#US Federal Reserve rate hike

[shaktiknowledgeblog]

US Federal Reserve | FED | fed funds rate | Fed Impact |fed rate like | fed rate hike |fed interest rate hike | fed news

US Federal Reserve increases 0.25% in Fed Rate, tomorrow Indian Stock Market will be engaged Fed Rate Hike: Once again the US Federal Reserve has raised the Fed rate by 25 basis points on Wednesday। It will also affect the Indian stock market. US Federal Reserve hiked Fed Rate: The US Federal Reserve on Wednesday raised the Fed rate to 25 basis points। Since this announcement, the interest rate…

[usanewsology]

RBI should pause, think about decoupling from Fed: Soumya Kanti Ghosh - Times of India

KOLKATA: The RBI should ‘pause and think’ if it can continue mirroring the US Federal Reserve ‘stroke-by-stroke’ in terms of rate hikes or decouple from the American central bank, SBI group chief economic adviser Soumya Kanti Ghosh said.Ghosh said he does not see an end to the rate hike cycle of the Fed in the short-term, which makes a case for the RBI to contemplate about decoupling.“My point is…

[shreemetalprices]

The Federal Reserve (Fed) said that raising interest rates will continue to be implemented in its semi-annual Monetary Policy Report sent to Congress in order to combat excessive inflation.

[togglesbloggle]

Why do you think tumblr will die in only a few years?

Answer with jargon: a strong correlation between recent economic shifts and chaotic choices by major tech companies is most easily explained if the 'traditional' social media platforms of 2005-2020 are mostly a zero-interest rate phenomenon.

Longer answer, with less jargon: Even though Musk's takeover is making all the headlines recently, the last year has in fact seen major shakeups at many social media platforms, so Twitter is actually part of a trend. Almost inevitably, these are cases of social media companies trying to find a way to squeeze more money out of their userbase (Reddit), cut costs dramatically (Twitter), or both. This marks a sudden departure from a much more relaxed attitude towards revenue in the Pictures Of Cats industry, where the focus was historically more on expanding the userbase to a global scale and then counting on world domination to sort of <????> and then the company would become profitable eventually.

We joke, correctly, that Tumblr has never been profitable. But the entire structure of ad-supported content curation between human users is deeply suspect as a business model; IIRC Twitter was never profitable either, and Facebook has been juicing its numbers in very shenanigany ways. Discord was actually making money on net last I checked, at least a bit, so they're not all completely in the hole. But even if you take the accounting figures at face value, none of these companies has anything like the amount of money that their cultural prominence would suggest. Instead, they're heavily fueled by investment dollars, money given by super-rich people and institutions in the expectation that fueling the growth of the company now will pay off with interest later.

So what changed?

I'm not an expert here, but I'll do my best to muddle through. The American Federal Reserve has one mandate that dominates all others (sometimes called the 'dual mandate'), and one primary tool that it uses to enforce that mandate. The goal is to maintain low (but nonzero) rates of inflation and unemployment, which in their models are deeply interlinked phenomena. The tool is 'rate hikes', or more specifically, tweaking the mandatory rate of interest that banks charge one another when making loans.

As a particular consequence of this, hiking the rate also means that bonds start paying out much better. When the rate hike goes through, that affects people who let the government borrow their personal cash- that is, people who buy bonds- as well as institutions like banks that lend to one another. A rate hike means that you, personally, can make a little extra money by letting the government borrow it for a while. The federal government of the US is a rock-solid low-risk choice for this kind of moneymaking scheme, so the federal interest rate sort of defines the 'number to beat'; to attract investors, a company has to give those investors money at a better percentage than whatever the feds are offering. Particularly since a company is a lot more likely to go out of business than the state!

To wrap this back around to the Pictures Of Cats industry: the higher the rate hike, the better your company needs to be doing (or the less risky it needs to be as an option) to attract big investment dollars. Very high rates make it very hard to convince people to invest in business activity rather than the government itself, and very low rates put moonshots and big dreams on the table, investment-wise, in a way that wouldn't otherwise be possible. Social media companies were one of these big dreams.

In the great financial crisis of 2008, the Fed took the dramatic step of reducing their rate to zero, trying to juice the economy back to life. And ever since then, they've kept it there. This has produced an unprecedented amount of funding for very crazy stuff; it's part of what has allowed so many weird new tech companies (Uber, streaming services, etc.) to get so much money, so quickly, and use that to grow to massive size without a clear model of how they're ever going to make money. This state of affairs kept going for quite a while, with no clear stopping point; that zero-interest environment has been one of the shadowy forces in the background that shaped fundamental contours and limits in how our Very Online World has grown and developed. Until COVID.

Or rather, the bounce back from COVID: we suddenly saw a massive spike in inflation and an incredibly strong labor market, as employees quit in record numbers, negotiated higher salaries, and found better work, and at the same time supply chain issues and other economy stuff caused prices to climb dramatically. Recall the Fed's 'dual mandate', to control the employment rate and inflation. This was, basically, kicking them right in the jooblies. They responded in kind, finally finally raising their rates for the first time in 15 years. For some of the people reading this, it'll be the first significant shift in their entire adult lives.

The goal, as I understand it, is to fight inflation by reducing the amount of outside investment into private companies, forcing them to hire fewer people and pay smaller salaries, ultimately drawing money out of the working economy and driving prices back down by lowering demand for everything. You get paid less, so you eat out less, and buy at cheaper restaurants when you do, so restaurants have to compete harder by lowering their prices; seems pretty dodgy to me as a theory, but it's the theory. And the first part will almost certainly work- companies are going to see less investment.

For social media companies that are still paying most of their salaries with investor dollars instead of revenues, this is especially catastrophic. Without outside investment, they're just a massive pile of expenses waiting to happen, huge yearly costs in developer salaries and server fees. This is why, all of a sudden, every social media company is suddenly making bonkers decisions. They're noticing that nobody wants to give them any more money! So they're trying to figure out how to live a lot more cheaply, to actually somehow for reals turn their giant userbases in to some kind of actual revenue stream, or both.

Tumblr is kind of the ur-example of this kind of thing, supporting a very large userbase with no coherent plan whatsoever to start paying its staff with our dollars instead of investors' dollars. When interest rates were low and Scrooge McDuck had nowhere else to hide his pile of gold coins, a crazy kid with a dream was the best alternative available to him. But now, unless something changes, he's going to notice he can just buy bonds instead, and that crazy kid can go take a hike.

That's why I think Tumblr is living on borrowed time, though I don't know how much. Like all cartoons, the economy doesn't really fall off a cliff until somebody looks down and notices they've been standing on thin air this whole time. But they always fall eventually; that's the gag.

[partisan-by-default]

On Wednesday, the Federal Open Market Committee announced it would be holdinginterest rates steady in November as it continues its efforts to bring inflation down. This follows a pause in September, as well, and comes on the heels of promising economic data — inflation in September held steady from August at 3.7% year-over-year, the US added 336,000 jobs the same month,andGDP growth came in at a two-year high of 4.9% in the third quarter.

Federal Reserve Chair Jerome Powell indicated during the September press conference that the economy is moving toward the Fed's inflation target of 2%, and following ten consecutive interest rate hikes since March 2022, he said it makes sense for the central bank to slow down its aggressive inflation-fighting efforts.

"We need to get to a place where we're confident that we have a stance that will bring inflation down to 2% over time," Powell said. "That's what we need to get to, and we've been moving toward it. As we've gotten closer to it, we've slowed the pace at which we've moved."

The Fed's latest move, coupled with the economy's recovery, have also cast aside recession concerns for 2023. The White House's Council of Economic Advisors, for example, released a blog on Tuesday stating that "the US economy has proven to be consistently resilient."

[loving-n0t-heyting]

Holy fuck they are hawking this bullshit again about high mortgage rates being racist

Borrowing costs for mortgages have more than doubled over the last two years as the Federal Reserve has battled inflation by hiking interest rates, which hit a 22-year high earlier this year. […]

The Financial Services Forum, representing eight of the biggest U.S. banks, said it is spending a seven-figure sum on television advertising blasting the proposal as an added fee on Americans already burdened by inflation.

“The fed has hiked interest rates to reduce inflation, and also as the Evil League of Evil points out, these high interest rates exacerbate the problem of inflation.” Could you try to hide the doublethink a bit harder?

After George Floyd’s murder ignited nationwide protests in the summer of 2020, corporations across the economy committed to projects aimed at battling systemic racism. Mortgage lenders pledged to work with financial regulators to provide credit to more minority borrowers.

“To honour the death of George floyd, we need to use interest rates to hike housing values.” Shameless. Just fucking shameless.

Then again, if she extends the lease on her two-bedroom apartment — where her 11-year-old son is sharing a bedroom with his 22-year-old brother — her rent will increase by $70 a month, to nearly $1,400.

“To hear costs just keep going up is really disheartening,” she said. “Where do they want people to live?”

If the problem this woman is facing is that the rent is too damn high, I think the natural thing to do would be to focus on policies with the ability to make the rent less damn high. But no, increasing homeownership forever at all costs is clearly the only solution, which actually dovetails with instead of flatly contradicting addressing the problem of rentiers being able to extort more money from their tenants bc of their high property values

Sen. Sherrod Brown (D-Ohio), who chairs the Senate Banking Committee, struck an incredulous tone over the industry’s lobbying push as the bank CEOs testified before the panel Wednesday.

“Wall Street banks are actually saying that cracking down on them will, quote, ‘hurt working families.’ Really?” he asked. “You’re going to claim that?”

Love that the obligatory “And now we will give coverage to the other side” section is just sherrod brown saying “Sorry do u expect me to actually swallow this tripe?” Lol

[argumate]

If necessary, however, the Fed does have a lot of firepower, given that the effective federal funds rate (the US equivalent of the Reserve Bank’s cash rate) is 5.3 per cent. Before the rate-hiking cycle began in March 2022, the Fed was targeting a range of zero to 0.25 per cent.

aside from the silliness of referring to the potential for interest rate cuts as "firepower", it's noteworthy that 5.3% is a totally normal rate, historically? or at least not unusual for the time period 1966 -- 2001, before we decided that charging interest on loans was for suckers.

[mariacallous]

If you’re one of the millions of Americans worried about your pocketbooks and the general cost of living, you might have picked up on some good news recently: Inflation has really been cooling off this summer, as long-sticky (and long-lamented) food and energy prices continue to moderate. Some economic indicators remain stubborn, however—and they aren’t likely to abate anytime in the near future, no matter how long the Federal Reserve keeps interest rates high, what tweaks President Joe Biden makes to his trade policy, whether corporations decide themselves to slash prices on certain products, or whether Covid-battered supply chains finally get some long-needed fixes.

Other, grimmer recent headlines help to explain why. Hard rains from a tropical disruption in the Gulf have been battering Florida’s southern regions for days, leading to a rare flash-flood emergency. Another batch of storms is swirling near Texas at the moment and could form into a tropical depression, according to forecasts from the National Hurricane Center. Even if both states end up missing bigger storms now, it’s likely only a matter of time before they’re threatened again: The National Oceanic and Atmospheric Administration predicts that the United States will see its worst hurricane season in decades this summer.

Meanwhile, the heat waves that have enveloped Phoenix are intensifying to the point that some analysts are deeming its latest conditions “a Hurricane Katrina of heat.” Spanning outward, the Midwest and Northeast are projected to get their own extreme heat warnings as early as next week, with energy demand set to skyrocket as people turn on their air conditioners. The country has already seen 11 “billion-dollar disasters” this year, including the tornadoes that slammed Iowa just weeks ago. Meanwhile, the already strapped Federal Emergency Management Agency faces a budgetary crisis, and sales of catastrophe bonds are at an all-time high.

Now, let’s look back at the inflation readings. One of the categories remaining stubbornly high while other indicators shrink? Shelter and housing, natch, as rents and insurance stay hot—and still-elevated interest rates make construction and mortgage costs even more prohibitive. On the energy front, motor fuel may be cheapening, but fuel and electricity for home use are still pricey. Auto insurance remains a driving outlier, as I noted back in April, not least because of insurers hiking premiums for cars in especially disaster-vulnerable regions—like the South, the Southwest, and the coasts.

Look at what else is happening in those very regions when it comes to home insurance: Providers are either retreating from or dramatically heightening their prices in states like California, Texas, Florida, and New Jersey, thanks to their unique susceptibility to climate change. These states have seen supercharged extreme weather events like floods, rain bombs, heat waves, and droughts. National lawmakers fear that the insurance crises there may ultimately wreak havoc on the broader real estate sector—but that’s not the only worst-case scenario they have to worry about.

Agricultural yields for important commodities produced in those states (fruits, nuts, corn, sugar, veggies, wheat) are withering, thanks to punishing heat and soil-nutrition depletion. The supply chains through which these products usually travel are thrown off course at varying points, by storms that disrupt land and sea transportation. Preparation for these varying externalities requires supply-chain middlemen and product sellers to anticipate consequential cost increases down the line—and implement them sooner than later, in order to cover their margins.

You may have noticed some clear standouts among the contributors to May’s inflation: juices and frozen drinks (19.5 percent), along with sugar and related substitutes (6.4 percent). It’s probably not a coincidence that Florida, a significant producer of both oranges and sugar, has seen extensive damage to those exports thanks to extreme weather patterns caused by climate change as well as invasive crop diseases. Economists expect that orange juice prices will stay elevated during this hot, rainy summer.

(Incidentally, climate effects may also be influencing the current trajectory and spread of bird flu across American livestock—and you already know what that means for meat and milk prices.)

It goes beyond groceries, though. It applies to every basic building block of modern life: labor, immigration, travel, and materials for homebuilding, transportation, power generation, and necessary appliances. Climate effects have been disrupting and raising the prices of timber, copper, and rubber; even chocolate prices were skyrocketing not long ago, thanks to climate change impacts on African cocoa bean crops. The outdoor workers supplying such necessities are experiencing adverse health impacts from the brutal weather, and the recent record-breaking influxes of migrants from vulnerable countries—which, overall, have been good for the U.S. economy—are in part a response to climate damages in their home nations.

The climate price hikes show up in other ways as well. There’s a lot of housing near the coasts, in the Gulf regions and Northeast specifically; Americans love their beaches and their big houses. Turns out, even with generous (very generous) monetary backstops from the federal government, it’s expensive to build such elaborate manors and keep having to rebuild them when increasingly intense and frequent storms hit—which is why private insurers don’t want to keep having to deal with that anymore, and the costs are handed off to taxpayers.

When all the economic indicators that take highest priority in Americans’ heads are in such volatile motion thanks to climate change, it may be time to reconsider how traditional economics work and how we perceive their effects. It’s no longer a time when extreme weather was rarer and more predictable; its force and reasoning aren’t beyond our capacity to aptly monitor, but they’re certainly more difficult to track. You can’t stretch out the easiest economic model to fix that. And you can’t keep ignoring the clear links between our current weather hellscape, climate change, and our everyday goods.

Thankfully, some actors are finally, belatedly taking a new approach. The reinsurance company Swiss Re has acknowledged that its industry fails to aptly factor disaster and climate risks into its calculations, and is working to overhaul its equations. Advances in artificial intelligence, energy-intensive though they may be, are helping to improve extreme-weather predictions and risk forecasts. At the state level, insurers are pushing back against local policies that bafflingly forbid them from pricing climate risks into their models, and Florida has new legislation requiring more transparency in the housing market around regional flooding histories. New York legislators are attempting to ban insurers from backstopping the very fossil-fuel industry that’s contributed to so much of their ongoing crisis.

After all, we’re no longer in a world where climate change affects the economy, or where voters prioritizing economic or inflationary concerns are responding to something distinct from climate change—we’re in a world where climate change is the economy.

[dreaminginthedeepsouth]

Kevin (KAL) Kallaugher

* * * *

LETTERS FROM AN AMERICAN

June 23, 2024

HEATHER COX RICHARDSON

JUN 24, 2024

On Thursday, Moody’s Analytics, which evaluates risk, performance, and financial modeling, compared the economic promises of President Joe Biden and presumptive Republican nominee Donald Trump. Authors Mark Zandi, Brendan LaCerda, and Justin Begley concluded that while a second Biden presidency would see cooling inflation and continued economic growth of 2.1%, a Trump presidency would be an economic disaster.

Trump has promised to slash taxes on the wealthy, increase tariffs across the board, and deport at least 11 million immigrant workers. According to the analysts, these policies would trigger a recession by mid-2025. The economy would slow to an average growth of 1.3%. At the same time, tariffs and fewer immigrant workers would increase the costs of consumer goods. That inflation—reaching 3.6%—would result in 3.2 million fewer jobs and a higher unemployment rate. 

Trump’s proposed tariffs would not fully offset his tax cuts, adding trillions to the national debt. 

Michael Strain, director of economic policy studies at the American Enterprise Institute, a conservative think tank, said that Trump’s tariff policy “would be bad for workers and bad for consumers.” Chief Economist of Moody’s Analytics Mark Zandi said: “Biden’s policies are better for the economy.”   

In the New York Times today, Jeffrey Sonnenfeld, the president of the Yale Chief Executive Leadership Institute at the Yale School of Management, debunked the notion that corporate leaders support Trump. Sonnenfeld notes that he works with about 1,000 chief executives a year and speaks with business leaders almost every day. Although 60 to 70 percent of them are registered Republicans, he wrote, Trump “continues to suffer from the lowest level of corporate support in the history of the Republican Party.”

Among Fortune 100 chief executives, who lead the top 100 public and private U.S. companies ranked by revenue, Sonnenfeld notes, not one has donated to Trump this year. 

While they might not be enthusiastic Biden supporters, unhappy with his push to enforce antitrust laws and rein in corporate greed, the president has produced results they like: investment in infrastructure, repair of supply chains, investment in domestic manufacturing, achievement of record corporate profits, and transformation of the U.S. into the largest producer of oil and natural gas in the world. 

In contrast, they fear Trump. The populist plans that thrill supporters—like hiking tariffs and taking financial policy away from the independent Federal Reserve Board and putting it in his own hands—are red flags to business leaders. Such positions have more in common with the far left than with traditional Republican economic policies, Sonnenfeld says. Those policies reflect that Trump has surrounded himself with what Sonnenfeld calls “MAGA extremists and junior varsity opportunists,” while the more senior voices of his first term have been sidelined. 

On Saturday, Trump spoke in Philadelphia with a message that The Guardian’s David Smith described as “light on facts, heavy on fear.” He appears to be trying to overwrite his own criminal conviction with the idea that Biden’s immigration policy has brought violent undocumented migrants to the United States, creating a surge of crime. He told rally attendees that murders in their city have reached their highest level in six decades, while in fact, violent crime in the city is the lowest it’s been in a decade. 

In February, Trump pushed Republican lawmakers to reject a strong bipartisan border bill so he could use immigration as his primary issue in the election. That focus on immigration was key to the rise of Hungary’s Viktor Orbán to power, and it is notable that Trump’s picture of the United States echoes the rhetoric of the authoritarians hoping to overturn democracy around the world.  

On Friday, during a podcast hosted by venture capitalists, Trump blamed Biden for starting Russia’s war against Ukraine by calling for Ukraine’s admission to NATO, the North Atlantic Treaty Organization that resists Russian aggression. This statement utterly rewrites the history of Trump’s support for Russia’s annexation of the same Ukrainian regions it has now occupied: as Trump’s campaign manager Paul Manafort testified, the Kremlin helped Trump’s 2016 campaign in exchange for the U.S. permitting Russian incursions there.

More significant in this moment, though, is that Trump, who is running to become the leader of the United States, is siding against the United States and parroting Russian propaganda. Mark Hertling, a retired lieutenant general of the United States Army who served for 37 years and commanded U.S. Army operations in Europe and Africa, wrote: “This statement is—to put it mildly—stunningly misinformed and dangerous.”

Trump told host Sean Spicer that the U.S. is a “failing nation,” claiming that airplane flights are being delayed for four days and people are “pitching tents” because their flight is never going to happen. In reality, as Bill Kristol pointed out, with 16.3 million U.S. flights, 2023 was the busiest year in U.S. history for air travel, and the cancellation rate was below 1.2%. This was the lowest rate in a decade. 

Trump is insisting at his rallies that crime is skyrocketing under Biden. In reality, crime rose rapidly at the end of Trump’s term but is now dropping. From 2022 to 2023, according to the FBI, the only crime that went up was motor vehicle theft. Murders dropped by 13.2%, rape by 12.5%, robbery by 4.7%, burglary by 9.8%. The first quarter of 2024 showed even greater drops. Compared to the same quarter in 2023, violent crime is down 15.2%, murder down 26.4%, rape down 25.7%, robbery down 17.8%, burglary down 16.7%. Even vehicle theft is down 17.3%. 

Trump’s negative picture might play well to his die-hard supporters, but portraying the U.S. as a hellscape has rarely been a recipe for winning a presidential election.

President Biden and Trump are scheduled to debate on Thursday, June 27, and Trump’s team is trying to lower expectations for his performance. He became so incoherent in Philadelphia that the Fox News Channel actually cut away while he was talking. The Biden-Harris team has taken simply to posting Trump’s comments, prompting Josh Marshall of Talking Points Memo to note: “It’s pretty bad when one candidates rapid response account just posts the other guys quote verbatim with no explanation at all.”

After months of insisting that Biden is mentally unfit, now Trump and his surrogates are saying Biden will perform well in the debate because he will be on drugs. There is no evidence that Biden has ever used performance-enhancing drugs, but curiously, Trump’s former White House physician Ronny Jackson (whom Trump repeatedly misidentified as Ronny Johnson last week) gave Fox News Channel host Maria Bartiromo a very detailed list of drugs that could sharpen attention and clarity. One of the ones he mentioned, Provigil, was on the list of those widely and improperly distributed by the White House Medical Unit in the Trump White House. 

Jackson said that he was “demanding” that Biden take drug tests before and after the debate. A White House spokesperson responded: “[A]fter losing every public and private negotiation with President Biden—and after seeing him succeed where they failed across the board, ranging from actually rebuilding America’s infrastructure to actually reducing violent crime to actually outcompeting China—it tracks that those same Republican officials mistake confidence for a drug.”

With the evaluation that Biden is better for the economy and Trump’s apocalyptic vision of the U.S. is not based in reality, it jumps out that on Thursday, a filing with the Federal Election Commission showed that the day after a jury convicted former president Donald Trump on 34 criminal counts, billionaire Tim Mellon made a $50 million donation to one of Trump’s superpacs. Since 2018, Mellon has contributed more than $200 million to Republicans, giving $110 million to Republican candidates and funding committees in the 2024 election alone. He has also given $25 million to independent candidate Robert Kennedy Jr. 

In a 2015 autobiography, Mellon embraced the old trope that “Black Studies, Women’s Studies, LGBT Studies, they have all cluttered Higher Education with a mishmash of meaningless tripe designed to brainwash gullible young adults into going along with the Dependency Syndrome,” saying that food assistance, affordable health care “and on, and on, and on” had made Americans on government assistance “slaves of a new Master, Uncle Sam.” “The largess is funded by the hardworking folks, fewer and fewer in number, who are too honest or too proud to allow themselves to sink into this morass,” he wrote. 

It is this trope that the Biden administration has smashed, returning to the idea that the government should answer to the needs of all its people. The last three years have proved the superiority of this vision by creating a roaring economy; rebuilding the country’s infrastructure, supply chains, and manufacturing; cutting crime rates, and reinforcing international alliances. 

As Dan Eberhart, a Republican donor and chief executive officer of the energy company Canary, told Wall Street Journal reporter Tarini Parti about Mellon: “He’s clearly terrified of Biden remaining the president.”

LETTERS FROM AN AMERICAN

HEATHER COX RICHARDSON

[mandsleanan]

Sorry, parents: The American dream is only for DINKS

Homebuyers with kids will likely spend 66% of their income on a mortgage and childcare this year.

Parents in Los Angeles and San Diego can expect to spend as much as 121% and 113%, respectively.

Some Californians have moved across the country to afford to buy a home.

Thinking about buying a home this year with kids already in the picture? Get ready to dig deep.

A recent study from Zillow found that potential homebuyers with children are likely to spend 66% of their income on mortgage payments and childcare expenses — an increase of nearly 50% from 2019. 

The real-estate company estimated city- and state-level childcare costs from 2009 to 2022 for the typical American family with 1.94 children by analyzing data from the Women’s Bureau of the US Department of Labor and advocacy group Child Care Aware.

According to Zillow’s analysis, in 31 of the largest 50 US metropolitan areas with available childcare cost data, families looking to buy a home can expect to spend more than 60% of their income on mortgage and childcare costs.

Some areas are even costlier, with parents in cities like Los Angeles and San Diego needing to dedicate as much as 121% and 113%, respectively. (In those areas, the cost of buying a typical home and childcare is so big relative to the median income that Zillow's calculation results in figures over 100%.)

Zillow determined that a family earning a median household income of $6,640 per month can expect to allocate $1,984 of that to childcare. If the family purchased a house at a 6.61% interest rate — the rate in early January, when the US Department of Labor released its latest data on childcare costs — and made a 10% down payment, their monthly mortgage would amount to $1,973.

That leaves just $2,683 for additional expenses like food, transportation, and healthcare. This means many households with kids are financially strained; they're likely spending more than 30% of their income on housing, well above what experts recommend.

It all adds up to a costly reality that's making the American dream of homeownership seem farther out of reach for parents than ever before.

Parents can blame a yearslong battle with inflation, as well as stubbornly high home prices and mortgage rates, for contributing to their predicament.

Based on the study, a new buyer household in the United States, making the median income, would spend 30% of it on housing. It's paying for childcare, then, that adds so much on top of the housing budget.

The upshot: Another group, less encumbered financially, appears better poised to realize the dream of homeownership: "DINKS," an acronym that stands for "dual income, no kids."

Some child-free DINKS — who boast a median net worth above $200,000 according to the Federal Reserve's Survey of Consumer Finances — devote their disposable income to luxuries like boats and expensive cars.

Without the financial obligations of raising children, such as covering medical expenses or enrolling them in daycare or private school, DINKS can save thousands of dollars a year and build greater long-term wealth.

Some DINKS use their savings to finance vacations and travel the world, like Elizabeth Johnson and her husband, who, over the past couple of years, have hiked in the Swiss Alps, snorkeled in Hawaii, and enjoyed leaf peeping in Canada.

"We hang out with other people's kids every once in a while," Johnson previously told Business Insider's Bartie Scott and Juliana Kaplan, "but then we happily just give them back to their parents."

Some Americans with kids move to places where their money goes further

One solution to the high cost of both buying a home and raising a family?

Move.

In recent years, young Americans in higher-cost states have decided to move to places that offer them a cheaper cost of living.

Janelle Crossan moved to New Braunfels, Texas, from Costa Mesa, California, in 2020 following a divorce.

She was able to become a first-time homebuyer and found a safe community to raise her son.

"I paid $1,750 for rent in a crappy little apartment in California," Crossan told BI earlier this year. "Now, three years later, my whole payment, including mortgage and property taxes, is $1,800 a month for my three-bedroom house."

Pengyu Cheng, a program manager for a tech company, told BI in 2023 that moving from California to Texas allowed him and his wife to afford their first home, giving them the confidence and security to have their first child.

"Living in California has always been expensive," Cheng said. "I knew that when my wife and I eventually expanded our family, we wouldn't be able to afford San Francisco or the Bay Area in general — even though we both earn good salaries."

[bighermie]

China&#8217;s Economic &#8216;Perfect Storm&#8217; Accelerates Decoupling With US, Says Analyst

China’s Economic ‘Perfect Storm’ Accelerates Decoupling With US, Says Analyst https://link.theepochtimes.com/mkt_app/china/chinas-economic-perfect-storm-accelerates-decoupling-with-us-and-not-on-xis-terms-says-analyst-5478142?utm_source=andshare

He forecasts U.S. interest rates to be higher than China’s for a “sustained period of time,” at least into 2025. In the past several months, China’s central bank has repeatedly lowered its key interest rates to control deflation, and the U.S. Federal Reserve has hiked rates to reduce inflation.

[awesome-casuallyfamouscollector]

Why Car Ownership Is Getting So Expensive | CNBC Marathon

CNBC Marathon examines a variety of factors that lead to car ownership in the U.S. being so expensive, from auto loans to repairing your vehicle. A car loses about 10% of its value as soon as it's driven off the lot. And within the first three years, that number goes up to 50%. Depreciation — the rate at which that happens — is one of those numbers everyone in the automotive world thinks about including consumers, automakers and the massive used car market, which made up somewhere around 35.2 million in 2022 — compared with 13.8 million new cars. More than 100 million Americans have an auto loan and auto loan debt in the U.S. is at a record high of $1.56 trillion. Between the Covid-19 pandemic, supply chain issues, alleged predatory lending practices, inflation, and the Federal Reserve's interest rate hikes, getting an auto loan is getting increasingly difficult and costly. Auto repair costs have been rising for years, but recently they've spiked. Experts say it's likely a mix of factors including heavier, faster and more complex vehicles, riskier driving behavior, new technology, and labor and supply shortages. Repair shop owners say they can’t find enough technicians despite paying six-figure salaries. As technology marches forward, and fancy cutting-edge EVs fill the roads, consumers hear horror stories about huge repair bills. But insiders say there are reasons to be optimistic.

P.S. The main reason - primitive consumerism: in America, many people have forgotten that the primary function of a car is to be an efficient means of transportation, not to impress neighbors and friends with the huge size of the car and the size of the loan payment... One of my biggest culture shocks when visiting America was the American car inefficiencies...! You have to see with your own eyes how they drive to work or to Walmart every day in huge pickup trucks and people don't even make money with these cars...! In addition, they still brag about who has the biggest, most inefficient and therefore worst car in town. This is complete nonsense...!

There are practically no cars of reasonable design in America...It's no wonder Americans are inundated with auto loan debt...and American car manufacturers are NOT popular in Europe anymore. American cars are conceptually designed to get as much money out of people's pockets as possible...

[reality-detective]

In December, BlackRock’s top minds told their clients that a U.S. recession was “foretold.” The Federal Reserve’s aggressive interest rate hikes, although meant to merely tame inflation, would ultimately lead to a wave of job losses and falling GDP, they warned. But now with inflation fading, GDP growth continuing, and the labor market remaining resilient, experts at the world’s largest asset manager have become a bit more optimistic about the future—at least in the near term.

They are telling us what is coming.

Are you prepared?🤔

[zimshan]

Corporate greed is outta control and antitrust action is the best reason to vote for Biden this fall.

It’s time to declare the debate over. In 2021, the total corporate profit increase was $730bn, or a little over $2,100 a person. That’s a large chunk of the inflationary increase in costs. Moreover, the price-fixing in the oil industry, which contributed roughly $200bn of that, isn’t an anomaly.

Take post-Covid rent hikes. One software and consulting pricing firm for landlords, RealPage, specialized in telling its clients to hike rents more than they otherwise might. As of December of 2020, RealPage had nearly 32,000 clients, including “10 largest multifamily property management companies in the United States”. There are multiple antitrust suits accusing the private equity-owned firm of organizing a massive price-fixing conspiracy to inflate rents across the board.

Beyond rent, the Biden administration or private plaintiffs now have credible antitrust claims against firms engaged in price-fixing in meat, hotels and large online sellers like Amazon. Corporations in a range of industries have made comments similar to those of Sheffield.

Alex Cisneros, an executive for Red Roof Inn, told a trade outlet that Red Roof Inn was using a software package called STR from CoStar to systematically hike prices across the hotel industry. “Red Roof’s franchisees for the most part are making more money with less occupancy,” Hotel News Now explained. “Red Roof is now providing more data to franchisees to educate and get them comfortable commanding higher rates.”

According to a lawsuit, an unnamed executive at Smithfield, a pork processor, summarized the advice he got from Agri Stats, a consulting firm that coordinates production in the industry, as: “Just raise your price.”

Rent, meat, oil and hotels are big sectors, so criminal activity in the form of price-fixing to boost profits should bust through the illusions economists have about how our markets really work. There are also a number of concrete steps policymakers can take to respond to this price-fixing.

The first is to arrest or sue the offending executives for criminal activity.

The second is to strengthen price-fixing and merger laws, allow more private class-action suits, force judges to speed up cases and increase the budget of antitrust enforcers to make collusion more difficult.

The third is to reform the Federal Reserve so policymakers there stop using macro-economic models that avoid considerations of profits and price-fixing.

And the fourth is, frankly, political. One key reason there is action on these schemes is because Biden has prioritized antitrust enforcement. He hasn’t put enough into antitrust, and he doesn’t talk about it very often. But he should, or else Americans are likely to fall into the trap of thinking that what is good for big business is good for their pocketbooks, when the opposite is so often the case.

[algeroth]

Take the housing market. Home sale prices have come off of their 2022 peak, but they're still 47% higher than they were in 2019, according to the S&P CoreLogic Case-Shiller National Home Price Index. Even if you manage to find a deal, getting a loan is going to be costly. Thanks to the Federal Reserve's interest-rate hikes, mortgage rates are much higher than they were just a couple of years ago: somewhere around 7%, compared with just about 2.5% in 2021. Not only do these high rates weigh on prospective buyers, but anyone thinking of selling their home — hello, boomers — is likely to be turned off because their current mortgage rate is probably lower than a new one. With both buyers and sellers feeling the squeeze from higher mortgage rates, and with homebuilders unable to keep up, the inventory of available homes has collapsed. And as much as a lot of people would like to see a housing-market bubble burst, that's probably not in the cards.

The car market is in a similar situation. Vehicles are expensive. Loans are getting tougher to come by, and even if you manage to get credit, elevated interest rates are making financing costly. Car insurance is much more than it used to be, too. The Bureau of Labor Statistics' most recent consumer price index indicates the cost of car insurance is up by more than 20% over the past year.

When it comes to work, the vibe is static, too. Yes, the labor market is strong, but it's not a great time to go looking for a new job. Companies aren't laying people off en masse, but they're also not bringing employees on board quickly. Hiring has slowed significantly from where it was in 2021 and 2022. And, it's much lower than one would expect with the current unemployment rate.

"Employers are hiring as if there's a relatively weak labor market, not a strong one," said Matt Darling, a senior employment-policy analyst at the Niskanen Center, a center-right think tank.

The downshift in hiring has also tipped the balance of power back toward employers. While wages are still on the upswing, switching jobs may not come with as much of a pay bump as it did during the Great Resignation of 2021 and 2022. That may be fine for those who are happy in their jobs, which many people are, but it's not so great for those who are feeling a little antsy or underappreciated. And for those Americans who find themselves out of work and looking for a new gig, it's going to take a minute. Darling told me that for the unemployed, it takes about twice as long to get a job as it did before 2008. A job search that used to take 10 weeks at a similar unemployment rate now takes 20.

"That's obviously a huge source of dissatisfaction, because 20 weeks is a long time," Darling said. "What's that, five months to be looking for a job?"

What this all translates to is a scenario where some Americans feel trapped. They can put food on the table and fill up their gas tanks, albeit at a price they'd rather not be paying. But it's hard and expensive to move up the ladder in many meaningful ways. In a consumerist society that encourages people to want more and a culture that prizes itself on economic mobility, this level of stillness is uncomfortable. While it's still possible to get a better job or a new house, those things feel like they're off in some nebulous future, out of your control.