I would dare a politician to offer that choice :-).
We don’t need to discuss this by the terms of the debate that you set.
It is a false choice.
People want both.
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The loan rate was very low, they won’t default like in the 2008. So I doubt there will be a housing crisis, they can always rent it out.
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Maybe. But if demand goes through the floor and their values go down 20%, people wont want to continue paying on a house that is “losing money”.
And a lot of people wont want to rent their houses. They’d rather just walk away.
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One thing I found out with real estate is that they are not like stocks, transaction costs are high. 20% is not going to make a difference. House prices will fluctuate over time, people are not walking away with 20% decline.
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The one thing that can really cause a housing crash will be unemployment. If there’s a big recession and people start losing their jobs, they wont be able to keep their houses. And if a big employer lays off thousands of people in one location, we may see people bailing out of necessity.
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True, but they have to live somewhere, maybe they may have to rent out a few rooms to strangers.
Lately, there are so many different types of jobs that I think it’s not as bad as in 2008.
Doordash, Uber, Lyft, Instacart, etc…
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Are people concerned that this inflation will cause the Fed to cause a recession, and this may stress the job market for kids that are either about to enter the job market, or kids that have just entered the job market?
I think the Fed is going to continue to be aggressive until inflation drops and they will accept some collateral damage.
Will it affect all kids? No because companies will always need to build a pipeline of young talent.
Will it affect some kids? Probably the ones who are borderline hires.
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not concerned about an upcoming recession bcos IMO that is the only way the fed can tame the inflation that it (and govt fiscal policy) have caused.
Yes, it will diminish the job market somewhat, but it should not be as bad as previous recessions as the employment market has shrunk IMO. Due to covid, millions upon millions of older boomers (50’s+) retired and are not coming back. (One reason causing the national teacher shortage.)
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It is interesting that both these factors are at play. I am seeing both offers being rescinded, or internship companies not offering returns, and at the same time new grad entry salaries higher than last year’s new grad salaries.
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If my kids are new graduates I would be a nervous parent, I was a bit nervous when the second graduated, I gave up all hope when the first one graduated. The great recession was so bad.
Companies will always pay for the cream of the crop students. Right now salaries are higher and you cant pay the super whiz graduate less than what other companies pay.
What will most likely happen is companies will just hire less people or recruit less from certain schools or as you say, offer fewer interns a full time position.
During a recession, you could also see a lot more people going to graduate school if the job market is terrible.
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Isn’t salary higher is because of inflation.
Yes it is. But I am seeing some salary increases that exceed inflation.
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Wages may stagnate but wont fall even in a recession. Companies would rather lay people off than reduce salaries. They need to keep their best people and not have them look for other jobs.
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Jeremy Siegal on CNBC
He argued that the Fed made a massive policy mistake last year by not moving to tighten monetary policy before inflation got out of hand, and he mocked the Fed and Powell for insisting inflation would quickly fade on its own.
And now, Siegel said, the Fed is making another mistake by raising interest rates and tightening monetary policy too aggressively.
“When we had all commodities going up at rapid rates, Chairman Powell and the Fed said, ‘We don’t see any inflation. We see no need to raise interest rates in 2022.’ Now when all those very same commodities and asset prices are going down, he says, ‘Stubborn inflation that requires the Fed to stay tight all the way through 2023.’ It makes absolutely no sense to me whatsoever,” Siegel said on CNBC’s “Halftime Report.”
As a result of all this, he said, the central bank is making working- and middle-class Americans pay with what he expects will be a punishing recession.
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I agree with Siegel’s first point, but his second is not logical. If the fed was slow to start, common sense says that they have to make up time by raising rates faster now. (Otherwise, he just lengthens the time that inflation will last.)
And by focusing only on commodity prices, Siegel ignores the other two prices: producer prices and consumer prices. Yes, many commodities have been declining. And producer prices have declined slightly , but that is primarily due to the recent drop in energy prices (which can easily go back up). But salaries and energy costs are getting baked into consumer prices, and until those start to decline…
Even that is not quite correct. The poor are most affected by inflation. But yes, everyone will pay for Powell being too dovish at at the start and his pipe-dream of a ‘soft landing’, all the while publicly supporting additional Govt spending.
A cynic, I’ll just point out that Powell never got around to changing his tune about ‘transitory’ inflation until he was officially re-appointed. (Just sayin’)
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True for many markets. Fortunately where I live, housing doesn’t tend to crash like it does elsewhere. It flattens.
And of course in a continuous inflationary environment, assets are where you want to be, especially if you’re leveraging someone else’s money at 3%.
But who knows. A prolonged and super deep recession and all bets are off.
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Agree with much of that. I for one am sick of hearing about transitory and structural inflation. This is the real deal folks. This is “too much of something makes it less valuable” inflation.
And let me be clear: this absolutely crosses party lines. Every President, Trump included, was too cowardly to lean into the Fed to do the right thing.
FTG
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Agree that all President’s blame the Fed for whatever economic thing that is occurring. But there is a difference between Govt policies that encourage growth and those that don’t, particularly wrt to inflation and countering rising interest rates.
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