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Tag: economics

October 5, 2024By Paula Pant

#546: The Surprising Economic Proposal Both Candidates Agree On

The Federal Reserve slashed interest rates by half a percentage point. What does this mean for your mortgage, your savings account, and the economy at large?

In this First Friday economic episode, we dive deep into the Fed’s decision. But that’s just the beginning.

As the presidential election looms, we’ll also unpack the economic proposals from both candidates, examining how their plans for housing, taxes, and more could shape your financial future.

We emphasize critical, non-partisan analysis of economic proposals. We want you to understand complex economic issues and their potential impacts, rather than advocating for specific political positions.

Here are more specifics about this episode:

The Federal Reserve’s decision to cut interest rates by half a percentage point – the first rate reduction since the pandemic – is the biggest economic story of the month.

We start by exploring the implications of the Federal Reserve’s rate cut, from falling mortgage and auto loan rates to potential increases in home prices and a tightening housing inventory. We also touch on the flip side: declining yields on high-interest savings accounts and CDs.

We unpack the reasoning behind the Fed’s decision, including shifting concerns from inflation to unemployment. We delve into economic indicators like the “dot plot” and “R-Star,” explaining their significance in predicting future interest rates and economic trends.

Then we discuss the latest jobs report, with 254,000 new jobs added in September, surpassing expectations. We break down the unemployment rate’s drop to 4.1 percent.

As the conversation shifts to the upcoming election, we take a nonpartisan approach to examining economic proposals from both presidential candidates.

The episode focuses on policy rather than politics, encouraging critical thinking about each proposal’s potential impacts.

One area of bipartisan agreement – a proposal for no tax on tips for service workers – is scrutinized. We explain why economists across the political spectrum view this idea skeptically, highlighting the lack of specificity in defining “service workers” and “tips.”

Housing policy takes center stage, with both candidates proposing regulatory streamlining for home construction and opening federal lands for development. We discuss the limitations of federal intervention in what are often local zoning and regulatory issues.

The episode also examines proposals for first-time homebuyer assistance, explaining how subsidizing demand in a supply-constrained market could potentially lead to higher housing prices.

Throughout the discussion, we emphasize the importance of evaluating these policies based on their potential economic impacts rather than political affiliations.

This episode will help you make more informed decisions about personal finances and policy preferences.

Keep reading...

February 2, 2024By Paula Pant

#486: Stocks are Hot. Jobs are Hotter. What’s Next?

By every definition of the word, we’re in a bull market.

The S&P 500 hit record highs for five consecutive days last week, and remained strong throughout this week.

The Dow is above 38,000 for the first time in history.

Unemployment has stayed below 4 percent for 24 months, marking the strongest jobs market in half a century.

And consumer sentiment, which reflects more pessimism than the data warrants, is showing signs of improvement.

The Fed met this week and decided to hold rates steady, as expected, but there are hints that they’ll start dropping interest rates within a few months.

Inflation isn’t yet down to the Fed’s target rate of two percent, but it’s getting closer — with one notable exception. Auto insurance has skyrocketed; across the nation, car insurance is 17 percent higher than last year.

Meanwhile, a shake-up in the real estate industry is creating tumult for the National Association of Realtors, which is facing its first serious challenge in 100 years. The outcome could determine how steeply you’ll have to pay when you sell your home.

Where do we go from here? What’s next for the economy? We tackle these questions in this First Friday podcast episode.

Enjoy!

Keep reading...

July 20, 2023By Paula Pant

#452: Mind Games: How Confidence Shapes our Financial Markets, with Economist Peter Atwater

Peter Atwater, an economics professor at The College of William and Mary and author of “The Confidence Map,” joins us to discuss how confidence shapes our financial markets.

He explains how The Hunger Games relates to the Lehman Brothers collapse. He describes why you should “Buy Adele and Sell Pharrell.”

From the Panic of 1857 to the patterns behind modern media consumption, Peter talks us through the intricate web of behavioral oddities that extend beyond finance. 

He talks about the “K-shaped recovery” – how different segments of the population are experiencing different economic realities. 

He touches upon economic, political, and social trends, and the hidden dynamics that shape market behavior and reveal the profound impact of consumer confidence. 

Our conversation will leave you with a deeper understanding of how behavioral patterns shape the financial landscape – including your investments.

Enjoy!

Keep reading...

July 10, 2023By Paula Pant

#450: The Surreal Business of War: A Reporter’s Account of the Russian Economy in Chaos, with Andrea Palasciano

On the First Friday of each month, we roll out a bonus episode that’s totally different from what we usually produce.

These bonus episodes are special, unique, and – we hope – round out a fuller, more multifaceted picture of what we think about.

Today, I’m introducing you to a business and economics correspondent from Moscow who I’m honored to call a close friend. Her name is Andrea Palasciano. She’s covered business stories from Paris, Marseilles, Rome and Moscow. She’s fluent in Italian, German, Spanish, French, English and Russian. She’s covered stories ranging from diamond mining in Siberia to sleep deprivation.

She’s close friends with Evan Gershkovich, the 31-year-old Wall Street Journal reporter who’s currently in a Russian prison. Today is his 100th day behind bars.

Andrea and I were both Knight-Bagehot Fellows and bonded during our year of immersing ourselves into deeply  understanding how to tell better stories about business and economics. She joins me in this special episode to talk about the stories she’s covered, the sabbatical experience, and why it’s critical to understand how a bond works (!!).

Enjoy!

Keep reading...

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