The Fed’s unemployment mandate is now overshadowing any . Fed Chairman Jerome Powell, on Friday at the Kansas City Fed Conference in , gave a dovish speech and signaled “a shifting balance of risks may warrant adjusting our policy stance.” Additionally, Powell said “downside risks to employment are rising.”
The thing that got everybody all excited was when the Fed Chairman said, “Our policy rate is now 100 basis points closer to neutral than it was a year ago, and the stability of the and other labor market measures allows us to proceed carefully as we consider changes to our policy stance.”
This means that not only are they going to cut, but they’re also probably going to cut four times because they are 100 basis points above where they should be.
Powell also recognized that “decline in growth has largely reflected a slowdown in consumer spending.” Treasury yields declined in the wake of Powell’s comments, and the stock market staged a relief rally.
Meanwhile, housing inflation is cooling off. The National Association of Home Builders announced on Thursday that rose 2% in July to an annual pace of 4.01 million. This was a big surprise, since economists were expecting a 0.5% decline. In the past 12 months, median home prices have only risen 0.2% to $422,400.
The Commerce Department announced on Tuesday that surged 5.2% in July to a 1.428 million pace compared to a revised 1.358 million annual pace in June. In the past 12 months, new housing starts have risen 12.9%. Building permits actually declined to a 1.354 million annual pace in July, down from a revised 1.393 million annual pace in June. Overall, this was good news for the housing industry, and it appears that many home builders may be anticipating lower mortgage rates in the upcoming months.