Rising Rates Add to Housing Dilemmas
Home buyers braving the hot U.S. housing market have run headlong into a striking transition. The average interest rate for a 30-year fixed mortgage jumped from around 3.2% at the beginning of 2022 to 5.3% in mid-May, the highest level since 2009. This rise was sparked by the Federal Reserve’s commitment to raise the federal funds rate — a key benchmark for short-term interest rates — to help control the highest inflation in decades.1
Although mortgage rates are not directly tied to the federal funds rate, all borrowing costs are influenced by the Fed’s monetary policies. Mortgage rates tend to track changes in the 10-year Treasury yield, which is sensitive to changes in the funds rate and fluctuates based on the bond market’s longer-term expectations for economic growth and inflation.
Housing Costs Are Soaring
For nearly two years now, buyers have faced an intensely competitive housing market characterized by historically low inventory, bidding wars, and escalating prices. The national median price of existing homes rose 14.8% over the year ending April 2022 to reach $391,200. Home prices are rising in every region, and 70% of the nation’s 185 metro areas experienced double-digit annual increases in the first quarter. In a notable shift, price gains in affordable small- and mid-size cities outpaced gains in more expensive urban markets, as many home buyers seized the opportunity to work remotely.2
Home prices and market conditions can vary widely by region and even by neighborhood. April median prices in the 10 most expensive cities ranged from $662,000 in Denver to $1,875,000 in San Jose. Half of the nation’s 10 priciest markets are in California, a state with a particularly severe and longstanding housing shortage.3
Rents have also been rising. In April 2022, the median rent for 0- to 2-bedroom properties in the 50 largest U.S. metro areas reached $1,827, a year-over-year increase of 16.7%. Spikes were more dramatic in Sun Belt cities such as Miami (51.6%), San Diego (25.6%), and Austin (24.7%).4
In this environment, prospective home buyers, renters who must renew a lease, or anyone looking for a different place to live could find themselves in a challenging situation.
Affordability Is Waning
The combination of rising mortgage rates and home prices has taken a serious toll on affordability. A borrower with a $300,000 mortgage would pay $1,666 per month at a 5.3% rate versus $1,297 at a 3.2% rate, the prevailing rate earlier this year. Affordability is an even bigger issue in high-cost areas and for first-time buyers who haven’t benefited from gains in home equity.
Borrowers who started a home search and were pre-qualified by a lender before rates spiked may not be approved for the mortgages they initially sought. Consequently, demand for adjustable-rate mortgages (ARMs) that offer lower rates has surged in recent months.5 A lower monthly payment makes it possible to qualify for a larger mortgage, so borrowers who expect to move at some point may be comfortable with an ARM that has a fixed rate for the first three, five, seven, or 10 years of the 30-year term before it adjusts to prevailing rates.
Some buyers will change their expectations and settle for a less-expensive home. But others may give up the search if they are not satisfied with the homes they can afford, especially if they are priced out of their favorite neighborhoods. Many entry-level buyers could be forced out of the market entirely, at least for the time being.
Buyers of new homes may be subject to substantial interest-rate risk because purchase contracts are often signed many months before their homes will be completed. With their deposits at stake, buyers might consider paying the extra cost to extend rate locks for six, nine, or even 12 months.
Higher borrowing costs are likely to reduce demand for homes enough to slow price growth, and prices might retreat in some overheated markets. Even so, most economists don’t expect home prices to collapse because market fundamentals are otherwise relatively strong. Inventory levels are still extremely low, and lenders have generally been conservative, so most homeowners who bought in recent years can afford their mortgages.6 Interest rates don’t impact cash buyers, such as downsizing retirees and investors, who account for about 26% of transactions.7 And assuming the economy and employment hold up, there should be plenty of demand from millennials in their peak home buying years.8
Tips for Bewildered First-Time Buyers
Paying rent indefinitely may do little to improve your financial future, but if you are ready to commit to a mortgage, buying a home could stabilize your housing costs for as long as the payment is fixed. You can also build equity in the property as your loan balance is paid off over time — more so if the value appreciates.
No one knows for sure where mortgage rates are headed or what will happen next in the housing market. So how can you decide whether it makes financial sense to purchase a home? As always, the answer depends on where you want to live, your lifestyle preferences, and your finances.
Here are three ways to start preparing for the home buying process.
Become a better borrower. Before you apply for a mortgage, order a copy of your credit report to check for errors and clean up any inaccuracies. Having a higher credit score could earn you a lower interest rate.
Save up for a down payment. Buyers must typically invest 20% of the purchase price for conventional mortgages, but some loan programs allow smaller down payments of 5% to 10%. If parents or other family members offer to “gift” cash for a down payment, lenders may ask for a letter to document the source of funds. There may also be local programs that provide down-payment assistance for buyers who meet income requirements and take classes on home ownership.
Find out how much you can afford to spend. Start with online calculators that take your income, debt, and expenses into account. A mortgage provider can help determine how much you may qualify to borrow. It can take three to five years to recoup real estate transaction costs, so be sure to consider the stability of your employment situation and your income.
1) Bloomberg, May 12, and May 19, 2022
2-3, 7) National Association of Realtors, 2022
4) Realtor.com, 2022
5) The Wall Street Journal, May 5, 2022
6) NPR, May 12, 2022
8) The Wall Street Journal, December 14, 2021
The Question is How Long High Inflation Will Last?
at an annual rate of 8.5% in March 2022. That is the highest level since December 1981.1 A Gallup poll at the end of March found that one out of six Americans considers inflation to be the most important problem facing the United States.2 The Consumer Price Index for All Urban Consumers (CPI-U), the most common measure of inflation, rose
Many economists, including policymakers at the Federal Reserve, believed the increase would be transitory and subside over a period of months when inflation began rising in the spring of 2021. Inflation has proven to be more stubborn than expected. There are many reasons for the rising prices. The Fed has a plan to deal with the situation.
Russia and China contributed to the situation.
Among the cause of rising inflation are the growing pains of a rapidly opening economy, pent-up consumer demand, supply-chain slowdowns, and not enough workers to fill open jobs. Significant government stimulus and the Federal Reserve monetary policies helped prevent a deeper recession but contributed to an increase in inflation.
Russian invasion of Ukraine increased the already high global fuel and food prices.3 China’s response to the reappearance of COVID’s was strict lockdowns, which closed factories and increased already struggling supply chains for Chinese goods. The volume of cargo handled by the port of Shanghai, the world’s busiest port, dropped by an estimated 40% in early April.4
Behind the Headlines
8.5% year-over-year “headline” inflation in March was high. However, monthly numbers provide a clearer picture of the current trend. The month-over-month increase of 1.2% was extremely high, but more than half of it was due to gasoline prices, which rose 18.3% in March alone.5 Despite the Russia-Ukraine conflict and increased seasonal demand, U.S. gas prices dropped in April, but the trend was moving upward by the end of the month.6 The federal government’s decision to release one million barrels of oil per day from the Strategic Petroleum Reserve for the next six months and allow summer sales of higher-ethanol gasoline may help moderate prices.7
Core inflation, which strips out volatile food and energy prices, rose 6.5% year-over-year in March, the highest rate since 1982. However, the month-over-month increase from February to March was just 0.3%, the slowest pace in six months. Another positive sign was the price of used cars and trucks, which rose more than 35% over the last 12 months (a prime driver of general inflation) but dropped 3.8% in March.8
Wages and Consumer Demand
For the 12 months ended in March, average hourly earnings increased 5.6%. This was not enough to keep up with inflation, although it was enough to dulled some of the effects. Lower-paid service workers received higher increases, with wages jumping by almost 15% for nonmanagement employees in the leisure and hospitality industry. Although inflation has cut deeply into wage gains over the last year, wages have increased at about the same rate as inflation over the two-year period of the pandemic.9
One of the big questions going forward is whether rising wages will enable consumers to continue to pay higher prices, which can lead to an inflationary spiral of ever-increasing wages and prices. Recent signals are mixed. The official measure of consumer spending increased 1.1% in March, but an early April poll found that two out of three Americans had cut back on spending due to inflation.10-11
Soft or Hard Landing?
The Federal Open Market Committee (FOMC) of the Federal Reserve has laid out a plan to fight inflation by raising interest rates and tightening the money supply. After dropping the benchmark federal funds rate to near zero in order to stimulate the economy at the onset of the pandemic, the FOMC raised the rate by 0.25% at its March 2022 meeting and projected the equivalent of six more quarter-percent increases by the end of the year and three or four more in 2024.12 This would bring the rate to around 2.75%, just above what the FOMC considers a “neutral rate” that will neither stimulate nor restrain the economy.13
These moves were projected to bring the Fed’s preferred measure of inflation, the Personal Consumption Expenditures (PCE) Price Index, down to 4.3% by the end of 2022, 2.7% by the end of 2023, and 2.3% by the end of 2024.14 PCE inflation was 6.6% in March. this tends to run below CPI, so even if the Fed achieves these goals, CPI inflation will likely remain somewhat higher.15
Fed policymakers have signaled a willingness to be more aggressive, if necessary, and the FOMC raised the funds rate by 0.5% at its May meeting, as opposed to the more common 0.25% increase. This was the first half-percent increase since May 2000, and there may be more to come. The FOMC also began reducing the Fed’s bond holdings to tighten the money supply. New projections to be released in June will provide an updated picture of the Fed’s intentions for the federal funds rate.16
The question facing the FOMC is how fast it can raise interest rates and tighten the money supply while maintaining optimal employment and economic growth. The ideal is a “soft landing,” like what occurred in the 1990s, when inflation was tamed without damaging the economy. At the other extreme is the “hard landing” of the early 1980s, when the Fed raised the funds rate to almost 20% to control runaway double-digit inflation, throwing the economy into a recession.18
Fed Chair Jerome Powell acknowledges that a soft landing will be difficult to achieve, but he believes the strong job market may help the economy withstand aggressive monetary policies. Supply chains are expected to improve over time, and workers who have not yet returned to the labor force might fill open jobs without increasing wage and price pressures.19
The next few months will be a key period to reveal the future direction of inflation and monetary policy. The hope is that March represented the peak and inflation will begin to trend downward. But even if that proves to be true, it could be a painfully slow descent.
Projections are based on current conditions, are subject to change, and may not happen.
1, 5, 8-9) U.S. Bureau of Labor Statistics, 2022
2) Gallup, March 29, 2022
3, 7) The New York Times, April 12, 2022
4) CNBC, April 7, 2022
6) AAA, April 25 & 29, 2022
10, 15) U.S. Bureau of Economic Analysis, 2022
11) CBS News, April 11, 2022
12, 14, 16) Federal Reserve, 2022
13, 17) The Wall Street Journal, April 18, 2022
18) The New York Times, March 21, 2022
Is the Global Economy endangered by Ukraine war?
Globalization of trade was expected to promote peace. Russia’s invasion of Ukraine is taxing that theory. The vulnerabilities of global supply chains are being highlighted. This has compounded the strains caused by the pandemic.
The United States, European Union (EU), United Kingdom (UK), and their allies are using financial sanctions to inflict severe damage on Russia’s economy and pressure its leaders to end the war. This has come a momentous cost to the global economy.
Punishing Russia
The joint effort of these countries to isolate Russia is unparalleled. Some of Russia’s largest banks have been expelled from SWIFT, an international payments system. Assets that Russia’s central bank held in North America and Europe have been frozen, restricting its ability to prop up the value of its currency, the ruble.1
Germany stopped the opening of a new gas pipeline that was intended access natural gas from Russia at the same time the United States and the United Kingdom announced bans on Russian oil imports.2 Hundreds of Western companies have suspended operations or pulled out of Russia, the world’s 11th largest economy, either to comply with sanctions or because of public outrage over the war. Some wealthy oligarchs believed to be close to the Kremlin have also had their assets frozen or seized.3
The effects of sanctions have clearly been felt in Russia, where the central bank raised its key interest rate to 20%, and it’s estimated that the Russian economy could contract up to 10%.4-5 Until recently, Russia was a full participant in the global economy, so being cut off from Western supply chains and technologies could be painful for Russian businesses and consumers. It remains to be seen whether China will step in to fill the void left behind by the West.
Supply Shocks
Russia is a major producer and exporter of food, energy, metals, and other raw materials that often fluctuate in price based on the balance between supply and demand across global markets.6 Therefore, supply shocks stemming from the war and sanctions have caused price spikes for some high-demand goods.
Russia is a top energy exporter, so crude oil and natural gas prices have surged since the conflict began, largely due to concerns about supply constraints. The EU relies heavily on energy imported from Russia (about 40% of its gas supply and almost 25% of its oil). Thus, reductions in energy deliveries from Russia would be difficult to replace and could worsen shortages in the global market.7
Russia is also a major producer of metals such as palladium (needed for catalytic converters), platinum, aluminum, copper, and nickel (needed for batteries).8In addition, about half of the world’s supply of the neon gas used to make semiconductors came from Ukrainian companies that have been forced to close their operations. Until neon production is ramped up elsewhere, shortages could exacerbate the chip shortage that has been slowing the production of new cars, computers, electronic devices, and other products.9
Russia and Ukraine account for nearly 30% of global wheat exports, 17% of corn, 32% of barley, and 75% of sunflower seed oil. Financial sanctions have largely blocked Russia from exporting food, while the conflict has prevented Ukraine from transporting food out of the country. Russia is the world’s top producer of fertilizer, providing about 15% of the global supply. Thus, crop yields throughout the world could be hindered by a shortage of fertilizer, which has risen to record prices alongside the natural gas from which it is often made.10
Consumers everywhere may soon face even higher grocery bills. The United Nations projects that global food costs, which are already at an all-time high, could soar another 22% due to the war. Egypt and other developing nations in North Africa, the Middle East, and Asia are especially dependent on grains from Russia and Ukraine. Disrupted food supplies and elevated prices are expected to cause a notable increase in world hunger.11
Ripple Effects
Russia and Ukraine account for only about 2% of global gross domestic product, but high energy prices and supply shocks caused by the war could have a far-reaching impact on a global economy that has not fully recovered from the pandemic. The Organization for Economic Cooperation and Development (OECD) estimates that global economic growth in the first year after the war began will be 1.1% lower, and inflation will be about 2.5% higher, than they would have been without the invasion. The impact will be greatest for countries with closer trade and financial ties to Russia and Ukraine. Throughout the world, people with lower incomes will likely suffer more because food and energy account for a larger share of spending.12
According to the same OECD report, inflation could rise an additional 2% in the euro area and 1.4% higher in the United States than it would have without the war. The OECD expects 2022 economic growth to be reduced by about 1.4% in the euro area and 0.9% in the United States.13
Russian aggression has caused a humanitarian disaster and an economic catastrophe in Ukraine that are nearly impossible to measure. More than 4 million people have already fled Ukraine, and many more could follow. Without outside help, accommodating the flood of refugees is likely to strain the finances of host governments such as Hungary, Moldova, Poland, Romania, and Slovakia.14
Europe has more exposure to the Russia-Ukraine conflict than the United States, but in both economies, inflation had already climbed to levels that haven’t been seen for decades.15 In the coming months, the world’s key central banks will face the tricky task of raising interest rates enough to control inflation without causing a recession. There could also be longer-term repercussions, such as the reorganization of global supply chains and less integrated financial markets.
Estimates and projections are based on current conditions, are subject to change, and may not happen.
1) The Wall Street Journal, March 18, 2022
2) The Wall Street Journal, March 23, 2022
3) The New York Times, March 22, 2022
4, 15) The Wall Street Journal, March 7, 2022
5) The Wall Street Journal, March 16, 2022
6-8, 12-13) OECD, March 2022
9) Reuters, February 25, 2022
10) The New York Times, March 20, 2022
11) Bloomberg, March 13, 2022
14) Associated Press, March 30, 2022
What Do Rising Interest Rates Mean for You?
On March 16, 2022, the Federal Open Market Committee (FOMC) of the Federal Reserve raised the benchmark federal funds rate by 0.25% to a target range of 0.25% to 0.50%. This is the beginning of a series of increases that the FOMC expects to conduct over the next two years to combat high inflation.1
The FOMC released economic projections that suggest the equivalent of six additional 0.25% increases in 2022, followed by three or four more increases in 2023 when it announced the current increase, 2 These are only projections, based on current conditions, and may not happen. However, they provide a helpful picture of the potential direction of U.S. interest rates.
What is the federal funds rate?
The federal funds rate is the interest rate at which banks lend funds to each other overnight to maintain legally required reserves within the Federal Reserve System. The FOMC sets a target range, usually a 0.25% spread, and then sets two specific rates that function as a floor and a ceiling to push the funds rate into that target range. The rate may vary slightly from day to day, but it generally stays within the target range.
Although the federal funds rate is an internal rate within the Federal Reserve System, it serves as a benchmark for many short-term rates set by banks and can influence longer-term rates as well.
Why does the Fed adjust the federal funds rate?
The Federal Reserve and the FOMC operate under a dual mandate to conduct monetary policies that foster maximum employment and price stability. Adjusting the federal funds rate is the Fed’s primary tool to influence economic growth and inflation.
The FOMC lowers the federal funds rate to stimulate the economy by making it easier for businesses and consumers to borrow, and raises the rate to combat inflation by making borrowing more expensive. In March 2020, when the U.S. economy was devastated by the pandemic, the Committee quickly dropped the rate to its rock-bottom level of 0.00%–0.25% and has kept it there for two years as the economy recovered.
The FOMC has set a 2% annual inflation goal as consistent with healthy economic growth. The Committee considered it appropriate for inflation to run above 2% for some time to balance the extended period when it ran below 2% and give the economy more time to grow in a low-rate environment. However, the steadily increasing inflation levels over the last year — with no sign of easing — have forced the Fed to change course and tighten monetary policy.
How will consumer interest rates be affected?
The prime rate, which commercial banks charge their best customers, is tied directly to the federal funds rate, and generally runs about 3% above it. Though actual rates can vary widely, small-business loans, adjustable-rate mortgages, home-equity lines of credit, auto loans, credit cards, and other forms of consumer credit are often linked to the prime rate, so the rates on these types of loans typically increase with the federal funds rate. Fixed-rate home mortgages are not tied directly to the federal funds rate or the prime rate. Although Fed rate hikes may put upward pressure on new mortgage rates.
Rising interest rates make it more expensive for consumers and businesses to borrow. Although, retirees and others who seek income could eventually benefit from higher yields on savings accounts and certificates of deposit (CDs). Banks typically raise rates charged on loans more quickly than they raise rates paid on deposits, but an extended series of rate increases should filter down to savers over time.
What about bond investments?
Interest-rate changes can have a broad effect on investments, but the impact tends to be more pronounced in the short term as markets adjust to the new level.
When interest rates rise, the value of existing bonds typically falls. Put simply, investors would prefer a newer bond paying a higher interest rate than an existing bond paying a lower rate. Longer-term bonds tend to fluctuate more than those with shorter maturities because investors may be reluctant to tie up their money for an extended period if they anticipate higher yields in the future.
Bonds redeemed prior to maturity may be worth more or less than their original value, but when a bond is held to maturity, the bond owner would receive the face value and interest, unless the issuer defaults. Thus, rising interest rates should not affect the return on a bond you hold to maturity, but may affect the price of a bond you want to sell on the secondary market before it reaches maturity.
Although the rising-rate environment may have a negative impact on bonds you currently hold and want to sell, it might also offer more appealing rates for future bond purchases.
Bond funds are subject to the same inflation, interest rate, and credit risks associated with their underlying bonds. Thus, falling bond values due to rising rates can adversely affect a bond fund’s performance. However, as underlying bonds mature and are replaced by higher-yielding bonds within a rising interest-rate environment, the fund’s yield and/or share value could potentially increase over the long term.
How will the stock market react?
Equities may also be affected by rising rates, though not as directly as bonds. Stock prices are closely tied to earnings growth, so many corporations stand to benefit from a more robust economy, even with higher interest rates. On the other hand, companies that rely on heavy borrowing will likely face higher costs going forward, which could affect their bottom lines.
The stock market reacted positively to the initial rate hike and the projected path forward, but investors will be watching closely to see how the economy performs as interest rates adjust — and whether the increases are working to tame inflation.3
The market may continue to react, positively or negatively, to the government’s inflation reports or the Fed’s interest-rate decisions, but any reaction is typically temporary. As always, it’s important to maintain a long-term perspective and make sound investment decisions based on your own financial goals, time horizon, and risk tolerance.
The FDIC insures CDs and bank savings accounts, which generally provide a fixed rate of return, up to $250,000 per depositor, per insured institution. The return and principal value of stocks and investment funds fluctuate with market conditions. Shares, when sold, may be worth more or less than their original cost. Investments offering the potential for higher rates of return also involve higher risk.
Investment funds are sold by prospectus. Please consider the fund’s objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.
1–2) Federal Reserve, March 16, 2022
3) The Wall Street Journal, March 17, 2022
Global Finance: Kicking Russia Out of SWIFT
Over the past days, the United States and other countries have imposed various sanctions on Russia for its invasion of Ukraine. One sanction that was discussed initially but not implemented immediately was blocking Russia from the SWIFT global banking network. However, the United States and European allies eventually agreed to remove selected Russian banks from SWIFT. What does this mean?
What is the SWIFT financial system?
SWIFT, which stands for the Society for Worldwide Interbank Financial Telecommunication, is a cooperative of financial institutions formed in 1973. Headquartered in Belgium, SWIFT is overseen by the National Bank of Belgium along with other major central banks, including the U.S. Federal Reserve System, the Bank of England, and the European Central Bank.1
SWIFT isn’t a traditional bank and doesn’t move money like a traditional bank. Rather, it moves information about money, acting as a secure global messaging system that connects more than 11,000 financial institutions in over 200 countries and territories around the world, alerting banks when transactions are about to take place and facilitating cross-border financial activity.2
SWIFT communications are important to the global banking system. In 2021, SWIFT recorded an average of 42 million messages per day, an 11.4% increase over 2020.3
Blocking selected Russian banks from SWIFT is a drastic measure that could potentially result in significant economic pain for Russia, both immediately and over the long term. It essentially cuts Russia off from the global financial system.4
What was behind the initial delay in expelling Russia from SWIFT?
The United States favored blocking Russia from SWIFT at the outset, but couldn’t do so unilaterally. Such a move required the support of other European nations, and some of the 27-member nations in the European Union (EU) were initially hesitant. Because Russia is a key energy supplier to Europe, some European nations worried that expelling Russia from SWIFT could potentially disrupt natural gas supplies and make it more costly and complicated to send payments for energy and other goods.5 Another reason for hesitancy was the fear of jeopardizing a fragile post-COVID economic recovery in Europe.6
Additionally, there were concerns that blocking Russia from SWIFT would cause it to find alternative ways to participate in the global economy by forging stronger ties with China, developing its own financial messaging system, and/or creating its own digital currency. There was also the risk that Russia could attempt to disrupt the global economy through ransomware attacks.7
While the United States waited for buy-in from all 27-member EU nations to block Russia from SWIFT, it focused on targeting Russian banks directly to limit their ability to raise capital and access U.S. dollars. Russia’s financial services sector is heavily dominated by state-owned entities that rely on the U.S. financial system to conduct their business activities, both within Russia and internationally. By targeting Russian banks directly with sanctions, the United States attempted to isolate Russia from international finance and commerce.8
Treasury Secretary Janet Yellen stated, “Treasury is taking serious and unprecedented action to deliver swift and severe consequences to the Kremlin and significantly impair their ability to use the Russian economy and financial system to further their malign activity.”9
The road to SWIFT sanctions
Then on February 26, 2022, after intense international diplomacy and an impassioned plea by Ukraine President Volodymyr Zelensky that by all accounts moved world leaders to act, the United States, Canada, the European Union, and the United Kingdom agreed to kick selected Russian banks off the SWIFT financial network.10In making the announcement, European Commission President Ursula von der Leyen stated, “This will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally.”11
Not all Russian banks were cut off from SWIFT, though. As a compromise, some smaller banks were allowed to remain to allow European nations to pay for natural gas (the EU imports 40% of its natural gas from Russia) and to allow the United States to pay for oil.12
Along with blocking certain Russian banks from SWIFT, the United States, Canada, the European Union, and the United Kingdom also announced that they would take additional actions against Russia’s central bank to prevent it from deploying its more than $600 billion in reserves in attempt to “sanction-proof” Russia’s economy. Ms. von der Leyen stated, “We will paralyze the assets of Russia’s central bank.”13
This is a fluid situation, and ongoing diplomacy around sanctions is likely in the days and weeks ahead.
1-2, 4) nbcnews.com, February 24, 2022
3) SWIFT FIN Traffic & Figures, 2022
5) The New York Times, February 24, 2022
6) The New York Times, February 25, 2022
7) The New York Times, February 23, 2022
8-9) U.S. Department of the Treasury, February 24, 2022
10) The Washington Post, February 27, 2022
11-13) The Wall Street Journal, February 26, 2022
Investments in our Infrastructure is expected to have an impact on our economy.
A bipartisan congress passed the Infrastructure Investment and Jobs Act. The act provides roughly $1 trillion for infrastructure. Funds are provided for existing programs and provided more than $550 billion in new funding over the next five years. The expenditures will go toward upgrading aging U.S. transportation, water, power generation, and communication systems.1 The American Society of Civil Engineers called the legislation a significant down payment on the $2.5 trillion in deficiencies identified in the industry group’s 2021 Report Card for America’s Infrastructure.2
The objective is to improve public safety and grease the wheels of commerce by making a historic federal investment in physical infrastructure. This large injection of funds is likely to affect how many Americans commute, travel, transport goods, access the Internet, power homes and buildings, and more, with implications for communities, businesses, industries, and the economy.
How the funds will be used
The new spending is a combination of targeted funds for overdue repair projects and forward-looking programs intended to make the nation’s critical infrastructure assets more resilient to climate risks.3 Here’s an overview of the Act’s allocated funds:
• $110 billion to fix deteriorating roads and bridges, and other major surface-transportation projects
• $66 billion to pay for passenger and freight railway maintenance, modernization, and expansion, primarily to overhaul Amtrak and make rail travel a reliable alternative to driving or flying between more U.S. cities
• $65 billion to build out broadband Internet in underserved areas and subsidies to help lower-income households pay for high-speed Internet access
• $65 billion to update the electric grid and help protect it from severe weather and cybersecurity threats
• $55 billion to help ensure access to clean drinking water, remove lead service lines, and upgrade wastewater systems (another $8 billion goes toward addressing dwindling water supplies in the West)
• $47 billion to help states and cities prepare for and defend against more frequent and destructive storms, droughts, wildfires, and other climate impacts
• $42 billion to expand and upgrade airports, ports, and border-crossing stations, measures that are sorely needed to shore up supply-chain weaknesses
• $39 billion to repair and revamp public transit and make it more accessible to the elderly and disabled
• $21 billion to enhance public health and create jobs by cleaning up abandoned mines and oil and gas wells, polluted waterways, and contaminated superfund sites
• $11 billion to improve highway and pedestrian safety and support research
• $7.5 billion to build out a network of electric vehicle charging stations plus $7.5 billion for low-emission school buses and ferries
• $1 billion to reconnect communities negatively affected by past infrastructure projects
Benefits
Transportation funds are normally allocated to states according to a formula based on population, gas-tax revenue, and other factors, and each state typically decides how to spend the money. Most of the new funding will be distributed under this traditional formula, but $120 billion will be awarded through dozens of new competitive grant programs.4 The Transportation Department will select recipients from applications submitted by state and local governments, and Congress will have direct oversight, so lawmakers can monitor projects and call hearings to assess the results. It’s likely to take at least six months to pass out the money, finalize plans, and kick off projects — and timelines could run longer for grant programs.
Moody’s Analytics projects that the law’s economic impact will peak in about five years and fade as spending tails off, creating an estimated 556,000 jobs and raising U.S. output by 0.5% by year-end 2026. Other projections vary, but economists tend to agree that greater infrastructure spending eases worker mobility and the transportation of goods, providing a boost to labor productivity, business efficiency, and economic growth.5
The additional infrastructure spending will be partially paid for by new revenue and unspent COVID-19 relief funds. However, the Congressional Budget Office found that the Act would add $256 billion to budget deficits over the next decade, so borrowing to cover the difference could offset some of the law’s economic benefits.6
1, 5) The Wall Street Journal, November 6, 2021
2) American Society of Civil Engineers, 2021
3) The New York Times, August 10, 2021; White House Fact Sheet, November 6, 2021
4) The Wall Street Journal, November 7, 2021
6) Congressional Budget Office, August 9, 2021
The Federal Reserve System Fights Inflation
The Federal Reserve System (Fed) adjusts its monetary policy in response to rising inflation. The Federal Open Market Committee (FOMC) quickened the reduction of its bond-buying program mid-December 2021. They projected three increases in the benchmark federal funds rate in 2022, followed by three more increases in 2023 and speedup its buying bonds. These steps were more aggressive than previous FOMC actions or projections.1
A closer look at the FOMC’s tools and strategy may help to appreciate the impact of how these steps may affect the U.S. economy, investors, and consumers.
Jobs vs. Prices
The Federal Reserve is our national bank. It has two mandates, maintain price stability and full employment. These mandates require some inflation. An economy without inflation is typically stagnant with weak employment. A strong economy with high employment is prone to high inflation.
The FOMC currently has set a 2% annual inflation target based on the personal consumption expenditures (PCE) price index to meet the Fed’s mandate. The PCE index represents a broad range of spending on goods and services and tends to run below the more widely publicized consumer price index (CPI). The Committee’s policy is to allow PCE inflation to run moderately above 2% for some time to balance the periods when it runs below 2%.
PCE inflation was generally well below the Fed’s 2% target from May 2012 to February 2021. But it has risen quickly since then, reaching 5.7% for the 12 months ending in November 2021 — the highest level since 1982. (By comparison, CPI inflation was 6.8%.)2-3
Fed officials, and many other economists and policy makers, originally believed that inflation was “transitory” due to supply-chain issues related to opening the economy. But the persistence and level of inflation over the last few months led them to take corrective action. They still believe inflation will drop significantly in 2022 as supply-chain problems are resolved, and project a PCE inflation rate of 2.6% by the end of the year.4
The Fed’s Toolbox
The FOMC uses two primary tools to meet an acceptable balance between employment and prices. The first is its power to set the federal funds rate, the interest rate that large banks use to lend each other money overnight to maintain required deposits with the Federal Reserve. This rate serves as a benchmark for many other rates, including the prime rate that commercial banks charge their best customers. The prime rate usually runs about 3% above the federal funds rate and acts as a benchmark for rates on consumer loans such as credit cards and auto loans. The FOMC lowers the funds rate to stimulate the economy to create jobs and raises it to slow the economy to fight inflation.
The second tool is purchasing Treasury bonds to increase the money supply or allowing bonds to mature without repurchasing to decrease the supply. The FOMC purchases Treasuries through banks within the Federal Reserve System. Rather than using funds it holds on to deposit, the Fed simply adds the appropriate amount to the bank’s balance, essentially creating money. This provides the bank with more money to lend to consumers, businesses, or the government (through purchasing more Treasuries).
Shifting from Extreme Stimulus
When the economy shut down in March 2020 in response to the COVID pandemic, the FOMC took extraordinary stimulus measures to avoid a deep recession. The Committee dropped the federal funds rate to its rock-bottom range of 0% to 0.25% and began a bond-buying program that reached an unprecedented level of $75 billion per day in Treasury bonds. By June 2020, this was reduced to $80 billion per month and remained at that level until November 2021, when the FOMC decided to wind down the program at a rate that would have ended it by June 2022.5-6
The December decision accelerated the wind down, so the bond-buying program will end in March 2022, at which point the FOMC will likely consider raising the federal funds rate. Although it’s not certain when an increase will occur, the December projection is that the rate will be in the 0.75% to 1.00% range by the end of 2022 and the 1.50% to 1.75% range by the end of 2023.7
Rising Interest Rates
Currently the Fed’s plan is to slow inflation by returning to a more neutral monetary policy; this represents confidence that the economy is strong enough to grow without extreme stimulus. If these are the only actions required, the impact may be relatively mild. The first increase in rates will likely occur in the spring.
Rising interest rates make it more expensive for businesses and consumers to borrow, which could impact corporate earnings and consumer spending. Rates have an inverse relationship with bond prices. When interest rates rise, prices on existing bonds fall (and vice versa), because investors can buy new bonds paying higher interest.
Conversely, higher rates on bonds, certificates of deposit (CDs), savings accounts, and other fixed-income vehicles could help investors, especially retirees, who rely on fixed-income investments. Brick-and-mortar banks typically react slowly to changes in the federal funds rate, but online banks may offer higher rates.8
Many believe Inflation is a far greater concern other than rising interest rates, and it remains to be seen whether the Fed’s projected rate increases will be enough to tame prices. There are other moving parts, such as the movement of wages and prices. Generally, it is best not to overreact to policy changes. Often the best approach is to maintain an investment portfolio appropriate for your situation and long-term goals.
U.S. Treasury securities are guaranteed by the federal government as to timely payment of principal and interest. The principal value of all bonds fluctuates with market conditions. Bonds not held to maturity could be worth more or less than the original amount paid. The FDIC insures CDs and bank savings accounts, which generally provide a fixed rate of return, up to $250,000 per depositor, per insured institution. Forecasts are based on current conditions, subject to change, and may not happen.
1, 4, 6–7) Federal Reserve, 2021
2) U.S. Bureau of Economic Analysis, 2021
3) U.S. Bureau of Labor Statistics, 2021
5) Federal Reserve Bank of New York, 2021
8) Forbes Advisor, December 14, 2021
The foregoing is provided for information purposes only. It is not intended or designed to provide legal, accounting, tax, investment or other professional advice. Such advice requires consideration of individual circumstances. Before any action is taken based upon this information, it is essential that competent, individual, professional advice be obtained. JAS Financial Services, LLC is not responsible for any modifications made to this material, or for the accuracy of information provided by other sources.
Supply-Chain Chaos
The network, supply chain, that products and parts moved from the factories to distributors and resellers to the consumer have been under pressure since the pandemic began. This situation has gotten worse in the latter months of 2021at the same time demand for goods increased as the holiday season approached.1
California ports receive about 40% of U.S. imports. Operating 24/7 was enough to solve the problem. Workers were not able to keep up with the flow of container ships arriving from overseas. In mid-November, there was a record backlog of vessels waiting offshore for more than two weeks to unload their cargo.2 Other U.S. ports are also congested, and severe shortages of truck drivers and warehouse workers have further slowed the distribution of goods. The availability of contains is another factor slowing the flow of merchandise. These bottlenecks held up finished merchandise, as well as the inputs and raw materials needed to manufacture products domestically.
Compounding supply-chain issues have been increasing freight and labor costs, delaying shipments, and leaving consumers with higher prices and fewer options since the spring of 2021. As the seasons changed, logjams remained and time was running out, raising fears that U.S. retailers would not have sufficient inventories of goods to meet consumer demand during the holidays.
The good news is that many businesses responded nimbly to challenging conditions, and some consumers have been innovative, too. Here’s a glimpse into how these kinks in the supply chain might affect your holiday shopping in 2021.
Are Retailers Ready?
Many of the nation’s largest retailers anticipated problems and went to great lengths to ensure that shelves would be well stocked with a robust variety of goods in time for the holiday shopping season. In many cases, this required paying much higher freight costs to charter their own smaller ships or cargo planes so they could bypass clogged ports and make up for production delays.3
These costly measures are usually not an option for smaller retailers, which could put them at a disadvantage. In a November survey, 48% of small businesses reported that supply-chain disruptions are having a significant negative impact on their holiday sales.4
Expecting enthusiastic consumer demand, the National Retail Federation (NRF) forecast record holiday spending of 8.5% to 10.5% above 2020 levels. But retailers have also warned consumers that sporadic product shortages and shipping delays would continue and perhaps worsen later in the season.5
Poised to Spend
U.S. retail sales rose 1.7% in October, a surprisingly strong showing and the third monthly increase in a row.6 The potential for a more limited selection of some types of products has been widely reported, and it seems that consumers are paying attention. According to an annual NRF survey, a record share of consumers (49%) started their holiday shopping before November, and 36% did so to avoid missing the chance to buy key holiday items.7
U.S. households have extra money to spend this year after amassing about $2 trillion in excess savings during the pandemic. This was largely due to historic levels of economic relief provided by the federal government, along with fewer spending opportunities due to lockdowns.8 The recent rise in consumer spending bodes well for retailers and economic growth, but heavy demand also weighs on the supply chain and pushes up prices.
A Season of Inflation
Unfortunately, escalating prices for holiday gifts and basic needs could prompt the loudest “bah humbug” of the 2021 holiday season. With businesses paying more for the raw materials, packaging, labor, transportation, and fuel needed to produce and distribute products, a portion of the additional costs are being passed on to consumers. Some sellers have added additional price increases.
Measured by the Consumer Price Index (CPI), prices across the U.S. economy increased 6.2% during the 12 months ending in October 2021 — the highest inflation rate in nearly 31 years. Grocery prices (food at home) rose 5.4% year over year, while prices for the category that includes meats, poultry, fish, and eggs spiked 11.9%.9
Energy prices overall have climbed 30% since October 2020, and the natural gas that keeps many homes warm and cozy increased 28.1% year over year. Gasoline prices rose nearly 50% over the prior 12 months, slamming the budgets of households who plan to drive to family gatherings over the holidays.10
Because supply-and-demand shocks have driven these sharp price increases, some economists still believe they are temporary and that inflation will moderate in 2022 as supply constraints ease.11 Of course, even short bursts of inflation can be especially painful for consumers with lower incomes and little or no savings, and no one knows for certain how long prices might stay elevated. The impact of price increases and the many factors that impact the economy are beyond the scope of this discussion.
Shop Early or Be Flexible
On top of being more expensive, some in-demand products could be hard to find, and transportation bottlenecks aren’t the only issue impacting supplies. A global shortage of semiconductors, or computer chips, is limiting the production of all kinds of electronic devices, including cars, home appliances, laptops, smartphones, TVs, and gaming consoles. The availability of some brands of sportswear, shoes, and accessories could be affected by a COVID outbreak that shut down factories in Vietnam. Other reported shortages include jewelry, some popular toys and books, frozen turkeys, cardboard boxes needed for shipping, and Christmas trees, both real and artificial.12
If you need certain items for entertaining or have family members with specific gifts on their wish lists, it could be risky to wait until the last minute to buy them. Otherwise, shopping locally, being open to alternatives, and giving cash or gift cards to be spent later might end up being your best options.
Projections are based on current conditions, are subject to change, and may not happen.
1) Consumer Reports, October 20, 2021
2) Bloomberg, November 13, 2021
3) The Wall Street Journal, October 10, 2021
4) National Federation of Independent Business, November 3, 2021
5, 7) National Retail Federation, November 16, 2021
6) U.S. Census Bureau, 2021
8) Bloomberg, November 16, 2021
9-10) U.S. Bureau of Labor Statistics, 2021
11) Moody’s Analytics, November 18, 2021
12) CBS News, November 18, 2021
Budget and Debt Ceiling Vagueness
On September 30, 2021, Congress averted a potential federal government shutdown by passing a last-minute bill to fund government operations through December 3, 2021.1 Two weeks later, another measure raised the debt ceiling by just enough to sustain federal borrowing until about the same date.2 Although these bills provided temporary relief, they did not resolve the fundamental issues, and Congress will have to act again by December 3.
Spending vs. Borrowing
The budget and the debt ceiling are often considered together by Congress, but they are separate fiscal issues. The budget authorizes future spending, while the debt ceiling is a statutory limit on federal borrowing necessary to fund already authorized spending. Thus, increasing the debt ceiling does not increase government spending. But it does allow borrowing to meet increased spending authorized by Congress.
The underlying fact in this relationship between the budget and the debt ceiling is that the U.S. government runs on a deficit and has done so every year since 2002.3 The U.S. Treasury funds the deficit by borrowing through securities such as Treasury notes, bills, and bonds. When the debt ceiling is reached, the Treasury can no longer issue securities that would put the government above the limit.
Twelve Appropriations Bills
The federal fiscal year begins on October 1, and 12 appropriations bills for various government sectors should be passed by that date to fund activities ranging from defense and national park operations to food safety and salaries for federal employees.4 These appropriations for discretionary spending account for about one-third of federal spending, with the other two-thirds, including Social Security and Medicare, prescribed by law.5
Though it would be better for federal agencies to know their operating budgets at the beginning of the fiscal year, the deadline to pass all 12 bills has not been met since FY 1997.6 This year, none of the bills had passed as of late October.7
To delay for further budget negotiations, Congress typically passes a continuing resolution, which extends federal spending to a specific date based on a fixed formula. The September 30 resolution extended spending to December 3 at FY 2021 levels.8 Adding to the stakes of this year’s budget negotiations, spending caps on discretionary spending that were enacted in 2011 expired on September 30, 2021, so FY 2022 budget levels may become the baseline for future spending.9
Raising the Ceiling
A debt limit was first established in 1917 to facilitate government borrowing during World War I. Since then, the limit has been raised or suspended almost 100 times, often with little or no conflict.10 However, in recent years, it has become more contentious. In 2011, negotiations came so close to the edge that Standard & Poor’s downgraded the U.S. government credit rating.11
A two-year suspension expired on August 1 of this year. At that time, the federal debt was about $28.4 trillion, with large recent increases due to the $3 trillion pandemic stimulus passed with bipartisan support in 2020, as well as the 2021 American Rescue Plan and continuing effects of the Tax Cuts and Jobs Act of 2017.12-13 The Treasury funded operations after August 1 by employing certain “extraordinary measures” to maintain cash flow. Treasury Secretary Janet Yellen projected that these measures would be exhausted by October 18.14
The bill signed on October 14 increased the debt ceiling by $480 billion, the amount the Treasury estimated would be necessary to pay government obligations through December 3, again using extraordinary measures. Unlike the budget extension, which is a hard deadline, the debt ceiling date is an estimate, and the Treasury may have a little breathing room.15–16
Potential Consequences
If the budget appropriations bills — or another continuing resolution — are not passed by December 3, the government will be forced to shut down unfunded operations, except for some essential services. This occurred in fiscal years 2013, 2018, and 2019, with shutdowns lasting 16 days, 3 days, and 35 days, respectively.
Although the consequences of a government shutdown would be serious, the economy has bounced back from previous shutdowns. By contrast, a U.S. government default would be unprecedented and could result in unpaid bills, higher interest rates, and a loss of faith in U.S. Treasury securities that would reverberate throughout the global economy. The Federal Reserve has a contingency plan that might mitigate the effects of a short-term default, but Fed Chair Jerome Powell has emphasized that the Fed could not “shield the financial markets, and the economy, and the American people from the consequences of default.”17
Given the stakes, it is unlikely that Congress will allow the government to default, but the road to raising the debt ceiling is unclear. The temporary measure was passed through a bipartisan agreement to suspend the Senate filibuster rule, which effectively requires 60 votes to move most legislation forward. However, this was a one-time exception and may not be available again. Another possibility may be to attach a provision to the education, healthcare, and climate package slated to move through a complex budget reconciliation process that allows a bill to bypass the Senate filibuster. However, the reconciliation process is time-consuming, and it is not clear whether the debt ceiling would meet parliamentary requirements.18
The budget and the debt ceiling are serious issues, but Congress has always found a way to resolve them in the past. It’s generally wise to maintain a long-term investment strategy based on your goals, time frame, and risk tolerance, rather than overreacting to political conflict and any resulting market volatility.
U.S. Treasury securities are guaranteed by the federal government as to the timely payment of principal and interest. The principal value of Treasury securities fluctuates with market conditions. If not held to maturity, they could be worth more or less than the original amount paid. All investments are subject to market fluctuation, risk, and loss of principal. When sold, investments may be worth more or less than their original cost.
Planning is further complicated by the uncertainty as to what changes, if any, will be made relating to income, estate and gift tax provisions and their effective dates. Individual circumstances will differ. Review your situation and planning to determine what if any actions is required. Pay close attention to your current and expected future tax brackets when you consider the timing of deductions and income.
1, 8) The Washington Post, September 30, 2021
2, 16, 18) Barron’s, October 15, 2021
3) U.S. Office of Management and Budget, 2021
4, 7, 9) Committee for a Responsible Federal Budget, June 25, 2021; October 18, 2021
5, 11, 14, 17) The Wall Street Journal, September 28, 2021
6) Peter G. Peterson Foundation, October 1, 2021
10) NPR, September 28, 2021
12, 15) U.S. Treasury, 2021
13) Moody’s Analytics, September 21, 2021
Too Hot to Handle: What’s Ahead for the U.S. Housing Market?
The U.S. housing market, already strong before the pandemic, has heated up to record levels in 2021. The Case-Shiller U.S. National Home Price Index, which measures home prices in 20 major metropolitan areas, reported a 12-month increase of 18.6% in June 2021, the largest year-over-year gain in data going back to 1987.1
The National Association of Realtors (NAR), which provides more current data, reported that the national median price of an existing home was $359,900 in July, down from a record $362,800 in June. Even so, this was the 113th consecutive month of year-over-year price increases. The June to July price relief was due in part to increased supply. Total inventory of new and existing homes increased 7.3% over June but was still down 12.0% from a year ago.2
The July 2021 NAR data suggests that the red-hot market may be cooling slightly, but prices are still extremely high, and industry experts expect them to remain high for the foreseeable future. Here’s a look at some key factors behind the current trend and prospects for future direction.
Low Supply, Surprise Demand
The housing supply has been low for more than a decade. The housing crash devastated the construction industry, and a variety of factors, including labor shortages, tariffs, limited land, and restrictive permit processes, have kept the supply of new homes below historical averages, placing more pressure on existing homes to meet demand.3
The pandemic exacerbated labor problems and led to supply-chain issues and high costs for raw materials that held back construction, while demand exploded despite the economic downturn. With the shift to remote work and remote education, many people with solid jobs looked for more space, and low interest rates made higher prices more affordable.4
At the same time, homeowners who might have seen high prices as an opportunity to sell were hesitant to do so because of economic uncertainty and the high cost of moving to another home. Refinancing at low rates offered an appealing alternative and kept homeowners in place. Government mortgage forbearance programs have helped families from losing their homes but also kept homes that might have otherwise foreclosed off the market.5
Health concerns also played a part. The pandemic made it less appealing to have strangers entering a home for an open house. And older people who might have moved into assisted living or other senior facilities were more likely to stay in their homes.6
Taken together, these factors produced a perfect storm of low supply and high demand that drove already high prices to dizzying levels and created desperation among buyers. All-cash sales accounted for 23% of transactions in July, up from 16% in July 2020. The average home stayed on the market for just 17 days, down from 22 days last year. Almost 90% of homes sold in less than a month.7
Freezing Out First-Time Buyers
Recent inventory gains have been primarily in more expensive houses, and there continues to be a critical shortage of affordable homes. First-time buyers accounted for just 30% of purchases in July 2021, down from 34% the previous year.8 A common formula for home affordability is to multiply income by three — i.e., a couple who earns $100,000 might qualify to buy a $300,000 house. A study of 50 cities found that home prices in Q2 2021 were, on average, 5.5 times the local median income of first-time buyers, putting most homes out of reach.9
The lack of affordable housing for first-time buyers also helps to drive rents higher. People with higher incomes who might be buying homes are willing and able to pay higher rents. Rents on newly signed leases in July were 17% higher than what the previous tenant paid, the highest jump on record. After dropping while many young people lived with parents during the pandemic, occupancy of rental units hit a record high of 96.9%.10
Is This a Bubble?
From 2006 to 2012, the housing market plummeted 60%, taking the broader U.S. economy with it.11 Mortgage requirements were made much stricter after the housing crash, and homeowners today are more likely to afford their homes and to have more equity from larger down payments. The housing market has always been cyclical, so it’s likely that prices will turn downward at some point in the future, but less likely that prices will collapse the way they did during the Great Recession.12
What’s Next?
Prices are so high that some buyers are backing off, but demand remains strong and will outstrip housing supply for the foreseeable future. Some near-term relief might come if high prices inspire more homeowners to sell, and if the end of government programs puts more foreclosed homes on the market. There are more single-family homes under construction than at any time since 2007, but it will take months or years for those homes to increase the housing supply.13
The housing market tends to be seasonal, with demand dying down in the fall and the winter. That didn’t happen last year, because pent-up demand was so strong that it pushed through the seasons. With the supply/demand tension easing, the seasonal slowdown may be more significant this year.14 The Federal Home Loan Mortgage Corporation (Freddie Mac) projects that home prices will grow by 12.1% in 2021, lower than the current pace, and drop further to 5.3% growth in 2022.15
Location, Location
Although national trends reflect broad economic forces, the housing market is fundamentally local. The West is the most expensive region, with a median price of $508,300 for an existing home, followed by the Northeast ($411,200), the South ($305,200), and the Midwest ($275,300).16 Within regions, there are dramatic price differences among states, cities, and towns. The trend to remote work, which helped drive prices upward, may help moderate prices in the long term by allowing workers to live in more affordable areas.
1) S&P Dow Jones Indices, August 31, 2021
2, 7, 8, 16) National Association of Realtors, August 23, 2021
3, 4, 6) The New York Times, May 14, 2021
5) NBC News, July 6, 2021
9) The New York Times, August 12, 2021
10) Bloomberg Businessweek, August 18, 2021
11) NPR, August 17, 2021
12) The Wall Street Journal, March 15, 2021
13) Bloomberg, August 19, 2021
14) CNN Business, August 23, 2021
15) Freddie Mac, July 2021
