The Question is Not “When” but “Why” the Fed Would Cut Rates with a Labor Market this Strong and Wage Growth Accelerating

The amazing labor market that just keeps plugging along despite the high interest rates.

By Wolf Richter for WOLF STREET.

It was the kind of jobs report that you’d expect from an economy that is plugging along just fine, growing at a solid pace while the gyrations of the pandemic have settled down.

There was a kink in it though: Average hourly earnings jumped, with growth accelerating for the third month in a row, rising at an annualized rate of 5.0% in November, at the high end of the range of the past 12 months, and we discussed that a minute ago

The question is why would the Fed “pivot” to multiple rate cuts starting in Q1, with the labor market this strong, with wage growth re-accelerating, and with inflation in services – where two-thirds of consumer spending goes – running at 4.6% according to the PCE price index and at 5.5% according to CPI? Sure, energy prices plunged, and durable goods prices dropped off their spike, but the action is in services, and Powell has lamented the stubborn core services inflation at every press conference.

So this was not a rate-cut jobs report – and there hasn’t been a rate-cut jobs report this year. This was another jobs report in a long series that changes the question of when the Fed would cut rates to why it would.

Employers added 199,000 workers to their payrolls in November, according to the survey of employers by the Bureau of Labor Statistics today.

The strikes in the manufacturing sector had caused manufacturing employment to fall by 35,000 in October, but by now, many of these workers went back to work – as we said a month ago they would, and here too. So in November, employment in manufacturing rose by 28,000 workers.

The three-month average of jobs created by employers rose to 204,000 and has been in the same range since June. In 2019, the three month-average of net job gains was running between 100,000 and 200,000.

Total payrolls at employers rose to a record of 157.1 million.

The total number of workers, including self-employed, jumped by 747,000 in November from October, to a record 162.0 million, based on the BLS survey of households, which accounts for all types of workers, even those that do not work for an employer per se (green line in the chart below).

To iron out these month-to-month ups and downs and see the trend, we look at the three-month moving average. It rose by 162,000 in November (red line).

The number of workers includes these categories that we’ll get into in greater detail:

  • Workers with wages and salaries
  • Self-employed workers
  • Part-time workers
  • Multiple jobholders – in this survey of households, each worker counts as one worker, no matter how many jobs they have, since this data counts people not jobs.

The number of workers with salaries and wages jumped by 644,000 in November, to 150.8 million, per the survey of households.

The number of self-employed workers rose by 55,000 in November after having dropped by 43,000 in October.

A larger population and a larger labor force and more working people means that self-employment should be looked at in relationship to the total number of workers – what portion of the workers are self-employed.

Self-employment as a percentage of total employment has dropped to the low end of the range before the pandemic, to just over 5.5%:

The number of part-time workers rose by 339,000 in November after plunging by 670,000 in October. At 27.0 million, the number of part-time workers was roughly in line or below the years before the pandemic (between 27-28 million). The BLS defines part-time work as 34 hours per week or less.

Part-timers as a percent of total employment dipped to 16.7%, roughly in the middle of the range of the past two years, and well below the declining range before the pandemic. In 2016, it was still above 18%:

The number of multiple jobholders dipped in November to 8.34 million. As percent of all workers, multiple job holders dipped to 5.1%, same as where they’d been in November 2019. In the 1990s, multiple job holders accounted for over 6% of total employment.

Note that in this survey of households, each worker counts as one worker, no matter how many jobs they have, since this data counts people not jobs:

The labor force jumped by 532,000 people. These are people who are either working or actively looking for work. Over the past 12 months, the labor force grew by 3.73 million. The labor force is surging due to the increase in the number of workers and the influx of people looking for work, such as young people just starting out, immigrants, people returning to the labor force after some time off the hamster wheel, etc.

During the pandemic, the constrained labor force had been a huge problem and caused some of the labor shortages and the sharp increases in wages.

But the increase in the labor force in November has been more than absorbed by demand for labor, and the number of unemployed and the unemployment rate actually dipped.

The fact that supply of labor rose at a good clip and demand for labor rose even faster is another indication of a still strong labor market.

The number of unemployed people who are actively looking for a job fell by 215,000 to 6.29 million, the lowest since July, after having zigzagged higher from historic lows (green line). The three-month moving average dipped to 6.39 million (red line).

The unemployment rate, which accounts for the rising labor force, dipped to 3.7%, the lowest since July. These are historically low rates. The rate has hovered in the range between 3.4% and 3.9% since February 2022.

Just to see how historically low the unemployment rate is, here are the past four decades:

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  276 comments for “The Question is Not “When” but “Why” the Fed Would Cut Rates with a Labor Market this Strong and Wage Growth Accelerating

  1. Harrold says:

    Why is there so much pessimism? I keep asking that but never get an answer. From now on I’ll just take that to mean the person commenting is having a rough time personally, and extrapolates that to everyone else. Even though everyone around them is buying cars and/or eating out nearly every meal.

    People just like repeating the same garbage about the fed, and so forth.

    • John H. says:

      “Why is there so much pessimism?” – Harold

      The pessimism stems, I believe, from an informed recognition that an economy running on demand stimulant (in the form of both monetary and fiscal policy) will eventually face the reality of the mopping up of excess money, a return to fiscal discipline, a prolonged bout of institutionalized inflation, or all three. Though the disasters manifested differently, this was the case in 1921, 1930’s and the 1970’s, and the GFC.

      Each generation is offered multiple opportunities to learn about cycles, but most individuals choose to assume that “this time is different,” and that “we are wiser now.” Confusingly, each time is AWAYS different…. but the cycles still occur.

      (Kipling’ 1919 poem God’s of the Copybook Headings described it perfectly.)


      • brad says:

        The ‘Rob Peter to Pay Paul economy’ cannot go on forever.

        • Sean Shasta says:

          @Harold: No, it’s not pessimism. As John H. and brad have mentioned above, it’s questioning the fiscal and monetary policies of our government and the Fed – and rightly so because they are short-sighted and inherently bad for most Americans except perhaps for the 1%.

          Repression of interest rates and blowing up stock market and housing market bubbles causes enormous monetary and emotional pain to citizens as they ride this roller coaster economy month after months and year after year. If you are not able to see that, that’s ok.

          So there’s indignation, anger, and frustration, not pessimism.

        • Brian says:

          The Fed is less short-sighted than most and most that predicted differently (and correctly) were just lucky. There may be a few true visionaries the predicted accurately based on facts and good reasoning but most are just stopped clocks with no real track record.

          So stop blaming people for being short-sighted while you look at them with the benefit of hind-sight.

          Also realize that the Fed’s hand has been forced by dealing with major short-term problems like the GFC and the pandemic. Long-term planning just isn’t possible when your kitchen is on fire.

      • JeffD says:

        The punishment has already occurred. All prices were adjusted higher, and they are not coming back down.

        • Wolf Richter says:

          Prices of used cars, electronics, and a bunch of other durable goods have already come down and will continue to come down. Deflation in durable goods is pretty common.

        • Harry Houndstooth says:

          A single family home is durable, no?

      • Donny D says:

        I never heard of that poem before, but I love it.

      • Caveman says:


        Maybe because the average worker can’t afford the average house or car, let alone anything extra: like a boat or RV.

        I’m personally doing fine, but at 3x the median income for the area, my new dollars should go further than they do.

        Inflation has come down, but prices have not. $100k a year is the new $50k.

      • Jim T says:

        How can “mopping up excess money and a return to fiscal discipline” co-exist with “institutionalized inflation” of the money supply?

        • John H. says:

          Jim T.-

          By “institutionalized inflation” I was referring to the historical favoring of:
          – money printing and distribution and fiscal stimulus
          – tightening and austerity (i.e. “discipline”)

          The former involves government largesse, various asset bubbles, and is popular. Short term gain, but with long-term painful consequences to currency value.

          The latter involves “belt tightening,” job losses, bankruptcies, and is unpopular. Short-term pain, but monetarily more protective of currency purchasing power.

          Government agencies and legislature, being human, tend toward less-painful short-term solutions, especially as inevitable financial crises arise.

          This bias is on display in the relatively new policy of a 2% inflation target, versus a more responsible and credible 0% target.

          Sadly, this quote from Pat Paulson (1968 Presidential candidate and comedian) humorously summed up the question of the inflation problems of that era:

          “I think I could solve it no matter how much money it took.”

      • phillip jeffreys says:


        Deeper dive also shows primary employment gains have been in healthcare (which experienced profound changes downward during Covid) and federal/state government (a definite negative!).

    • JD says:

      “Why is there so much pessimism?”

      Because there are a lot of miserable people in this country who watch cable news and live in fear. When you spend this much time consuming propaganda deliberately built to make you keep coming back, you’ll inevitably find reasons to be pessimistic about everything from immigrants to AI.

      • Leo says:

        “Why Ded would cut rates?”

        To give trillions of dollars to the 1% that can then throw cents to the bottom 50% to benefit their cronies in “both parties” in the upcoming elections.

        Doesn’t matter which party wins elections, the cronies will rule.

        • joedidee says:

          I find those who have little to no skills are the pessimists
          those with skills have bright future
          I know 25 year old – bought 2nd home, no college, barely got out of high school – family with 2nd child on way
          now so busy with projects he’s hiring out and basically being a general contractor on side projects
          has great skills and can think out problems, gaining experience every day

        • El Katz says:

          To dream is free!*

          *The hustle sold separately

      • STom says:

        The Fed will not cut rates until the labor market deteriorates over a sustained 2-4 month period. Like Wolf explains, it’s currently chugging along with no sign of heading south. The 1st-time unemployment claims will have to get up to about 250K weekly and stay there for at least 2 months before the Fed will even consider the first 25-basis point cut. They know the real issue is a ’74-’76 head fake where inflation shot higher after a brief respite. There’s a 50-50 chance headline inflation pushes up towards 4% by next summer.

        I’m not miserable, but I certainly don’t have my head stuck in the sand. Anyone who doesn’t have any real complaints is easily in the top 40%. The other 50-60% are getting hammered pretty hard.

        Massive income inequality, paralyzed government, weaponized FBI, DOJ & ATF, erosion of liberties, major geopolitical issues that could get much worse at a moment’s notice, ~$34T in national debt, $981B annualized interest expense, rising PCE inflation, rising existing homes prices (sidebar: new home prices are ONLY falling because they had become so egregiously high with commensurate gross margins for builders), rising insurance costs, including Heathcare, gas prices above $3, expensive cars, expensive food, airfare. The list goes on & on.

        And, immigration & AI are really big issues, way bigger than your flippant reference to them implies. The former will be a MAJOR issue in the ’24 election, especially at the state level. AI is probably more of a ’28 & ’32 issue but it will be an extremely big deal once we start to move out of the “Oh, don’t worry, it’s going to make you better at your job phase.”

      • MitchV says:

        The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails. … William Ward

      • Escierto says:

        Exactly right. They are hooked on it like junkies.

        • joedidee says:

          large majority of homeless are druggies
          and they don’t care about damaging your property
          I’ve seen them walk right into moving traffic and then yell at drivers to watch out for them
          there is so much work out there for those who have some skills, are teachable and have work ethic
          you don’t get rich overnite like bitcoin boys/girls say

        • Apple says:

          Many of the homeless are suffering from mental illness.

      • TK says:

        Well said! Fear is a great way to get votes and eyeballs to watch commercials.

      • Flashman says:

        I think Charles Dickens said it better in his Tale of Two Cities than I could. So I have copied it.

        It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way–in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only. ~ A Tale of Two Cities

        Copied from Charles Dickens Info

        • Volvo P-1800 says:

          Here’s another great Dickens quote that can explain some of the present misery:
          “Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness.
          Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”
          ― David Copperfield

      • phillip jeffreys says:

        Thank you Max Weber!

        No one but you can think independently or has actual friggin experience in the military, intelligence, business, R&D communities!

    • Kent says:

      I’ve said this before: there are a significant percentage of the population that rents, likes to own high-end pickups, and eats out a lot. Inflation has eaten them alive, but they can’t imagine any other way to live.

      For the rest of us, its the best economy in our lifetimes.

      • doug says:

        Best economy?

        I make more than I ever did in my lifetime and can’t afford a house that I could have easily bought three years ago. There’s an entire generation locked out of home ownership because of irresponsible fiscal policies.

        Why should they be happy?

        • joedidee says:

          just wait to SHTF with fiat $dollar
          think you have problem today
          I’m making roughly same as I did 5 years ago
          I ratchet up my prices for services
          What I did since 2009 is payoff all mortgages
          around $1million paid off since 2009 – made a lot of lemonaide
          now all investments are Free and Clear – but costs are going up and so are the rents

        • Harrold says:

          That’s not true, doug. You can afford a house. Just maybe not the one you dream about, in the location you want. Not everyone can be rich. Adjust your expectations like a grown up.

        • President Skroob says:

          @Harrold. So just grow up and overpay for a house you don’t really like at the peak of a massive real estate bubble and plan for no equity increase for 15 years or so and risk getting your face ripped off if the bubble implodes spectacularly? Is that your sage advice to young people looking for their first house? Give me a break. Try to consider how difficult all this economic volatility is on folks in different stages of their lives.

        • JeffD says:

          In all but a handful of states median *household* income is not high enough to qualify for a median priced home *statewide*, and by a large margin. Doug has a point, backed up by real world statistics, not merely based on personal beliefs. Below are the mortgage payments (P&I only, 3% down payment, 7% rate) as a percent of *household* median income to buy a median priced house for a few states.

          CA 72%
          HI 65%
          MT 64%
          WA 57%
          NY 55%
          MA 55%
          OR 55%
          CO 54%

          MS 41% (median ratio)

          Since the debt to income ratio to qualy for a mortgage loan is 43%, you could barely quailfy to buy a home in Mississippi, assuming no other household debt, whatsoever.

        • phleep says:

          There was an event, a pandemic. There was a response, a wave of money (yes, at an inopportune time). There was some overspend with that. This wave too will pass. It is showing it is passing.
          Had you lived through a war, I mean a real one at scale, you would have much more to complain about. The world is at moments inequitable to a certain demographic. That is not strictly fixable, especially in a compressed time. But it is being addressed. Each life path too has some luck and randomness. Everybody doesn’t get the same free gum or opportunities.

        • Fed Up says:


          You have to be kidding. I won’t get into what I feel about the shutdown since this isn’t the site for such discussion. But the level of monetary/fiscal stimulus that followed was completely unnecessary, and now we have a mess in services and asset prices that need to be unwound (deflation) from the past three years that never should have happened. The Fed was too quick to dismiss inflation that even the average Joe knew wasn’t transitory. I can’t believe you think this too shall pass. This wasn’t a little inflation, and with the way our government is still spending and wall street pushing for easy money, we will never get back to normal.

        • El Katz says:

          Jeff D:

          The real crux of the problem is the “3% down payment”. If you can only come up with 3% down, you shouldn’t own a home or even consider buying one. Period. Full stop. It’s called champagne tastes and a beer budget.

          I don’t give a rat’s patoot about “bubbles” and the like. There have been multiple bubbles over the decades. Multiple economic downturns. Multiple examples of skyrocketing interest rates. Guess what? If it’s important enough to you, you’ll figure it out and work tirelessly towards that goal. Generations before you did. So could you. But you prefer to sit on the couch and whine.

          If you’re deluded enough to think that a 3% down payment for any major purchase is a wise financial choice, and that’s all you can muster, you will likely learn an unforgettable lesson in personal finance. And by waiting a year because “houses were too expensive”, you just learned an important lesson in personal finance. Make a plan, work your plan, adapt your plan. Keep your eye on the prize.

          And…. nowhere in any period that I can recall prior to the 2008 implosion and the HGTV / Magnolia Network fantasies, did anyone run around and crow about what their house was worth… yesterday, today, tomorrow, or the next year. It was a frickin’ place to live – not an “investment”. Your monthly nut never changed much…. unlike the ramp ups in rent. You can then plan to build real wealth while wielding a paint brush rather than playing Grand Theft Auto or yelling at the TV set while watching sportsball. Walk in your garage (or street or parking lot) and add up those notes. How much other useless crap have you bought because “you make good money”?

          Real world: 2010 my daughter bought a house. Interest rates were high and she had limited down money (10% – far more than you). She got kicked to the curb on everything she bid on. I lost count. Then we found a sugar shack that was completely redone, a little forlorn, and bank owned. They wanted off it. She looked like she was 12 at the time, so no other buyer at the open house (one weekend – best and final on Monday) considered her a competitor and talked openly about their “strategy” (most of which were stupid “get me dones”). We talked as she walked the property, put a full price offer with only an inspection contingency, 30 day close, the bank countered at +5K and we did the deal. We did increase her down payment with an inter-family loan. Her monthly nut was @ $1,500 per month all in. Her apartment at the time was $2,000 a month (2/3 the size) and went up to nearly $3,000 within a few years. Her monthly with the house remained nearly the same (small creep in property tax thanks to prop 13). From that point on, with predictable expenses, she could make bank as bonuses came in and career progression occurred. With the reduction in her rent, she had funds to repay the loan. (Note: Never spend a bonus – invest it. It’s found money.)

          Lastly, house prices are adjusting. I just sold my sister’s house in FL for $1M “turnkey” as in all the stuff in it went with it. Gustav Stickley solid cherry furniture. Art (real art, not drymounted posters). Baccarat crystal. The works. House across the street sold in June of 2022 for $1.84M. Same house. Same pool. Same cul de sac. I discounted it $350K because the buyer was gold plated (cash), quick close (15 days), and I could GTFO of Florida forever. It will need a $30K+ roof in two years (otherwise uninsurable), needed landscaping renovation (I can’t be in two places at once and what the contractors do to geezers is borderline criminal), and – regardless – insurance will be a nose bleeder when the next renewal comes due in March. Plus, if a storm comes and it were to get damaged, I don’t know how I would deal with that from 2,500 miles away. It cost about $3,500 /mo to keep the house alive (utilities, etc.), so any “loss” on sale will be recovered over a period of a few years ($1M @ 5.2% = $52K simple math per year plus $42K of money not spent on a vacant house – bust out in about 3 years and zero risk of suffering any further dain bramage). And that doesn’t include the costs associated with me flying there every 6 weeks or so to keep the house insurable (aka “occupied”).

        • Caveman says:


        • JeffD says:

          @El Katz,
          With 20% down instead of 3%, you can knock 5% off the ratios I gave. Still, deeply underwater in many states. And that is with no car loans, student loans, credit card debts, etc. in the household. Furthermore, costs of property tax, insurance, downpayment, etc. are not debts, but none the less cut into disposable income. Do you
          expect people not to eat? My point is that there is an older cohort that believes economics for young people today is the same as economics from when they grew up, or even from a decade ago, simply because they are too lazy to run the numbers and see that today’s economy is, in fact, different from any historical period they were alive to see. Be a curmugeon if you want, but The Fed royally screwed the majority of people in this country (lower 50% of income) with their MBS purchases and ZIRP from 2020 to 2023. Meanwhile, landlords refi’d to a lower rate to reduce the cost of their investment while simultaleosly increasing rents by 50%. And no, repairs, insurance and taxes didn’t increase by anywhere near 50% over that period.

        • JeffD says:

          @El Katz,
          Sorry. Knock 10 off the ratios I gave, not 5. All the comments still apply. Also, while the insurance and property tax may have increased by 50% somewhere, the point is that the extra costs come nowhere near the additional money from the 50% rent increase.

        • Bobber says:

          El Katz,

          Interesting stuff, but I’d say your points apply to low-to-mid priced markets, where affordability has reduced but remains within reach. When people read your post from places like LA, Boston, Seattle, or San Fran, etc., the points don’t have reasonable application.

          In markets where the median priced home is $1.5M and a two bedroom 1500 ft. dump goes for $1M, you’ll have a hard time convincing a hard-working nurse or firefighter high housing prices are not a problem, particularly when many of these areas are known for booms and busts. You can drop $1M on a fixer upper, spend 1,000 hours on it, then have to sell it for $700k five years later. At these price levels, it’s a real risk.

        • phillip jeffreys says:

          Pardon me Harrold but pack sand.

          It’s clear as all day that the economy has been separated from true market forces and manipulated/orchestrated by huge ideologically founded gov’t spending priorities and regulations, endless executive orders, biased (on the take) media, etc., etc.

          The “just smile and make due with what’s at hand” argument doesn’t cut it.

          But hey! The Republican House just passed proposed legislation that expands FISA authorities to collect and act on data covering domestic communications! Better comply!

        • Lili Von Schtupp says:

          “…We did increase her down payment with an inter-family loan…”

          You see! Its easy! Bootstraps is always the answer!



      • Einhal says:

        There are also a lot of people who rent, don’t drive cars at all, and eat our fairly rarely. I work with a lot of them.

        They have seen their costs jump 25-50% over the past couple of years, and most have not gotten anything near that in raises.

        Meanwhile, business owners were handed a gift by Congress in the form of “forgivable” PPP loans.

        And asset holders, whether in the form of houses or stocks, have seen their assets skyrocket during that time of “pandemic hardship.” Many of them realize they were lucky, and others think they are brilliant investors, and “deserve” all of that new wealth.

        They’re out spending it on luxuries, driving up the costs of living for the everyday Joe.

        Meanwhile, the retired 80 year old has seen her meager $100,000 in savings be devalued by 25%, and the thugs in charge of the Federal Reserve gaslight us about “returning to 2%” while making no effort to undo the overshoot.

        I think it’s pretty clear to see why people are pissed off, if you just use your head.

        • John H. says:

          Einhal –

          Good points about currency devaluation and sloppy and excessive fiscal stimulus.

          But do you mean to villainize all “asset holders” as evil opportunists? If yes, I think you are taking on the vast majority of posters on this sight. They have tuned in to Wolf because they ARE asset holders now and want to enhance and protect their accumulated holdings, or because they ASPIRE TO BE asset holders so they can comfortably retire some distant day.

          I don’t think the disparagement of asset ownership was necessarily your intent, but that’s how it reads…


        • Glen says:

          And perhaps this is a California only thing but plenty of people who have jobs still can’t afford rent and are homeless. Seems to be a general desire to have a reductionist view of various issues.

        • Cas127 says:

          John H.,

          It is just a matter of time before the asset holders (villains or otherwise) get nailed.

          DC manipulation of interest rates (via manipulation of the money supply), horribly over-inflated asset prices (read up on discounted cash flow model) and every day with now-semi-normalized rates is a day when that bubble can pop horrifically (thus the pivot praying by Wall Street and realtors).

          Equities have already fallen maybe 25% of the way to their final destination (a tiny handful of still-overvalued giants in the indices obscure this) and *actual home sales* have fallen by 35% (nobody can use merely theoretical paper gains…you have to be able to actually *sell* the house to use/enjoy alleged “wealth” on paper).

        • Einhal says:

          John H.,

          I’m not villainizing all asset holders. However, there is a huge segment of asset holders who have no humility about the fact that the Fed handed them a gift, and fight like hell to keep it.

          I heard talking heads on CNBC say that it’s not worth getting inflation under control if it causes a decline in the stock market.

        • georgist says:

          As a great video I watched the other day said:

          > if you give rich people money, it won’t trickle down
          > they’ll buy your mum’s house and rent it back to you

          Until rentier activity is outlawed through punitive taxation, this will remain true.

        • Wolf Richter says:

          Then don’t SELL the house to them! It gets really old reading your silly comments about “rentier activity” to describe the business of investing (and risking a lot of money) in a building, and paying for improvements, remodeling, maintenance, insurance, taxes, and repairs, and then trying to make a return on that investment by renting out the apartment, office space, industrial space, self-storage, retail space, etc.

        • John H. says:


          I hear you.

          Those particular heads are selfish idiots intent on gaming the system to their own ends.

          In the great circle of investors, on either side of the idiot, stands a more average Joe like you or me, I’d like to think. Hate to lump them all together too much.

          (I hope my general estimate of 67% good:bad is not too naively aggressive…)

        • Kevin says:

          In an imaginary world, without monopoly and QE, the rich might deserve what they make. But in the real world, the amount of wealth they make with monopoly and with the help of government and Fed cannot be justified.

        • cc says:

          You said it as it is!

          Don’t worry about asset holders feelings because they don’t care about yours!

          “They denied that Wishes were Horses; they denied that a Pig had Wings;
          So we worshipped the Gods of the Market who promised these beautiful things.” Kipling 1919

        • MM says:

          Counter-argument: one can be an asset (home)owner, and still be hurt by rising hme prices.

          If you bought a home to live in and don’t have plans to sell, rising asset prices cost you more money and you don’t reap any of the gains.

          “Asset holders” is a huge group ranging from folks with multiple vacation homes, to those living in <1000 sqft ranches with a food budget of $10/day (hi).

          Renters aren't the only victim of Fed policy.

        • phillip jeffreys says:

          John H – look at what has happened to the distribution of wealth in this country over the last two decades.

          It’s a losing hand for all but the top 1%-5%.

        • John H. says:

          Phillip Jeffreys-

          No argument that the “gates open” years of monetary and fiscal extravagance have temporarily benefited those with assets, but when the markets ultimately correct, the vast majority of those who benefited will fall from the top tier, and many will be permanently relegated to penury. Many will hold a LOSING hand, then. At least it seems that that’s how bubbles have played out in the past.

          Allow me to ask: are the local fireman’s pension plan, or the the VALIC retirement plan (California Teachers), both of which benefited from the asset run-up over the past 10 years, also included in the “asset holders” net that might be implied in Einhal’s assertion?

          Or the Catholic Church, or the AFL-CIO?

          Who gets to judge where “the wealthy” begins, and where does “equalization” end?


      • bulfinch says:

        It’s just as likely that a number of those Raptor-driving, fine-dining renters are leasing strategically having sold their miserable little hovel to some numb nuts in ‘22 for triple what they paid. But by all means, preach a narrative that makes you feel smug.

      • American Dream says:

        If you think this is the best economy in your lifetime then you should feel very fortunate to be a have and not a have not.

        While some people don’t manage money properly there are far more people homeless and starving because of the wealth inequality our government has bred.

        Inflation is literally eating the poorest and most vulnerable parts of our society.

        This economy nor country is not something to be proud of. We should all be ashamed and understand who the enemy really is

        • JD says:

          There are less people living in poverty on this planet than at any point in the past.

          Are there way too many homeless people concentrated (mostly) in blue states who have policies that encourage their presence? Absolutely.

          Is our immigration system broken? Absolutely.

          All of these things can be true. Especially when we keep adding hundreds of millions in population every couple years. But with incredible medical advances and the fact that this many people are surviving or thriving (depending on your view) tells me that there has never been a better time to be alive.

        • El Katz says:

          The real enemy are those who destroyed the family unit. That’s when and where most of the damage was done to the U.S. society. A family (not a bunch of people who are merely related by birth) learns values, works together for each other’s benefit, and doesn’t turn their backs on a sibling, a child, or a parent, because they’re inconvenient. My parents were children of immigrants who came with bupkus from Europe. My wife’s grandmother was an indentured servant from Czeckoslovakia that escaped communism with nothing more than her Mayday dress on her back. Every one of them prospered despite the wars, Great Depression, recessions, job losses, financial setbacks, illnesses, and tragedies. They held each other together.

          My kids have backstopped me when I needed it, backstopped their aunt, I’ve backstopped my sister – both from an emotionally draining perspective as well as financial ones. The kids are thriving. My son learned how to, and now loves, building things from me. My daughter picked up financial acumen and is clever about how, when, and where she spends her money (yet still lives a quality lifestyle on the beach in CA). I made sure they were educated without debt and *launched* as a young adult because being a father is much more than providing fertilization to an egg. My wife and I sacrificed *stuff* so Mom could be home – which paid off by producing a couple of productive members of society. We still did okay financially, despite not having a Porsche or Corvette (equivalent of today’s King Ranch pickup) in the driveway when we were in our 20’s or 30’s. We bought a crapbox house and made it our own over a period of years. Probably the best decision we made at that age as it set the stage for future prosperity. And, no, we didn’t worry about what it was “worth”. It was home. My parents and sister helped us with the down money (we paid them back within a year) so we could start building a life at the ripe old age of 24. My parents and my Sis/BIL weren’t rich… but they knew how to build a stable foundation for the future.

          If you look at some other cultures and their multi-generational households (we experienced that firsthand in CA), how they care for and respect their elders, grandkids watching grandma while she toddles down the street in her walker then watch the hood rats, it’s not hard to figure out why you don’t see massive homelessness in their native countries. Their culture doesn’t allow it. Ours does.

          So blame “da Fed”, “Raygun”, “J Pow”, and any other boogie man you choose… then look in the mirror and point your finger at that guy cuz that’s where the blame lies.

          You are likely the enabler of much of what you profess to despise.

        • American Dream says:


          Blue states homeless people really?
          Politics really??!? Clearly don’t get the problem

          Currently in a red state plenty of homeless people came from a blue state plenty of homeless there to

          Also I’d say it’s unlikely there is less raw number of poverty now then in the past… Based on the population growth you mentioned… Maybe you mean percentage wise and all I have to say to that is there shouldn’t be anybody who is hungry or homeless with the massive amount of wealth that has been accumulated in this world and in particular this country. Especially since that wealth had been accumulated by the blood sweat and tears of so many who still have so little.

          Oh and the biggest medical advance we’ve had in this country is perfecting how to keep people alive long enough to vampire all there assets out of them before they die. Sound morbid? Take a look at long term care and hospice expenses. Ridiculous!

    • GoodWalk says:

      Economics is called the ‘dismal science’ for good reason. Economic uncertainty is always present. Cable news and blogs are full of negative spin resulting in constant pessimism. The financial media are spin doctors and ‘presstitutes’ who pump Wall Street narratives, creating fertile ground for writers and bloggers to attack and expose. The result is negativity, Fed bashing, skepticism and yes, general pessimism. It goes with the territory. It’s important use filters and limit daily intake. Moderation in all things.

      • CCCB says:

        Agreed. The best thing anyone can do is reduce their intake of innacurate, self serving “news”

        Most folks would do just fine reading business news once a week or even less.

        It’s a proven fact that holding profitable assets for the long term is the best investment strategy. If that’s the case, there’s no need to listen to “news” at all, but we’re addicted to it

        • JimK says:

          Holding profitable assets for the long term is only possible if you can afford it. Also, just blindly holding profitable companies means I might still own IBM, GE, Kodak, GM, Ford, etc. Those of us who live off of our assets plus some SS, beating inflation is crucial, and only possible if we stay informed. The better thing to do is to pay enough attention so that we gather many dissenting views, realize that many are self-serving, as you said, analyze them to the best of our ability, and make good decisions. For example, if I just kept my investments in a 60/40 fund, as highly recommended by many pundits, and hadn’t done a deep dive, I’d have been killed in 2022.

        • 91B20 1stCav (AUS) says:

          …and entropy, never, ever, sleeps…

          may we all find a better day.

        • John H. says:


          You say: “It’s a proven fact that holding profitable assets for the long term is the best investment strategy.”

          Your advice is perilously close to a plagiarism of the famous quote attributed to Will Rogers:

          “Don’t gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don’t go up, don’t buy it.”

          …and your advice about as easy to put into practice!

          That said, in some markets and for some people, buy and hold can be a good strategy.

        • phillip jeffreys says:


          The best antidote is experience – actual hands on knowledge.

          Sorry Pangloss…your message isn’t going top sell.

    • cb says:

      insecurity due to high prices (inflation 2), caused by money epansion (inflation 1)

      courtesy of the FED

    • elbowwilham says:

      Isn’t unemployment always low at the top? The two recessions I have lived through had very low unemployment right before the downturn. People were out partying like the good times would never end. There are so many other indicators that show we are due for a recession, it just seems obvious.

      • VintageVNvet says:

        YES EW, exactly correct!
        As a GC with tons of work, it was very difficult to get subs to even call me back in the period of 06 to early 08,,, and it was usually the ”office boy” or some such if at all those years…
        By early 09, it was the company owner calling back and ready, willing, and able to bid anything I might have to keep him busy.
        Similar pattern in two earlier ”recessions,” but 06-07 was THE worst as many older skilled workers hung up their tools.

        • Tom15 says:

          Very true.
          We also lost the youngsters
          Starting out in the trades.
          We are paying for that now.

          I mentor anyone who wants to be my competiton. A great time to be young and willing to risk starting up your business.

      • Bobber says:

        You can tell a market top by the breadth of speculators who are making gains.

        At the top of the last bust, I visited a bar by my house and chatted with two mortgage brokers with high-school diplomas who were bragging about pulling in $500k per year. Their little mortgage shop dissolved by 2010 and both were working at Costco a year later.

        The same night, I spoke with a group of police officers who were pooling funds to invest in RE investment opportunities. I don’t know how they came out, but I can make an educated guess.

        • Volvo P-1800 says:

          Reminds me of the bragging mortgage brokers in “The Big Short” who end up looking for jobs at IKEA.

        • El Katz says:

          Re: The $500K brokers…. I’ll bet they lived a $500K+ lifestyle until it all collapsed. Smart people stay the course when their income goes up. You never know when it will do a hard turn for the worse. If you built a nest egg, it’s not quite as painful.

          I have a friend who bought out his parent’s construction company. Things were going swimmingly. He bought everything in sight. Has a $6M sale proof house (at least he has it for the moment until he defaults on the loan), a building (with no business in it), scads of construction equipment (that he can’t sell), an ocean going racing boat, and a $3M++ judgement against him (remaining after the confiscation of all their bank accounts) because he let his ego get in the way of common sense and survival instincts. I watched them do this multiple times (restaurant investment that went sour, condo conversions just prior to the great recession, and a bunch of other get rich quick stuff. Every one of them had the same outcome. A shipwreck.

          Storybook case of how not to enter your 50’s with three kids in college (none go to a state school because that wouldn’t be cool enough).

      • Jackson Y says:

        Which indicators are showing a recession?

    • Glen says:

      Probably different for everyone although I don’t consider myself a pessimist. I’m a Marxist/Leninist so I am against the nature of a system that by definition has class warfare and many contradictions. I follow here because I exist as part of the system and honestly most of Wall Street is, as people see it as some abstraction, is simply a set of institutions and the people working for them are just trying to support themselves and their families. So I root for the rise of the working class but material conditions really don’t exist for change here in any way and people consider token reforms as victories. But I must be pragmatic with my money as my children’s college and health care and so on isn’t something society prioritizes over imperialism and profit for the few.
      Not trying to convince anybody of anything, just trying to answer your question.

      • Nick Kelly says:

        ‘I’m a Marxist/Leninist so I am against the nature of a system that by definition has class warfare’

        Now that is odd, to be polite. The WHOLE basis of Marxism is the class struggle or in other words the clash of labor vs capital. See ‘Das Kapital’

        They explicitly say that, so it would be interesting to see the reaction of the faithful to a comrade who is not interested in the class struggle. That’s why the first target of the various revolutions has been the
        landlords, money lenders, etc. They then go on to sweep up all ‘rightists’, e.g., the liquidation of the kulaks, Russia’s peasants.

        Could it be possible that you are a socialist, another target of the hard core Marxists? The original Russian Revolution was by a coalition of leftist groups, including the Peasants Party, led by Kerensky. It was then overthrown by a small violent group, led by Lenin.

        • Nick Kelly says:

          PS: the group was the Bolsheviks

        • Glen says:

          Not even clear what you definition of hard core Marxist is. Fascism in Germany was who went after communists and socialist as those were the first concentration camps. Interesting how all that same language is coming around again via US politics. Marx rarely used the word socialism except when criticizing utopian socialism, which is all but gone now. The concept of being a Leninist is the belief that revolution is required as those in power do not willingly give up that power. The material conditions would dictate what that might look like in any country. That said, I was simply answering a question about why people are pessimist, not looking for a reductionist view of the Russian revolution.

        • Flea says:

          Any political definition is the same Marxist ,communist,,democracy. The money always goes to the ogliarchs .

      • Nick Kelly says:

        ‘A very basic principle of the Marxist theory is the theory of class division of society and class struggle. According to it, each society has the oppressors and the oppressed and the oppressed are eventually bound to revolt and build a new society and economy.’


        To self describe as a Marxist but not subscribe to above is simply to have a private language.

      • Anthony says:

        People worship Karl Marx as if he were some sort of god. Let’s assume that’s true, he is still the biggest failure in history for shamelessly leaching off of his own mother and instead of doing ANY manual labor his entire life, waited for “the old hag to die”.

        Rasputin felt compelled to meet the man he first saw in a painting, this Karl!

        There you have it, the eternal champion of the working man, who’s best friend was a millionaire and hated the company of working men.

      • Harry P Flashman says:

        I find actual humans who are Marxist/Leninist’s to be such amazingly smart yet dumb people. As a feel-good intellectual exercise, I understand the alure but as a practical matter and with all evidence of human history how does one accept that this is their worldview? It’s a failed ideology which has caused more misery than it purports to cure and ignores that the world is in a golden age as we read this, largely because of a market (EG Capitalist) system.

    • Bobber says:


      You ask – “Why is there so much pessimism?”

      Pessimism or optimism has little to do with accurate economic or investment analysis, so I’m curious why you ask about it. If you believe the economy will enter recession or asset prices will fall, or you believe the opposite, these should be a cold hard conclusions based on analysis, not emotional bent.

      Actions based on emotion are what cause bubbles and markets that can drop 50%.

      Arguably, Fed leadership has done the most damage via emotional decision-making. Their actions suggest an irrational fear (of recessions) and irrational denial (believing problems will simply go away in the future). So, unfortunately, highly emotional decision-making has become institutionalized.

      Of course, Wall Street understands this, and they’ve built a huge propaganda machine to manipulate the Fed and the public into acting irrationally. As Wolf points out, the overwhelming majority of main stream media “analysts” today, even at a high level, are simple propaganda conduits.

    • Crypto Investor says:

      Why cut rates? Obviously, we want looser monetary policy to pump my crypto bags and real estate prices.
      Accumulated risk assets for a while now. Let’s pump it baby! Bitcoin 100k!

    • Bruce says:

      Rent is too damn high

    • Raging Texan says:

      I’d like to say why I’m pessimistic.

      I’d like to buy a home for my family at a reasonable price. I make 3X the median household income (which doesn’t include welfare) for my zip code and have no debt. I’d like to pay cash or maybe would tolerate a small 10 yr mortgage. Should be easy with my high income, right?

      Prices of homes are insane and increasing faster than I can save up for them. Yes a lot of people i know in this town have bought homes, if I ask them about it they have all admitted to me they have huge mortgages.

      Then we can talk about WHY the prices of homes are so insane, which rapidly leads to understanding that there are Unconstitutional govt (and FED) programs drivingc up the cost of homeownership, and the Fed/Fedgov keeping interest rates lower than the rate of increase of the fake currency supply. Finally, most people in their stupidity ardently support the Unamerican fed-worshipping status quo. It’s all very annoying idiotic etc.

      • Raging Texan says:

        … and similar thoughts and frustrations about education, healthcare, transportation, food – ya know, basically everything my family needs and wants is being messed with by abusive governments and >50% of the people are in favor of heaping ever more abuse on themselves and the rest of us along with them.

        Now there are some things to be optimistic about, but that’s another discussion, and I have a different pseudonym for that.

      • Crypto investor says:

        “I’d like to pay cash or maybe would tolerate a small 10 yr mortgage. Should be easy with my high income, right?”

        lol. So entitled. I don’t feel sorry for you. You live in a fantasy world.

        Where does this expectation come from? Avg income doesn’t mean anything. Btw Those that are supposedly make avg income get paid under the table (contractors, waiters, etc) and make way more than avg.

  2. gerard says:

    They won’t cut rates.
    They will probably have to raise them ,considering the amount of money this government has to borrow.
    When you have such a deficit,you just create artificial growth,this is why we sould not expect a recession.
    This is just temporary,before the elections.
    Then you realise that debt creates less and less growth.and that raising the rates are destroying the economy.

    • Brant Lee says:

      That’s what I’m thinking. The real driver of interest rates has to be the debt. If not now, it will be soon. Wall Street should be betting on whether government has to raise or lower rates based on paying the interest on the debt.

    • JK says:

      I don’t see why they would cut rates. Doesn’t make sense. Food is still costly. My health insurance was raised almost 30% starting in March and I have to look for a new policy. Started working part time doing gig work to supplement my rentals income. My tenants are working extra to make ends meet. I still jobs advertised so I don’t see a decrease.

      I have an Indian friend (India) and he tells me the Indians in tech are buying homes 600 grand and up-no problem. These guys work in tech. I checked the area where I have my rentals (lower income) and some prices dropped, but nowhere even near to 2008 crisis. That was an incredible. drop. The areas in MT, ID and WY that I’m looking to buy something have not dropped much. People still holding and price per acre is not cheap at all. Where I am finding value is purchasing a place out of America (not telling you where) where I can get citizenship.

      I think Powell should just STFU and say we are staying the course or will go up in rates if economy starts overheating. The FED is America’s second biggest fiscal enemy behind Congress/President.

    • Gattopardo says:

      “They won’t cut rates.
      They will probably have to raise them ,considering the amount of money this government has to borrow.”

      Not necessarily. Treasury auctions will determine the price the government pays to borrow. The Fed overnight rates has influence, sure, but if .gov needs to borrow a lot (and they do), the primary driver of price will be what the market will bear.

      • gerard says:

        Yes,this is what i said.The more they need to finance the deficits,the more they need takers for their bonds.
        If it’s not the FED,then they need to find more and more takers for the bonds.
        That should push the rates up.

    • M says:

      Wall Street forced the Fed to cut rates in 2019. IMO They are going to do it again. Will it be terrorism somewhere different in the financial plumbing, or will another regional bank suddenly get torpedoed? Keep your binoculars on lookout for barely reported news about these going forward.

      • Wolf Richter says:

        Back then (2019), inflation was BELOW the Fed’s target. Now inflation is at twice the Fed’s target. Everything has changed. You have to go back 40 years to make comparisons.

  3. Glen says:

    I agree there is not rational reason to lower but still to be seen if there is a rationalized reason. Hopefully they just go off the numbers. This is a decent time for most so keep it going, keep investing in manufacturing, and so on.

    • Fed Up says:

      Exactly. Rationalized is what worries me. Time will tell. Until such time, I’ll remain cautiously optimistic.

    • Steve says:

      Yes. Man is not a rational creature, he is a rationalizing creature.

  4. SpencerG says:

    It will be interesting to see the pay raise data come the first quarter of 2024 when most corporations give their employees a COLA. Putting that on top of already strong wage growth is going to have Fed Governors reaching for the Pepto Bismol.

    • Glen says:

      Perhaps you can write them a new jingle. “When you’ve got low unemployment, rising wages, services inflation….”

      • MOFO says:

        You funny!

        Dozens, nee hundreds of TV options. Everyone is watching something different but we all see the same flipping commercials.

    • Glen says:

      Starting in April, 500,000 fast food workers in CA will get a raise to $20 from about $16.41. While of a course a relatively small percent of the workforce it will increase prices more than likely as well as wages obviously. Other laws in our state are boosting wages for healthcare workers and others, not to mention the settled “Hollywood” strikes which are getting a large industry back to work. Plus new jobs for pointless rail projects here which will kick in over time.

      • JK says:

        I hardly eat out, but went to El Pollo Loco which is a California fast food Mexican a step above Taco Bell. That burrito that used to cost under 10 bucks is now 12.50 or so. My eyeballs popped out of my head when I saw the menu price thru the drive thru.

        Bought a bag of frozen Chimichangas for under 20 bucks that aren’t too bad. That’s my answer to that price increase. Prices are going up in segments if you’re paying attention, but add it all up over the last several years and it’s been brutal.

      • trading good for bad says:

        Most fast food is very unhealthy, too, so people are paying a lot now for poor quality, to then have to pay a lot more in the future for the resulting health problems. Some burgers don’t even come with lettuce, tomato, onion, etc. If we don’t want to eat veggies now, our body won’t be able to work when we get old. And now we get Cos Mc’s. Overpriced sugar and caffeine bombs from a drive through only. McDonald’s seems to be doubling down on unhealthy products.

        • 91B20 1stCav (AUS) says:

          “…there are three basic components comprising product quality: fast, good, and cheap. You may select two, the non-selected component being your product’s lacking quality variable…”


          may we all find a better day.

    • Some Guy says:

      3.7% unemployment combined with a 7.3% budget deficit is pretty much guaranteed to have the Fed governors reaching for the Pepto Bismol

  5. dishonest says:

    2024 is an election year is it not?

  6. OutWest says:

    Pretty incredible. Most countries are the world would be pleased with those charts…

  7. GringoGreg says:

    So, you have been Pavlovian trained by Wall Street and the Fed to believe that 5% on FFR is high and how can the economy bare these high rates. Actually, these rates will wash out the garbge and keep fantasy-land investing and risk taking somewhat grounded. Will be better for the economy if rates stabilize arounf the 5% FFR and gvts and corporations realize they need to be fiscally responsible!!

  8. Jim Cramer Fan says:

    This is not a “pivot rally”; it’s a “soft landing rally.” The Fed pulled off a soft landing in the mid 90s (The Maestro’s magnum opus). This required a few insurance cuts in 1995-96. If history repeats itself (or rhymes), it’s stock-buying time.

    • Wolf Richter says:

      Yes, someone always has to buy, or else the people that want to sell cannot sell. Every share sold must be bought by someone. The job that buyers have is to allow sellers to sell.

      • sunny129 says:

        Buying and selling goes on all the time.
        But the Question is at what price?

  9. Thomas Curtis says:

    Rick Rider (Black Rock) and Mohamed El-Erain (Allianz) on Bloomberg on Friday morning GUESSED that the Fed might cut the Fed Funds Rate by 100 basis points in total in 2024 beginning in June or July.

    So from that I guess that they do not see any large dark clouds anywhere near.

    • MM says:

      This right here.

      First time in awhile I find myself disagreeing w El-Erain.

      Fed can’t cut as long a inflation remains >2%.

      • Jon says:

        El erian has been begging for rate cuts for quite some time.
        He has been using fear mongering tactics asking for ratw cuts and has been very harsh in fed for such aggressive hikes per him.

        Very difficult to get de addicted from cheap money.

        You can guess where is he invested.

        • jon says:

          I came across El Erian interview pleading FED to increase their inflation target of 2% to 3% or so. The reasons he cited was: things have changed fundamentally and thus higher inflation is structural in our economy. Thus he wanted FED to increase their target.

          He has been a vocal critic of FED for their fastest hikes done.

      • Einhal says:

        I tend to agree. My feeling is that Powell is a spineless coward, and would be happy to inflate asset prices as long as he can pretend he’s doing something else.

        If he cuts rates with inflation significantly above 2%, he loses that plausible deniability.

        • MM says:

          It would be an implicit admission that the Fed has abandoned the 2% target.

          I also think geopolitics is a factor – the Fed wants to ‘out-hawk’ other central banks by keeping UST rates higher than bond yields. In doing so the Fed is defending the dollar vs other currencies.

          Case in point: look what happened with USDJPY when the BOJ teased the idea of higher rates.

        • MM says:

          …keeping UST rates higher than local** bond yields…

  10. Uriel says:

    So many moving parts. Baby boomers retiring, birth rates historically down, people (labor) becoming more valuable as globalism dies, interest rate putting banks, indebted corporations (most), a govt that now spends on debt service than defense-all on the verge of collapse…. Interesting times

    • Flea says:

      Rates are up because FED ,can’t borrow money on world markets ,so second best get it from Americans. This will end BAD

  11. TEF says:

    Congratulations to all of you Americans, truly world leaders, the envy of all others and constantly proving that capitalism is the only way to wealth and freedom for anyone who chooses to educate themselves and work hard. Long may it last, your businesses and currency are the only place I will invest in, all others are bleeding heart socialists or communists destined to sure failure.

    • Fed Up says:


    • Glen says:

      Not sure what a bleeding heart socialist is unless you are implying social democrat and of course they aren’t on the left but hopefully one day we can meet and I can buy you some vodka and sunflower seeds. Great comment! Sarcasm without the need for /s is always the best.

      • Nick Kelly says:

        Here in BC Canada we have a whole bunch of self described ‘social democrats’ who at the moment form the government: the NDP. They would all describe themselves as ‘on the left’ or possibly ‘center left’.

        • Glen says:

          True, and same in the US but it doesn’t make it so. Outside of fringe groups the most left we get tends to be Bernie and he is not left relative to the definition. Admittedly I have nothing against reforms as improvements for the working class are never a bad thing but they also tend to be transitive and just the right amount to make the working class content. The recent strikes were a good example of this and of course best wage increases in 40 years. In any event this isn’t where I participate in these types of discussions as I find Wolfs data driven analysis interesting in the same way I find dialectical materialism fascinating, but I do that elsewhere.

        • El Katz says:

          Yep the big salary increases from the big 3… as they shutter plants for “retooling”. It wouldn’t be a wild bet that the “retooled” factory launches under another corporate umbrella and assembles EV’s without the need for either a dealer body or the UAW.

          You’re always better off with a stable job that pays decent wages than shooting for the moon and finding yourself in the street with your belongings in a box when the company deems you highly paid but replaceable “associate”.

    • SpencerG says:

      You are welcome!

    • Thomas Curtis says:


      Wow! As an American thank you for the kind an encouraging words.

      I have read that Zi once asked Biden (when they were Vice-Presidents) to explain America. Biden said I can do that in one word, “Possibilities”.

      I agree. America is constant and great change. Living in it is often bewildering/worrying but I think it makes us strong/safe.

      • American Dream says:

        Lol you think he’s being serious??😂

        Our country is pathetic and if you can’t see it for what it is all I gotta say is….



        • Thomas Curtis says:

          American Dream,

          You said, “Lol you think he’s being serious??😂

          Our country is pathetic and if you can’t see it for what it is all I gotta say is….


          You are possibly right. The thought occurred to me but I decided to believe he was sincere because cynicism is a mental disease. You should consider this.

  12. Fed Up says:

    I agree there is no logical reason for the Fed to cut rates, but when you look at the last 15 or so years, it’s no wonder people are skeptical. Ultra low interest rates and QE being used when not needed makes it difficult to trust the Fed. Also, Powell ruined his credibility with his inflation is transitory stance. I hope this is a changed Fed that will do right by the American people, but I’m still on the fence. We shall soon find out.

    • MM says:

      The last 15 years are the anomoly, not the norm. The bond bull market ended in 2020 and rates will keep going up. I’m literally betting on it.

    • Pea Sea says:

      The Fed shouldn’t have done years and years of QE and interest rate repression after the GFC, but it did. The Fed shouldn’t have cut QT short in 2019, but it did. The Fed shouldn’t have done QE and ZIRP in response to the pandemic, but it did. The Fed shouldn’t have continued to do QE and ZIRP long after its absurd market distortions became clear in 2021, but it did. The Fed shouldn’t have bailed out tech gazillionaires’ massive uninsured deposit accounts earlier this year, but it did.

      Those who are betting on the Fed to cut rates next year may or may not be wrong (I suspect they are wrong), but their reasoning is not necessarily unsound. It’s simply not that unreasonable to expect an institution with a decade-plus history of doing the wrong thing over and over again to…do the wrong thing again.

      • Pea Sea says:

        Correction: The Fed itself didn’t bail out those tech gazillionaires who couldn’t read the plaque on the door of the bank, that was part of a plan jointly conceived by the Fed, the Treasury Dept, and the FDIC. I shouldn’t have included it in a list of the Fed’s own screwups. So instead I’ll add one that I had left out:

        The Fed shouldn’t have assured investors, that it would keep rates near zero for years to come, thus encouraging investors to take on duration risk that blew up on them when the Fed panicked and reversed course, but it did.

      • KingKong says:

        I think the biggest issue is that people can’t seem to think beyond a 10-20 year timeframe. Look back long enough and you start realizing things tend to move in a 80-100 year cycle. This is especially true politically, with a major war every 4 generations.

        I’d posit we’re just finishing up winter (financially), now comes spring and with that comes spring cleaning.

        In Roman days, during the darkest time of the year, they would celebrate Saturnalia – a holiday where everything was upside down and everyone basically went crazy.

        This is what this entire QE/ZIRP era was, our societal Saturnalia. The party has ended, but people are still somewhat slow to see daylight is coming back. And as light comes back, so too do people have to sober up again to reality.

  13. Mark says:

    Depth Charge Thanks for speaking the truth

    Totally correct

  14. TR Bond says:

    Since the Wall Street establishment always wants cheap money, they forecast low inflation or ignore signs of sticky high inflation ( like the wage increases in the payroll number). To then push the Fed to ease.

    I saw little to nothing from the Wall Street commentators on this sticky high wage increase.

    Chris Waller even came out last week stating that if inflation comes down the Fed would then lower rates.

    Music to Wall Street’s ears. He must be angling for a lucrative Wall Street job.

    Wolf makes a good point, and no one is talking about it because they don’t want to.

    But no way the Fed cuts rates 5 times next year

  15. SocalJimObjects says:

    I can only think of two reasons, and they are weak ones:
    1. To head off a crisis in the Commercial Real Estate sector.
    2. Perhaps to prevent a repeat of Silicon Bank. Looking at the BFTP program, it offers “offers loans of up to one year in length to banks, savings associations, credit unions and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities and other qualifying assets as collateral.” Isn’t the one year anniversary coming up in April?

    Honestly though, the Fed can always introduce a ton of other programs to bail everyone out. This time around, everyone will be a winner, guaranteed.

  16. longstreet says:

    Bank Term Funding Program

    121 Billion and continued outflows from banks to govt paper
    The trend is disturbing, I suspect, to the Fed.

    • Wolf Richter says:

      For some banks, the BTFP is just a less onerous way for banks to borrow than offering 5.5% on CDs to attract or keep funding. It’s a pretty good deal for banks, much better than the Discount Window and some other options, and so they use it.

      BTW, $121 billion is nothing for the huge US banking sector with 4,000 banks that together have $22 trillion with a T in assets.

      • Bobber says:

        That is concerning. If banks are increasingly getting financing from the government (the Fed), banks become more dependent on government action and more insulated from market forces. Odds for bank bailouts increase.

        If its small and doesn’t matter, why even do it? I say make them go out to market and attract CD money. Perhaps that is the plan and the reason why they put a one-year term on it.

        • SocalJimObjects says:

          That’s my thought as well. Also 121 billion discounts the possibility of contagion. Remember when subprime “was contained”? Pull the support and we’ll see if banks stop lending to one another, then we’ll see the true picture of the US banking industry. I mean, everything could be swell, but I think 121 is an underestimate.

        • Wolf Richter says:


          “…and we’ll see if banks stop lending to one another,…”

          Interbank lending in the US has withered since the Financial Crisis. In terms of contagion, that’s a very good thing. Interbank lending went from $450 billion in early 2008 to 70 billion (-85%) at the end of 2017 — $70 billion in a $22 trillion banking system — and at that point, the Federal Reserve Board of Governors stopped tracking interbank loans on its H8 as a separate line item but combined that with some other activities, maybe repos, can’t remember.

          Interbank lending was still reported as separate line item for Nov 2017:

          And it was no longer reported as a separate line item in Jan 2018 — this was of course announced and explained at the time:

  17. LordSunbeamTheThird says:

    The reason why the labor market is strong and wage growth is accelerating is because the printed money which was originally concentrated in the original receivers is now, still, in the process of spreading out into the economy at large i.e. historic QE is affecting a delayed stimulus.
    At some point this meets tighter financial conditions for debtors in the private sector.

  18. John says:

    Thanks Wolf,
    So now the rate cuts or interest rates shouldn’t even be mentioned anymore. Higher for longer said by Powell makes me think it’s all QT from here as the tool for now. Last hike was July. PCE at 4.6 and CPI at 5.5. I believe Wall Street knows what’s coming with the Fed shrinking its balance sheet. Higher for longer stays the same. 5.25-5.50 by the fed. What the interest rate on the curve says I don’t know.

  19. Franz Beckenbauer says:

    The gubment spends three trillion dollars in new debt and that labor market just keeps going.


    It’s a miracle.

    • longstreet says:

      Chicago spent millions on a tent city for their illegals…then tore it down
      Look at all the govt funded jobs!
      Broken window economics and Taylor Swift concerts

      • Shiloh1 says:

        Earlier this week The Duran with Alex Christophou and Alexander Mercouris show entitled ‘Let’s talk about some news’ , Alexander said the U S. may as well elect Taylor Swift president.

      • Franz Beckenbauer says:

        Taylor Swift who made a song about how much better her life would be if she were a man ?

        I mean, she could be a rock star ! And get filthy rich !

  20. Bet says:

    Stocks like NVDa are pricing in growth for the next five plus years. Not sustainable
    The markets are similar to tech in 2000. The stocks fall on their own weight .But party on Garth

    • MM says:

      Party on Wayne!

    • Depth Charge says:

      And then after they price in the next five years, they’ll price in another five. And after they do that they’ll make up another narrative and price in five more. That’s what happens when the FED just prints money and hands it to cashed up oligarchs who turn the entire economy into a speculative orgy.

    • American Dream says:

      And just like the dot com bubble this bubble to will pop but I think we’re still in the 1999 part of this comparison. More bubbling to come before the drain gets pulled. Time will tell

  21. fred flintstone says:

    The most dangerous wealth destroying economic statement…..
    In the long run………this statement is implied in all sorts of internet based economic advice columns.
    History tells us that in the long run there is no long run. Most of it is about tomorrow.
    because things change in ways very few can anticipate.
    Even the famous statement….in the long run we are all dead is starting to be challenged by modern science.
    So……listen to the facts and make your own evaluation and don’t listen to the constant drum of advice from the internet.
    This Wolfe site is a perfect example of a great source of unbiased facts being placed in context. Take what you need and apply. You will do better.
    Don’t be afraid to invest. If you listen to the internet you’ll kill yourself to avoid the long run.
    Just trying to help the younger crowd.

    • Einhal says:

      I agree that people shouldn’t in general be afraid to invest. But putting money into obscenely overpriced stocks when you can get 5.3% in treasury bills is the height of recklessness.

      • El Katz says:

        Everything in moderation…… The 5.3% can evaporate just like it has before and stocks may continue to climb. Or not. No one truly knows.

        • Jackson Y says:

          What? Once you buy a treasury, the coupon payments are fixed for life, and you cannot lose your principal if you hold until maturity.

        • MM says:

          Jackson Y –

          Einhal specifically said treasury *bills* which are zero coupon. You buy them below par and get par back at maturity.

          They’re also <1year in duration, which is what El Katz is referrimg to by "The 5.3% can evaporate just like it has before" (although I personally disagree with the assertion that rates will go down).

      • Fred flintstone says:

        Nothing against your comments, however, I remember a gentleman telling a young me the same thing in 1973. If you buy at 1000 Dow you are a fool he said. It’s true, the dow dipped to 574 a year later……but…..I wished I had put every dime into the Dow at 1000.
        The point is, growth will outrun even the worst timing.
        Believe in the USA.

        • Gattopardo says:

          Yo, Fed,

          Except you couldn’t just buy the Dow back then. Index funds were just getting started, not really available. But I get your point and agree.

      • KingKong says:

        This is me. I have cash accumulating risk-free interest. I’ll get into stocks when the party ends and people are afraid. Right now there is still too much music.

  22. MM says:

    Consider the following:

    The Fed has spent the last year saying “no rate cuts while inflation remains above our target.”

    Inflation remains well above their target (despite the rate of price increases having slowed).

    If the Fed cuts while inflation remains >2%, its an implicit admission that they’re abandoning their inflation target.

    This could cause the Fed to lose control of the long end of the curve, as longer bonds reprice down & yields spike. The Fed does not want this.

    Ergo, the Fed /cannot/ cut while inflation remains >2%.

    • longstreet says:

      Price of Gas has dropped significantly. Big input consideration.

    • CCCB says:

      We’re still above their target and they haven’t cut rates either.

      Why won’t anyone believe the fed. They’ve been doing exctly what they said they would do for over 2 years now?

      • KingKong says:

        People don’t believe the fed because they don’t want the party to end. Nothing to do with logic or reason, just simple greed and addiction to easy money.

        Keep in mind that many people today only really know a low-interest rate environment. The idea of hard-earned money is anathema to those who only thrive in an easy money environment.

        • 91B20 1stCav (AUS) says:

          ‘…one doesn’t know what one doesn’t know…’ (paraphrasing one our past leaders), or, if having acquired some unease at the possibility of an advancing dark, might begin to whistle, loudly…

          may we all find a better day.

    • Jackson Y says:

      That’s not what they said. Powell said they may well cut before the annualized (last 12 month) PCE number reaches 2.0%. Because by then they would have overshot their target to the downside.

      He also said as inflation declines, leaving rates where they are is equivalent to tightening.

      Do you listen to his press conferences?

      • MM says:

        I think you’re misinterpreting this quote:

        “The next question will be for how long will we remain restrictive? We said we will keep policy restrictive until we are confident that inflation is on a sustainable path down to 2%. That will be the next question. But honestly right now, we are tightly focused on the first question.”

        He’s talking about the general restrictiveness of monetary policy – NOT specifically rate cuts.

  23. Debt-Free-Bubba says:

    Howdy Folks. Less than 100 billion to go. What a mess THEY have created.

  24. Jeff Tidd says:

    Looking at the chart, the current report is at good time levels but the trend line is different – flat during “good times” and trending down now.

  25. The Real Tony says:

    The graph for multiple jobholders that’s a function of the real or true inflation rate minus the Fed funds rate which is positive. The news media spins this as being negative but the inflation rate is being understated. The longer it stays positive the poorer everyone will get and the more jobs they’ll have to work at the same time.

  26. Louie says:

    In my humble opinion, the FED under Jay Powell has been brilliant! Consider, normally the FED responds to data points as they appear in the business cycle. In 2020, the 25 trillion dollar U.S. economy as well as much of the world’s economy was basically SHUTOFF. Clearly that was a mess to navigate and they seem to have done a brilliant job of it. I would expect there would not be a rate cut any time soon UNLESS there was a black swan event. (think 9-11 or similar).

    • Debt-Free-Bubba says:

      Howdy Louie. Don t forget Pow Pow raised and then lowered during the Trump Presidency. Our one party system does silly things …….

    • Gwtorrence says:

      Yes, Covid-19 changed everything including perception. For the typical wage slave it was in a weird way kinda nice to not work, get government money to survive, and now they are questioning whether going back to being a wage slave is a good thing. No economic theory required.

    • Einhal says:

      If you’re not being sarcastic, you’re deluded.

      There’s nothing brilliant about printing money. It’s a trick as old as the hills. All it does it is forcibly confiscates people’s savings, without any need for legislative action. In the long run, it kicks the can down the road, and postpones any hard decisions.

      The only reason we can sort of get away with it is because we’re the reserve currency.

      When nations like Argentina try it, they get hyperinflation.

      • Louie says:

        I thought I mentioned the once in a lifetime (hopefully) shut down of the 25 trillion dollar economy. Drastic times call for drastic measures. I’m glad they were there to do what was necessary at the time.

        • Einhal says:

          Yeah, and next time it’ll be a shutdown because of war. Governments can always find an emergency to justify immoral actions.

          They did way more than what was necessary. The costs of the response, if any, should have been borne by society as a whole. Not merely by cash holders. Taxes should have been raised to pay for it.

        • Depth Charge says:

          The shutdown was one of the dumbest, most unfair moves in history, with zero benefit whatsoever. It did nothing to control the spread of the virus.

          What it did do, however, was destroy countless small businesses and their respective owners, and hand those customers to the mega-whales like Walmart, etc.

          They told the local furniture store they couldn’t be open, but allowed people to cram into Walmart, shoulder to shoulder (that’s super fricking healthy to control a virus spread), and buy their furniture. “Necessary at the time” my asz.

        • Bobber says:


          Are you serious? You are suggesting a 25% inflationary spike was unavoidable.

          The Fed could have handled the crisis a lot better by withdrawing stimulus a lot sooner than it did. Approximately $5T of helicopter money was printed in 2020/2021. Common sense says that’s going to raise price levels by at least $5T (20% to 30% inflation) across the economy, particularly in an environment of constrained supply. Yet, as prices started rising, the Fed said it was transitory, which allowed the inflation to continue until the full $5T increase in money supply embedded into price levels and GDP. Even now, the Fed piddles as the inflationary spike rises from 20% to ??????.

          Even more alarming, they kept buying MBS in the face of a quickly inflating RE market, AFTER prices had already skyrocketed by 100%-300% the past decade.

          If that is brilliant performance, the scale needs to be recalibrated.

        • Swamp Creature says:

          The shutdown took out 40% of the small business in the DC Metro areas. Small business were forced to close while the big box stores were allowed to stay open selling some of the same merchandise. The small business lost all their customers and many were forced into bankruptcy. Good job from the government.

      • Glen says:

        Argentina is certainly in a world of hurt. Even Brazil is feeling sorry for what is happening there, although of course Brazil has its own struggles on the horizon but likely not on the hyperinflation front. For whatever reason I find South America fascinating as not sure why. America in 50 years might start to begin to go where the UK economically is currently at and that is very unlikely but not a lot of parallels I can see to South America outside of the generalization of a political pendulum.

        • fullbellyemptymind says:

          Spend some time in Uruguay – you’ll never want to come back. Lots of upside to moving there if you can maintain your US income and/or move it offshore.

      • Fed Up says:

        There are a few on here like that. They are either clueless or trolls.

    • SpencerG says:

      I agree with you. For all of the grief that the Fed gets the simple truth is that they are the only adults in Washington. If they had a Congress and President willing to work with them in the financial crises that we have had for the past fifteen years then they wouldn’t have had to engage in such extreme measures for so long to keep the economy going.

      But that has not been the case. The last Washington politician who was serious about fiscal policy was John Boehner… and his OWN PARTY ran him out of town on a rail. So the Fed has been forced to “push on a string” to get the results the country needed.

      • Einhal says:

        They haven’t “kept the economy going.” They’ve kicked the can down the road. When a parent has an immature teenager, being the adult does not mean bailing him out from his bad decisions.

        • Depth Charge says:

          We have oligarch affluenza.

        • SpencerG says:

          Kicking the can down the road IS what is keeping the economy going. Frankly that is the whole purpose of ANY nation’s central bank… to be a countervailing force in the economy. When times are tough… they loosen. When times are good… they tighten.

          As to “bad decisions”… COVID wasn’t a decision at all… it was a virus that caused a once-a-century pandemic shutdown of the global economy.

        • Einhal says:

          COVID was a virus. Shutting down the economy and losing $1.5 trillion in economic activity, while then dropping $6 trillion in in stimulus, that certainly was a “decision”

    • Thomas Curtis says:


      I agree. Powell has forecast accurately since they started raising rates and by believing him I have been able to navigate the markets well.

      Most people here, more than half, just like to b!tch and believe in their own nonsense rather than study and work and earn some money.

      The fed will cut to keep people working and not before.

      The markets next move is based upon the CPI print which I think will be pretty good because of energy down and what I see as more selective shoppers.

      • Bobber says:

        Was the uninformed personal insult in paragraph 2 really necessary? You obviously do not know the backgrounds of over half the message board posters. Why tarnish posts with that garbage?

        • Thomas Curtis says:


          It was necessary. Why would you say it was uninformed. I read their words.

          The mindless babble needs to lessen.

      • SpencerG says:

        Yeah… I am fascinated by these people who think the Fed’s reason for existence is to blow up the economy rather than to keep it stable. They use different phrases than that (“rip the bandage off”, etc.) but the bottom line is that they think that somehow or another they will be immune to any spillover effects if the Fed lets the economy tank.


  27. Vader says:

    There has been predictions to the upside and to the downside for both GDP and future inflation by a lot of people. I saw El-Erian mentioned earlier in this thread, El-Erian in a recent interview with CNBC believes the FED is going to abandon its inflation mandate of 2% in the future and move it up to 3% because he doesn’t think inflation will settle below that and he doesn’t think the FED wants to wreck the economy getting there, (and a lot of smart people think the same that inflation will settle around 3% give or take). If the Fed inflation mandate is raised, that a lone is sending yields significantly higher the moment a change like that takes place.

    I think there should be more talk overall about the future neutral rate of fed policy. I’ve seen wild predictions from 1% to around 4.5% for a future neutral rate or R*.

    If GDP stays in the 2% range and lets say core inflation stays at a 3+ handle like El Erian, Jim Bianco, and others forecast, where is this putting the neutral rate in the future? It sure can’t be 2 or 2.5% anymore or less than that, it should be around 4 maybe I would guess because now the inflation rate has been moved up. So again, this comes back to the thread title. Unless we get a recession, WHY are we getting or forecasting all these rate cuts when there is still a significant inflation problem and the economy is still chugging forward.

    I don’t buy the argument rates need to be lowered because of commercial real estate or real estate getting smacked down in the future. Those asset classes need smacked down substantially. There are significantly less people starting families and having kids because they can’t afford a house at a younger age or have the money to support a wife and multiple kids at a younger age. If this trend continues its going to be a problem down the road.

    I can maybe see the fed lowering rates if a substantial amount of main banks get in serious trouble like in 2008. But I would predict the fed injects them with money temporarily to bail them out as opposed to lowering rates unless things got really bad.

    • Jackson Y says:

      CPI & PCE are already in the 3’s right now. Last 12 months annualized (and with much higher inflation in the earlier months.) If we made it this far without a recession, we can reach the 2’s without one – there’s no need for a target increase.

      As for the neutral rate, I think it’s likely at least 2% inflation target + 2% = 4% right now, which is in line with estimates before the 2008 banking crash. The 2.5% (2% target + 0.5%) estimate by economists is delusional.

      • Vader says:

        You are assuming inflation is just going to go down in a straight line with zero reacceleration again, which never happens. And that is with severe loosening in the financial markets recently.

        If you look at the Cleveland fed for example, they are predicting a massive cpi increase 1 month from today, meaning, they are predicting inflation to rise over the course of the next 2 months.

        The same cleveland fed estimate for PCE at the end of next months report and not this months report is 3.36. That is no where close to 2 let alone inflation settling at 2.

        The next 2 estimates for PCE by the cleveland fed are .3 handles. Again, that is no where close to inflation settling at 2%.

        Im in the camp of both Wolf and Jim Bianco, inflation is going to go higher from here and yields are going to go higher from here, especially the 10 yr.

        That’s my prediction. Along with bare minimum rate cuts next year if any at all and no recession next year.

    • Thomas Curtis says:


      I much agree with you and El-Erain’s point is that we are in a supply constrained world (more demand than supply causes inflation…).

      This is mostly because of the divide between the West and the rest (Xtra supply chain) but also because the number of people in the world keeps increasing and natural resources get more expensive to harvest.

      To your list of economists in agreement with El-Erain add Roubini and Peterson.

      • Bobber says:

        There’s a good case for saying inflation will be higher than 2%, considering aging demographics, deglibalization, global warming, etc.

        The big question is what central banks do in response to the rising interest rates that would normally result from higher inflation targeting.

        Do they attempt yield curve control and QE, or do they let higher LT rates adjust asset prices downward? Higher interest rates would also complicate the fiscal crisis.

        What happens to LT rates is what matters.

  28. Mr. Bull says:

    There is a paradox here. Wall Street bets on rate cuts and as they want to be ahead of FED, they are buying assets in full speed. By doing that, they are loosening financial conditions and delaying the rate cuts. Interesting to watch where it will go.

    • Jackson Y says:

      They’re loosening financial conditions but as long as that doesn’t generate consumer price inflation (asset price inflation is a different story), the Federal Reserve won’t care & wont tighten further in response.

      The 2010s were a full decade of ultra loose financial conditions with consumer price inflation stuck between 0-2%.

      • Fed Up says:

        Well, we aren’t even close to 2% and won’t be any time soon. With services, it’s even worse, so they damn well better care.

  29. Micheal Engel says:

    1) We need a recession, but it’s not coming.
    2) In the good old days, when the Fed suppressed rates to zero,
    landlords of multi units in the flyover country imitated each other, herd
    together, competed with each other and built a multi units bubble.
    3) Landlords ask : where can they go. Since the answer is nowhere they
    raised existing tenants rent by 10%/30% a year, preempting debt rollover in 2024/2025.
    4) In 2024/2025 $3T of corp debt, mostly junk and $7T of gov debt will
    mature. That $10T will suck liquidity from the market.
    5) To preempt debt rollover businesses will layoff workers in order
    to ease the cash flow problems.
    6) The Fed might cut rates in a low slog down. In the race between the
    reducing the 3M and the 10Y the long duration will be the winners.
    After the raids resumption, if the 10Y will be negative, Janet Yellen will be pleased.
    7) In construction privately owned 5+ units : 1 million units will be completed in 2024/2025.

    • BS ini says:

      M Engel. Brilliant points as always. Patience is something Wolf writes about and points out that asset prices are still below the 2021 levels (stocks , bonds , maybe not housing, and CRE. An increase in Multi Family Home units should help with inflation and help with high rents boosting the GDP on other areas like manufacturing. Lots of positives out there with jobs and rising incomes!

      • Depth Charge says:

        Yes. All of those Gen Zers and younger need to just be patient and allow decades to pass before they can possibly afford shelter.

        Nah, Powell needs to unload the entire book of MBS over the exact same time frame he bought them, that f***ing a-hole.

        • Escierto says:

          Thirty percent of Gen Z own a home. Just saying.

        • Einhal says:

          Escierto, great. And what percentage of that 30% bought in the past 2 years and likely will be underwater when the housing market corrects?

          Was this 30% disproportionately people with well-off Gen X or Boomer parents who were able to help them out?

        • Glen says:

          It is more location dependent as to where they own homes. The West and North East typically lowest.

  30. njbr says:

    I’m so old, I can remember all the wittering about the ZIRP trap.

    The pandemic did quite a job in overthrowing the Great Financial Crisis ZIRP

    Now we worry whether we can move toward ZIRP.

    People like walls of worry.

  31. Finster says:

    To keep stock prices levitating?

    Rate cut pleadings coming from the Wall Street Econ Corps?

  32. William Leake says:

    It turns out 5% Fed Funds Rate is pretty close to the historical average, since 1971 (4.68%). From 1971 to 2008 it was 6.43%. So to get to Powell’s 2% inflation (which probably will never happen, imho), the Fed Funds Rate has to go much higher.

    And I thought Wolf was a “higher for longer” outlier freak, as is myself. Of course history may not be a good guide, but it is all we have. Jim Grant’s view is probably at least three or four standard deviations away from the Wall Street pundits’ norm:

    “Jim Grant, however, takes a historical reading of monetary policy, and argues we’re in for a generation of rising rates, with some volatility in between. “The phrase would be higher for much, much, much, much longer—but we have to underscore and italicize the conditional—if past is prologue,” he told Fortune.”

    • John H. says:

      James Grant — humble, smart, and witty. A great way to go through life!

    • Z33 says:

      Sounds like what Felix Zulauf said recently. Rates temporarily coming down and this decade will keep going up and probably into double digits as government spending is out of control (plus lots of volatility in equity markets). Followed by spending cuts on entitlement programs and government selling some assets to get more funds if necessary.

    • spencer says:

      Grant is right. It’s called crowding out.

  33. Fed Up says:

    Some sites dismissing yesterday’s jobs report as meaningless because it didn’t support wall street’s rate cut agenda. The propaganda is telling people to ignore it and instead focus on the next CPI report. Wall Street needs to be knocked down to size.

  34. Geo says:

    I am interested to know how these data sets would be altered if Wolff were to include the “under ground economy” in which employers pay workers off-the-books. How big is the underground economy?

    • Wolf Richter says:

      “I am interested to know how these data sets would be altered…”

      You already know: 8 out of the 10 charts include the “underground economy” and would not be altered at all.

      The “underground economy” is not underground. It’s just that employers and employees don’t pay taxes on it.

      1. Charts #1 and #2 don’t include the “underground economy.” Survey of employers. Paying workers “under the table” is blatant tax fraud, and the risks are huge, from legal to reputational, and major employers stay away from it. Smaller employers do that occasionally. Some construction contractors do that — paying illegals under the table, and perhaps treating them like slaves — and some got caught on a big project in San Jose by, I believe, a Chinese developer, and people went to jail.

      2. Charts #3 through #10 include the “underground economy.” Survey of households, and it doesn’t matter how people get paid, or whether they’re permitted to work in the US, or whatever.

      • Swamp Creature says:

        The underground economy is gigantic in high tax states like NY and NJ. I had an uncle back then when I lived there that used to brag about how much money he made in the undergound economy. He was a carpenter, who worked only for Doctors and Junkyard dog Attorneys. All of his income was “Off the books” and he bragged about it to everyone he knew. He said those who paid taxes were suckers and losers. He even got one of his doctors to give him a “handicap’ tag to put in his car so that he could park in a handicap parking space even though he was an abled body carpenter.

  35. Jackson Y says:

    Simple: the Federal Reserve will cut rates because Wall Street expects it.

    The Federal Reserve has historically followed the bond market & federal funds futures market. (The equity market always wants low rates.) In 2021-22, the bond market was giving them the green light to raise rates – in fact, rate hikes were priced in even before March 2022, but the QE taper was completed as scheduled.

    This time, the bond, futures, and equity markets are all expecting lower rates in 2024. To not follow through would risk a lot more economic disruption than if it were only the equity market throwing a tantrum.

    The other difference is the politics. When inflation was running at 9% & became a heated political issue, the Federal Reserve had no choice but to act. With inflation down to 3% and trending lower, it’s a lot different.

    • MM says:

      That historical trend has only been true during the last 30 years of relatively low inflation. The previous playbook has been completely thrown out.

      The Fed futures market has been “pricing in” rate cuts for the last year+ and has consistently been wrong.

      Powell has been very clear: rates will remain higher for longer. I believe him. The fed is not a slave to the bond market like some say.

      Lets revisit these cormments in a year and see who was right.

  36. BlakeB says:

    I got to the last paragraph of this article and realized that Wolfstreet was not going to answer the question that they posed of “why should the Fed cut rates”.

    It seems obvious to many of us. The US cannot afford to be selling Treasuries for very long when the interest rates are this high. The interest rates will escalate the weight of the ball and chain (i.e. debt service) that our politicians have stuck us with by propping up our economy for decades. Our debt is now at 33 trillion and rising at least a trillion a year.

    Secondly, the world is also precariously balanced with its own suffocating debt problems. All it will take is one small to medium sized country and its banking system to default and this could cause a domino effect around the financial world. I can list ~ a dozen here but they are well known. How long can we keep bailing them out?

    We all remember what happened in 2009. Our debt today is a magnitude worse than 2009 even though we fool ourselves saying our banking system is in much better shape. If so, what happened with Silicon Bank? We all saw how the Fed moved in panic mode to pay off everyone and sweep that one under the rug. Imagine if that happened times 100 in the same month and what the result would be. With one or two insolvent banks, it made a big jump in the total government debt.

    Be sure and have some cash on hand and some junk silver because it won’t be pretty when we reach the tipping point. The Fed absolutely needs to cut rates to insure the solvency in the short term of both our country and the world.

    • Wolf Richter says:

      1. I gave you some of the reasons why the Fed should NOT cut rates. What I said in essence was that there is no reason to cut rates.

      2. “….to insure the solvency in the short term of both our country… ”

      You’re driven by a fundamental misunderstanding about what a country that controls its own currency can do. So let me help you: it can NEVER be insolvent. The US can never be insolvent, period. Repeat after me: The US can never be insolvent. Won’t happen, cannot happen, because the US controls its own currency.

      What CAN happen, and what already happened, is INFLATION. That’s what kills fiat currencies. And that’s the problem we now have. And dealing with inflation requires higher rates.

      After you understand this, you will realize that the rest of your theories are bogus.

      • If Ackman says cut rates, they will cut says:

        The WSJ’s persistent pivot campaign hasn’t work.

        However, if Bill Ackman, Peter Thiel and David Sacks start tweeting and demanding a rate cut, a rate cut there will be. (Just like the FDIC did their bidding with SVB.)

        • Wolf Richter says:

          These Wall Street crybabies want a rate cut in Q1 and 4-6 rate cuts in 2024. In its last dot plot, the Fed said 2 rate cuts in the second half.

          But your favorite market manipulators cannot wait that long, so they’re out their pushing their book. These Wall Street crybabies have with huge bets on these rate cuts.

          They have been calling for rate cuts and a recession since June 2022, and look what they got!!

          We’re going to get a new dot plot this week. So we’ll see.

          If we don’t get a rate cut by March, I’m going to post an article that will hilariously ridicule all these Wall Street crybabies. I’ve been doing that periodically because they’re just too funny, and no one remembers the BS they said 15 months ago and that folks like you are so eagerly spreading around.

      • sunny129 says:

        “The US can never be insolvent’

        Very True!
        But my hard earned dollar is losing purchasing power every year, immaterial of pontification of how low or high inflation rate is. Taxes are another thing.

    • spencer says:

      Congress needs to cut spending. The only thing holding up the U.S. dollar in exchange rates is the contraction of the E-$ market (thank you Sheilia Bair).

      • sunny129 says:

        Neither party is interested in cutting deficit spending. Without deficit spending, their political career will come to an end abruptly.

        Consumers are binge buying BNPL (But Now and pay later) Apparently this doesn’t show up in consumer CC data!

        • Glen says:

          Conceptually it could show up in statement balances and we assumed beyond a certain rate these could not be paid off to not pay interest. Credit card companies are also happy to provide 0% APR for 12 to 21 months and that is free money. I am loading them up on them and putting in tbills. Calendar reminders already exist to pay those off in full!

  37. Bobber says:

    The reasonable question is not whether to cut rates or pause.

    With federal deficits at the $2T level, ample money supply, unemployment near all-time lows, and stock markets near all-time highs, the appropriate question is – when should the Fed increase interest rates.

    The answer is now.

    If the Fed waits for inflation to rise again, it will be too late. That’s the same mistake they made in 2021/2022.

  38. Micheal Engel says:

    1) To finance US gov debt the Fed will suppress the long duration. 2) The spread between the 3M and the 10Y will grow. Bank’s
    “held to maturity” securities unrealized assets will turn green.
    Banks will lend less. The spread between o/n rates and what they charge will grow.
    3) Financing buybacks and executive perks will become expensive.
    4) Small businesses are protected by higher rates.

  39. DownFed says:

    “The Question is Not “When” but “Why” the Fed Would Cut Rates…”
    That’s kinda simple, because the national debt is becoming too expensive to service, and perhaps the interest on the debt is becoming too expensive.

    Cutting is not the question, the question is, does the Fed try to lower the interest rate below the inflation rate, called yield curve control? That requires money printing so that the central bank can purchase debt from debt markets to manipulate price discovery. Japan comes to mind.

    We’ll see. I think the Fed is coasting on excessive money printing that occurred in the past for now, but they’re not going to be able to coast forever.

    • Wolf Richter says:

      your paragraph #1: I’ll just repeat it here: You’re driven by a fundamental misunderstanding about what a country that controls its own currency can do. So let me help you: it can NEVER be insolvent. The US can never be insolvent, period. Repeat after me: The US can never be insolvent. Won’t happen, cannot happen, because the US controls its own currency.

      What CAN happen, and what already happened, is INFLATION. That’s what kills fiat currencies. And that’s the problem we now have. And dealing with inflation requires higher rates.

      After you understand this, you will realize that the rest of your theories are bogus.

      • Pants_Explosion says:

        Hi Wolf, understanding that the US cannot become insolvent because it controls its own currency, I ask you this:

        Surely there are meaningful negative consequences to rising FFR and ballooning debt service payments, aren’t there?

        If we get to debt service accounting for 35%+ of tax receipts, what is the negative consequence of that, if any?

        • Wolf Richter says:


          Just remember: there are no free lunches.

          “Ultimately, all sins lead to inflation”® (I just made that up, but it’s pretty good?)

          If the government cannot bring its budget deficit down to something sustainable (such as below nominal GDP growth), inflation will take care of it, see Argentina, 140% inflation, which destroys the currency and the economy, it impoverishes regular people and destroys the wealth of the wealthy. The Fed is trying to prevent that. That’s its #1 job.

          When interest payments eat up half the tax revenues, it may be the only form of discipline what works in getting Congress to get serious. It worked last time.

          Here is interest payments as percent of tax receipts:

        • John H. says:


          If your looking for in-depth post-mortem of deficit spending end-game, read:

          The Economics of Inflation, by Constantino Bresciani-Turroni (Beware – very dense and data packed. Translated into English just before Keynesian revolution)

          This is from the Amazon page description of the book:

          “The depreciation of the mark of 1914-23, which is the subject of this work, is one of the outstanding episodes in the history of the twentieth century. Not only by reason of its magnitude but also by reason of its effects, it looms large on our horizon. It was the most colossal thing of its kind in history: and, next probably to the Great War itself, it must bear responsibility for many of the political and economic difficulties of our generation. It destroyed the wealth of the more solid elements in German society: and it left behind a moral and economic disequilibrium, apt breeding ground for the disasters which have followed. Hitler is the foster-child of the inflation. The financial convulsions of the Great Depression were, in part at least, the product of the distortions of the system of international borrowing and lending to which its ravages had given rise.”

          I don’t claim we’re in a Weimar currency spiral to zero, but this is how one debt spiral-up transpired only a century ago. (Some will say: “we’re wiser than that now.” I say, tell that to our legislators and budget breakers…)

        • MM says:

          “Ultimately, all sins lead to inflation”®

          Love this quote Wolf.

          I think the argument these commenters are trying to make is that inflation is a soft default, more in the philosophical or moral sense vs the technical condition of default/insolvency as we normally think of it.

        • rick m says:

          Do all virtuous acts lead to deflation? Asking for an invisible friend.

        • 91B20 1stCav (AUS) says:

          RickM – if no good deed goes unpunished, would infer the negative (…and in either case, not in a straight line…).

          may we all find a better day.

      • DownFed says:

        I didn’t make a claim that the government would become “insolvent”, so I don’t understand your argument. I think this “insolvency” tack is a bit of a strawman. I’m in total agreement, a country that can create new money can’t go “insolvent”. My claim is, the country will cut rates to reduce the costs of servicing the debt. But, if they cut rates too much, only the central bank will buy the debt, like Japan. And if they don’t, the debt is going to crowd out other spending, such as big war, that the government wants to engage in, hence the “too expensive” claim.

        The question related to cutting rates. It is my theory that in order to cut rates below the inflation rate, it is necessary to resume quantitative easing and its associated Large Scale Asset Purchases.

        Now you claim that “hypothesis” is bogus. I think the Japanese would like to hear your explanation on how they can keep interest rates at 1% while experiencing 3% inflation without QE.

        Insolvency – won’t hear me say that. On the other hand, Ponzi schemes that require endless new money would be more comparable to monetary policy, because of the feature that the printer and the new money need not ever be shut off. That’s what I see in Japan right now, and unfortunately, it seems the US has been emulating their policies.

        I see monetary and fiscal policies on a collision course. And it is my suspicion that when push comes to shove, it will be the Fed that capitulates and adopts a policy of “fiscal dominance”. We’ll see.

        • Wolf Richter says:

          “…the country will cut rates to reduce the costs of servicing the debt. But, if they cut rates too much, only the central bank will buy the debt, like Japan.”

          LOL, did you forget about INFLATION. It has taken off, even in Japan.

          See my reply and chart to Pants_Explosion above.

          When the BOJ bought the bonds, Japan had essentially 0% inflation (light inflation followed by light deflation followed by light inflation…). The US was never in the boat. It’s always inflation in the US. In my life time core PCE was never negative. But since late 2020, it has seriously taken off.

          So the Fed CANNOT buy bonds without fueling inflation further. See Argentina. That option is now off the table. So forget it. Inflation put an end to QE.

          Also over the long run, inflation will lower the burden of the debt, at the expense of just about everyone. And that process is happening. Look at the debt as a percent of nominal GDP

          Quoted from this article:

          If nominal GDP grows faster than the debt, the ratio declines, and therefore the burden of the debt declines, as it has done after Q2 2020.

          But in Q3, nominal GDP grew by 2.1% from the prior quarter (not annualized, not adjusted for inflation), while the debt grew by 3.5% over the same period (also not annualized, not adjusted for inflation). And so the burden of the debt grew. A similar thing happened in Q2.

      • Pants_Explosion says:

        Thanks for the new catch phrase, Wolf.

        I can see how hyperinflation hurts the poor, but how does it destroy the wealthy? I ask because most wealthy folks aren’t even 25% liquid. Surely those with leveraged asset portfolios would cheer on seeing their mortgage balances inflate away. Then they could sell assets, or cash-out refinance at hyper inflated prices.

        2.) Even at 50% tax receipts vs debt service, what makes you believe the US government will find the resolve to cut budgets drastically?
        We have a population that just found out they can eliminate their loans with a simple vote.

        It seems more likely we let the inflation rip at a measured rate, to stay the least dirty shirt in the laundry.


        1.) Isn’t hyperinflation good for asset holders?

        2.) Haven’t the government (and voters) demonstrated clearly enough that they will not have the resolve to meaningfully cut spending/reduce deficits ever again?

        • kramartini says:

          Why would an asset holder benefit from inflation? Assets go up as much as inflation, which leaves the holder no better off. And then the capital gains taxes end up making the asset holder worse off.

        • Einhal says:

          kramartini, they benefit in the sense that they stay even with inflation, while laborers and savers lose.

          In any case, asset inflation over the past 15 years has far outpaced “life essentials inflation,” so they have come out ahead.

  40. Micheal Engel says:

    The Japanese PM is in trouble. Premier Shi will visit Vietnam. A
    communist might win the Taiwan election. Mike Johnson is back after
    Xmas break.

  41. drifterprof says:

    I have been reading “The Price of Time: the Real Story of Interest.”

    I was surprised to find out that easing / tightening cycles (natural, uncontrolled by central banks, in the beginning) and the good or bad effects were being discussed by theorists (anarchists, socialists, capitalists, oligarchists) back as early as the mid-1800s.

    All the historical data and economy commentator theory could be fed into and AI for guidance on how to proceed. But could it improve on the too-good-to-be-true Goldilocks story unfolding so far?

  42. Anthony says:

    Be carefull, the oil price is down because everything is slowing down. If everything was bright and breezy, transport, shipping and oil would be booming but they are not…. Even airbnb is slipping fast….., foodbanks are up and it all feels grim…

    • Wolf Richter says:

      Nah, you got the dynamics wrong. The oil price is down because it should have never spiked like it did, and so now it’s coming off its spike and is still high. What pushes it down is massive production in the US. The US is the largest petroleum and petroleum products producer in the world, and a major exporter, and it’s not run by OPEC.

      BTW, gasoline demand in the US roughly plateaued from 2007 through 2019 with a trough in the middle. It did so because of more fuel-efficient vehicles. Now EVs are an ever-larger share of the active fleet, and gasoline consumption in 2023 is well below 2019. EV’s growing share of the active fleet will further cut gasoline consumption in the US. This is a structural shift, and nothing is going to change the trend that is now visible.

      The petrochemical industry in the US, the largest in the world, is a huge consumer of petroleum and petroleum products, and looks like it will continue to grow.

  43. Micheal Engel says:

    – Gravity between the German 10Y and US 10Y pulls them together.
    The spread between Japan 10Y and US 10Y is 4.1%. Lower US 10Y will
    help the regional banks “held to maturity”. It will help to finance $7T gov debt maturity.
    – When the Fed raided bank accounts in Oct 2008 gold popped up from
    $650 to $1,950. When the Fed raided bank accounts in Mar 2020 gold
    [1W] popped to $2,089.30. Two weeks ago, on Nov 27, gold closed at
    $2089.70, a higher close. Last week gold rose to $2,152.30, but closed
    at $2,014.50, not good enough.

  44. Gen Z says:

    The Canadian argument is to rescue the homeowners from paying a few extra pennies on their renewed mortgages.

    Meanwhile, rents are skyrocketing that it’s almost feudalistic and extortionate.

    • El Katz says:

      Riddle me this, Gen Z: Do the landlords not have mortgages on their rental properties and, if the answer is *yes*, are they not entitled to recover those additional expenses from those who occupy the rental units?

      I would think so….

  45. SoCalBeachDude says:

    Bloomberg: Decisive Moment Arrives With $4 Trillion Stocks Rally at Stake

    Investors are facing a pivotal week as a key measure of inflation that hits Tuesday and the Federal Reserve’s interest-rate decision on Wednesday are expected to set the tone for the stock market and economy heading into 2024.

    Growing speculation that the Fed is done hiking rates and will start cutting by mid-year is fueling a sharp drop in Treasury yields and rekindling investors’ risk appetite. The S&P 500 Index has added roughly $4 trillion in market value since late October, as traders rush into beaten-down areas of the market like small caps, which typically benefit from falling borrowing costs.

    “Stocks have been rallying on optimism the Fed is done raising rates,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance. “The pricing has been rational considering how much the 10-year yields have dropped since mid-October. It seems like stocks will continue to grind higher as we enter 2024.”

    That said, a closer look reveals concerns about the week ahead. A measure of expected volatility in the S&P 500 for the next five trading sessions is surging relative to the subsequent five days. At one point this week, the gap reached the widest since March for such a period, signaling rising demand to hedge against turbulence.

    Tuesday kicks off the one-two punch of crucial moments next week, with the release of November’s consumer price index. Signs of ebbing inflation could buoy shares into year-end by cementing expectations that the Fed will soon shift to easing. Consumer prices likely rose at a 3.1% annual pace, the lowest since June, according to a Bloomberg survey.

  46. DawnsEarlyLight says:

    Wolf is looking good on Thoughtful Money!

  47. JG says:

    They will cut rates to inflate away debt & for election year politicking. Powell already on record saying they will cut in advance of actually hitting the 2% target. What a pathetic joke the FED has become. Oy vey.

    • Wolf Richter says:

      “… saying they will cut in advance of actually hitting the 2% target.”

      You bet, and they should. With rates at 5.5% and core inflation persistently (not just one month) at 2%, that would be very restrictive and would likely strangle the economy, throw it into a deep recession, and then force massive rate cuts.

      Instead, they should cut by a little but sooner: So if core inflation is at 3% persistently, they can do four cuts to 4.5%, and still be restrictive to get inflation down further without triggering a recession. That’s the scenario of a soft landing.

      The problem is that inflation will likely resurge, which inflation, once it breaks out, has a tendency to do, and then they will hike again. They’re trying to avoid that by holding rates at restrictive levels for longer. But they will cut eventually, and inflation will resurge eventually. It’ll be that kind of thing going forward.

      • Clykke says:

        In theory there should be an equilibrium, the fabled R*, do you think that we are near or just over R* then? And if that’s the case do you believe this has therefore risen since the 2010s?

        Most seem to base what interest rates on either by comparing to the 2010s or the 1990s/2000s period, without any knowledge or concept of an equilibrium point moving over time. Curious on your thoughts.

  48. Heavy rain here says:

    And rates aren’t high. They are normal.

    The handful of arm-chair economists on Youtube, taking their talking points from biased organizations have been desperately trying to push a recession narrative for at least 18 month. “The world is going to hell.”….yet no recession in site. lol.

  49. JimF says:

    Hi Wolf,
    Great stuff, as usual. Can I get your thoughts on two things? First, my understanding is that the unemployment rate and and wages are both lagging indicators. Second, Jeff Gundlach has recently highlighed the fact that the response rate of the Household survey (among other surveys) has dropped dramatically in the last few years, calling into question the value of it’s signals. (“Jeffrey Gundlach on the End of Secular Norms” on YouTube, right around the 11:47 mark.)

    • Wolf Richter says:

      1. Unemployment measures are not lagging indicators of recessions; they’re the CAUSE of recessions. If companies let enough people go, and they cannot find a job quickly enough, we’ll eventually get a recession because enough unemployment will reduce consumer spending. So unemployment measures predict recessions

      Sharp wage increases are fuel for higher inflation — that’s how rent increases etc. can accelerate. So they tend to be predictors of more inflation.

      Read this. It gets into the details of the most real-time unemployment measure we have:

      2. Gundlach is a pivot monger – he mongered for negative interest rates back in 2020 because that would have made him, bond fund manager, a huge amount of money – and he will use anything to talk his book, including pure BS, such as the response rate. A smaller size of a random sample (lower response rate) just increases the variability from month to month (the noise). But it does not change the trend. That’s why I use the three-month moving average which takes care of that issue.

      • JimF says:

        Thank you Wolf, I appreciate the response, and will dig into your earlier work. To follow up on the response rate, I tend to believe that plausible explanations exist which would clearly bias the trend one way or the other.

  50. Ben R says:

    Morning Wolf. Thank you for the continued exceptional data and analysis. Informative, top notch, and highly entertaining! I understand you focus on the economy as a whole but I’m concerned we could be missing out on important clues about the economy by not honing in more on the poor, lower, and lower middle class. The recent article on subprime auto loans was great and i wonder what else could be seen by honing in on that segment. Specifically, you mention that credit card balances are often paid in full to earn points which is absolutely true, but i haven’t seen data on amount paid via finance charges, so this seems like more of an assumption/glossing over compared to your typical purely data-driven information. Similarly, it would be interesting to learn more about BNPL balances over time. Tracking data on households by income is an important way to see early signs of cracks in the economy, and with your analytical abilities, I’d love to see more trends over time such as that. Apologies if I’ve missed it, but if you don’t track that kind of stuff, are there resources you’d recommend? Not finding trustworthy data on it. Thanks again for everything you do!

    • Wolf Richter says:

      Look, this is a site about the economy – about business, finance, and money – not a social studies site. Homelessness is a huge problem in the US, everywhere. And life for them is utterly miserable. I went to Tulsa (my former hometown) a little while ago and stayed at a hotel downtown, and there were homeless people milling around everywhere, and that downtown was otherwise dead. But homeless people do not move the needle of consumer spending, and so they have no impact on the overall economy.

      Poor people don’t move the economic needle either — they cannot even borrow much, and so their credit card debts are small, if they can even get a credit card, and most cannot. Most poor people have to make do with debit cards, and some don’t even have bank accounts (the “unbanked”). Because they have small incomes, and next to no debts, they don’t move the economic needle either; about 20% of households fall into this category.

      Subprime doesn’t mean poor, it means bad credit. The young dentist with too much debt getting into it over his head is a classic example of high-income bad-credit. But subprime is only a small part of consumer debts and is responsible for only a minuscule part of consumer spending. See the subprime auto article – that was the big takeaway from the article.

      BNPL is a short-term loan, such as for four weeks, that is interest free for the consumer and is subsidized by the merchant. It’s a good deal for consumers — it’s free money for a few weeks. Why do you gripe about something that is a good deal for consumers and costly for companies? Consumers have their own brain to make their own decisions, they don’t need your help.

      At any rate, if you want to read about social injustice, the ravages of poverty, homelessness, alcoholism, drug addiction, or whatever, this site isn’t going to be it. This site is about business, finance, and money.

      Here is data on households by wealth category. Note the per-household wealth of the “Next 40%” (between bottom 50% and top 10%); it’s big. That’s the middle class. Even the top range of the bottom 50% do pretty well.

      • Ben R says:

        Wolf: Really appreciate your thoughtful response. As fascinating as social studies is, the purpose of the question was to look for insight into the housing market and any early signs of where it may be heading. In hindsight, as your response suggests, mentioning the poor, lower class, BNPL, etc., was off-point; it’s probably more the lower/middle and massive middle class that will hold those clues (or lack thereof). I still think it’s a bit dismissive to downplay the data on credit card balances by saying “damn near everyone pays it off in full,” without first looking at the data. Wouldn’t data on changes CC finance charges paid over time (even in aggregrate rather than broken down by income) help paint a clearer picture of the economy?

  51. ron says:

    Many of the CRE earnings calls and analysts say that lower interest rates will be their savior. No one thinks that whatever event that precipitates that lowering will effect them of their tenants negatively.

    I can’t recall a time where the fed lowered rates just for the hell of it.

    • Einhal says:

      I can’t either, but I also can’t remember a time when the entire elite apparatus is on the side of something destructive for America, from the intelligentsia, to big corporations, to Wall Street, to banks, to politicians of both sides.

      • John H. says:


        Good point

        Our legislators have handed the keys to the economy over to a Washington/Wall Street “Board of Governors” charged with keeping employment high while simultaneously keeping inflation low.

        At the very least the Federal Reserve System has been a stabilization failure, a boon to deficit spending, and an exercise in progressively more destabilizing can-kicking.

        • John H. says:

          And with every past crisis, the scope and powers of the FRS have been broadened!

          “Authority in delirium,” Mirabeau reportedly called paper money production way back in 1789.

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