FOMC Recap!!! What it means for you!

So the Fed just raised interest rates for the 9th time in a 1 year span- that also happens to be a 16 year high. Fed Chair Jerome Powell said more increases, “May be appropriate.” The FOMC does not see any rate cuts this year, so in other words… those rate hikes are gonna keep on coming.

So what really does this mean for you and I? Well lets get into it!

This rate increase is exactly what it sounds like, increased rates on credit cards, adjustable rate mortgages and other loans. Basically this will slow down economic activity. Too much money was pumped into our economy the past couple years so they need to slow down the movement of all this money. Less economic activity means less money to go around, which will effect households, businesses and could eventually lead to layoffs. We have seen a lot of companies implement a hiring freeze right now. (If you have a job that you enjoy, continue to outperform everyone and you will be just fine!)

Borrowing money will become more expensive as a result of this, so cars and homes will be effected. Those who bought a home in a sub 3% mortgage, consider yourself lucky, that opportunity will not come around again for awhile. As mortgage rates rise and people cannot afford these homes, inventory will sit and if inventory is greater than demand, home values will fall- the same with the automobile industry. Stocks, real estate and other asset classes will begin to fall as rates continue to inch higher.

The biggest thing is- as rates increase and keep going higher, the more likelihood we will enter a recession. Major declines in consumer and business spending, investment and overall confidence as well.

To relate this back to a post from the other night… the most important thing to do is to be prepared and have cash on hand. The famous investor Warren Buffet says the best time to buy, is when there is blood on the streets.

Its coming everyone. Be prepared. We will continue to do our absolute best to give you up to date knowledge so you can all succeed.

Have a great night everyone!

-TM