What Is Going On With This Economy?

The Weekly Recap

Fed officials are considering more modest rate hikes although J Pow said inflation is easing, US Mortgage applications are up 25% YTD, Manhattan rentals hit an all time high for January, US unemployment hit a 53-year low, office capacity reached a post-pandemic peak of 50% which prompted Treasury Sec Yellen to pronounce "You don't have a recession at a 53-year low", eggs might become affordable again soon and 50 million Americans are expected to bet on the Super Bowl for a cool $16 billion in total wages including 'What Color Gatorade The Winning Coach Will Get Dumped on Them'.

What is Going On With This Economy?

This economy is like every girl I dated in college in that it keeps sending me mixed signals about what the heck is actually going on. The Fed-rate hike deceleration slammed right up against a Bureau of Labor jobs report that was so unexpectedly 'positive' that it changes a lot of economists baseline outlooks for the rest of the year. The jobs report is arguably proof that the economy is still running 'white hot' even with tech companies and large financial firms announcing layoffs seemingly daily.

The goal of all the rate hikes is in trying to navigate the uncharted route of a soft landing for the economy in which inflation cools without flatlining the overall economy. Everyone from Wall Street Bankers, to Financial Advisors and Economists has their own insight with half saying that rising rates has stunted progress while the other half say that scaling down rate hikes too soon could put the economy in a fun arena called Stagflation (stagflation is not fun btw).

Since the start of the fourth quarter the S&P 500 index has climbed 15%, close enough to enter the actually fun arena of bull territory after a 20% climb. All in all, there is nothing close to an expert consensus on how the overall market economy is going to react, which should be comforting for those of us who rely on them.

Takeaway: When insight seems to large to comprehend or to understand how all the underlying pieces make up the whole, it's important to localize what all of this means. As it relates to NYC real estate, what we've seen is a 167% increase in inventory since last month and an almost 33% increase in contracts signed in the same time period. These are lagging indicators that prove that confidence is returning mightily to the marketplace and even with the Fed raising rates, some banks are offering rates in the sub 6% range. It's easy to get excited, it's fortuitous to stay analytical.

Market Performance

Here are how some other asset classes performed this week as of this mornings opening bell. The Nasdaq and S&P hit five month highs.

Mortgage Rate Update

Following an interest rate hike from the Federal Reserve and a surprisingly strong jobs report, mortgage rates increased slightly this week. The 30-year fixed rate continues to hover close to six percent and interested homebuyers are easing their way back to the market just in time for the spring homebuying season.

News You Can Use

• Fed Officials On Board With More Modest Pace of Hikes Reuters

• January Jobs Report Shows Increase of 517,000 Jobs CNBC

• Fed Chair Powell says Inflation is Starting to Ease But Rates Will Still Rise CNBC

• Housing Market Shows Signs of Thawing WSJ

• Home Equity Loans Are Booming- Here's Why Axios

• Manhattan Rental Prices Hit Record High for January CNBC

• US Recession Still Likely Despite Resilient Economic Data-PIMCO Reuters

• How a Hot US Jobs Report Moved the Goalposts on Interest Rate Expectations MarketWatch

• Its Not the Covid Economy, Its Just the Economy Now Axios

• Wholesale Egg Prices Have Collapsed CNBC

• Yellen: 'You don't have a recession' When Unemployment at 53 Year Low Reuters

• More than 50 Million Americans are Projected to Bet on the Super Bowl WSJ

The Deep Insight

Puppy of the Week

Meet Chef! He has a big head and is the poster boy for what pitbulls are really like. Giant cuddle monsters who just like to have their belly rubbed. Chef is a current resident of Philadelphia and I'm sure very excited for the Puppy Bowl this weekend. Bask in the glory that is Chef.

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