For What It’s Worth
This week’s “pop” hit, as it relates to our current economic news, is the 1967 Buffalo Springfield’s hit “For What It’s Worth.” The song says, “There’s battle lines being drawn… Nobody’s right if everyone is wrong”. This covers so much of what we are seeing today. In 1967, it was Nixon v. Hubert Humphrey. Today, we have a presidential race similar to that of Trump and Biden. Inflation had risen to its highest level in 15 years (sounds familiar). We were dealing with the Vietnam “crisis” where we were sending our troops and $$$ to Vietnam, somewhat like the aid we are sending overseas currently.
Our Federal Reserve continues to send out “mixed messages.” Still, it seems to be now focusing on the employment situation and other “Macro” economic reports and less on the actual annual inflation rate. While Federal Reserve Chairman Powell still states that “employment” remains strong, he went on to say that it is “cooling.” I would say a rise from 3.5% to 4.1% is more than just “cooling” and most likely will move higher before we move lower.
We are also seeing signs of declines in GDP and manufacturing data. The Fed needs to listen to the “sounds” and not wait too late to ease their current “restrictive” monetary policy before we slide deep into a recession. The “sounds” are there… they need to listen and continue to expand their views to a more Macro approach. I believe they are moving in that direction, and I feel we will get an easing in monetary policy over the next five months.
Trying to predict how many moves they will make between now and the end of the year is tough… but I would not be surprised to see a .75% reduction in FED funds by the end of the year, which would put us in a possible 6% 30-year fixed rate environment by the end of the year. Whether that is 2 or 3 moves by the FED, I’m not sure. However, I don’t think a .75% drop in the FED Funds rate is totally out of the question by year-end.
Remember… the BEST RATE… IS A LOCKED RATE… with a float down… ask me about our program that allows you to lock your rate and then float down if rates move lower.
Make sure you (or your buyer) get pre-approved before looking at homes so we can determine if you are looking in the correct price range and have you armed to submit an offer with a pre-approval letter!
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Blog post date: Thursday, July 18, 2024
