Money in a Minute for the Week Ending Sept. 3
Every Friday I recap “news you can use” from the week: a handful of quotes from major (and often expensive) news sources, so you can stay up to date on the news that affects your money without spending a dime and in less than a minute.
Here’s an overview of what happened this week:
Inflation Eased in July, According to the Fed’s Preferred Measure (August 26, Wall Street Journal): Inflation decelerated in July, measured by the Federal Reserve’s preferred gauge, though it remained close to its fastest pace since 1982.
Consumer prices rose 6.3% in July from a year earlier, down from 6.8% in June, as measured by the Commerce Department’s personal-consumption expenditures price index, which it reported Friday. The gain in June marked the sharpest 12-month rise since January 1982.
Shrinking the Fed’s balance sheet sheet is not likely to be a benign process, new Jackson Hole study warns (August 27, MarketWatch): Since March 2020 at the start of the coronavirus pandemic, the Fed has doubled its balance sheet to $8.8 trillion by buying Treasurys and mortgage-backed securities to keep interest rates low to sustain the economy and the housing market.
“If the past repeats, the shrinkage of the central bank balance sheet is not likely to be an entirely benign process,” according to the study.
The housing recession will continue and eventually flatten house prices, Goldman Sachs economist says (August 30, MarketWatch): Goldman Sachs economist Ronnie Walker said housing starts have dropped 20% from their peak and existing home sales have skidded by 30%.
House price growth on a quarterly basis will slow to 8.5% in the third quarter and 3% in the fourth quarter, which will take the year-over-year rate down to 14% by the end of the year. Next year, Walker says home price growth will stall completely.
Bitcoin Falls Below $20,000 as Hawkish Fed Continues to Weigh on Riskier Assets (August 30, Bloomberg): Riskier assets have been having a rough few days as traders digested comments from Fed Chair Jerome Powell, who reiterated that the central bank is willing to continue monetary tightening even at the risk of an economic downturn.
S&P 500 Drops 4.2% in August; Fed Is in Focus (August 31, Wall Street Journal): Major indexes slid between 4% and 5% in August, their worst monthly performances since June.
Stocks have come under pressure in the wake of Fed Chairman Jerome Powell’s speech at Jackson Hole, Wyo., where he said interest rates must be raised further until inflation is under control, despite higher recession risk.
U.S. gains 315,000 jobs in August. Labor market still strong but shows signs of cooling. (September 2, MarketWatch): The U.S. added a robust 315,000 new jobs in August, showing that businesses still have a big appetite for labor even as the economy slows and worries about a recession grow.
The Federal Reserve wants to see the tightest labor market in modern times loosen up to prevent high inflation from becoming ingrained in the economy. The shortage of workers is driving up wages and contributing to the highest inflation in 40 years.
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I founded Money Talks News in 1991. I’m a CPA, and I have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.
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