycheck As Inflation Soars

Economy

Inflation

Recession

Americans’ sentiment about the <a href="http://dailywire.com/topic/economy">economy</a> is more pessimistic than at any time in the past seven decades, according to the University of Michigan’s most recent Survey of Consumers.
The index reading of 50 in June reflects a severe drop since May and the lowest level since 1952, according to <a href="https://www.wsj.com/articles/consumer-sentiment-at-record-low-is-another-ominous-sign-for-economy-11656093116">The Wall Street Journal</a>, and is a key indicator of a looming <a href="http://dailywire.com/topic/recession">recession</a>.
“Consumers across income, age, education, geographic region, political affiliation, stockholding and homeownership status all posted large declines,” Survey of Consumers Director Joanna Hsu said in a statement, per <a href="https://www.cnn.com/2022/06/24/economy/consumer-sentiment-final-read-june/index.html">CNN</a>. “About 79% of consumers expected bad times in the year ahead for business conditions, the highest since 2009.”
The influential survey has seen a <a href="https://fred.stlouisfed.org/series/UMCSENT">significant decline</a> beginning in the spring of 2021, when inflation started to <a href="https://fred.stlouisfed.org/series/CPIAUCSL#0">rise</a> beyond the roughly 2% level seen over the last few decades. As of May, the Consumer Price Index (CPI) has <a href="https://www.dailywire.com/news/inflation-reaches-8-6-setting-new-four-decade-high">risen</a> 8.6% year-over-year — the highest <a href="http://dailywire.com/topic/inflation">inflation</a> rate witnessed since the 1980s.
“As higher prices become harder to avoid, consumers may feel they have no choice but to adjust their spending patterns, whether through substitution of goods or foregoing purchases altogether,” Hsu added. “The speed and intensity at which these adjustments occur will be critical for the trajectory of the economy.”
To contend with skyrocketing inflation, the <a href="http://dailywire.com/topic/federal-reserve">Federal Reserve</a> increased <a href="https://www.dailywire.com/news/federal-reserve-takes-most-aggressive-action-to-fight-inflation-in-three-decades">interest rates</a> earlier this month by 0.75% — the largest rate hike increment since 1994. The central bank already <a href="https://www.dailywire.com/news/the-fed-jacks-key-rate-up-half-point-as-inflation-surges">hiked rates</a> by 0.5% in May — the largest such increase since 2000 — after a 0.25% rate hike from near-zero levels in March. Interest rates are now at 1.5% to 1.75%, with <a href="https://www.dailywire.com/news/expect-higher-unemployment-as-federal-reserve-tackles-inflation-warns-top-policymaker">more increases likely</a> on the way.
Fears of a recession have gripped American consumers and businesses. Last week, a bout of <a href="https://www.dailywire.com/news/wall-street-sees-worst-carnage-since-2020">stock market selloffs</a> caused the Dow Jones Industrial Average and the Nasdaq Composite to fall 4.8%, while the S&amp;P 500 was down 5.8% — marking its worst week since 2020, according to <a href="https://www.cnbc.com/2022/06/16/stock-market-news-futures-open-to-close.html">CNBC</a>.
President Joe Biden, however, said in a recent interview that a recession is by no means “inevitable” and told Americans to <a href="https://www.dailywire.com/news/biden-claims-recession-not-inevitable-tells-americans-they-shouldnt-believe-economist-warnings">wait before concluding</a> that economists’ forecasts are true.
“They shouldn’t believe a warning. They should just say: ‘Let’s see. Let’s see which is correct.’ And from my perspective, you talked about a recession. First of all, it’s not inevitable,” Biden told Associated Press reporter Josh Boak before pointing to a survey taken last year to allege that households have robust savings.
Meanwhile, Biden has deflected on the issue of rising price levels, <a href="https://www.dailywire.com/news/biden-claims-inflation-is-worse-everywhere-but-here-thats-not-even-close-to-true">claiming</a> that “Putin’s Price Hike” — a reference to the Russian invasion of Ukraine and its role in soaring <a href="https://www.dailywire.com/news/gas-prices-hit-grim-national-average-of-5-per-gallon">global energy costs</a> — is the primary pressure behind inflation.
“High gas prices at the pump, energy, and food prices accounted for around half of the monthly price increases, and gas pump prices are up by $2 a gallon in many places since Russian troops began to threaten Ukraine,” Biden said. “Even as we continue our work to defend freedom in Ukraine, we must do more — and quickly — to get prices down here in the United States.”
When questioned by a recent Harvard <a href="https://www.dailywire.com/news/poll-95-of-voters-say-inflation-is-somewhat-or-very-serious">survey</a> about rising price levels, 95% of respondents said that inflation is “very serious” or “somewhat serious.” A plurality — 47% — said that the Biden administration is responsible.

8C36A07C-5EC9-4000-9157-317D3523A106_1_201_a

Consumer Sentiment Plummets To Lowest Level Since 1950s

Consumer Sentiment Plunges To Lowest Level In 70 Years

Biden Administration

Supply Chain

The <a href="http://dailywire.com/topic/federal-reserve">Federal Reserve</a> announced on Thursday that the American <a href="http://dailywire.com/topic/banks">banking</a> system is projected to be able to weather the next <a href="http://dailywire.com/topic/recession">recession</a>.
The central bank’s <a href="https://www.federalreserve.gov/newsevents/pressreleases/bcreg20220623a.htm">stress test</a> of major financial institutions involved a scenario in which <a href="http://dailywire.com/topic/unemployment">unemployment</a> rises up to 10% amid a decline in economic output. Because the banks have “strong capital levels,” they can “continue lending to households and businesses during a severe recession” — despite weathering $612 billion in predicted losses.
“The individual bank results from the stress test will factor directly into a bank&#8217;s capital requirements, mandating each bank to hold enough capital to survive a severe recession,” the Fed press release explained. “If a bank does not stay above its capital requirements, it is subject to automatic restrictions on capital distributions and discretionary bonus payments.”
In 2008, bank insolvency threatened to plunge the <a href="http://dailywire.com/topic/economy">economy</a> into a deeper recession, forcing the federal government to <a href="https://www.investopedia.com/insights/too-big-fail-banks-where-are-they-now/">purchase toxic assets</a> from investment banks through the $700 billion Emergency Economic Stabilization Act. The Fed <a href="https://www.nytimes.com/2022/06/23/business/fed-banks-recession.html">began</a> conducting its annual stress test in 2011 after the financial crisis.
The stress test comes as several economic phenomena — including <a href="https://www.dailywire.com/news/inflation-reaches-8-6-setting-new-four-decade-high">record-breaking</a> inflation — have eroded <a href="https://www.dailywire.com/news/everything-is-too-high-right-now-in-west-philadelphia-residents-battle-inflation-and-gas-prices">consumer</a> and <a href="https://www.dailywire.com/news/majority-of-manufacturers-predict-recession-within-the-next-year">business</a> confidence. The stock market has also endured weeks of <a href="https://www.dailywire.com/news/wall-street-sees-worst-carnage-since-2020">heavy losses</a>, with some analysts predicting that more <a href="https://www.dailywire.com/news/investment-banks-predict-how-much-more-stock-market-could-plummet">falling asset prices</a> are in the near future.
Earlier this week, Fed Chair Jerome Powell <a href="https://www.dailywire.com/news/fed-chair-jerome-powell-says-recession-is-a-possibility-but-remains-strongly-committed-to-killing-inflation">testified</a> before members of the Senate that there is a “possibility” of recession.
“At the Fed, we understand the hardship high inflation is causing. We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so,” the policymaker explained. “We have both the tools we need and the resolve it will take to restore price stability on behalf of American families and businesses. It is essential that we bring inflation down if we are to have a sustained period of strong labor market conditions that benefit all.”
Last week, the Fed <a href="https://www.dailywire.com/news/federal-reserve-takes-most-aggressive-action-to-fight-inflation-in-three-decades">increased interest rates</a> by 0.75% — the largest rate hike increment since 1994. The central bank already <a href="https://www.dailywire.com/news/the-fed-jacks-key-rate-up-half-point-as-inflation-surges">hiked rates</a> by 0.5% in May — the largest such increase since 2000 — after a 0.25% rate hike from near-zero levels in March. Interest rates are now at 1.5% to 1.75%, with <a href="https://www.dailywire.com/news/expect-higher-unemployment-as-federal-reserve-tackles-inflation-warns-top-policymaker">more increases likely</a> on the way.
Rate hikes are intended to cut inflation by increasing the <a href="https://www.dailywire.com/news/the-federal-reserve-just-raised-interest-rates-how-will-it-impact-your-family">cost of borrowing money</a> — a move that tends to slow economic activity. Many investors, however, have nevertheless urged the Fed to tighten its monetary policy.
“The only way to stop today’s raging inflation is with aggressive monetary tightening or with a collapse in the economy,” Pershing Square Capital Management CEO Bill Ackman <a href="https://www.dailywire.com/news/top-hedge-fund-manager-sees-two-ways-out-of-soaring-inflation-and-neither-one-is-pretty">said</a> last month. “There is no prospect for a material reduction in inflation unless the Fed aggressively raises rates, or the stock market crashes, catalyzing an economic collapse and demand destruction.”
Meanwhile, key policymakers have started to acknowledge that they <a href="https://www.dailywire.com/news/janet-yellen-admits-she-could-have-used-a-better-term-than-transitory-to-describe-unacceptable-inflation">failed</a> to accurately predict soaring inflation. Treasury Secretary Janet Yellen admitted that she and Jerome Powell “could have used a better term than transitory” to describe higher prices.
“There’s no question that we have huge inflation pressures, that inflation is really our top economic problem at this point and that it’s critical that we address it,” she told Congress earlier this month. “I do expect inflation to remain high, although I very much hope that it will be coming down now.”

Stocks Continue To Slide As Concerns Rise Over Conflict In Ukraine

Federal Reserve ‘Stress Test’ Shows Big Banks Will Be Fine Through The Next Recession

'Stress Test' Of American Banks Shows They Can Weather A Recessionary Storm

Banks

Federal Reserve

<a href="http://dailywire.com/topic/federal/reserve">Federal Reserve</a> Chair Jerome Powell testified before members of the Senate on Wednesday that the central bank remains “strongly committed” to combating record-high <a href="http://dailywire.com/topic/inflation">inflation</a>, although there is a “possibility” of a <a href="http://dailywire.com/topic/recession">recession</a>.
Last week, the Fed <a href="https://www.dailywire.com/news/federal-reserve-takes-most-aggressive-action-to-fight-inflation-in-three-decades">increased interest rates</a> by 0.75% — the largest incremental rate hike since 1994. The central bank already <a href="https://www.dailywire.com/news/the-fed-jacks-key-rate-up-half-point-as-inflation-surges">hiked rates</a> by 0.5% in May — the largest such increase since 2000 — after a 0.25% rate hike from near-zero levels in March. Interest rates are now at 1.5% to 1.75%, with <a href="https://www.dailywire.com/news/expect-higher-unemployment-as-federal-reserve-tackles-inflation-warns-top-policymaker">more increases likely</a> on the way.
“At the Fed, we understand the hardship high inflation is causing. We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so,” Powell <a href="https://www.federalreserve.gov/newsevents/testimony/powell20220622a.htm">told</a> the Senate Banking, Housing, and Urban Affairs Committee. “We have both the tools we need and the resolve it will take to restore price stability on behalf of American families and businesses. It is essential that we bring inflation down if we are to have a sustained period of strong labor market conditions that benefit all.”
While the Consumer Price Index (CPI) increased <a href="https://www.dailywire.com/news/inflation-reaches-8-6-setting-new-four-decade-high">8.6%</a> year-over-year as of May, the Producer Price Index (PPI) — which tracks <a href="http://dailywire.com/topic/inflation">inflation</a> for businesses — increased <a href="https://www.dailywire.com/news/inflation-for-businesses-continues-at-double-digit-pace">10.8%</a> over the same period, according to two recent reports from the U.S. Bureau of Labor Statistics.
During the hearing, Sen. Elizabeth Warren (D-MA) noted that the rate hikes could “tip this economy into recession” without stopping inflation, according to <a href="https://www.cnbc.com/2022/06/22/powell-tells-congress-the-fed-is-strongly-committed-to-bringing-inflation-down.html">CNBC</a>. Rate hikes are meant to curb rising price levels, but they also have the effect of increasing borrowing costs and thereby dampening economic activity.
“You know what’s worse than high inflation and low unemployment is high inflation and a recession with millions of people out of work, and I hope you’ll reconsider that before you drive the economy off a cliff,” Warren said.
The Federal Open Market Committee, which handles the Fed’s monetary policy interventions, has a dual mandate to maximize employment while keeping inflation low. Historically, there has been a tradeoff between the two goals, with low unemployment associated with higher inflation and high inflation associated with lower unemployment.
“It’s certainly a possibility,” Powell told Warren. “It’s not our intended outcome at all, but it’s certainly a possibility, and frankly the events of the last few months around the world have made it more difficult for us to achieve what we want, which is 2% inflation and still a strong labor market.”
Although rate hikes pose new risks, high inflation is creating hesitance among consumers and other economic actors. When questioned by a Harvard <a href="https://www.dailywire.com/news/poll-95-of-voters-say-inflation-is-somewhat-or-very-serious">survey</a> about rising price levels, 95% of respondents said that inflation is “very serious” or “somewhat serious.” A plurality — 47% — said that the Biden administration is responsible.
President Biden, however, has <a href="https://www.dailywire.com/news/biden-claims-inflation-is-worse-everywhere-but-here-thats-not-even-close-to-true">argued</a> that “Putin’s Price Hike” — a reference to the Russian invasion of Ukraine and its role in soaring global energy costs — is behind the inflationary pressures.
“High gas prices at the pump, energy, and food prices accounted for around half of the monthly price increases, and gas pump prices are up by $2 a gallon in many places since Russian troops began to threaten Ukraine,” Biden said. “Even as we continue our work to defend freedom in Ukraine, we must do more — and quickly — to get prices down here in the United States.”

Fed Chair Jerome Powell Delivers Semiannual Monetary Report At Senate Hearing

Fed Chair Jerome Powell Says Recession Is A ‘Possibility’ But Remains ‘Strongly Committed’ To Killing Inflation

Jerome Powell Testifies Before The Senate On Recession, Inflation

Billionaire entrepreneur Elon Musk made it clear on Tuesday that he did not agree with the current administration officials — including President Joe Biden himself — who have claimed that a recession was &#8220;not inevitable.&#8221;
<a href="https://dailywire.com/news/i-dont-even-care-if-it-lowers-my-life-expectancy-elon-musk-raves-about-diet-coke-popcorn-and-movies/">Musk</a> made the comments during an appearance at the Qatar Economic Forum, saying, &#8220;A recession is inevitable at some point. As to whether there is a recession in the near term, that is more likely than not. It is not a certainty, but it appears more likely than not.&#8221;
The Tesla CEO&#8217;s assessment is diametrically opposed to the one embraced by the White House, with President Biden saying as recently as Monday that he did not believe the United States was doomed to face a <a href="https://dailywire.com/news/watch-biden-pushes-back-at-reporter-over-recession-warnings-dont-make-things-up/">recession</a> in the near term.
&#8220;Economists are saying that a recession is more likely than ever,&#8221; one reporter prompted Biden, who responded by saying that the question made the reporter sounded &#8220;like a Republican politician.&#8221;
&#8220;Now you sound like a Republican politician, I&#8217;m joking, that was a joke, that was a joke. But all kidding aside, no I don&#8217;t think it is. I was talking to Larry Summers this morning, there&#8217;s nothing inevitable about a recession,&#8221; Biden said — but Summers has said on several occasions that he believes a recession is likely coming, and soon.
&#8220;Look, nothing is certain, and all economic forecasts have uncertainty. My best guess is that a recession is ahead. I base that on the fact that we haven’t had a situation like the present with inflation above 4 percent and unemployment beyond 4 percent without a recession following within a year or two,&#8221; <a href="https://thehill.com/homenews/3529163-larry-summers-my-best-guess-is-that-there-is-a-recession-ahead/">Summers</a> told NBC&#8217;s Chuck Todd on Sunday&#8217;s &#8220;Meet the Press.&#8221;
Treasury Secretary <a href="https://dailywire.com/news/yellen-recession-not-inevitable-russias-war-to-blame-for-soaring-inflation/">Janet Yellen</a> <a href="https://www.politico.com/news/2022/06/19/recession-biden-administration-officials-00040719">agreed</a> with Biden during a Sunday appearance on ABC&#8217;s &#8220;This Week,&#8221; saying that although she did expect the economy to slow, she did not believe recession was inevitable.
&#8220;I expect the economy to slow. It’s been growing at a very rapid rate as the economy, as the labor market is recovered and we reached full employment,&#8221; she said. &#8220;It’s natural now that we expect to transition to steady and stable growth. I don’t think recession is at all inevitable.&#8221;
Musk, for his part, predicted major upheaval in May — but he seemed confident that the disruption would bring about a much-needed correction. &#8220;[This] is actually a good thing. It has been raining money on fools for too long. Some bankruptcies need to happen,&#8221; he <a href="https://twitter.com/elonmusk/status/1529983508206190592">tweeted</a>. &#8220;Also, all the COVID stay-at-home stuff has tricked people into thinking that you don’t actually need to work hard. Rude awakening inbound!&#8221;

Key Speakers At The Qatar Economic Forum

Elon Musk Splits With Biden Advisers, Says ‘Recession Is Inevitable’

Elon Musk Splits With Biden Advisors, Says 'Recession Is Inevitable'

Elon Musk

Qatar

The S&amp;P 500, a key <a href="http://dailywire.com/topic/wall-street">stock market</a> index, could drop another 15% to 20% before fully adjusting to a looming <a href="http://dailywire.com/topic/recession">recession</a>, according to a recent analysts’ note from investment bank Morgan Stanley.
“The bear market will not be over until recession arrives or the risk of one is extinguished,” the note predicted, per <a href="https://www.bloomberg.com/news/articles/2022-06-21/goldman-morgan-stanley-strategists-see-more-stock-market-losses?sref=3REHEaVI">Bloomberg</a>. Meanwhile, analysts from Goldman Sachs said stock traders were only pricing in a mild recession, “leaving them exposed to a further deterioration in expectations.”
The month of June has been marked by a <a href="https://www.dailywire.com/news/wall-street-sees-worst-carnage-since-2020">series of selloffs</a> amid dismal news on <a href="http://dailywire.com/topic/inflation">inflation</a>, as well as the <a href="https://www.dailywire.com/news/federal-reserve-takes-most-aggressive-action-to-fight-inflation-in-three-decades">most aggressive move</a> to combat inflation from the <a href="http://dailywire.com/topic/federal-reserve">Federal Reserve</a> in nearly 30 years. While the Dow Jones Industrial Average and the Nasdaq Composite fell 4.8% during the week ending on June 17, the S&amp;P 500 was down 5.8% — marking its worst week since 2020, according to <a href="https://www.cnbc.com/2022/06/16/stock-market-news-futures-open-to-close.html">CNBC</a>.
More <a href="https://www.dailywire.com/news/bloodbath-on-wall-street-as-stock-market-plunges-into-bear-territory">selloffs occurred</a> during the week ending on June 10 — the day upon which the U.S. <a href="https://www.bls.gov/news.release/cpi.nr0.htm">Bureau of Labor Statistics</a> announced that the Consumer Price Index (CPI) rose 8.6% between May 2021 and May 2022, meaning that <a href="https://www.dailywire.com/news/inflation-reaches-8-6-setting-new-four-decade-high">inflation hit new four-decade record highs</a> and once again surpassed economists’ expectations. The Dow fell 2.5%, the Nasdaq fell about 3%, and the S&amp;P 500 fell 2.7% by the end of the week, according to <a href="https://www.nbcnews.com/business/markets/dow-falls-inflation-hits-40-year-high-consumer-sentiment-rcna32950">NBC News</a>.
On June 14, a <a href="https://www.dailywire.com/news/wall-streets-key-recession-indicator-just-went-off">yield curve inversion</a> — a phenomenon in the bond market that <a href="http://dailywire.com/topic/wall-street">Wall Street</a> watches as a key recession indicator — made the financial world uneasy. An inverted yield curve historically precedes recessions by six months to two years, as indicated by data from the <a href="https://fred.stlouisfed.org/series/T10Y2Y">Federal Reserve Bank of St. Louis</a>.
The Federal Reserve’s benchmark interest rate is now between 1.5% and 1.75%. Although rate hikes increase the cost of borrowing money and thereby slow economic activity, central bankers are <a href="https://www.dailywire.com/news/expect-higher-unemployment-as-federal-reserve-tackles-inflation-warns-top-policymaker">prepared to hike interest rates again</a> next month if high inflation persists.
While Democratic officials inside the Biden administration have insisted that a recession is not inevitable, former Democratic economic advisers lean in the opposite direction.
Larry Summers, who led the Treasury Department under the Clinton administration and served as National Economic Council director under the Obama administration, <a href="https://www.dailywire.com/news/top-obama-economic-advisor-whole-range-of-indicators-point-to-coming-recession">said over the weekend</a> that “a whole range of indicators” point to a contraction.
“The dominant probability would be by the end of next year we will be seeing a recession in the American economy,” Summers told NBC News host Chuck Todd, noting that his view is widely shared among forecasters.
However, current Treasury Secretary Janet Yellen acknowledged the economic woes while remaining <a href="https://www.dailywire.com/news/yellen-recession-not-inevitable-russias-war-to-blame-for-soaring-inflation">as optimistic as possible</a>.
“I expect the economy to slow,” Yellen told ABC News host George Stephanopolous. “It’s been growing at a very rapid rate, as the economy, as the labor market, has recovered. We have reached full employment. It’s natural now that we expect a transition to steady and stable growth, but I don’t think a recession is at all inevitable.”
President Joe Biden <a href="https://www.dailywire.com/news/watch-biden-pushes-back-at-reporter-over-recession-warnings-dont-make-things-up">shot down a question</a> from a reporter on Monday about recessionary risks during his walk on Rehoboth Beach in Delaware.
“The majority of them aren’t saying that,” Biden said. “Come on, don’t make things up, okay? Now you sound like a Republican politician. I’m joking. That was a joke, but all kidding aside, I don’t think it is.”

Times Square As U.S. Stocks Climb On Earnings

Investment Banks Predict How Much More Stock Market Could Plummet

Morgan Stanley Says Stock Market May Fall Up To 20% More

Stock Market

Wall Street

Two former <a href="http://dailywire.com/topic/tesla">Tesla</a> employees filed suit against the automaker on Sunday for allegedly violating federal law through its decision to <a href="http://dailywire.com/topic/unemployment">lay off</a> much of its staff.
Earlier this month, Tesla CEO <a href="http://dailywire.com/topic/elon-musk">Elon Musk</a> <a href="https://www.dailywire.com/news/elon-musk-has-a-super-bad-feeling-about-the-economy-wants-a-massive-layoff-at-tesla">told executives</a> that he had a “super bad feeling” about the <a href="http://dailywire.com/topic/economy">economy</a> and asked them to begin dismissing 10% of employees. According to a <a href="https://www.courthousenews.com/wp-content/uploads/2022/06/lynch-tesla-complaint-usdc-texas.pdf">class action complaint</a> filed by John Lynch and Daxton Hartsfield — who worked at Tesla’s Gigafactory 2 plant in Sparks, Nevada — the company violated the Worker Adjustment and Retraining Notification (WARN) Act by failing to provide 60 days of advance written notice regarding the mass layoff.
“Plaintiffs and all similarly situated employees have been damaged by Tesla’s conduct constituting violations of the WARN Act,” the lawsuit argues, “and are entitled to damages for their back pay and associated benefits for each day of the violation because Tesla has not acted in good faith nor with reasonable grounds to believe their acts and omissions were not a violation of the WARN Act.&#8221;
Lynch and Hartsfield were allegedly informed of their dismissals on June 10 and 15, respectively, and laid off on the same days. They believe that “more than 500” coworkers were placed in the same situation.
“It&#8217;s pretty shocking that Tesla would just blatantly violate federal labor law by laying off so many workers without providing the required notice,” Shannon Liss-Riordan, a lawyer representing the workers, <a href="https://www.reuters.com/business/tesla-sued-by-former-employees-over-mass-layoff-2022-06-20/">told</a> Reuters.
The Nevada employees are not the only ones affected by the layoffs. A Monday <a href="https://electrek.co/2022/06/20/tesla-lay-off-head-lgbtq-diversity-elon-musk-woke-mind-virus/">report</a> from electric vehicle news outlet Electrek showed that two employees involved in volunteer LGBTQ and diversity roles at the automaker also <a href="https://www.dailywire.com/news/lgbtq-diversity-officials-heads-roll-at-elon-musks-tesla">lost their jobs</a>. Electrek made clear that both separations were part of the “broader wave of layoffs,” but repeated that both employees had received multiple promotions in their relatively short tenures, seemingly indicating that their performance was not a cause for concern.
Regarding Tesla’s overall layoff plans, Musk has since clarified that he intends to decrease salaried headcount by 10% while increasing hourly staffing — ultimately affecting 3.5% of the overall workforce. “A year from now, I think our head count will be higher in both salaried and obviously in hourly,” Musk <a href="https://www.cnbc.com/2022/06/21/elon-musk-clarifies-tesla-layoffs-after-ex-employees-sue-company.html">said</a> at a Bloomberg conference on Tuesday, per CNBC.
According to CNBC, Musk, the world’s richest man, also said that Lynch and Hartsfield’s lawsuit has “no standing.”
“That is a small lawsuit of minor consequence,” he commented. “Anything that relates to Tesla gets big headlines, whether it is a bicycle accident or something much more serious.”
Meanwhile, at SpaceX — which Musk also leads — multiple <a href="https://www.dailywire.com/news/get-woke-go-broke-spacex-fires-employees-who-wrote-a-letter-blasting-elon-musks-behavior-and-values">employees were fired</a> for drafting and circulating a letter blasting the billionaire for his “behavior” and “values.”
“Elon’s behavior in the public sphere is a frequent source of distraction and embarrassment for us, particularly in recent weeks,” the letter asserted. “As our CEO and most prominent spokesperson, Elon is seen as the face of SpaceX — every tweet that Elon sends is a de facto public statement by the company.”
SpaceX President and COO Gwynne Shotwell said in an email that the employees had been fired. “We have too much critical work to accomplish and no need for this kind of overreaching activism,” she wrote.

Elon Musk visits construction site of the Tesla Giga Factory

Employees Sue Elon Musk’s Tesla Over Mass Layoffs

Tesla Employees Hit By Mass Layoffs Say Company Violated Federal Law

Tesla

Unemployment

President Joe Biden was caught on video pushing back at a reporter on Monday who asked about a possible upcoming recession.
The incident occurred while Biden answered questions from media while walking on Rehoboth Beach in Delaware when a female journalist asked about some economists who have predicted such a downturn is looming.
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
WATCH: Biden snaps at a reporter for asking about economists warning of a recession.
“C’mon, don’t make things up&quot; <a href="https://t.co/eqEh2f9fEh">pic.twitter.com/eqEh2f9fEh</a>
&mdash; RNC Research (@RNCResearch) <a href="https://twitter.com/RNCResearch/status/1538924537852661762?ref_src=twsrc%5Etfw">June 20, 2022</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
&#8220;The majority of them aren&#8217;t saying that. Come on, don&#8217;t make things up, okay? Now you sound like a Republican politician. I&#8217;m joking. That was a joke, but all kidding aside, I don&#8217;t think it is,&#8221; Biden responded.
The exchange came after a Wall Street Journal <a href="https://www.wsj.com/articles/recession-probability-soars-as-inflation-worsens-11655631002?mod=hp_lead_pos1" target="_blank" rel="noopener">survey</a> of a group of economists reported on Sunday that the odds of the nation entering a recession in the next 12 months rank at 44%.
&#8220;Forecasters have raised recession probability due to a number of factors: higher borrowing costs, a blistering pace of inflation, supply-chain problems and commodity-price shocks stemming from the war in Ukraine,&#8221; the report stated.
&#8220;Mostly, however, they see dimming chances that a steeper path of rate increases by the Fed can cool inflation without inducing higher unemployment and an economic downturn,&#8221; the Wall Street Journal added.
In addition to record-breaking gas prices and high inflation, the nation&#8217;s gross domestic product (GDP) declined by 1.5% during the first quarter of 2022.
&#8220;The U.S. economic contraction to start the year was worse than expected as weak business and private investment failed to offset strong consumer spending, the Commerce Department reported Thursday,&#8221; CNBC <a href="https://www.msn.com/en-us/money/markets/first-quarter-gdp-declined-15-25-worse-than-thought-jobless-claims-climb/ar-AAXKVmD?ocid=uxbndlbing" target="_blank" rel="noopener">reported</a> last month.
&#8220;First-quarter GDP declined at a 1.5% annual pace, according to the second estimate from the Bureau of Economic Analysis. That was worse than the 1.3% Dow Jones estimate and a writedown from the initially reported 1.4%,&#8221; the report added.
CEOs of some of the nation&#8217;s largest companies have also expressed concern regarding a coming recession.
&#8220;That hurricane is right out there, down the road, coming our way. We just don&#8217;t know if it is a minor one, or Superstorm Sandy, or Andrew, or something like that. And you better brace yourself,&#8221; JPMorgan Chase CEO Jamie Dimon recently said about a coming recession, NPR <a href="https://www.npr.org/2022/06/14/1104601336/recession-inflation-federal-reserve-ceos-elon-musk-jamie-dimon" target="_blank" rel="noopener">reported</a>.
Tesla CEO Elon Musk wants to slash 10% of jobs at the company due to his “super bad feeling” about the economy, according to a Friday report from <a href="https://www.reuters.com/technology/exclusive-musk-says-tesla-needs-cut-staff-by-10-pauses-all-hiring-2022-06-03/">Reuters</a>.
The United States economy shrank at a 1.5% annualized rate in the first quarter of 2022, according to the <a href="https://www.bea.gov/sites/default/files/2022-05/gdp1q22_2nd.pdf">Bureau of Economic Analysis</a>, which associates recessions with <a href="https://www.bea.gov/help/glossary?title_1=All&amp;title=&amp;page=6#:~:text=The%20NBER%20recession%20is%20a,well%20as%20quarterly%20GDP%20growth.">two consecutive quarters</a> of negative growth.
In a recent email to executives seen by Reuters, Musk instructed Tesla to “pause all hiring worldwide” and said that the company needs to cut 10% of jobs. Tesla currently has more than 99,000 employees, <a href="https://www.nytimes.com/2022/06/01/technology/elon-musk-tesla-spacex-office.html">The New York Times</a> reported.
Microsoft, Coinbase, and other tech companies have also recently <a href="https://www.dailywire.com/news/recession-fears-lead-big-tech-companies-to-pause-hiring-cut-jobs" target="_blank" rel="noopener">announced</a> recent plans to slow hiring over a potential recession.

Joe Biden

Watch: Biden Pushes Back At Reporter Over Recession Warnings: ‘Don’t Make Things Up!’

Watch: Biden Pushes Back At Reporter Over Recession Warnings

Delaware

Former Obama administration economic adviser <a href="https://www.dailywire.com/topic/larry-summers">Larry Summers</a> warned Sunday that all precedents in the <a href="https://www.dailywire.com/topic/economy">economy</a> are pointing to a recession happening in the next two years. 
Summers, appearing on “<a href="https://www.nbcnews.com/meet-the-press/video/fmr-treasury-secretary-larry-summers-says-recession-likely-by-end-of-next-year-142416965792">Meet The Press</a>,” told NBC News host Chuck Todd that “a whole range of indicators” — including markets, relative levels of <a href="https://www.dailywire.com/topic/interest-rates">interest rates</a> at different durations, consumer expectations, and supply and demand — are pointing toward a recession, which is defined as two consecutive quarters of negative economic growth. 
“All of that tells me that, while I wouldn’t presume whether to judge the timing, the dominant probability would be by the end of next year we will be seeing a recession in the American economy,” said Summers, who also served as treasury secretary in the 1990s. He also said that this perspective had become the common view among a number of statistical models and forecasters. 
Noting economic precedents, Summers said in a different <a href="https://www.bloomberg.com/news/articles/2022-04-14/podcast-summers-predicts-a-u-s-recession-more-likely-than-a-soft-landing?srnd=premium">Bloomberg</a> interview, “If you look at history, there has never been a moment when inflation was above 4% and unemployment was below 5% when we did not have a recession within the next two years.”  
The Biden administration, for its part, has been acknowledging the challenge of the economy but has also echoed in lock-step that an economic downturn isn’t inevitable. Department of Energy Secretary <a href="https://www.dailywire.com/topic/jennifer-granholm">Jennifer Granholm</a> and Department of Treasury Secretary <a href="https://www.dailywire.com/news/yellen-recession-not-inevitable-russias-war-to-blame-for-soaring-inflation">Janet Yellen</a> both spoke to this point on Sunday morning news shows, as well. 
“I expect the economy to slow,” Yellen told George Stephanopolous on ABC News. “It’s been growing at a very rapid rate, as the economy, as the labor market, has recovered. We have reached full employment. It’s natural now that we expect a transition to steady and stable growth, but I don’t think a recession is at all inevitable.”
According to a <a href="https://www.dailywire.com/news/new-survey-reveals-when-ceos-expect-a-recession-to-hit">Conference Board survey</a> of 750 CEOs released on Friday, a majority of top company execs foresee a recession in the next 12 to 18 months. A small minority, 15%, said in the same survey that the region in which their company operates is already in a recession. In a National Association of Manufacturers Survey, nearly <a href="https://www.dailywire.com/news/majority-of-manufacturers-predict-recession-within-the-next-year">6 in 10 business leaders</a> indicated that a recession was more likely in the next year due to inflationary pressures. 
President <a href="https://www.dailywire.com/topic/joe-biden">Joe Biden</a> himself has suggested Vladimir Putin is partly responsible for rising costs and accused businesses of price gouging. On Thursday, in an interview with the Associated Press, Biden encouraged Americans to <a href="https://www.dailywire.com/news/biden-claims-recession-not-inevitable-tells-americans-they-shouldnt-believe-economist-warnings">wait and see</a> whether economists were correct about their recession predictions. 
“They shouldn’t believe a warning. They should just say: ‘Let’s see. Let’s see, which is correct.’ And from my perspective, you talked about a recession. First of all, it’s not inevitable,” said Biden.

Former U.S. Treasury Secretary Larry Summers

Top Obama Economic Advisor: ‘Whole Range Of Indicators’ Point To Coming Recession

Larry Summers Says 'Range Of Indicators' Point To Recession In Next Two Years

Department of the Treasury

Janet Yellen

Larry Summers

The majority of CEOs foresee a <a href="http://dailywire.com/topic/recession">recession</a> within the next 12 to 18 months, according to a <a href="https://www.conference-board.org/topics/c-suite-outlook/c-suite-midyear-2022-views-on-volatility-war-risks-business-growth">Conference Board</a> survey released on Friday.
In the group’s global survey of 750 executives, respondents revealed concerns about <a href="http://dailywire.com/topic/inflation">inflation</a> and <a href="http://dailywire.com/topic/supply-chain">supply chain</a> bottlenecks, especially amid the Russian invasion of <a href="http://dailywire.com/topic/ukraine">Ukraine</a>. Over 60% said that “they expect a recession in their primary region of operations before the end of 2023 or earlier,” while 15% said that “their region is already in recession.”
The United States economy <a href="https://www.dailywire.com/news/united-states-economy-shrinks-in-the-first-part-of-2022">shrank</a> at a 1.5% annualized rate in the first quarter of 2022, according to the U.S. Bureau of Economic Analysis, with two consecutive quarters of negative growth indicating recession territory. The <a href="https://www.dailywire.com/news/wall-streets-key-recession-indicator-just-went-off">yield curve inverted</a> earlier this week for United States government bonds in another sign that a recession is on the horizon. In response, the Federal Reserve is currently trying to battle inflation by increasing interest rates, including a <a href="https://www.dailywire.com/news/federal-reserve-takes-most-aggressive-action-to-fight-inflation-in-three-decades">0.75% rate hike</a> that represents the boldest anti-inflation action since 1994.
“There is this gap between how consumers are viewing this — they’re not as worried as CEOs are,” Conference Board Chief Economist Dana Peterson told <a href="https://www.wsj.com/articles/recession-fears-surge-among-ceos-survey-suggests-11655458200?mod=hp_lead_pos2">The Wall Street Journal</a>. “But CEOs are trained to look 12 to 18 months down the line. Most consumers? The next few months, or three to six months, is really what they’re thinking about.”
While the Consumer Price Index (CPI) rose <a href="https://www.dailywire.com/news/inflation-reaches-8-6-setting-new-four-decade-high">8.6%</a> year-over-year as of May, the Producer Price Index (PPI) — which tracks inflation for businesses — rose <a href="https://www.dailywire.com/news/inflation-for-businesses-continues-at-double-digit-pace">10.8%</a> over the same period, according to two recent reports from the U.S. Bureau of Labor Statistics.
A slim 10% of CEOs believe inflationary pressure will be resolved by the middle of 2022, according to the Conference Board. While the plurality predict an end to soaring price levels by the end of the year, 31% remain concerned that inflation will endure beyond 2023.
Other salient risks weighing on CEOs include the increased chance of cyberattacks amid the Ukraine conflict. Likewise, executives are attempting to strengthen their supply chains.
The Conference Board’s findings correspond with other recent polls tracking sentiment among business leaders. In CNBC’s most recent CFO Council Survey, 68% of financial executives said that a <a href="https://www.dailywire.com/news/every-single-business-leader-surveyed-in-new-poll-thinks-a-recession-is-coming">recession will occur</a> in the first half of 2023. None of the 22 respondents expect the economy to avoid a recession.
In a survey from the National Association of Manufacturers, 59% of business leaders <a href="https://www.dailywire.com/news/majority-of-manufacturers-predict-recession-within-the-next-year">said</a> inflationary pressures “make a recession more likely in the next 12 months.” Likewise, more than 90% of respondents pointed to higher raw material costs as one of the “primary business challenges” in the second quarter of 2022.
Biden, however, attributed rising inflation to “Putin’s Price Hike” and <a href="https://www.dailywire.com/news/president-biden-blames-vladimir-putin-for-record-high-inflation">pinned the blame</a> on purported corporate price-gouging, as well as wealthy Americans failing to pay higher taxes.
“Prices at the pump are a major part of inflation, and the war in Ukraine is a major cause of that. The United States is on track to produce a record amount of oil next year, and I am working with the industry to accelerate this output,” Biden said in a statement. “But it is also important that the oil and gas and refining industries in this country not use the challenge created by the war in Ukraine as a reason to make things worse for families with excessive profit taking or price hikes.”

Grocery store

New Survey Reveals When CEOs Expect A Recession To Hit

CEOs Expect A Recession Within The Next Several Months

Business

President <a href="http://dailywire.com/topic/biden-administration">Joe Biden</a> said in a Thursday <a href="https://apnews.com/article/biden-ap-interview-4d2c2f9015341f280d8078182601ec58">interview</a> with the <a href="http://dailywire.com/topic/associated-press">Associated Press</a> that a <a href="http://dailywire.com/topic/recession">recession</a> is “not inevitable,” instead encouraging Americans to wait and see whether repeated warnings from <a href="http://dailywire.com/topic/economy">economists</a> are correct.
The interview came amid a week of poor economic news. The Consumer Price Index (CPI) increased <a href="https://www.dailywire.com/news/inflation-reaches-8-6-setting-new-four-decade-high">8.6%</a> year-over-year as of May and the Producer Price Index (PPI) increased <a href="https://www.dailywire.com/news/inflation-for-businesses-continues-at-double-digit-pace">10.8%</a> over the same period in a continuation of record-high <a href="http://dailywire.com/topic/inflation">inflation.</a> The stock market also entered <a href="https://www.dailywire.com/news/bloodbath-on-wall-street-as-stock-market-plunges-into-bear-territory">bear territory</a> and the Federal Reserve <a href="https://www.dailywire.com/news/federal-reserve-takes-most-aggressive-action-to-fight-inflation-in-three-decades">hiked interest rates</a> by the highest increment since 1994. Meanwhile, the <a href="https://www.dailywire.com/news/wall-streets-key-recession-indicator-just-went-off">yield curve inverted</a>, constituting one of Wall Street’s key recession indicators.
Yet despite <a href="https://www.dailywire.com/news/even-obamas-former-economic-advisor-recognizes-corporate-greed-isnt-to-blame-for-high-inflation">economists</a> and <a href="https://www.dailywire.com/news/every-single-business-leader-surveyed-in-new-poll-thinks-a-recession-is-coming">business leaders</a> sounding the alarm, Biden is still alleging that the economy is not in dire straits.
“You&#8217;ve got serious economists who warn of a recession next year… What should Americans believe?” AP White House reporter Josh Boak asked Biden.
“They shouldn’t believe a warning. They should just say: ‘Let’s see. Let’s see, which is correct.’ And from my perspective, you talked about a recession. First of all, it’s not inevitable,” Biden replied before claiming that he <a href="https://twitter.com/BenZeisloft/status/1537643707150831622">reduced the budget deficit</a> and referred to a <a href="https://www.federalreserve.gov/publications/files/2021-report-economic-well-being-us-households-202205.pdf">survey taken last year</a> to allege that Americans have more robust savings.
Though unemployment is at near pre-recession lows and wages are nominally rising, real average hourly wages have <a href="https://www.bls.gov/news.release/realer.nr0.htm">dropped</a> 3% year-over-year as of May — meaning Americans are tightening their budgets or working more than last year to enjoy the same standard of living.
Boak noted the same reality. “They are less dependent on unemployment benefits and the government for aid, and yet more of them say they’re having trouble with meeting their weekly expenses… What’s that paradox?” he pressed. In response, Biden pivoted to the Trump administration’s “failure… to act on COVID” and Americans’ poor mental health.
Biden <a href="https://www.dailywire.com/news/biden-claims-inflation-is-worse-everywhere-but-here-thats-not-even-close-to-true">repeated his argument</a> that inflation is higher “in every other major industrial country in the world” — which Fox News correspondent Peter Doocy <a href="https://www.dailywire.com/news/thats-not-true-peter-doocy-throws-cold-water-on-white-house-claim-inflation-is-worse-everywhere-but-here">pressed</a> White House Press Secretary Karine Jean-Pierre about on Thursday. The 8.3% inflation rate seen in the United States from April 2021 to April 2022 was higher than the 7.8% rate in the United Kingdom, the 7.4% rate in Germany, the 6.8% rate in Canada, and the 2.5% rate in Japan, according to the most recent available <a href="https://www.oecd.org/sdd/prices-ppp/consumer-prices-oecd-06-2022.pdf">data</a> from the Organization for Economic Cooperation and Development (OECD).
Earlier in the AP interview, Boak pointed to the University of Michigan’s benchmark <a href="https://fred.stlouisfed.org/series/UMCSENT">Survey of Consumers</a>, which has shown consistent declines in consumer sentiment since April 2021. Yet Biden appeared to argue that respondents to the survey “had a very different view” until the Russian invasion of Ukraine.
Biden also said there was “zero evidence” that the $1.9 trillion American Rescue Plan caused inflation, then disagreed with Treasury Secretary Janet Yellen’s earlier assertion that the package could end up causing a marginal contribution to inflation.
“Now you just said two different things. You said Republicans said I caused inflation. She said it may have a marginal impact on it,” Biden told Boak. “You could argue whether it had a marginal, minor impact on inflation. I don’t think it did. And most economists do not think it did. But the idea that it caused inflation is bizarre.”
Last year, an <a href="https://www.dailywire.com/news/comparing-trump-and-bidens-covid-relief-bills">analysis</a> from the University of Pennsylvania’s Wharton School showed that the American Rescue Plan was less effective than President Donald Trump’s $2.3 trillion CARES Act, because the latter passed when the economy was at the worst point of the recession and therefore provided a more immediate boost to economic output.

President Biden Meets Virtually With Baby Formula Manufacturers To Discuss Shortage

Biden Claims Recession ‘Not Inevitable,’ Tells Americans They ‘Shouldn’t Believe’ Economist Warnings

Biden Says A Looming Recession Is 'Not Inevitable'

Associated Press

Sentiment among home builders is <a href="http://dailywire.com/topic/recession">plummeting</a> as Americans’ <a href="http://dailywire.com/topic/economy">demand</a> for <a href="http://dailywire.com/topic/housing">properties</a> begins to slow, according to a Wednesday report.
The National Association of Home Builders and Wells Fargo’s <a href="https://eyeonhousing.org/2022/06/ongoing-decline-for-builder-confidence-signals-slowing-economic-growth/?_ga=2.124207754.1482003734.1655389989-132539847.1655389989">Housing Market Index</a> fell by two points to 67 in June, reaching its lowest level since June 2020 in its sixth consecutive month of declines. A value over 50 indicates that more builders see conditions as good rather than bad.
The drop in optimism reflects high inflation and lackluster economic activity. Material costs for residential construction are 19% greater year-over-year, while <a href="https://www.dailywire.com/news/mortgage-rates-soar-to-highest-level-since-2008">mortgage rates</a> are soaring to their highest levels since 2008 — excluding many potential home buyers from the market. As a result, total housing starts declined over 14% in May, with single-family home starts falling over 9%, according to data from the <a href="https://www.census.gov/construction/nrc/pdf/newresconst.pdf">U.S. Census Bureau</a>.
Heritage Foundation research fellow Joel Griffith told The Daily Wire that although “backlogs in delivery, labor shortages, and surging input costs” are headaches for home builders, plummeting demand due to “broader macroeconomic problems” means that “builders are having difficulty unloading completed homes.”
Government-backed mortgage company <a href="https://www.freddiemac.com/pmms">Freddie Mac</a> announced on Thursday that the benchmark 30-year fixed-rate mortgage has surged to 5.78% — gaining 0.55% in a single week and marking the largest such increase since 1987. Through most of the past two years, rates have been below 3%, yet began their climb to nearly 6% in early 2022.
“A mortgage payment on a typical home with 20% down payment jumped from $1,500 to $2,355 — a stunning 57% rise in monthly payments,” Griffith remarked. “During this time, many families experience a loss of close to $2,600 annually in inflation-adjusted income. With the equities indexes officially in a bear market — a more than 20% decline across the board — families are finding that down payment resources are dwindling as well.”
Indeed, following news that the Consumer Price Index (CPI) <a href="https://www.dailywire.com/news/inflation-reaches-8-6-setting-new-four-decade-high">rose 8.6%</a> between May 2021 and May 2022, stock exchanges officially entered <a href="https://www.dailywire.com/news/bloodbath-on-wall-street-as-stock-market-plunges-into-bear-territory">bear market territory</a>. The Dow Jones Industrial Average <a href="https://www.dailywire.com/news/dow-plummets-below-30000-down-almost-20-this-year-under-biden">fell below 30,000</a> on Thursday for the first time since January 2021 amid an aggressive <a href="https://www.dailywire.com/news/federal-reserve-takes-most-aggressive-action-to-fight-inflation-in-three-decades">interest rate hike</a> from the Federal Reserve meant to combat inflation.
Optimism among home builders remains highest in the South, which scored a three-month moving average of 78 on the Housing Market Index. The West — which is home to some of the <a href="https://www.dailywire.com/news/california-cities-see-top-rental-costs">most expensive real estate</a> in the nation — saw the most severe decline of any region, falling nine points to a value of 74.
Purchase activity for luxury homes, defined as the top 5% of the market, is <a href="https://www.dailywire.com/news/housing-prices-are-now-becoming-too-high-even-for-the-wealthy">quickly declining</a>. Sales fell 18% from February to April 2022 compared to the same period last year, according to a report from Redfin obtained by The Wall Street Journal.
Between the second quarter of 2020 and the first quarter of 2022, the median home sales price has increased from $322,600 to $428,700 — a 33% rise in less than two years, according to the <a href="https://fred.stlouisfed.org/series/MSPUS">U.S. Census Bureau</a>.
Griffith told The Daily Wire that a return to more affordability requires the federal government to “reduce its subsidies of the housing market” through the government-sponsored enterprises like Freddie Mac and Fannie Mae. Meanwhile, the Federal Reserve must “cease purchasing mortgage-backed securities” — a decision that Fed Chair Jerome Powell <a href="https://www.dailywire.com/news/watch-powell-admits-that-fed-policies-are-behind-high-home-prices">acknowledged</a> last year as a factor behind soaring home prices. Griffith also said that governments worldwide must “stop COVID-related interference with supply chains.”

Row of houses with garbage and recycling bins on roadside

Home Builders Have Trouble Selling Properties As Mortgage Rates Rise, Prices Stay Elevated

Home Builders Sentiment Plummets To Levels Seen In June 2020

Housing

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