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The Swarm Lounge
General Investing and Economics Discussion - No Politics
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<blockquote data-quote="Deleted member 2897" data-source="post: 806322"><p>The Fed forecast for GDP growth for 2021 is 7.0% and almost 6.0% in 2022. To your point, being a consumer based economy and turning down the spigot on free money, I'm guessing those forecasts prove aggressive. I also am starting to see proof of their forecast that inflation will stall. For example, lumber prices have absolutely tanked over the last month. People have been hoarding things on the supply side, while buyers on the other side started balking at the prices...so now the hoarders are all trying to flood the market selling their inventory. So the market is right sizing. The spigot on free money for a lot of people will also slow down a lot of the speculation in the markets with people able to get paid to daytrade and everything else. So they might end up getting proven right. If they increase interest rates much at all, that will crush the economy - a 1% absolute value increase in mortgages is a 35% increase in the amount of interest people will have to pay each month. A $500,000 loan for example and a 1% increase in interest rates will increase the monthly mortgage payments from $3,000 to $4,000. They're beyond the point of no return on the decision to have not started raising rates gradually a long time ago. So they are all-in on their hopes the market self-cools. We will see!</p></blockquote><p></p>
[QUOTE="Deleted member 2897, post: 806322"] The Fed forecast for GDP growth for 2021 is 7.0% and almost 6.0% in 2022. To your point, being a consumer based economy and turning down the spigot on free money, I'm guessing those forecasts prove aggressive. I also am starting to see proof of their forecast that inflation will stall. For example, lumber prices have absolutely tanked over the last month. People have been hoarding things on the supply side, while buyers on the other side started balking at the prices...so now the hoarders are all trying to flood the market selling their inventory. So the market is right sizing. The spigot on free money for a lot of people will also slow down a lot of the speculation in the markets with people able to get paid to daytrade and everything else. So they might end up getting proven right. If they increase interest rates much at all, that will crush the economy - a 1% absolute value increase in mortgages is a 35% increase in the amount of interest people will have to pay each month. A $500,000 loan for example and a 1% increase in interest rates will increase the monthly mortgage payments from $3,000 to $4,000. They're beyond the point of no return on the decision to have not started raising rates gradually a long time ago. So they are all-in on their hopes the market self-cools. We will see! [/QUOTE]
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