FED Avoiding Another "Great Inflation" Disaster

👉The Federal Reserve is hoping to avoid a repeat of the 70's Great Inflation Disaster

🏡✨Why the FED may be justified in delaying rate cuts: Now you may have heard of the “great inflation” of the 70’s, but a lot of people don’t really have context for that event and how it relates to the Federal reserve of today, and why it matters for interest rates in 2024. But first, we have to mention the latest inflation numbers that came out on tuesday, which have pretty much crushed hopes of a rate cut any time soon. These core inflation numbers came in around 39 basis points higher than expected, which has essentially confirmed the fed’s fears of a re-acceleration in core inflation. The Fed has signaled that rates are likely to stay higher for longer, and even the possibility of future rate hikes. I know that sounds crazy, but the fed wants to avoid a repeat of the 70’s “great inflation” disaster. Which If you’re not familiar, inflation rose sharply 3 times between 1970 & 1980. Each time, they lowered rates too fast, too soon and inflation re-accelerated, rising higher than before, from near 7% to 12% and then spiked again to near 15% forcing them to raise interest rates even higher each time. Fortunately Paul Voelker stepped in and turned the screws to get things under control in the early 80’s — Which is why the fed is hoping they can avoid the same situation, by keeping a close eye on economic data, and specifically employment and core inflation numbers.

If you want to keep an eye on the headlines yourself to get an idea of what to anticipate, essentially you’re looking for strong jobs data (low unemployment) and higher than expected core inflation which mean higher interest rates, for longer. And if the opposite turns out to be the case, at least you’re prepared and its essentially a bonus! One of my core philosophies is: look at all data objectively, and prepare for the worst outcome, then strive for the best outcome. **And I Just want to be clear, none of this is about being right or knowing what is going to happen–no one knows what is going to happen, and I often hope that I am wrong and things turn out better than anticipated. But As a fiduciary, its important to me that we determine what is LIKELY to happen, and advise you of options and help you create a plan based on your situation and the potential outcomes** I Just think about it this way, there is very little risk in preparing for things to be more difficult than they turn out to be. Imagine how relieved you will be when you are fully prepared?

My step-by-step process is a bit like preparing for an important exam, and when you ace it, you’re pretty hyped! And before we get into mortgage rates, I want to ask for your help reaching a bigger audience! Can you think of 3 people to share this with? My goal is to help as many people as possible become informed on the real estate market and make sound investments. And of course, it helps a ton if you like, subscribe, follow etc. Thank you!

💯Drop a comment or send a DM to let me know what else you would like to hear about! 👉Try out my mortgage and affordability calculator and see the latest listings in Washington State at www.BellinghamListings.com

⭐️And if you’re ready to cut to the chase and schedule a strategy session with me, just text me at 360-392-5475 👉If you want to be added to the 2024 Market Outlook email, shoot me your email in the DM!

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