Is The Fed Moving Fast Enough to Save Us From a Recession?

Dave:Hey everyone, welcome to On the Market. I’m your host, Dave Meyer. Joined today by Kathy Fettke. Kathy, how are you doing?

Kathy:Well, you may or may not know I am obsessed with following the Federal Reserve, so today’s show is exciting to me because I feel like maybe we’ll get some insights when Jerome Powell is speaking so cryptically. You need someone to interpret that.

Dave:Yeah, this is a great episode. If you haven’t heard before, we were having a guest on, Nick Timiraos, who’s been on the podcast, I guess this is his third time now. He is the chief economics correspondent for the Wall Street Journal. So a super well credentialed reporter. Sounds like he basically just flies around and follows Jerome Powell, whatever he does. Maybe we should do that. I think we should go to Jackson Hole next summer. It sounds like a great place to go visit.

Kathy:Absolutely.

Dave:Just a big bunch of nerds in a beautiful place, so maybe we’ll go do that. But in reality, Nick does all of that for us and just helps explain the Fed’s policy and thinking in a super digestible and interesting way. So Kathy, what are you going to be looking out for in this conversation?

Kathy:Just confirmation that everything’s going to be okay and that they’re not going to throw us into a deep, dark depression, which I don’t think they’re going to, but just to get a better read on what’s going on because a lot of people probably didn’t realize until the last 18 months even who the Fed is and what their role is and so forth. And there’s probably still a lot of confusion about that, which we probably should explain to people who they are and what they do.

Dave:Well, that’s a good point, Kathy. So I will just briefly explain what the Federal Reserve is. It’s basically a government entity. It’s our central bank in the United States. And they are responsible for monetary policy, which is basically what is going on with our money supply. They have a dual mandate from Congress. So their job is to use monetary policy to, one, ensure price stability, is how they say it, which basically means control inflation. And the other part is to maximize employment, which AKA just means make the economy grow as quickly as possible.And why the Fed I think is so controversial and so interesting is because those two things are completely at odds with one another. Inflation is driven by an overheated economy, so their job is to heat the economy but not lead to inflation. So they’re always sort of walking this type rope, like on a seesaw, trying to balance two conflicting mandates. And it’s why I think Kathy and I are so fascinated by everything they do because obviously it impacts us as investors, as Americans, but it’s also just kind of a soap opera also what they’re going to be doing, or maybe only I see it that way.

Kathy:Well, it’s a soap opera that we all get to be a part of. So it affects us and that’s why it matters.

Dave:Absolutely. I just think people follow it like it’s a sports conference.

Kathy:That’s true.

Dave:Or maybe not the average person does, but the people who are nerds like us, read his transcripts, read the Fed’s transcripts after everything he says because obviously it impacts us like Kathy said, but it’s just kind of incredible how much power over the economy this small group of people had. So it really is important to pay attention to. And that’s why we’re bringing on Nick. So with no further ado, let’s bring on Nick Timiraos from the Wall Street Journal.Nick Timiraos, welcome back to On the Market. Thanks for being here.

Nick:Thanks for having me.

Dave:For those of our listeners who didn’t join us for the first two times you were on the show, can you please reintroduce yourself?

Nick:Sure. I am the chief economics correspondent at the Wall Street Journal and I wrote a book, Trillion Dollar Triage, about the economic policy response to the COVID shock of 2020.

Dave:Yes. And you have been an incredible insider for us and reader of the tea leaves about Fed policy and so we’re excited to have you back. We are recording this at the end of August, it is the 30th of August. Just last week the Fed did meet in Jackson Hole. Nick, did you get to go to Jackson Hole by the way?

Nick:Yeah, I was there for the conference this year.

Dave:All right. Well, that sounds like a nice place to go visit, hopefully a fun work trip. What were some of the big headlines from the symposium?

Nick:Well, the focus of the symposium was on Chair Jay Powell’s speech. He always gives the morning opening address. Of course, last year his speech was kind of a rifle shot where he squarely dedicated the Fed to bring down inflation saying that they would accept a recession. I mean, he didn’t use those words, but he said there would be some pain involved. And so that kind of had everybody’s antenna up for this year. Well, how will he follow 2022? What’s he going to say now?This year he was more nuanced, focused still on bringing inflation down. The way I think about the Fed right now is there was an interview that Kobe Bryant had in 2009 after the NBA Finals. The Lakers had taken a two-games-and-nothing lead and a reporter asked him why he didn’t seem happy because Kobe seemed very sober and serious after the Game 2 win. And Kobe said, “What’s there to be happy about? The job’s not finished.” And that’s sort of the message that I think we got last week from Jay Powell and that we will continue to get from the Fed until they just see more evidence that inflation’s coming down. So that was sort of the takeaway was. Yes, we see that inflation’s improving, but we need to see more of that. And if the economy strengthens here, then the Fed will go up again with interest rates. So that was one of the takeaways from the Jackson Symposium.

Kathy:And one of the big concerns they have as an inflation driver is too many jobs, right? Because then employers have to raise their wages to attract employees, I mean, generally. So we’re going to have a lot of jobs reports out this week and already had one that was actually more what the Fed seems to want. Would you agree with that, that they might be getting more of what they want this week?

Nick:That’s right. So the Job Openings and Labor Turnover Survey, which came out at the end of August, which is for July, showed that job openings dropped to 8.8 million. It was as high as 12 million. One margin you can measure labor demand is job openings. Now some people say it’s not that reliable because technology has made it easier to post jobs, and that’s a fair point. But still you see that companies aren’t hiring as aggressively as they were in late 2021, early 2022. And the fact so far that labor demand seems to be coming down without an increase in the unemployment rate and we’re going to get the unemployment rate for August in just a couple of days, that’s the sign of success so far. But I think that’s where the emphasis is.What the Fed is the Fed really wants to see is wage growth that slows down. It was running around 5% last year. And if you think about the components of wage growth, it’s inflation. Or if you think of where you get inflation, it’s really what part of the wage picture is productivity. And so, if you have say 2.5% inflation and 1% increase in labor productivity, that’s 3.5% wage growth. The Fed would be fine with that. 5% is probably too high unless we have a big boom in labor productivity. So you would want to see the wage numbers continue to come down. And the way that the Fed and other economists will see progress on that is just that you have somewhat less hiring because that gives you more comfort that’s supply and demand are better balanced.

Kathy:I’m curious. Logan Mohtashami, I don’t know if you know who that is, he writes for HousingWire, he is of the belief that this robust job growth that we’ve seen is really just jobs coming back after the pandemic and that it’s not really as robust as it might seem. What do you think about that?

Nick:Yeah, it’s definitely a fair of thesis to have. If you think about a lot of the things that we’ve gone through, if they were to happen year after year after year, prices going up, strong hiring year after year after year, that would probably be a bigger cause for concern that you were going to get control of these things. If there are a one-time shift, a one-time increase in the price level for cars, a one-time increase in household formation because people during the pandemic decided to go out on their own and rent an apartment, move out in mom and dad’s basement, then it means that a lot of the strength that we’ve seen, it just can’t be expected to continue. So I think Logan’s point of view is a very sensible one. And if that’s the case that this has been kind of companies in the leisure and hospitality sectors that just haven’t been able to catch up to where they were before but they’re now catching up, then job growth would slow, wage growth would slow.And you’re seeing that one of the measures of whether the labor market is tight is what share of people are quitting their jobs. Because think about it, you quit your job, you’re more likely to quit your job to voluntarily leave your job if the job market’s really strong. You think you’re going to get more pay. You can raise your wages and your income if you go to a different employer. And the quits rate is a measure that we can look at and it’s been coming down. In the report that just came out at the end of August, it fell back to the level that it was before the pandemic. It was at a historically high level before the pandemic, but it went way up in the past couple of years. You think about companies that were throwing panic wages at people that keep them employed or to pull them into job openings. And so if the quits rate is coming down, that could also be a sign that some of the frenzy that we saw in hiring is behind us.

Dave:Nick, there are seemingly so many different labor market indicators and none of them are perfect. If we want to understand Fed thinking, are there any metrics that the Fed favors when they’re trying to evaluate the strength of the labor market?

Nick:Well, we’ve talked about wage growth. Wage growth is important to them and there’s a quarterly wage measure called the Employment Cost Index, which is seen as kind of the best quality measure of wages because it adjusts for changes in the composition of hiring. So if in one month you have a bunch of low wage jobs being created and then in another month you have a bunch of high wage jobs being created, the monthly payroll report doesn’t quite filter through those compositional differences. The Employment Cost Index does. We just got that at the end of July and wage growth was running in kind of the mid-fours. We’ll get that again for the second quarter at the end of October. And so that’s one.But they don’t just put all their eggs on one indicator. They’re going to look at kind of a constellation of indicators. And if they’re all generally moving in one direction, which they are right now, which is towards slower wages like we discussed, fewer openings, it’s a sign that the labor market might still be tight, but it’s not as tight as it was. It’s coming into balance. And those are generally things the Fed wants to see.Ow, if you were to see a big decline in payroll growth, that would be a different signal from what we’ve had and obviously people would start to say, “Well, have we slowed down too much?” Or if you saw hiring kind of ticking back higher here, inflation’s been falling, so that means our inflation adjusted wages are actually rising now and maybe that’s supporting more of the consumer spending. We saw strong retail sales in July. So if you saw some kind of acceleration in economic activity, that would also make the Fed maybe a little bit nervous because they think that we’re going to get back to the low inflation rates we had before the pandemic by having a period of slower growth. And so if you don’t have that slower growth, it calls into question their forecast that we’re going to get inflation to come down.

Kathy:We keep joking on the show, let’s just stop spending money and we’ll solve the problem. And that hasn’t been the case. It seems like part of that was due to people with the stay-at-home orders, they weren’t spending as much money, they were saving money. And then man, when they got out, they went crazy. But from the recent reports, it looks like they’ve kind of spent it like it’s petered out and now they’re working on credit cards. And then you hear these reports that and then students are going to be having to pay their student debt again. How do you see that factoring into people maybe slowing down their spending?

Nick:Yeah, if you look through the recent earnings reports for the retailers like Macy’s or Best Buy, you do hear more references to this cautious consumer. Executives or 2022 was great, everybody was out spending money on things that they hadn’t been able to go buy. And now you’re seeing maybe a slowdown. You’ve seen a slowdown, and the question is, student loan payments, what is that going to do? Is it really going to crimp consumer spending? Maybe people just don’t pay their student loans and they keep spending on other things. So there are maybe more question marks.We’ve already dealt with some pretty serious questions this year. I mean after the failure of Silicon Valley Bank and a couple of other banks in the spring, there were concerns of a serious credit crunch. And so far it seems like we’ve really avoided at least the more scary scenarios there. Obviously, it’s harder to get a loan now if you rely on bank credit, but we haven’t seen maybe some of the more dire scenarios realized. And so it does suggest that maybe there’s more resilience in the economy than people anticipated. Or maybe we’ll be talking six months from now and it’ll all be obvious that the lags of the Feds rate increases, the bank stress they finally caught up with the economy, but we really haven’t seen it through the summer, have we?

Kathy:No, I’m really glad you brought that up because that was going to be one of my questions that we know that the M2 money supply just blew up during the pandemic, so much money in circulation. And then one of the ways to slow down the economy is pull that money back out by less lending. And I thought that’s what was happening, is lending was becoming more strict and more difficult to get. Is that true for new businesses? Obviously, credit cards are being used and banks are fine with that.

Nick:Yeah. Well, if you look at the growth of the money supply, you’d sort of want to take a trend, kind of a pre-pandemic trend and extrapolate, “Well, this is what growth of the money supply might have been if not for the pandemic.” And so even though the money supply has been contracting over the last year, it’s still probably running above where it would’ve been. And so to the extent that you’re a monetarist and you use the money supply, it’s hard to tell maybe what the signal there is.If you look at lending standards, what banks are reporting right now, it’s gotten harder to get a loan. Commercial, industrial loan, commercial real estate banks are really tightening up on that kind of lending. In the corporate bond market, I mean, if you’re a big borrower and you’re borrowing in the investment grade or the lower investment quality, lower credit quality, the high yield market, we haven’t seen maybe as much of a pullback there, though with higher interest rates it is more expensive to borrow.So those are questions. I think one of the big questions is to the extent companies locked in lower interest rates during the pandemic when interest rates were just very, very low, if you have a four or five year term loan, that doesn’t mature for another couple of years, but what happens when it does? What happens when companies have to roll over their debt in 2025? If we’re looking at interest rates that are still as high as they are right now, then you could see more of a bite. And we haven’t had interest rates that high for that long, so it’s hard to see that effect yet.

Dave:Nick, from your understanding of the Fed’s own projections, how are they feeling about a recession? We keep hearing these signals that they’re okay with a recession and they’re forecasting them, but I see a lot of upward revisions to GDP forecast recently and I’m wondering if the Fed is more confident now that they might be able to achieve their so-called South landing.

Nick:Right. I think that’s going to be the big question, Dave, heading into the Fed’s next interest rate meeting, which is in mid-September. So every quarter they produced these economic projections. And in June, officials were raising their projections for inflation. They saw inflation coming down a little bit slower, but they still had growth declining in the second half of this year and they had higher interest rates. They thought that because inflation wasn’t going to come down quite as quickly, they were going to have to raise interest rates a little bit more.Now you have the first set of projections that are coming since the declines in inflation from June and July, and we will see about August here in a few weeks what happened with inflation in August. And so there’s a chance that they’re going to bring down their forecasts for inflation, certainly for 2023, but they might have to revise up their forecast for growth, because as you noted, whether it’s a recession or just a period of below trend growth, the Fed thinks that the long run trend growth rate for the US economy is just below 2%. So if you’re not doing that, if you’re not growing below trend or you’re not having a recession, then it raises the question, what is going to crunch demand enough to get inflation down the way that you’ve been forecasting?Now, sometimes economists refer to this as an immaculate disinflation or a period in which you kind of have a painless drop in inflation. We’ve certainly had that so far, right? Inflation came down this summer without a huge cost, or really any cost in the labor market, but that’s because you’ve had supply chain improvement. Rent growth is slowing and that’s going to continue to provide some help to getting inflation down. But I think the worry right now is if the growth picture is getting better, what does that mean for inflation not six months from now, but maybe a year and a half and now, the end of next year?The Fed in June was projecting they’d get inflation down to just around 2.5% at the end of 2024. Do they still think they can do that if we don’t get a period of slower growth? Do they just say, “Well, we think we’re going to get the slower growth because of everything we did on interest rates, but it’s going to come later”? I think that’ll be an important question for the September meeting and it’ll kind of tell us how much more they think interest rates have to go up. In June, they were projecting that they’d have to take rates up one more increase from here since they did one in July. And so, one question is do they still think they have to do that? I haven’t heard a lot of support for more than one increase. So I think the question is going to be, are they comfortable here or not? And the growth picture and the inflammation picture, they’re cutting in opposite directions.The other big change we’ve had since the Fed’s last meeting has been the increase in August in interest rates, especially 10, 30-year loan rates have gone up quite a bit. And the Fed expects that to slow down the economy, they’ve actually wanted to see financial conditions tighten. And so that’s happening now, but that also you kind of have to say, “All right, well you’re getting better growth, but you’re also getting higher interest rates. Market determined long-term interest rates. And so does that offset some of the concern you might have from stronger growth?”

Kathy:Wow, I hadn’t really looked at it that way. I was really happy that we might be avoiding a recession, but now it’s like that means rates higher for longer and maybe we don’t hit that 2% goal. I mean, how could we get to that 2% outside of a recession?

Nick:Well, I mean that would sort of be this immaculate disinflation or soft landing story where you just continue to get all the things that went wrong in the pandemic, they’re now reversing. And so you’re getting increase in labor supply. We’ve had more immigration that’s maybe taking some of the pressure off of wages. And so if the supply side of the economy heals, and that’s something the Fed can’t directly control if we get a lot more apartments being delivered and that’s going to bring down rents, if we get more auto production and that’s going to bring down car prices or at least prevent them from going up quite as much as they’ve been going up.So if you really were to see a really positive response on the supply side of the economy and you reduce demand enough, maybe you can get inflation down, I think it looks more possible that that’ll happen than it did a few months ago because you are getting these better inflation numbers.I think the other point with a soft landing, people talk about a soft landing, which is really where the Fed is able to bring inflation down without a recession or without a serious recession. To get something like that, historically you’ve needed the Fed to cut interest rates once it’s clear that they’ve done enough. Or maybe if they’ve gone too far, they’d take back some of the interest rate increases. And so in 1994, the Fed raised interest rates by 300 basis points over a 12-month period and then Greenspan cut interest rates three times, 75 basis points in total.This time I think the Fed is going to be a lot more careful about doing that because we have had inflation that’s much higher than it was in the 1990s and they’ve warned about this repeating the mistakes of the 1970s. One of the mistakes of the 1970s was that they eased too soon. You had what was called stop-go where they would stop, inflation would rise, so they’d have to presume interest increases. And so, to really nail a soft landing, you have to be confident that inflation is going to come all the way back down and you’re cutting interest rates because you think that’s going to happen. And if we’re in an environment where it’s sort of looks like, “Well, inflation’s going to settle out, but maybe closer to 3% than 2%,” everyone should know the Fed has a 2% inflation target. They think that’s important because it helps center expectations in the public’s eye. And if it looks like maybe the Fed is going to abandon that target, it can really mess things up.So they’re going to be serious about shooting for 2%. And if it looks like inflation isn’t getting back to 2%, it’ll call into question how quickly they might be able to undo some of the increases they’ve had. And that I think will continue to create higher recession brisk in 2024 even if we don’t go into a recession this year.

Dave:I think that’s a great point, Nick, and I tend to agree with the sentiment that the Fed has been very candid about the fact that they’re going to try and they don’t want to repeat this mistakes of the 1970s. I keep thinking about what Kathy and I talk about all the time, which is the housing market here. And if you think about how the housing market would react to probably even slight interest rate cuts, it would probably spur a frenzy of activity, which would probably reignite inflation very quickly. Even though housing prices aren’t necessarily in every inflation category, you just think about the amount of economic activity that the housing in general spurs. And so it makes sense to me that the Fed, given their stated targets, wants to keep interest rates higher for longer even if it’s just for housing, but obviously it’s for other sectors beyond just what we talk about on this show.

Nick:Yeah, I mean, there’ve been a lot of things in this cycle that have been unusual, right? The post COVID recovery has been unlike any from post-work experience. The housing cycle part of it has been I think a complete surprise. I mean, especially at the Fed, if you had said you’re going to get a 7% mortgage rate and you’re going to see new home sales having bottomed out home prices have possibly reached a bottom here, right? We just saw on the Case-Shiller Index, I think for July, June or July, or I guess it was June, we’re going back up now, that’s not something a whole lot of people had on their bingo cards for this year.To be clear, the way that inflation gets calculated by the government agencies, home prices may not play as bigger role as people think. They’re looking at owner’s equivalent rent, which is sort of an imputed rent for your house. And so during the housing boom of 2004 and ’05, actually shelter inflation didn’t go up nearly as much as the 30% increase in the Case-Shiller Index because what’s happening in the rental side of the market matters a lot. But that doesn’t really change anything of your point, Dave. It’s true that if you see a re-acceleration in residential real estate, that’s just one less place that you’re going to get the below trend growth that the Fed is looking for.Someone said to me yesterday, “The Fed broke housing in 2022. They can’t really break housing again.” So even if it’s not going to be a huge source of strength for the economy here, I mean it looks like the resale market’s just frozen right now, then neither is it really going to be a source of drag or slowdown. And it just means that if the Fed is serious about seeing slowdown, they’re going to have to rely on other parts of the economy to deliver it.

Kathy:Yeah. The housing market, I’m guessing, took everyone by surprise. It’s shocking that we’re back at our former peaks. And you said we’ve got to fix the supply side and build more. Is that even possible to build enough supply and housing to meet the demand?

Nick:Well, you have a lot of rental supply that’s going to come on the market, right? So it’ll be interesting to see where the rental market goes in the next couple of years and what that does to vacancy rates and rents. I think that it’ll be an interesting question.You also have these demographic forces that are quite constructive, right? I mean the millennial generations coming of age moving into their peak home buying years or rental housing years. So you do have sort of positive forces against this backdrop of higher interest rates and really terrible housing affordability. I went through some of the earnings calls for the home improvement companies, Lowe’s, Home Depot, and they feel good about kind of the medium to long run that people have housing equity right now. If you think about how different this recovery’s been from the period after the housing bust, people have equity, they’re spending money on their homes. If they’re not moving, they’re fixing that kitchen, doing the bathroom remodel. And so it’s a better environment for a lot of the home product companies even if you don’t have the same degree of existing home sales that we were used to in the earlier part of the century.

Kathy:Well, we talked a little bit about mortgage rates. And if mortgage rates come down, it could unlock the market, but it would also bring on a new frenzy. We saw that tenure mortgage rates are generally… I’m saying this for the audience not you, but mortgage rates generally tied to the 10-year treasury, which we saw go up, I suppose, in anticipation of people seeing not a recession and seeing robust growth and not getting where the Fed wants to be and they’re going to raise rates and keep going and so forth. But just this week we started to see that back off and a 10-year treasury come down, which then brought mortgage rates down a bit. Do you see that continuing that trend of the 10-year coming down?

Nick:It’s hard to predict the very near term fluctuations. It’s interesting. The last time we hit 7%, which was last November, we weren’t there very long. People got worried about growth, more optimistic about inflation and yields came down. But if I think back to a few months before that, maybe May, April of last year when the rate increases really got underway in earnest, and there were a lot of people who thought, “Oh, we’ll get back to a 5%, 4.5%, maybe 5.5% mortgage eventually,” and I think now you’re seeing more doubt about that. You’re seeing more doubt about whether interest rates will fall back as low as they were not just before the pandemic, but in the 2010s period where we got used to having mortgage rates between 4 and 5%. There are a couple of different reasons for that. One is that there’s just more treasury supply. We’re running bigger deficits. We’ve cut taxes, we’ve boosted spending. We have to spend more on healthcare as the baby boomers age. And so you have more treasury supply and somebody’s going to have to digest all of that and they might require a higher yield for it.A couple of things that happened more recently that are being pointed to as catalysts for this increase in interest rates, one is that the Bank of Japan has been changing their monetary policy. They had had a fixed cap on long-term Japanese government bonds and they have suggested they might let that cap on interest rates rise a little bit. Well, Japan’s the largest foreign buyer of US treasuries. So if Japanese investors now have a more attractive… They can earn something on their 10 year JGBs, maybe they aren’t going to buy as many treasuries. So you’ve begun to see other forces that were keeping interest rates lower. Long-term interest rates were held down because you had strong foreign demand. Now, if you have some of these forces reversing, I do think it calls into question maybe a 6% mortgage rate could be the new normal, maybe not. Maybe we go back into a recession and the Fed has to cut all the way and you do end up with lower interest rates. But I do think there’s maybe more potential for this to end up in different places from where people were expecting.

Dave:Nick, thank you so much for being here. We really appreciate it. This has been another eye-opening, very informative conversation with you. Thank you for sharing your wisdom with us. If people want to follow your reporting or check out your book, where should they do that?

Nick:All right. I’m on Twitter, @nicktimiraos. And you can go to my website, which is N-I-C-K-T-I-M-I-R-A-O-S.com.

Dave:All right, great. Thanks again, Nick.Kathy, what’d you think of Nick’s thoughts on the Fed?

Kathy:He just makes so much sense. And it really helps people like me and you who are trying to make decisions, financial decisions, and it depends a lot on what the Fed is going to do. So I think he brought a lot of clarity.

Dave:Absolutely. The more I listen to people like Nick who know what they’re talking about, the more convinced I am that the Fed is not lowering interest rates anytime in the near future, and I think we all need to just accept that. That doesn’t mean necessarily that mortgage rates can’t go down a little bit. I do think there’s a chance that they’ll go down a bit from where they are, but where we got at the end where he was saying we should expect 6% interest rates, I think that’s, in my mind, at least how I’m going to operate for the next year or so, is thinking that maybe they’ll come back down to 6.5, something like that, but I don’t think we’re getting a 5 handle anytime soon, and that’s okay. As long as you just sort of accept that, you can make your investing decisions accordingly.

Kathy:Yeah, absolutely. And that was kind of a light bulb moment for me too, where I’ve been really thrilled about a soft landing and like, “Wow, is this possible after all the Fed has done to try to wreak havoc?” But then on the flip side of that is, “Oh, that means we might not get down to the inflation target anytime soon if the economy isn’t going into recession.” So it’s opposite world. Like I’ve said so many times, good news is bad news, bad news is good news. I just look forward to someday having just normal news.

Dave:I’m with you. I don’t think it’s going to come for a while. To be realistic, like you said, I think the only way the Fed cuts interest rates is being forced to do it, right? Their whole goal is to control inflation until the labor market breaks and we have a serious recession, they have no reason to cut interest rates. And they’re not going to do it for real estate investors. They don’t care.

Kathy:No.

Dave:And so I think that’s good because rates come down, but then we’re in a serious recession. So either way, there is probably some unfortunate economic realities staring us in the face for the next six months to a year. Maybe longer. I don’t know. But I don’t buy the idea that as soon as inflation dips down into the 2s, the Feds are going to cut rates. I just don’t see that happening. I feel like they’re going to hold it up for as long as they can and we just need to deal with it.

Kathy:Yeah. Their fear of inflation is greater than their fear of recession, which is what it is.

Dave:It is what it is. Exactly. All right. Kathy, thank you so much for joining us and for asking so many great and thoughtful questions. We appreciate it. If people want to follow you, where should they do that?

Kathy:Realwealth.com is where you can find me and also on Instagram @kathyfettke.

Dave:All right. And I am @thedatadeli on Instagram or you can always find me on BiggerPockets. And if you like this episode and know people who like talking about the fat of this stuff, share it with a friend. We always appreciate when you find an episode of On the Market that you like if you share it with your community so they can be more informed and also make great informed investing decisions just like you. Thank you all so much for listening. We’ll see you for the next episode of On The Market.On The Market is created by me, Dave Meyer, and Kailyn Bennett, produced by Kailyn Bennett, editing by Joel Esparza and Onyx Media, research by Pooja Jindal, copywriting by Nate Weintraub. And a very special thanks to the entire BiggerPockets team.The content on the show On the Market are opinions only. All listeners should independently verify data points, opinions, and investment strategies.