I know it’s not the popular reddit opinion, but did we learn nothing from the 1970s. Inflation is MUCH more difficult to address than unemployment. Inflation has been slowly rising over the past 6 months, and unemployment is still low. There are issues with underemployment, but Fed rate cuts aren’t going to fix the issues creating that problem. If inflation continues to gain traction, we could easily see the 8-10% we saw a few years ago. That inflation still hasn’t been controlled. If it runs again, it won’t end any better than that last round of inflation. Housing will be even more expensive, and no you won’t be able to get a 3% mortgage if the fed cuts to 0%. Inflation expectations have a much larger impact on the 10-year yield and mortgage rates that The Fed rate. The post COVID job market is likely the strongest market we ever had and we will see in any of our lifetimes. It wasn’t normal, and it isn’t coming back. Today’s job market is better than average based on long-term historical date. Yes, it could get worse. But, history has shown over and over and over that unemployment is much easier to address than inflation.
1 Comment
I know it’s not the popular reddit opinion, but did we learn nothing from the 1970s. Inflation is MUCH more difficult to address than unemployment. Inflation has been slowly rising over the past 6 months, and unemployment is still low. There are issues with underemployment, but Fed rate cuts aren’t going to fix the issues creating that problem. If inflation continues to gain traction, we could easily see the 8-10% we saw a few years ago. That inflation still hasn’t been controlled. If it runs again, it won’t end any better than that last round of inflation. Housing will be even more expensive, and no you won’t be able to get a 3% mortgage if the fed cuts to 0%. Inflation expectations have a much larger impact on the 10-year yield and mortgage rates that The Fed rate. The post COVID job market is likely the strongest market we ever had and we will see in any of our lifetimes. It wasn’t normal, and it isn’t coming back. Today’s job market is better than average based on long-term historical date. Yes, it could get worse. But, history has shown over and over and over that unemployment is much easier to address than inflation.