I see Powell is at it again!

[newdayneeded]

Helping the middle class worker by again increasing rates yesterday....today, the dow is down 633. now we get to a watch grand or more drop of our 401k balance.

Plus a huge percentage of middle class were thinking of getting out of their apartment and finally getting a house will take a pass because of interest rates. Of course, it won't matter to them anyway because in a few months do to Powell's decisions, layoffs will start.

Economists need to stop looking at the 1960s playbook and instead just let the economy grow!

[gab13by13]

1. Powell is waiting for a recession

before he stops raising rates. When unemployment hits 5% he may stop?

[Fiendish Thingy]

7. 5% is considered "full employment"

The historical average for the Fed funds rate is 5-7%

Currently, the rate is at 4.25-4.50%

As inflation continues to cool, I would expect the Fed to continue with smaller hikes until we are somewhere in 5% territory.

Assuming the GOP doesn’t take the world economy over a cliff over the debt ceiling, rates could level off by Q2 in 2023.

[gab13by13]

8. The current "unemployment rate" is 3.7%

[Fiendish Thingy]

11. Yup, so that gives the fed some wiggle room to put on the brakes

[edhopper]

2. Inflation

also hurts the middle class. Higher rates also hurt corporations who now can't get free money loans. And it helps people who want interest savings and not have to put their retirement accounts into the volatile market. It's always a tightrope.

[multigraincracker]

3. stocks go up, then they go down.

Home prices are on the way down, because rates are up.
So, don't take out a loan. In the mean time try saving more and take advantage of those rates. Im doing great.

[Fiendish Thingy]

4. So you'd prefer to see double digit inflation?

Because that would be the result of “letting the economy grow”.

Were you around in the late 70’s/early 80’s when inflation was 12%, mortgages were 16%?

And then we had a recession anyway.

[moonshinegnomie]

6. its one thing to raise rates to cool the economy

its another thing to go to far.

inflation is already coming down and quickly
the last 6 months inflation has been running at 4.6%
for the last 3 months 3.6%

[Fiendish Thingy]

9. Um, inflation was 7.1% last month

Getting lower, but not out of the woods yet.

[moonshinegnomie]

13. That was for the last 12 months

Look at a 6 month chart instead and it’s running at 4.6% instead. The 3 month rate is 3.6%

[Yavin4]

16. And 12 months ago, we dealing with supply chain shocks

Remember the story about the shipping containers being backed up at the piers in LA?

[Fiendish Thingy]

20. The annualized CPI figure is the standard measurement most commonly used. Nt

[Dave says]

15. Record corporate profits and rising inflation

What does that suggest?

Almost every vector of the economy is dominated by 1, 2, or 3 mega-corporations. If you want the product, you pay the price. There aren’t alternatives except to go without. The only thing that holds back imposition of growing monopoly rents is the fear that there could be government intervention, e.g., antitrust breakup of the behemoths, taxation of runaway profits, etc.

The pandemic and its real supply-chain disruptions gave these corporations perfect cover to raise prices. And so they did. The only time trickle down economics work is when non-monopoly companies and labor attempt to keep up and inflation becomes endemic. And here we are.

So the fed will break the cycle, not by punishing the culprits, but by deflating demand via a severe recession. The pain will be felt by labor and small businesses. That’s what happened in the early eighties, that’s what will happen in 2023-2024.

I wish the world was governed by fair play, but it is not.

[moonshinegnomie]

5. wall street is already pricing in a rate cut late next year after powell gets his recession

current predicted fed funds rates

feb 4.64%
june 4.89%
december 2023 4.48%

[Fiendish Thingy]

10. I don't know where you're getting your info

Barring a recession, No rate cut is anywhere on the horizon.

[moonshinegnomie]

12. Look at fed funds futures at the cme

That’s where I get my info
Go to barchart.com and you can see the prices


Right now they are pricing in a fed ease late next year

[maxsolomon]

14. The low interest rates were overheating the housing market.

You may have noticed.

Prices were spiraling far beyond most people's ability to purchase. Now, they're dropping. Our home has increased ONE MILLION dollars in value over the last 2 decades. We've done NOTHING to improve it in that time (OK, we re-did the backyard landscaping and added an electric heat pump); it's a tear down.

Inflation is cooling more in the US than in other countries - because of the Fed's aggressive actions.

[Yavin4]

17. Powell's rate hikes have more to do with clamping down on labor than anything else.

Top talent is in its strongest negotiating position in decades, and they are demanding cost of living pay raises to match inflation. Powell needs a nasty recession to heal labor demands.

This has nothing to do with inflation which has been healed. This has everything to do with major corporations retaining top talent and preventing bidding wars.

[onenote]

19. Inflation has been "healed"? Try selling that argument to the public.

[onenote]

18. Mortgage rates peaked and have been declining for 5 straight weeks.

And mortgage applications have increased.