Although Fed Chair Janet Yellen admits that policy makers are baffled by persistently low inflation, they are undeterred by the failure to meet the 2 percent target they have set as the indicator that higher interest rates are in order, and still on track to boost interest rates once more this year.
Since the Federal Reserve boosted interest rates in March, additional rate moves this year have been pretty much a foregone conclusion. That the Federal Open Market Committee (FOMC), the Fed’s policy-making arm, will increase rates at its mid-June meeting remains the consensus view, but the conclusion is somewhat less foregone than it has been.
Although the employment numbers for March fell below expectations, disappointing many analysts, the Fed isn’t expected to alter its plan to boost interest rates at least twice and maybe three more times this year.
Concerns about rising interest rates and shrinking inventories, bubbling beneath the surface of real estate discussions for much of last year, have boiled over, dominating recent news reports and raising questions about the outlook for this year.
Year-end housing reports reflect two competing narratives. The first: Soaring prices and strong sales producing the best housing market performance in more than a decade. The second: Higher prices, rising interest rates and skimpy inventories combining with troubling signs that millennials are losing faith in the desirability of home ownership and/or the possibility of achieving it.
New Year’s resolutions are always frustrating, so we thought we’d compile some New Year’s forecasts instead. If resolutions fall by the wayside, you blame yourself; if economic forecasts don’t bear out, you won’t blame yourself, because they aren’t your predictions, and you won’t hold the forecasters responsible, either, because you won’t remember what they said.
As President-elect Donald Trump prepared to take the oath of office January 20th, the consensus economic forecast was “uncertainty” ─ uncertainty about the policies he will pursue, about the initiatives he will be able to implement, and about the impact they will have on the economy.
We’re focusing this month not on the employment report (which was pretty good) but on the tax reform plan crafted by House Republicans, which, housing industry trade groups have concluded, is not good at all for the housing market.
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