Tag Archive for: jerome powell

The Fed Is ‘Chasing Its Own Tail’ On Inflation, And The Housing Market Is Paying The Price, Expert Says

/in , , , , , , , , , , /by

A guest essay published in The New York Times on Tuesday finally pointed a finger at a major culprit behind the housing crisis: The Federal Reserve.

The essay was written by Westwood Capital Investment bank’s managing partner Daniel Alpert, and detailed his take on the Fed’s “relentless attack on inflation” which he thinks is jeopardizing the market. Alpert decries the Fed’s decision to raise key federal funds policy interest rate to a level 22 times what it had been in the year and a half prior.

In normal times, this type of action would make mortgages insanely expensive for homeowners and make homes a lot cheaper, which limits spending power. But Alpert rightly notes these aren’t normal times. As mortgage rates skyrocketed from around three percent to the near eight percent it is now, it caused a catastrophe for the housing market.

Homeowners with good interest rates don’t want to move. And new buyers don’t want to get locked into an overpriced home at a high interest rate. So we have “both a mobility and an inventory crisis,” as Alpert put it.

Housing has helped ensure the cost of just about everything has increased in 2023. “It is an irony that the Fed’s effort to tamp down inflation is causing an increase in core inflation measures,” Alpert notes. “And while the Fed is chasing its own tail, other avenues for controlling inflation have weakened considerably as a result of the unique circumstances surrounding the pandemic.”

The pandemic allowed for Americans to increase their savings rates. And many businesses were locked into cheap financing. So, what happens next?

Alpert thinks the Fed should declare victory and give up on its target of two percent. But the likelihood of that is low. Instead, Alpert wants the Fed to halt and then reverse policies related to mortgage securities and Quantitative Tightening. In layman’s terms, the Fed has to reduce the cost of mortgages or we’re doomed.

AUTHOR

KAY SMYTHE

News and commentary writer.

RELATED ARTICLES:

REPORT: Real Estate Downturn Could Destroy More Than 300 Banks

Owner Of California Biolab Tied To Chinese Government And Military, House Report Finds

EDITORS NOTE: This Daily Caller column is republished with permission. ©All rights reserved.

Unemployment Surges Above Expectations As The Number Of Jobless Americans Rises

/in , , , , , , , /by

The unemployment rate rose to 3.7% in October, up from expectations it would hold steady at 3.5%, as the number of jobless Americans rose to 6.1 million, the Bureau of Labor Statistics (BLS) reported Friday.

Labor force participation nudged down 0.1% from September to October, to 62.2%, according to the BLS. Despite employers adding 261,000 jobs overall in October, down from 315,000 in September, the number of unemployed people rose by 306,000, up to 6.1 million, the highest level since February, according to the Federal Reserve Bank of St. Louis.

The unemployment range has hovered between 3.5% to 3.7% since March, and labor force participation has hovered 1.2 percentage points below the pre-pandemic standard set in February 2020, the BLS reported. Monthly job growth has been slowing, with employers adding 372,000 jobs per month in the third quarter of 2022, down from 543,000 in the third quarter of 2021, according to The Wall Street Journal.

The number of additions blew past investors’ expectations of a more-modest gain of 205,000 jobs, and the unemployment rate surpassed predictions it would hold steady at 3.5%, the WSJ reported. The labor market is anticipated to slow as the Federal Reserve continues to hike interest rates in its bid to combat inflation.

“The broader picture is of an overheated labor market where demand substantially exceeds supply,” Federal Reserve Chair Jerome Powell said in a Wednesday press conference, according to the WSJ. “I don’t see the case for real softening just yet.”

The BLS data contradicts a Wednesday report from payroll firm ADP, which had estimated that the manufacturing sector had cut 20,000 jobs in October. In contrast, the BLS data finds that manufacturers added 32,000 jobs in October, slower than the 37,000 per month average in 2022, but faster than the 30,000 per month seen in 2021.

AUTHOR

JOHN HUGH DEMASTRI

Contributor.

RELATED ARTICLE: The Federal Reserve Hikes Interest Rates Again As Inflation Rages On

EDITORS NOTE: This Daily Caller column is republished with permission. ©All rights reserved. Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org.

The Stock Market Officially Collapses Into Bear Market Territory

/in , , , , , , , /by

The stock market closed out a week of intense losses with the Dow Jones falling more than 750 points Friday, entering bear market territory amid a wave of investor fears.

At time of writing, the index had, at its lowest point, fallen more than 2.7% during the day to around 29,300 points, with the Nasdaq and S&P 500 down by 2.7% and 2.64% respectively at time of writing. With the Dow Jones officially falling more than 20% from its recent peak in June, stocks will have entered a slump known by investors as a “bear market” if the losses hold when trading ends Friday, according to CNBC.

The Nasdaq was down by 30.92% this year, with the S&P 500 down 22.98% this year, as of close of business yesterday, according to data from MarketWatch.

“Stocks were overvalued because their nominal price has been fueled by the inflation of the Federal Reserve,” Heritage Foundation economist E.J. Antoni told the Daily Caller News Foundation. “As soon as the Fed took away the punch bowl… what happened? Stocks immediately took a nosedive and are continuing to do so, because the only thing that has been fueling this economic recovery hasn’t been real growth, but again, money creation.”

After wavering early this week as investors awaited the Federal Reserve’s Wednesday announcement of a third interest rate hike in just four months, stocks tumbled, with Goldman Sachs warning clients that investors are preparing for recession and slashing its expectations for the S&P 500 stock index by 16%.

After wavering early this week as investors awaited the Federal Reserve’s Wednesday announcement of a third interest rate hike in just four months, stocks tumbled, with Goldman Sachs warning clients that investors are preparing for recession and slashing its expectations for the S&P 500 stock index by 16%.

“Now we’re faced with the reality of having to do it the hard way, of having to actually grow the economy and not just grow the money supply.” Antoni said.

AUTHOR

JOHN HUGH DEMASTRI

Contributor.

RELATED ARTICLE: Stocks Stay Volatile As Recession Fears Loom

EDITORS NOTE: This Daily Caller column is republished with permission. ©All rights reserved. Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org.

November Jobs Report Is One Of The Worst Since Biden Took Office

/in , , , , , , , , /by

CORRECTION: This story has been updated to reflect that the number of jobs created in November is among the lowest initially reported for a single month in 2021.

The U.S. economy added 210,000 jobs in November, marking nearly the lowest number of jobs created in a month since President Joe Biden took office in January.

November’s jobs report was well below economists’ estimate of 573,000, according to CNBC. Additionally, unemployment fell to 4.2% from October’s 4.6% figure, according to the Bureau of Labor Statistics.

The U.S. economy, still recovering from the COVID-19 pandemic but now subject to uncertainty related to the Omicron coronavirus variant, appeared to slow in momentum in November, The Wall Street Journal reported.

“Just as Delta derailed the recovery in terms of the labor market, if Omicron behaved like that, I would guess it would hold back any recovery in the labor market,” Justin Weidner, an economist at Deutsche Bank, told the WSJ.

“Greater concerns about the virus could reduce people’s willingness to work in person, which could slow progress in the labor market and intensify supply-chain disruptions,” Federal Reserve Chairman Jerome Powell said in Senate Banking Committee testimony on Tuesday.

The BLS initially reported that 194,000 jobs were added to the economy in September, the lowest number of new jobs for a single month in 2021, but that figure was revised substantially in October to 312,000 jobs, CNBC reported.

COLUMN BY

HARRY WILMERDING

Contributor.

RELATED ARTICLE: MLB Owners Lock Out Players After Failed Contract Negotiations

EDITORS NOTE: This Daily Caller column is republished with permission. ©All rights reserved. Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org.