They need to hold steady. I realize the Federal Reserve has one major way to do anything to influence the economy and that’s raising and lowering rates, but even in the face of a slump, they should hold them steady for the long term health of our economy.
We’d be better off pursuing other means to kick start growth. Rather than top down incentives (which is what rate cuts are, really) we should look at bottom up ones.
Incentivize manufacturing on US soil, invest in infrastructure projects etc. they could tie subsidies to actual materialized job growth on US soil as well. There is an awful lot of government money that gets spent on subsidies that aren’t tied to things that would help boost the lower and middle class, which increases their spending power
I’d rather see the US raise taxes appropriately to pay for such things rather than make it cheap to borrow money again.
There is more ways out of a slump than simply rate cuts
The market is highly confident of a 25-50 (leaning towards the latter) bps rate cut at the September FOMC meeting. Lower job creation report and uptick in unemployment bolsters the Fed's case to cut sooner vs later. They've held long enough at terminal rate to arrive at "enough price stability," it is time to cut to not cause unnecessary damage to the labor market.
The Inflation Reduction Act has appropriated the funding for the financial policy you describe, and Congress is in no way functional enough to deliver on additional fiscal policy prior to November's election. If workers want better wages, they must unionize. Wages won't magically go up, and the evidence is robust enterprises are willing to hack, slash, and outsource to maintain profits, share buybacks, etc.
Could be. They seem to signal the possibility is high.
I am in a tl;dr way arguing that it shouldn’t cut rates though. We should re-prioritize government spending (especially subsidies) instead, raising taxes appropriately as required.
The reality is inflation hit the median household really hard and continues to do so while also getting squeezed on housing costs and other necessities.
Without addressing these issues on some level you aren’t really setting the economy up for long term success.
I know the reality is we have a deadlocked congress and a lot of state houses aren’t in much better shape either, being just as divided.
I agree. It seems insane to do rate cuts when it seems inflation is not really being controlled for the low/middle class. If anything they should stick to the current rate for YEARS. This will cause all the folks that are waiting to time the real estate market just move on and buy/sell what they need.
Each time they tease a future rate cut it just leads to more people holding out buying/selling. When the rate cuts come housing costs will soar as the buying frenzy kicks in. People rushing to buy before they are "priced out" again.
It seems like nothing will really be fixed. The rate cut will help smooth over the economy for several months. Oh jee, I guess it's just a coincidence that it's done right before a major election cycle.
There has been a fear that was not backed up by facts but by rhetoric. Certain circles were hoping that constant talk of recession would make one happen and give them an advantage to win over the current administration.
Readit News
We’d be better off pursuing other means to kick start growth. Rather than top down incentives (which is what rate cuts are, really) we should look at bottom up ones.
Incentivize manufacturing on US soil, invest in infrastructure projects etc. they could tie subsidies to actual materialized job growth on US soil as well. There is an awful lot of government money that gets spent on subsidies that aren’t tied to things that would help boost the lower and middle class, which increases their spending power
I’d rather see the US raise taxes appropriately to pay for such things rather than make it cheap to borrow money again.
There is more ways out of a slump than simply rate cuts
The Inflation Reduction Act has appropriated the funding for the financial policy you describe, and Congress is in no way functional enough to deliver on additional fiscal policy prior to November's election. If workers want better wages, they must unionize. Wages won't magically go up, and the evidence is robust enterprises are willing to hack, slash, and outsource to maintain profits, share buybacks, etc.
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch...
https://www.axios.com/2024/08/02/interest-rates-are-already-...
https://thehill.com/business/4807717-warren-criticizes-powel... (“Warren hammers Powell over jobs report: ‘Cut rates now’”)
https://www.axios.com/2024/08/02/jobs-economy-unemployment-f... (“New jobs numbers raise alarm bells on recession risk”)
I am in a tl;dr way arguing that it shouldn’t cut rates though. We should re-prioritize government spending (especially subsidies) instead, raising taxes appropriately as required.
The reality is inflation hit the median household really hard and continues to do so while also getting squeezed on housing costs and other necessities.
Without addressing these issues on some level you aren’t really setting the economy up for long term success.
I know the reality is we have a deadlocked congress and a lot of state houses aren’t in much better shape either, being just as divided.
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Each time they tease a future rate cut it just leads to more people holding out buying/selling. When the rate cuts come housing costs will soar as the buying frenzy kicks in. People rushing to buy before they are "priced out" again.
It seems like nothing will really be fixed. The rate cut will help smooth over the economy for several months. Oh jee, I guess it's just a coincidence that it's done right before a major election cycle.
Deleted Comment