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Money, Banking and the Economy
RayR Offline
#451 Posted:
Joined: 07-20-2020
Posts: 5,908
She was once labeled a common everyday racist by the Congressional Black Caucus when she was the maestro of the Federal Reserve, now as Treasury Secretary, she's transformed into just another woke word salad babbling incompetent member of the Biden regime.

So Tucker asks, "Why does Janet Yellen still have her job?"

https://rumble.com/v17sy67-tucker-carlson-why-does-janet-yellen-still-have-her-job.html
frankj1 Offline
#452 Posted:
Joined: 02-08-2007
Posts: 41,958
Tucker the Putin supporter?
Screw him.
Sunoverbeach Offline
#453 Posted:
Joined: 08-11-2017
Posts: 11,782
Why did the lady buy a banana?
So that she could eat it.
RayR Offline
#454 Posted:
Joined: 07-20-2020
Posts: 5,908
Posts #452 and #453 have absolutely nothing even remotely to do with the subject of this thread.
This is a diversion, the work of REGIME SPAMBOTS.
Sunoverbeach Offline
#455 Posted:
Joined: 08-11-2017
Posts: 11,782
Thanks for pointing that out, Sir Spam-a-lot

My friend invited me to their house because nobody was there …
When I arrived, the house was empty.
Palama Offline
#456 Posted:
Joined: 02-05-2013
Posts: 19,747
Sunoverbeach wrote:
Why did the lady buy a banana?
So that she could eat it.


Or use them for banana pancakes? 🥞
Sunoverbeach Offline
#457 Posted:
Joined: 08-11-2017
Posts: 11,782
Mmmmm....... Acceptable answer
HockeyDad Offline
#458 Posted:
Joined: 09-20-2000
Posts: 43,471
Banana nut bread.
Sunoverbeach Offline
#459 Posted:
Joined: 08-11-2017
Posts: 11,782
Had a friend who made banana, coconut, & Nutella bread. Shoulda oughtta gotten details
HockeyDad Offline
#460 Posted:
Joined: 09-20-2000
Posts: 43,471
Banana and Nutella on a crepe is good eating.
Speyside2 Offline
#461 Posted:
Joined: 11-11-2021
Posts: 2,049
Yeah, you probably drink white Zinfandel with it.
HockeyDad Offline
#462 Posted:
Joined: 09-20-2000
Posts: 43,471
Speyside2 wrote:
Yeah, you probably drink white Zinfandel with it.


White Zinfandel is an abomination created in a lab.
ZRX1200 Offline
#463 Posted:
Joined: 07-08-2007
Posts: 57,432
Can’t you only get it in a box?
RayR Offline
#464 Posted:
Joined: 07-20-2020
Posts: 5,908
I heard Janet Yellen only drinks Night Train and Thunderbird because she's a BUM.
Sunoverbeach Offline
#465 Posted:
Joined: 08-11-2017
Posts: 11,782
Mad Dog 20/20 for the win
RayR Offline
#466 Posted:
Joined: 07-20-2020
Posts: 5,908
Sunoverbeach wrote:
Mad Dog 20/20 for the win


An aficionado of BUM wines are ya?
Sunoverbeach Offline
#467 Posted:
Joined: 08-11-2017
Posts: 11,782
There are times in every person's life when cheap food and drink are necessary for survival.

Might be only half of that assertion is true
rfenst Offline
#468 Posted:
Joined: 06-23-2007
Posts: 36,816
Mix of factors causes pain at pump
Why gas hit $5 per gallon, with no sign of relief on horizon

AP

DALLAS — There is little evidence that gasoline prices, which hit a nationwide average of $5 a gallon on Saturday for the first time ever, will head into reverse anytime soon.

Rising prices at the pump are a key driver in the highest inflation that Americans have seen in 40 years and everyone seems to have a favorite villain for the high cost of filling up.

Some blame President Joe Biden. Others say it’s because Russian President Vladimir Putin recklessly invaded Ukraine. It’s not hard to find people, including Democrats in Congress, who accuse the oil companies of price gouging.

As with many things in life, the answer is complicated.

What is happening?
Gasoline prices have been surging since April 2020, when the initial shock of the pandemic drove prices under $1.80 a gallon, according to government figures. They hit $3 in May 2021 and cruised past $4 this March.

On Saturday, the nationwide average for a gallon ticked just above $5, a record, according to AAA, which has tracked prices for years. The average price jumped 18 cents in the previous week, and was $1.92 higher than this time last year.
State averages ranged from $6.43 a gallon in California to $4.52 in Mississippi.

Why is this happening?
Several factors are coming together to push gasoline prices higher.

Global oil prices have been rising — unevenly, but sharply overall — since December. The price of international crude has roughly doubled in that time, with the U.S. benchmark rising nearly as much, closing Friday at more than $120 a barrel.
Russia’s invasion of Ukraine and the resulting sanctions by the United States and its allies have contributed to the rise. Russia is a leading oil producer.

The United States is the world’s largest oil producer, but U.S. capacity to turn oil into gasoline is down 900,000 barrels of oil per day since the end of 2019, according to the Energy Department.

Tighter oil and gasoline supplies are hitting as energy consumption rises because of the economic recovery.
Finally, Americans typically drive more starting around Memorial Day, adding to the demand for gas.
What can be done to get more oil?

Analysts say there are no quick fixes; it’s a matter of supply and demand, and supply can’t be ramped up overnight.
If anything, the global oil supply will grow tighter as sanctions against Russia take hold. European Union leaders have vowed to ban most Russian oil by the end of this year.

The U.S. has already imposed a ban even as Biden acknowledged it would affect American consumers. He said the ban was necessary so the U.S. does not subsidize Russia’s war in Ukraine. “Defending freedom is going to cost,” he said.
The U.S. could ask Saudi Arabia, Venezuela or Iran to help make up for the expected drop in Russian oil production, but each of these options carries moral and political considerations.

Republicans have called on Biden to help increase domestic oil production — for example, by allowing drilling on more federal lands and offshore, or reversing his decision to revoke a permit for a pipeline that could carry Canadian oil to Gulf Coast refineries.

However, many Democrats and environmentalists would howl if Biden took those steps, which they say would undercut efforts to limit climate change. Even so, it would be months or years before those measures could lead to more gasoline at U.S. service stations.

At the end of March, Biden announced another tapping of the nation’s Strategic Petroleum Reserve to bring down gas prices. The average price per gallon has jumped 77 cents since then, which analysts say is partly because of a refining squeeze.

Why is U.S. refining down?
Some petroleum refineries shut down during the first year of the pandemic, when demand collapsed. While a few are expected to boost capacity in the next year or so, others are reluctant to invest in new facilities because the transition to electric vehicles will reduce demand for gasoline over the long run.
When will it end?

It could be up to motorists — by driving less, they would reduce demand and prices would follow suit.

“There has got to be some point where people start cutting back, I just don’t know what the magic point is,” said Patrick De Haan, an analyst for the gas-shopping app GasBuddy. “Is it going to be $5? Is it going to be $6, or $7? That’s the million- dollar question that nobody knows.”

How are drivers coping?
On Saturday morning at a BP station in the Brooklyn borough of New York, computer worker Nick Schaffzin blamed Putin for the $5.45 per gallon he was shelling out and said he will make sacrifices to pay the price.
“You just cut back on some other things — vacations, discretionary stuff, stuff that’s nice to have but you don’t need,” he said. “Gas you need.”

Sunoverbeach Offline
#469 Posted:
Joined: 08-11-2017
Posts: 11,782
She accused her husband of being too immature. Then he told her to get out of his fort
rfenst Offline
#470 Posted:
Joined: 06-23-2007
Posts: 36,816

How the Fed and the Biden Administration Got Inflation Wrong

Officials applied an old playbook to a new crisis. ‘We fought the last war.’


WSJ

In recent weeks, top officials in the Biden administration and Federal Reserve have publicly conceded that they made mistakes in their handling of inflation.

Behind their errors was a misreading of the economy.

Advisers to President Biden and Fed officials worried the Covid-19 pandemic and related restrictions would bring similar consequences to the 2007-09 financial crisis: weak demand, slow growth, long periods of high unemployment and too-low inflation.

So they applied the last playbook to the new crisis. The Fed redeployed low-interest-rate policies that it believed had been effective and generally benign, and promised not to pull back prematurely. Elected officials concluded they had relied too heavily on the Fed previously, and decided to spend more aggressively this time, starting with President Donald Trump and capped off with President Biden’s $1.9 trillion stimulus.

Moreover, many Democrats saw their control of the White House and Congress as a rare opportunity to shift Washington’s priorities away from tax cuts favored by Republicans and toward expansive new social programs.

But the pandemic economy turned out to be fundamentally different. While the financial crisis primarily dented demand by businesses and consumers, the pandemic undercut supply, resulting in persistent shortages of raw materials, container ships, workers, computer chips and more.

Unemployment fell and inflation rebounded more quickly than policy makers expected—yet they stuck with the old playbook. That exacerbated the supply-and-demand mismatches and helped drive inflation up, reaching 8.6% in May, its highest in 40 years.

After the 2007-09 financial crisis, total spending by consumers, business and government, unadjusted for inflation, remained stuck below the precrisis trend for years. By contrast, in the first quarter of 2022, it had shot to 5% above its prepandemic trend, or roughly $1 trillion, annualized, boosted by a tidal wave of federal stimulus.

Jason Furman, a Democrat who was chairman of President Barack Obama’s Council of Economic Advisers from 2013 to 2017, said the latest effort tackled the wrong crisis. “We fought the last war,” he said.

“It was a complicated situation with little precedent,” Randal Quarles, a Republican and the Fed’s vice chair for supervision from 2017 until the end of last year, said last month. “People make mistakes.”

Private forecasters and nonpartisan congressional scorekeepers similarly failed to anticipate the magnitude and duration of higher inflation. There was also bad luck. New Covid variants, Russia’s invasion of Ukraine and China’s Covid-related lockdowns have made a bad situation worse. And high inflation isn’t solely the result of U.S. policy errors: It will end the year at 7.2% in Germany, 8.8% in Britain, 6.1% in Canada, and 6.8% in the U.S., J.P. Morgan projects.

Treasury Secretary Janet Yellen and other White House officials have argued that the stimulus was worth it because it helped to drive unemployment down quickly to below 4%, averting the prolonged high unemployment of the previous decade.

“Our economy has recovered more quickly than our peers’ around the world, with a historically strong and equitable labor market recovery and historic reductions in human suffering,” said Brian Deese, director of the White House National Economic Council.

Officials have acknowledged that inflation is unlikely to recede quickly. Now they are scrambling to rectify their earlier miscalculations, a process that carries new risks of recession.

A year ago, Fed officials were projecting that inflation, using their preferred measure, would recede to 2.1% by the end of this year. They now see it at twice that, and unlikely to return to their 2% target before 2025. They have raised short-term interest rates by three-quarters of a percentage point, and officials could weigh raising rates by three-quarters of a percentage point at their meeting this week, accelerating the most rapid adjustment in decades.

Officials hope for a “soft landing,” a slowdown that curtails inflation without a recession. They also acknowledge how difficult the task is—and regret not starting sooner.

“If you look back in hindsight then, yes, it probably would’ve been better to have raised rates earlier,” Federal Reserve Chairman Jerome Powell said in an interview last month.

Ms. Yellen made headlines on June 1 when she acknowledged that she and other Biden administration officials had erred in assuring the public a year earlier that higher inflation would be transitory. In Washington, where policy makers rarely admit error, the administration’s critics pounced on the acknowledgment. Inflation worries have stalled Mr. Biden’s legislative priorities and eroded his approval ratings. Consumer confidence has plummeted, polls suggest. Polls suggest Democrats could face stinging defeats in this fall’s midterm elections.

When they set out to confront the pandemic in 2020 and 2021, policy makers were motivated by lessons of the expansion after the 2007-09 financial crisis, the slowest on record. It took six years for the jobless rate to fall from 10% to 5%.

The initial hit from the pandemic and shutdowns sent unemployment to 14.7%.

Mr. Trump in 2020 signed off on more than $3 trillion of federal relief, passed with bipartisan majorities in Congress. The Fed, deploying strategies used after the financial crisis, pushed short-term interest rates to near zero, committed to keep them there, and began buying bonds to keep long-term rates down.

When Ms. Yellen, who wasn’t deeply involved in Mr. Biden’s campaign, briefed him by videoconference in August 2020, she told him that after an initial burst of stimulus following the 2009 downturn, austerity had slowed the expansion, according to people who were on the call. With interest rates so low, she added, the government could avoid repeating that mistake by borrowing cheaply.

“There is a huge amount of suffering out there,” she said in a September 2020 interview, and supported additional stimulus.

The pandemic has caused lasting disruptions to global supplies of a range of goods and services, causing nagging shortages and upward pressure on prices that would likely have occurred even without stimulus. While supply has been slow to rebound, demand for goods and services recovered quickly.

By December 2020, the unemployment rate had fallen to 6.7%. It had taken three years to fall to that level after the 2007-09 recession.

Policy makers didn’t change course. House Democrats in May 2020 had approved a $3 trillion stimulus bill, and continued to back that figure, citing Mr. Powell’s support for targeted aid.

Fed officials and Mr. Biden’s advisers, many of whom had served either under Mr. Obama or, like Ms. Yellen, at the Fed during the financial crisis, remained haunted by the slow recovery of the 2010s and fears that new waves of Covid could derail the nascent upturn. Moreover, inflation had been below the Fed’s goal for more than decade. This also made them confident they had the scope to act further.

“We know from the previous expansion that it can take many years to reverse the damage” of prolonged high unemployment, Mr. Powell said in a February 2021 speech.

Politics, not just economics, figured in stimulus decisions. Many Democrats were angered that a decade earlier Congressional Republicans had pressed Mr. Obama to accept fiscal austerity to reduce budget deficits, then increased deficits to cut taxes and boost military spending under Mr. Trump. Democrats saw deficit-financed stimulus this time as a vehicle to advance expanded social programs, such as an enriched child tax credit they hoped to make permanent. In progressive circles, some lawmakers embraced the ideas of “modern monetary theory,” which posited that as long as inflation was low, there was no limit to how much Washington could borrow.

Mr. Biden likened his ambitions to those of Lyndon B. Johnson’s Great Society during the 1960s. “This is the first time we’ve been able to, since the Johnson administration and maybe even before that, to begin to change the paradigm,” he said after signing the stimulus into law in March.

In December 2020, after Mr. Trump had lost the election to Mr. Biden but had not conceded, he argued for $2,000 in additional relief checks to millions of individuals. Democratic candidates in Georgia’s Senate runoff elections picked up the call.

They won, giving control of the Senate to Democrats. Progressive lawmakers pressed for fast action on stimulus.

Days before inauguration, Mr. Biden and his closest advisers agreed on the $1.9 trillion plan, which included $350 billion in aid for state and local governments, $300 a week in extra unemployment benefits through the first week of September, and, fulfilling the Georgia Democrats’ promises, $1,400 relief checks, an addition to $600 passed by Congress in December.

Some economists warned this would lead to inflation, most prominently Harvard University’s Lawrence Summers, a former Treasury secretary. He estimated monthly household income was about $25 billion to $30 billion below what it would be in a normally functioning economy. He estimated the stimulus was near $200 billion a month and would fill that “output gap” many times over. Mr. Furman joined in those criticisms.

Their criticism frustrated White House officials because both were prominent Democrats who had served under Mr. Obama. Ms. Yellen, who was new to Mr. Biden’s team, was in a delicate position. When Mr. Biden completed the $1.9 trillion proposal in January, she wasn’t in the meeting, according to people familiar with the matter.

Ms. Yellen believed Mr. Summers might have a valid point with his analysis, according to people familiar with her thinking at the time. But based on her experience of the last expansion, she believed and repeatedly advised Mr. Biden that doing too little was a greater risk than doing too much, these people said. “The best thing we can do is act big,” she told lawmakers. Her views on inflation carried particular weight: She had chaired the Fed from 2014 to 2018 and over two decades had earned a reputation as an astute forecaster.

The Fed’s response was similarly anchored in a reading of the previous decade, when its overriding concern wasn’t high inflation but low inflation and stagnation, as Japan had suffered. Officials unveiled a policy framework in August 2020 that sought to push inflation modestly above the 2% target so as to make up for prior misses.

To follow through on the new strategy, they signaled they would keep rates at zero until the economy reached what Fed officials called “maximum employment,” the most that can be sustained without causing inflation. Such commitments were another feature of the postcrisis playbook designed by former Fed Chairman Ben Bernanke and Ms. Yellen.

Maximum employment is hard to estimate in normal times and was even more so as the pandemic receded. When inflation began to surge in June, Fed officials thought it transitory in part because unemployment was still 5.9%; it had fallen as low as 3.5% in 2019 without inflation going up. Rather than pivot their focus to inflation, they elected to stand by their new commitment to drive unemployment down further before raising rates.

Until November 2021, the Fed was adding more stimulus by buying $120 billion of Treasury and mortgage-backed bonds a month. Such purchases are aimed at holding down long-term interest rates. Officials had said they would “taper” those monthly purchases to zero before starting to raise rates.

Mr. Powell had wanted to move carefully because he feared a rerun of the “taper tantrum” in 2013, when investors, worried about an end to the Fed’s postcrisis bond buying, sent long-term Treasury yields up sharply. In early 2021, Mr. Powell urged his colleagues to delay any public discussion about tapering, according to people familiar with the deliberations. Once inflation began to rise, he began telegraphing plans to taper but did so gradually, spreading the debate over several policy meetings last summer.

“Tapering is the thing that really got us in this bind. We couldn’t lift off until we got it over with,” said Fed governor Christopher Waller. “We didn’t start fast enough, and we didn’t go fast enough at first.”

Mr. Quarles said in hindsight the Fed should have begun reducing bond purchases last September; it phased them out between November and this past March.

Before the pandemic, Mr. Summers had warned of a chronic shortfall of demand and low inflation, a combination dubbed “secular stagnation.” But after Mr. Biden’s stimulus passed in March 2021, his concerns shifted to excess demand and inflation. The Fed’s job is to take the punch bowl away just as the party gets going, a former chairman once quipped. Mr. Summers compared the Fed’s new framework to waiting “until we see a bunch of drunk people staggering around.”

Mr. Summers was in the minority. Many professional economists, using models similar to those used by Mr. Powell and Ms. Yellen, agreed with them that the inflation surge would be transitory. In July 2021, private forecasters surveyed by The Wall Street Journal projected inflation would recede to 2.4% by the end of 2022. They now project 4.8% at year-end.

Where in Americans’ household budgets is inflation hitting the hardest? WSJ’s Jon Hilsenrath traces the roots of the rising prices to learn why some sectors have risen so much more than others. Photo Illustration: Laura Kammermann/WSJ
“We used econometric models estimated off the last two decades or so of data. During that period, inflation was close to 2%,” said St. Louis Fed President James Bullard. “Then you tried to use that model when you got a gigantic pandemic shock; it wasn’t the right model to use.” Eventually, he said, the Fed had to “chuck the whole playbook.”

Other central banks also admit to getting inflation wrong and are racing to raise interest rates. The Reserve Bank of Australia, which until last fall planned to keep rates near zero until 2024 because it expected inflation to stay low, just raised them. “That’s embarrassing. We should forecast this better. We didn’t,” said its governor, Philip Lowe.

Mr. Biden hasn’t won much credit for a strong labor market because rising inflation has cut into household paychecks and because many goods have been harder to buy. As consumer confidence has fallen, Mr. Biden’s approval ratings have become mired around 40%, according to polls.

“In some ways, history may have steered the Fed a little bit wrong, and the fiscal policy as well,” said Mr. Bernanke at a public event last month. “Fiscal policy makers seem to have overlearned the lessons of austerity from the post-financial crisis period.”
BuckyB93 Offline
#471 Posted:
Joined: 07-16-2004
Posts: 12,397
Market took a big dump today.

Unfortunately I think there is more to come before it starts to do a real rebound. Other than auto deposits into my 401(k), IRAs, and core holdings in a brokerage account, I'll sit on cash for the time being.

Good chance we have a recession on the horizon. Just in time when I'll be finishing up my latest degree in the fall and looking for a real job (sigh). Hopefully IT jobs are recession proof.
rfenst Offline
#472 Posted:
Joined: 06-23-2007
Posts: 36,816
BuckyB93 wrote:
Market took a big dump today.

Unfortunately I think there is more to come before it starts to do a real rebound. Other than auto deposits into my 401(k), IRAs, and core holdings in a brokerage account, I'll sit on cash for the time being.

Good chance we have a recession on the horizon. Just in time when I'll be finishing up my latest degree in the fall and looking for a real job (sigh). Hopefully IT jobs are recession proof.

Cash is losing value at an annualized rate of 8+% right now, so putting it in a savings account is the worst place right now. Hope it's not a large part of your portfolio.
RayR Offline
#473 Posted:
Joined: 07-20-2020
Posts: 5,908
The central planning banksters suck. End the FED. End the Yellen too.
BuckyB93 Offline
#474 Posted:
Joined: 07-16-2004
Posts: 12,397
rfenst wrote:
Cash is losing value at an annualized rate of 8+% right now, so putting it in a savings account is the worst place right now. Hope it's not a large part of your portfolio.


Agreed. Free cash is not a large portion of my portfolio. My retirement stuff is just set on auto pilot with regular deposits and buys into broad based index funds. 401(k) is all in the Russell 1000 as that is the best pick, in my opinion, on what they had to offer. IRAs are mostly just an S&P 500 index, some bonds, a splash of NASDAQ 100, a little bit energy sector ETF and some domestic small cap value ETF (AVUV). They are pretty much hands off, and let it ride. A diehard Boglehead would say to add some international funds (around 20%) using a broad market international EFT like VXUS but I'd rather put my money into the US. Besides, most US based companies already have grips into international markets.

Brokerage account is, again, majority S&P 500 index fund and some bonds wrapped up in an ETF under the ticker of NTSX. Some free cash sits in there too as a savings account/emergency fund if needed. I did the swing trading thing on this account a few years ago, made some nice gains but I don't have the time to do that anymore so just doing boring index fund and let it ride.

I realize that inflation will eat away at the buying power of the free cash but it's good to have some liquid money available for unanticipated expenses. Plus gonna have to buy my son a car within a year. He goes for his driver's test this coming Saturday. Originally it was scheduled for early July but he was able to bump it up a couple weeks through his driver's ed school. We have a pinky promise deal on buying him a car. I pay 25%, the Ex pays 25%, he pays 25% and grandparents signed up to pay 25%.
Sunoverbeach Offline
#475 Posted:
Joined: 08-11-2017
Posts: 11,782
I stayed up all night wondering where the sun went, then it dawned on me.
rfenst Offline
#476 Posted:
Joined: 06-23-2007
Posts: 36,816
Powell: ‘Soft landing’ still Fed’s inflation policy goal

Members of both parties skeptical on plans to slow growth, avoid recession


Associated Press

WASHINGTON — Federal Reserve Chair Jerome Powell sought Wednesday to reassure the public that the Fed will raise interest rates high and fast enough to quell inflation, without tightening credit so much as to throttle the economy and cause a recession.

Testifying to the Senate Banking Committee, Powell faced skeptical questions from members of both parties about the Fed’s ability to tame inflation.

Democrats wondered whether the Fed’s accelerated rate hikes will succeed in curbing inflation or might instead just tip the economy into a downturn. Several Republicans charged that the Fed under Powell had moved too slowly to begin raising rates and now must speed up its hikes.

Powell acknowledged that a recession is possible as the Fed pushes borrowing costs steadily higher. “It’s not our intended outcome, but it’s certainly a possibility,” he said in response to a question from Sen. John Tester, D-Mont.

Powell stressed that the Fed’s primary goal is to reduce inflation but said he still hopes to achieve a “soft landing” — a reduction in inflation and a slowdown in growth without triggering a recession and high unemployment.

“We do think it’s absolutely essential that we restore price stability, really for the benefit of the labor market as much as anything else,” Powell said on the first of two days of testimony as part of the Fed’s semiannual report to Congress.
He said the pace of future rate hikes will depend on whether — and how quickly — inflation starts to decline.

The central bank’s accelerating rate increases — starting with a quarter-point hike in its key short-term rate in March, then a half-point increase in May, then three-quarters of a point last week — have alarmed investors and led to sharp declines in the financial markets.

Concerns are growing that the Fed will end up tightening credit so much as to cause a recession. This week, Goldman Sachs estimated the likelihood of a recession at 30% over the next year and at 48% over the next two years.

A senior Republican on the Banking Committee, Sen. Thom Tillis of North Carolina, on Wednesday accused Powell of having taken too long to raise rates, and like many other Republicans, also blamed President Joe Biden’s $1.9 trillion financial stimulus package, approved in March 2021, for being excessively large and exacerbating inflation.

Many economists agree that the additional spending contributed to rising prices by magnifying demand even while supply chains were snarled by COVID-19-related shutdowns and labor shortages were driving up wages. Inflation was further worsened by Russia’s invasion of Ukraine.

At Wednesday’s hearing, Sen. Elizabeth Warren, D-Mass., asked whether Powell’s rate hike plans would reduce gas or food prices.

Powell acknowledged that they wouldn’t. Instead, he said, higher borrowing costs for things like mortgages, auto loans and credit cards, resulting directly from the Fed’s hikes, can help slow consumer demand and inflation pressures.
rfenst Offline
#477 Posted:
Joined: 06-23-2007
Posts: 36,816
UK inflation rate reaches new high


LONDON — Britain’s inflation rate hit a new 40-year high of 9.1% in the 12 months to May, figures showed Wednesday, as Russia’s war in Ukraine drove food and fuel prices ever higher.

The Office for National Statistics said consumer price inflation rose from 9% in April, itself the highest level since 1982. The increase was in line with analysts’ expectations and signals no quick end to the cost-of-living squeeze facing millions in Britain. The Bank of England says inflation could hit 11% in October when a cap on domestic energy bills is raised.

Inflation is soaring worldwide. In May, U.S. consumer prices surged 8.6%, the biggest jump since 1981, while the 19 nations that use the euro saw a record 8.1% increase.
rfenst Offline
#478 Posted:
Joined: 06-23-2007
Posts: 36,816
30-year mortgage rate rises to 5.81%


Orlando Sentinel

WASHINGTON — Average long-term U.S. mortgage rates inched up this week following the biggest jump in 35 years last week.

Mortgage buyer Freddie Mac reported Thursday that the 30-year rate ticked up to 5.81% this week, from last week’s 5.78%. Last week’s average — which jumped more than a half-point from the previous week — was the highest since November 2008 during the housing crisis. One year ago, the average 30-year rate was 3.02%.

The average rate on 15-year, fixed-rate mortgages rose to 4.92% from 4.81% last week. A year ago, the rate was 2.34%.
Higher borrowing rates appear to be slowing the housing market, an important pillar of the economy.
Sunoverbeach Offline
#479 Posted:
Joined: 08-11-2017
Posts: 11,782
A courtroom artist was arrested today for an unknown reason... details are sketchy.
DrMaddVibe Offline
#480 Posted:
Joined: 10-21-2000
Posts: 52,211
Damn Putin's war.horse
RayR Offline
#481 Posted:
Joined: 07-20-2020
Posts: 5,908
DrMaddVibe wrote:
Damn Putin's war.horse


Ya, it's like Putin is destroying America from without like Biden is destroying America from within.

I heard the sanctions on Russian oil are making Putin richer so he can make more guns and stuff.
China, India, and Turkey are gladly gobbling up all that oil that the sanctioning nations are banning.
Sunoverbeach Offline
#482 Posted:
Joined: 08-11-2017
Posts: 11,782
Claustrophobic people are more productive thinking out of the box
rfenst Offline
#483 Posted:
Joined: 06-23-2007
Posts: 36,816
Russia slips into historic default amid sanctions


Bloomberg News

Russia defaulted on its external sovereign bonds for the first time in a century, the culmination of ever-tougher Western sanctions that shut down payment routes to overseas creditors.

For months, Russia had found paths around the penalties imposed after the Kremlin’s invasion of Ukraine. But at the end of the day Sunday, the grace period on about $100 million of trapped interest payments due May 27 expired, a deadline considered an “Event of Default” if missed.

The route to this point has been far from normal, as Russia has the resources to pay its bills — and tried to do so — but was blocked by the sanctions.

Those restrictions also mean there’s huge uncertainty about what comes next, and about how investors can go about getting their money.

Given the damage already done to the economy and markets, the default is also mostly symbolic for now, and matters little to Russians dealing with double-digit inflation and the worst economic contraction in years.

But still, it’s a grim marker in the country’s rapid transformation into an economic, financial and political outcast.

The nation’s eurobonds have traded at distressed levels since the start of March, the central bank’s foreign reserves remain frozen, and the biggest banks are severed from the global financial system.

Russia has pushed back against the default designation, saying it has the funds to cover any bills and has been forced into non-payment.
As it tried to twist its way out, it announced last week that it would switch to servicing its $40 billion of outstanding sovereign debt in rubles, criticizing a “force-majeure” situation it said was manufactured by the West.
HockeyDad Offline
#484 Posted:
Joined: 09-20-2000
Posts: 43,471
It’s prolly just transitory.
Dg west deptford Offline
#485 Posted:
Joined: 05-25-2019
Posts: 2,810
The Ruble is killing it! Anyone who bought the dip when the war started is very happy!
Waaay higher than pre-war levels

Turns out oil & natural gas are valuable. Who knew?

The socialist oligarchy may miss a boat or 2 but they can afford new super yachts now thanks to BBB aka make Russia great again

Maybe Bravo can do a below deck Russia series

Sure the proles will suffer but it's for the common good, right comrades?

Good luck G7 but Biden doesn't have the good sense to take Macrons advice. The only answer is American oil & natural gas production
DrMaddVibe Offline
#486 Posted:
Joined: 10-21-2000
Posts: 52,211
Pedo Joe isn't ever going to go back off the Green New Deal.

This is the folly of the Left. They believe the carbon garbage...when the plants need us and we need the plants. It isn't that hard.
Sunoverbeach Offline
#487 Posted:
Joined: 08-11-2017
Posts: 11,782
Entered what I ate today into my new fitness app and it just sent an ambulance to my house.
frankj1 Offline
#488 Posted:
Joined: 02-08-2007
Posts: 41,958
HockeyDad wrote:
It’s prolly just transitory.

great line, well played.
rfenst Offline
#489 Posted:
Joined: 06-23-2007
Posts: 36,816
What to Do Now to Prepare for the Next Recession


NYT

In the face of rising inflation, the Federal Reserve is trying to cool down the economy, raising interest rates by 0.75 percentage point in June, the biggest increase since 1994. Jerome Powell, the chair of the Federal Reserve, has vowed to try to engineer a “soft landing” — in which demand drops, bringing prices down, without tipping the economy into a recession and throwing hundreds of thousands of Americans out of their jobs.

But the Federal Reserve doesn’t have a good track record on pulling off that particular magic trick. Almost every other attempt since the 1950s to reduce inflation by tightening monetary policy has ended in an economic downturn. In congressional testimony late last month, Mr. Powell admitted that a recession was “certainly a possibility.”

“A slowing economy,” Wendy Edelberg, the director of the Hamilton Project at the Brookings Institution, told me, “is always, in my mind, at risk of going into a recession. It’s just hard for an economy to slow smoothly and without pain.”

Even if the Fed pulls it off, there are plenty of other economic risks that threaten to send us into a recession. The surge in spending that fueled rapid economic growth after the initial pandemic lockdowns stems from pent-up demand created by the combination of Americans staying home and receiving financial assistance from the federal government. But both of those engines are slowing, and with them consumer spending is likely to slow, too — as discretionary spending already has in response to inflation. Not to mention the risks posed by the war in Ukraine and ongoing supply chain snarls.

Given everything that is happening, it is quite probable, if not assured, that the country is headed for an economic downturn in the near future. That makes now the time to prepare so that as few Americans as possible suffer. And there are plenty of things lawmakers can do if they are able to find the political will to act.

Perhaps the program most obviously in need of changes is unemployment insurance. Congress acted to shore up the program in the early days of the pandemic, expanding benefit eligibility to people typically left out, like tipped restaurant workers and gig workers, adding weeks of benefits and increasing them by $600 a week. Without those emergency actions, however, many Americans would most likely have gotten very little pay for a paltry number of weeks — or been unable to qualify at all.

A big problem with unemployment is that it’s not truly one cohesive program, but 53 different ones that vary state to state and territory to territory. “Really your economic security depends on where you live,” Rebecca Dixon, the executive director of the National Employment Law Project, said. States set their own rules for who qualifies, how big benefits are and how long they last. In Mississippi, for example, maximum benefits are $235 a week, compared with $974 in Massachusetts. Congress should set a robust floor for all of those rules. All states used to offer at least 26 weeks of compensation; that could be mandated and even increased. Benefits have to grow as wages do, or they will fail to offer enough of a stopgap to keep workers from slipping into destitution after losing their jobs.

It is crucial to put changes like these in place before a recession so that the program can shield us from financial calamity. But people lose jobs all the time even in a dynamic economy, and they need a baseline of support to turn to until they get back on their feet. “We make temporary stints of unemployment personal financial crises for families in ways that other countries really don’t, and it hurts a lot of people for no real benefit,” said Sharon Parrott, president of the Center on Budget and Policy Priorities.

The federal government also has to step in and fund the system better. Right now it’s up to states to raise taxes enough on employers in good times to ensure an adequate fund in bad times, but that’s often a hard sell. “It pits employers and their taxes against working people,” Ms. Dixon said. And, of course, as Ms. Parrott noted, “Employers like low taxes.” Lawmakers often respond by lowering taxes and failing to refresh unemployment funds ahead of the next downturn.

“That makes them more reluctant to be more generous when the economy needs the unemployment insurance system to be more generous,” Dr. Edelberg said. The federal government backstops the program, but states have to pay the money back, often leading them to choose between raising taxes and cutting benefits, and many have gone with the latter. If the federal government took over more responsibility for the funding, the incentives would align toward a system adequate enough to support people under all conditions.

More federal money could also help states upgrade their outdated technology systems, which kept crashing at the start of the pandemic. Even changes as small as ensuring that the application sites work on mobile phones or having ways for workers to reset their pins without receiving a new one in the mail could make the system more accessible, especially when thousands of people need to call on it at once.

“We really just need to sit down and take a look and fix it,” Ms. Dixon said of the unemployment system. “It’s not working.”

Another emergency action Congress took early in the pandemic was expanding eligibility for tax credits to make the health insurance that is available on the Affordable Care Act exchanges more affordable. Medicaid and the Children’s Health Insurance Program also stopped kicking people off for fluctuations in income and personal circumstances, contributing to a 23 percent increase in enrollment in both after two years of declines. If those efforts were extended and the government ensured that people could get Medicaid in states that have refused to expand it, fewer people would be at risk of losing access to health care when economic disaster strikes. “You wouldn’t have to come in and try to do quite so much on an emergency basis,” Ms. Parrott said. “You would have an automatic way to shift people into different kinds of coverage during a recession.”

And then there are income supports like the child tax credit, which was expanded last year to reach all families up to a certain income threshold and send monthly payments based on their children’s ages. The payments helped reduce poverty and financial instability. They expired at the end of last year, but if they were extended permanently, it would mean that “when a recession hits and many more people have no income, the full credit is available to them,” Ms. Parrott said, keeping their families from falling into poverty.

Better still, if it’s an established program that has already enrolled those who are eligible, that makes it easier for Congress to send more money to them in a recession. “It provides a stable and predictable source of income in good times or bad,” said Hilary Hoynes, a professor of economics at the University of California, Berkeley. “It just provides a floor.”

One important overarching change would be to mandate that some of these programs respond automatically to changing economic conditions. Turning them into so-called automatic stabilizers, or benefits that kick into higher gear when the economy flatlines without Congress taking any action, would ensure that a robust safety net is available to catch everyone no matter what the overarching political situation is.

Food stamps already work this way, to some extent. The Supplemental Nutrition Assistance Program is an entitlement, which means that as more people experience financial hardship and become eligible, the federal government steps up its spending to make sure they can get benefits. “As your earnings drop down, you automatically gain eligibility, or your benefit increases,” Dr. Hoynes said. Unlike, say, the rigidly block-granted Temporary Assistance for Needy Families cash assistance program, SNAP increases quickly and robustly in a downturn.

Still, in both the Great Recession and the pandemic, Congress had to act to increase food stamps to battle such extreme income losses. That could instead be mandated: As the unemployment rate rises, SNAP benefits could automatically increase by certain percentage points. Eligibility restrictions could also automatically loosen to keep families who have suddenly lost income fed while injecting quick stimulus into the economy.

Unemployment insurance could automatically add weeks as unemployment shoots up, given that people will be more likely to be out of work longer in a weak economy. The program already has extended benefits that are meant to be triggered by unemployment reaching certain levels in each state, but those levels are set so high that they rarely, if ever, are met. Rental assistance similar to what Congress offered last year could receive an influx of funding when tenants face mass eviction. More federal funding for Temporary Assistance for Needy Families could automatically be sent to states so that they could help more people. Federal aid to state and local governments could flow based on decreases in taxable income that drain their coffers.

The important thing is to do these things now, not in the middle of an epic economic meltdown. “It is very, very hard to stand up a program in the middle of a crisis,” Dr. Edelberg noted. During the pandemic, rental assistance took months to actually reach tenants as states scrambled to create portals and programs. The Paycheck Protection Program botched many parts of its rollout. “Putting this infrastructure in place ahead of time is critical,” she said.

An adequate response to financial hardship shouldn’t depend on the political alignment of Congress and the White House, but right now it does. Republicans may have been motivated to back the initial rounds of Covid relief because they controlled the Senate and White House and risked shouldering the blame for a poor response. The nature of the crisis was also so widespread and so urgent that it prompted lawmakers to act quickly. Once Republicans were out of power in 2021, however, they refused to vote for any further stimulus. “My worry is that with Congress being so divided, in the next recession they may not be able to agree,” Ms. Dixon said.

The barriers standing in the way of congressional action are not hard to see, however. Once a crisis passes, it’s difficult to get lawmakers to focus their limited attention on fixing systems to be ready for the next one. All of the early pandemic enhancements to unemployment insurance, for example, have expired, and reforming the system didn’t even make it into the ultimately doomed Build Back Better package. Lawmakers may enjoy the opportunity to swoop in during hard times and vote to make changes as a way to show they’re being responsive, an opportunity that would diminish if our systems were set up to respond on their own.

“Congress wants to be seen as saving the day,” Ms. Dixon said. “But increasingly we run the risk of them not being able to agree on what that looks like, and working people are the ones who will suffer.”



Bryce Covert (@brycecovert) is a journalist who focuses on the economy, with an emphasis on policies that affect workers and families.
RayR Offline
#490 Posted:
Joined: 07-20-2020
Posts: 5,908
No worries....the lizard people are here to help.
HockeyDad Offline
#491 Posted:
Joined: 09-20-2000
Posts: 43,471
The recession is already here.
RayR Offline
#492 Posted:
Joined: 07-20-2020
Posts: 5,908
...thanks to the green scaley lizard people. 🦎🍉🦎🍉🦎🍉🦎🍉🦎
rfenst Offline
#493 Posted:
Joined: 06-23-2007
Posts: 36,816
Bill to grant crypto firms access to Federal Reserve alarms experts


The legislation would require the Fed to give crypto banks access to its payment rails. Some say that would be destabilizing.


WAPO

A wave of notoriously risky cryptocurrency firms could one day be integrated into the traditional banking system under a little-noticed provision in a new bill that is raising alarms among financial experts about potentially destabilizing consequences.

The provision — part of a sweeping proposal to regulate the crypto industry that Sens. Cynthia M. Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) introduced in June — would force the Federal Reserve to grant so-called master accounts to certain crypto firms seeking them from the central bank. The accounts give holders access to the Fed’s payment system, allowing them to settle transactions for clients without involving a separate bank.

Two Wyoming-based crypto firms championed by Lummis stand to benefit. Both companies, Custodia Bank and Kraken Financial, have been stymied over the last two years in bids to gain Fed master accounts. But financial regulators and experts say the measure’s impact would cascade through the industry and beyond.

The push by crypto firms to join the banking system’s central plumbing comes at a fraught moment for the industry and its regulators. A steep sell-off in cryptocurrencies has erased $700 billion from the digital asset market since early May, forcing a reckoning for some previously highflying start-ups, including firms attempting to bridge the divide between the crypto economy and traditional finance. One such firm, Celsius Network, halted withdrawals last month, citing “extreme market conditions” as it froze as much as $8 billion in deposits.

Even before the latest meltdown, the Federal Reserve had been reluctant to grant master accounts to crypto-focused banks. In Custodia’s case, Federal Reserve Chair Jerome H. Powell has cited his concerns about unleashing a tide of other crypto companies offering banking services while lacking federal insurance backstop.

“If we start granting these, there will be a couple hundred of them soon,” Powell told Lummis when she pressed him on the matter at a January congressional hearing.

Under Wyoming law, those banks can put their reserves into more volatile assets than their federally regulated counterparts — such as corporate and municipal debt — which could prompt a run if they suddenly lose value, said Lee Reiners, a former Fed official who now runs Duke University’s Global Financial Markets Center. “The concern is that you could have entities with poor risk management and poor risk controls integrated into the Fed’s payment system.”

The longer-term result could be a new buildup of systemic risk akin to what has preceded other financial meltdowns, some experts say. “I’m very concerned about the idea that uninsured banks of any type would have access to Fed services and more broadly proliferate, because we’ve had very bad experience with non-federally insured banks in the past,” said Arthur Wilmarth, an emeritus law professor at George Washington University and an expert on financial regulation. “I’m concerned they’ll become systemically important, and we could end up needing to bail them out if it looks like they’re going to fail.”

Proponents counter that giving more firms access to the central bank’s payments infrastructure will have the opposite effect, shoring up the crypto economy by giving federal overseers a better view of its activity. “Giving more regulated financial institutions access to the payment system reduces risk because it allows more visibility into who owes what,” a Lummis aide said. “And if there’s a systemic crisis, if a bank were to fail, there wouldn’t be as many ripple effects in the economy.”

Now, the Fed is facing increased pressure to act. On June 7, the same day Lummis and Gillibrand introduced their bill, Custodia sued the Federal Reserve and its Kansas City regional bank in federal district court in Wyoming, accusing it of unlawfully delaying action on its application 19 months after it was filed. (The timing was a coincidence, a Lummis aide said.)

The company, founded by Morgan Stanley veteran Caitlin Long, set up shop in Wyoming in 2020 to take advantage of special rules the state adopted the year before to attract firms looking to mix traditional banking activities with crypto transactions. Shortly after securing its state charter, it applied for a Fed master account. In the months since, “what has resulted is an unaccountable Kafkaesque process that has and continues to inflict grave, irreparable harm on Custodia,” the firm said in its suit.

The company has cast itself as a David taking on the Goliaths of Wall Street. “If federal regulators continue to hold back innovators like Custodia, they are only letting the big banks catch up and gobble up the market,” Custodia spokesman Nathan Miller said. “That leaves consumers with fewer choices and higher bank fees at a time when American families are struggling with inflation and economic insecurity.”

Kraken, for its part, is primarily known as a crypto exchange, operating the second-largest such trading platform in the United States. But an affiliate known as Kraken Bank in 2020 secured the first charter under Wyoming’s carveout for crypto banks, pledging to provide clients “a seamless banking gateway” between digital assets and traditional currencies.

When Kraken Bank applied for its own Fed master account shortly thereafter, a united front of banking lobbying groups pushed back. In a letter to the Fed, the coalition warned that Kraken’s business model presented “novel risks,” pointing to the company’s lack of federal oversight as it hosts leveraged trading of volatile digital assets. Amid a stark downturn for the crypto industry that has prompted several of its rivals to cut staff, Kraken, which is privately held, this month said it plans to add 500 employees. The company declined to comment.

The Fed is in the midst of developing standards for granting master accounts, a process whose murkiness has drawn criticism from Republicans in Congress.

The matter took center stage earlier this year in a partisan fight over the nomination of Sarah Bloom Raskin to serve as the Fed’s top financial regulator. Raskin served on the board of Reserve Trust, a Colorado payments company, when it secured a master account in 2018 after being denied one a year earlier. Lummis and other Republicans on the Senate Banking Committee pressed Raskin on whether she wielded her influence as a former Fed official to help the firm. Raskin denied any impropriety.

But the episode helped sink her nomination. In its wake, the Kansas City Fed revoked Reserve Trust’s master account. Sen. Patrick J. Toomey (R-Pa.), the top Republican on the Senate banking panel, wrote to the bank in June asking for details on the decision. The Kansas City Fed rejected his request, citing the need to protect the confidentiality of a private company and the bank’s own process.

Republicans are pushing a bigger point: As financial technology start-ups angle to compete with traditional banks, the Fed needs to explain its standards for doling out access to its payment rails. Lummis told Powell at a hearing in June that the process remains a “black hole” and said her frustration with it is “at a boiling point.”

The Fed is considering adopting a system that would subject firms that are not federally insured or federally regulated to stricter scrutiny. Dennis Kelleher, president of the nonprofit Better Markets, which advocates stricter financial regulation, said the details will matter, but the approach “would likely be the worst of all worlds,” granting crypto firms access to the Fed’s payment infrastructure “without the regulations imposed on banks. The result would be the appearance of protecting taxpayers and the financial system but not the reality.”
Sunoverbeach Offline
#494 Posted:
Joined: 08-11-2017
Posts: 11,782
If you're still looking for that one person who will change your life take a look in the mirror.
rfenst Offline
#495 Posted:
Joined: 06-23-2007
Posts: 36,816
Surge in US dollar’s value abroad offers pros, cons

Stronger buck restrains cost of imports, but hikes prices of America’s exports


Associated Press

WASHINGTON — The U.S. dollar has been surging so much that it’s nearly equal in value to the euro for the first time in 20 years. That trend, though, threatens to hurt American companies because their goods become more expensive for foreign buyers. If U.S. exports were to weaken as a result, so too would the already-slowing U.S. economy.

Yet there’s a positive side for Americans too: A stronger buck provides modest relief from runaway inflation because the vast array of goods that are imported to the U.S. — from cars and computers to toys and medical equipment — become less expensive. A strengthened dollar also delivers bargains to American tourists sightseeing in Europe, from Amsterdam to Athens.

The U.S. Dollar Index, which measures the value of American money against six major foreign currencies, has jumped nearly 12% this year to a two-decade high. The euro is now worth just under $1.02.

The dollar is climbing mainly because the Federal Reserve is raising interest rates more aggressively than central banks in other countries in its effort to cool the hottest U.S. inflation in four decades.

The Fed’s rate hikes cause yields on U.S. Treasurys to rise, which attracts investors seeking richer yields than they can get elsewhere in the world. This increased demand for dollar-denominated securities, in turn, boosts the dollar’s value.

Also contributing to the currency’s appeal, notes Rubeela Farooqi of High Frequency Economics, is that despite concern about a potential recession in the United States, “the U.S. economy is on firmer footing compared to Europe.”

Not since July 15, 2002, has the euro been valued at less than $1. On that day, the euro blew past parity with the dollar as huge U.S. trade deficits and accounting scandals on Wall Street pulled down the U.S. currency.

This year, the euro has sagged largely because of growing fears that the 19 countries that use the currency will sink into recession.
The war in Ukraine has magnified oil and gas prices and punished European consumers and businesses.

In particular, Russia’s recent reduction in natural gas supplies has sent prices skyrocketing and raised fears of a total cutoff that could force governments to ration energy to industry in order to spare homes, schools and hospitals.

Economists at the Hamburg, Germany-based merchant bank Berenberg have calculated that at current rates of consumption the added gas bill would be $224 billion over 12 months, or a whopping 1.5% of annual economic output.

A European slowdown could eventually give the European Central Bank less leeway to raise rates and moderate economic growth to address its own inflation problem.

The ECB has announced that it will raise its key interest rate by a quarter-point when it meets later this month and possibly by up to a half point in September. A weaker euro feeds inflationary pressures by making imports to Europe more expensive.
rfenst Offline
#496 Posted:
Joined: 06-23-2007
Posts: 36,816
As inflation lingers, Fed eyes repeat of rate hike


NYT

WASHINGTON — The Federal Reserve, determined to choke off rapid inflation before it becomes a permanent feature of the American economy, is steering toward another three-quarter-point interest rate increase this month even as the economy shows early signs of slowing and recession fears mount.

Economic data suggests that the United States could be headed for a rough road: Consumer confidence has plummeted, the economy could post two consecutive quarters of negative growth, new factory orders have sagged, and oil and gas commodity prices have dipped sharply lower this week as investors fear an impending downturn.

But that weakening is unlikely to dissuade central bankers.

Some degree of economic slowdown would be welcome news for the Fed, which is actively trying to cool the economy amid high inflation.

Inflation measures are running at or near the fastest pace in four decades, and the job market, while moderating somewhat, remains unusually strong.

Fed policymakers are likely to focus on those factors as they head into their July meeting, especially because their policy interest rate — which guides how expensive it is to borrow money — is still low enough that it is likely spurring economic activity rather than subtracting from it.

The minutes from the Fed’s June meeting, released Wednesday, made it clear that officials are eager to move rates up to a point where they are weighing on growth.

Fed Chairman Jerome Powell has said that central bankers will debate an increase of 0.5 to and 0.75 percentage points at the coming gathering, and will announce their decision July 27.
rfenst Offline
#497 Posted:
Joined: 06-23-2007
Posts: 36,816
30-year mortgage rate drops again


Orlando Sentinel

WASHINGTON — Average long-term U.S. mortgage rates eased again this week as the Federal Reserve remains likely to raise its benchmark borrowing rate in its fight against inflation.

Mortgage buyer Freddie Mac reported Thursday that the 30-year rate fell to 5.30% from 5.70% last week. A year ago, the average 30-year rate was 2.90%.

The average rate on 15-year, fixed-rate mortgages, popular among those refinancing homes, fell to 4.45% from 4.83% from last week. A year ago, the rate was 2.26%.

The Federal Reserve raised its benchmark rate last month by three-quarters of a point, the biggest hike since 1994.
Higher borrowing rates have discouraged house hunters and chilled the market.
frankj1 Offline
#498 Posted:
Joined: 02-08-2007
Posts: 41,958
my first mortgage on our first home was 11.9%.
I took it as a three year adjustable rate locked for 3 years as rates were typically 13.5% or so back then...I may be off a tick or two due to loss of brain cells in the 3 plus decades since then.

By the end of year 3 I had already refinanced at 8.5% fixed.

Though I could have been mortgage free currently, life events have made it so I am not. I locked in at 2.25%/10 years about a year and a half ago, will have it paid off several years early.

So, I've been all over the landscape of mortgage rates and I think 4.5% to 5.9% should be considered low, historically speaking.
The problem is those rates when combined with yuuuge home price hikes make it difficult for average earners to purchase.
Sunoverbeach Offline
#499 Posted:
Joined: 08-11-2017
Posts: 11,782
I didn't say it was your fault, I said I was blaming you.
rfenst Offline
#500 Posted:
Joined: 06-23-2007
Posts: 36,816

By Paul Krugman
Opinion Columnist


There’s an old story about Charles Darwin, which may or may not be true but seems appropriate to our current economic moment. According to the tale, two boys glued together pieces of various insects — a centipede’s body, a butterfly’s wings, a beetle’s head and so on — then, as a gag, presented their creation to the great naturalist for identification. “Did it hum when you caught it?” he asked. When they said yes, he declared that it was a humbug.

That’s kind of where we are in the economy right now. I’m not suggesting anyone is faking the data, but the different pieces of information we have don’t seem to line up — they almost seem to come from different countries. Some data suggest a weakening economy, maybe even on the verge of recession. Some suggest an economy still going strong. Some data suggest very tight labor markets; others, not so much.
Let’s talk about the numbers, and how they don’t add up.

The number we usually use to assess where the economy is going is real gross domestic product — and according to the official estimate, real G.D.P. shrank in this year’s first quarter. We won’t have an official (advance) estimate of second-quarter G.D.P. until later this month, but “nowcasts” that try to estimate G.D.P. based on partial information — like the Atlanta Fed’s widely cited GDPNow — suggest slow growth or even an additional period of shrinkage.

In case you’re wondering, no, two quarters of declining G.D.P. won’t mean we’re officially in a recession; that determination is made by an independent committee that takes a wide variety of information into account. And given the confusing picture right now, it’s unlikely to declare a recession, at least yet.

Among other things, another widely used number — job creation — is telling quite a different story. The official estimate of growth in nonfarm employment in June came in quite strong — 372,000 jobs added — which doesn’t look at all like what you’d expect in a recession.

So do we have a conflict between data on output and data on employment? If only it were that simple. We also have alternative measures of both output and employment — and in each case these are telling different stories than the more widely cited numbers.

We usually track economic growth using gross domestic product — the total value of stuff produced. But the government creates a separate estimate of gross domestic income, the money people get from selling stuff, including additions to inventory. The basic accounting says these numbers must be the same. But they’re estimated using different data, so the estimates never agree exactly. And right now the estimates are diverging a lot: G.D.P. shows a shrinking economy, but G.D.I., well, doesn’t.

What about employment? The Bureau of Labor Statistics carries out two surveys, one of employers — which is where the payroll numbers come from — and one of households, which produces an alternate estimate of the number of Americans working. The payroll number is usually considered more reliable — household data are famously noisy — but for technical reasons (the birth-death model; aren’t you sorry you asked?) the payroll data often seem to miss turning points, when employment growth either surges or plunges.

And right now the two surveys are telling different stories. I use quarterly rather than monthly data to smooth out some of the noise; the household data points to a much bigger slowdown than the payroll data:

But wait, there’s one more puzzle. Everyone says we have an extremely tight labor market, and when you combine that with high rates of consumer price inflation, there are widespread fears that we’re on the verge of entering the dreaded wage-price spiral. But wage growth isn’t accelerating. In fact, it’s falling fast, and at this point may not be much above the level consistent with the Federal Reserve’s long-run target of 2 percent inflation:

Are you confused? You should be. I’ve been in this business a long time, and I can’t remember any period when economic numbers were telling such different stories. On the other hand, we’ve never before faced the kind of shocks we’ve gone through in the past few years: Both the pandemic-induced recession and the recovery from that recession were, to use the technical term, weird, and maybe we shouldn’t be surprised the measures we normally use to track the economy aren’t working too well.

My guess about what’s really happening is that the economy is indeed slowing, but probably not into a recession, at least so far. And a moderate slowdown is actually what we want to see.

At the beginning of 2022, the U.S. economy was almost surely overheated, and this overheating was contributing to (although not the only source of) inflation. We wanted to see the economy cool down before inflation got entrenched in expectations, and that’s an area where all the available data — slowing wage growth, inflation expectations in the financial markets, surveys that ask consumers what inflation rate they expect over the next few years — are telling the same story: Inflation is not, in fact, getting entrenched.

Overall, the picture appears consistent with a “soft landing” — a slowdown that falls short of a full-on recession, or involves a mild recession at worst, together with stabilizing inflation.

But, of course, we don’t know that. In fact, given the wide discrepancies in economic data, economic pundits (including me) have unusual freedom to believe whatever they want to believe. Just pick and choose the numbers that tell you what you want to hear and glue them together.
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