What we’re reading (6/16)
“A Brief History Of Hard And Soft Landings” (Cato Institute). “Whenever the rate increases stopped in time to avoid a recession, we call that a “soft landing.” Among postwar Federal Reserve interest rates cycles only four have been four soft landings, leaving eight hard landings so far.”
“Wall Street Sounds A Louder Recession Call After Fed Rate Hike” (Yahoo! Finance). “US retail sales fell for the first time in five months in May as higher prices hit consumer pocketbooks. Also on Wednesday, the Federal Reserve Bank of Atlanta cut its estimate for second quarter growth to 0%. And Guggenheim Chief Investment Officer Scott Minerd said the US may already be in a recession, given the slowdown in consumer spending.”
“Stock Market's Fall Has Wiped Out $3 Trillion In Retirement Savings This Year” (CBS). “The selloff has erased nearly $3 trillion from U.S. retirement accounts, according to Alicia Munnell, director of the Center for Retirement Research at Boston College. By her calculations, 401(k) plan participants have lost about $1.4 trillion from their accounts since the end of 2021. People with IRAs — most of which are 401(k) rollovers — have lost $2 trillion this year.”
“Housing Market Update: Share Of Homes With Price Drops Reaches New High As Mortgage Rates Top 2008 Levels” (Redfin). ““The housing market isn’t crashing, but it is experiencing a hangover as it comes down from an unsustainable high,” said Redfin deputy chief economist Taylor Marr. “Housing demand has already cooled significantly to the point that the industry has begun facing layoffs. This week’s rate hikes will further stretch homebuyers’ budgets to the point that many more may be priced out.”
“On Inflation, Economics Has Some Explaining To Do” (Wall Street Journal). “While all of these critics [Larry Summers, Olivier Blanchard, Michael Strain] got the direction of inflation right, their analyses can’t explain, at least using prepandemic relationships, the magnitude, i.e., how inflation suddenly shot from around 2% before the pandemic to 8.6% now—6% excluding food and energy. They explain why inflation rose more in the U.S. than Europe, but not why inflation rose so much in Europe.”
