Date: 2020-06-15 22:30:00
The Federal Reserve JUST released its new Economic Policy Report – here is what’s in it, what they warned us about, and where they see the markets going – Enjoy! Add me on Instagram: GPStephan
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Full Report Here: https://www.federalreserve.gov/monetarypolicy/files/20200612_mprfullreport.pdf
Let’s start off with some of the GOOD NEWS FIRST:
They’ve stated that they’re “Committed to using their full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum-employment and price-stability goals.” they’ve made it VERY clear that, if anything should get TOO BAD…they’ll do everything within their power to lift us back up and support the economy.
Next: Inflation has actually GONE DOWN.
According to their report “Weaker demand and significantly lower oil prices are holding down consumer price inflation” – Now, this is largely due to the fact that most places are you can’t really do much else other than save it, so a bit of this is “forced” rather than voluntary.
Lastly: The FED will keep interest rates close to 0%.
According to the report: “They expect to maintain this target interest rate range until it is confident that the economy has weathered recent events and is on track to achieve its maximum-employment and price stability goals” They’re going to keep interest rates at pretty much 0% for as long as it takes for us to recover, which could very well be a few years based on their estimates.
BUT NOW…we have to go on to some of the bad news, unfortunately:
First, it was found that “The most severe job losses have been sustained by those with lower earnings and by the groups that are disproportionately represented among low wage jobs.” One – low wage earners are more likely to lose their jobs altogether. And even though high wage earners are more likely to KEEP their jobs – they’re just as likely to receive a pay cut.
The other bad news, depending on how you look at it, is that they found: “Borrowing conditions are tight for individuals with low credit ratings, but credit remains available to those with strong credit profiles.” Here’s what this means…if you’re someone with money, with a good credit score, who doesn’t NEED to borrow money…you’re going to have an easy time borrowing money, because YOU are less of a risk to banks. On the other hand, if you don’t have money and you don’t have a good credit score…getting a loan is going to be difficult.
So, overall…here are the main takeaways:
One, the Federal Reserve is going to watch over the economy and do everything in its power to keep us going – including keeping interest rates at historically low levels.
Two, they don’t anticipate any issues with inflation because people aren’t spending money, and the savings rate increased to 33% last month. With fewer people spending money, there’s less upward pressure for prices to increase…and no inflation….for now.
Three, the worst job losses are happening among low-wage employees, especially in service industries that had to be shut down. Even higher paying jobs are seeing pay cuts, although they’re not as severe. Because small businesses employ the majority of low income workers, the FED says that keeping small business afloat will have the biggest benefit to our economy.
Four, getting a loan will be significantly more difficult if you have a bad credit score…and, if you have a good credit score, things will be significant easier for you. So, take some time to begin improving this if you can – this isn’t difficult, and with very little work, you can do a lot to boost your score.
And five: they estimate this will take us several years to begin to return to normal. They don’t anticipate jobs and demand coming back immediately, and only time will tell how this plays out.
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com
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