If you are watching the headline news and wondering when the Fed will lower rates, Tall Pinze Advisory (a sister company to KJE Inc) has the update.
The two charts here show that US Consumer Spending is strongly outpacing income, and credit card balances on the “buy now, pay later” programs are significantly inflated.
Additionally, the increase in the federal funds rate and the Fed balance sheet reductions have just about used up their power, with the current Federal Funds rate stuck around 2.5%. The Fed is targeting a 2% Federal Funds rate, and likely these numbers will not be good enough to see the 4-6 Fed rate cuts so many are predicting in 2024.
So, what will tip the scales to force the Fed to lower their core rate? Unemployment.
Keep an eye on the unemployment numbers to rise from the current 3.9% to 4.25% or more before we see the Fed make any meaningful moves in lowering the Federal Funds rate this year.
If you own a home or are looking to buy, here is how this information will impact you…
Mortgage rates will decrease with the Fed funds rate decrease. So, expect lower rates going into 2025 and beyond. Home prices will rise during that time as well. So, if you have been on the sidelines of buying a home, this is still the time to buy while prices are stuck in a slight decline to steady pattern.
For information on how you can capitalize on this market, email Kirk@KirkJaffe.com and let’s have a conversation.
