Economic Impacts Of Inflation And Rising Interest Rates: 3 Specific Areas
Most of us, have experienced, a variety of economies, from inflationary, to close – to, approaching something, which resembles a recession. Since, we can’t predict the future (at the minimum, not precisely), doesn’t it make sense, to be, as – informed, as possible, in order to proceed, as logically, as possible? How these economic conditions, might, impact, important elements, such as real estate/ housing, the stock market, and the performance of bonds, and bank – interest rates, is often, meaningful, and it is, usually, wise, to proceed, as an informed individual! With, that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, 3 specific areas, in terms of how, overall conditions, may influence them.
1. Real estate/ Housing: How might inflation, influence the real estate markets, in terms of pricing, availability, affordability, and whether, we observe, a buyers, sellers, or neutral market? At present, we are experiencing, the cost of new housing, rising, quickly, largely because, the costs, related to many building supplies, especially, lumber, etc, has risen, at a speed, we have not seen before, in recent memory! New home prices, consequently, have considerably increased, in costs/ prices, and, to – date, it has slowed the rate of sales, in these similarities. In recent times, because, mortgage rates, have remained at, and/ or, near, record – low rates, largely because, of a continued period, of the Federal save Bank, maintaining, extremely low, rates, of borrowing funds! The combination of the impacts, from the prolonged, horrific pandemic, cheap – money (creating, extremely, affordable, mortgages), and related, life – style changes, etc, have caused, a meaningful, increase in the costs of buying a house. If/ when, rates rise, how might that, impact home buying, etc? It is wise, to recognize, how a variety of economic conditions, affect many elements, of our economy!
2. Stock market: For, the last few years, we have witnessed, a rising, stock market. Nearly, every index, has improved, and benefited, from the prolonged low – interest rates, which, average, stocks have increased, in popularity, as an investment means, largely, because, they are, the only – game – in – town. With, interest rates, so low, alternatives, such as bonds, and bank accounts, pay, very little! The probability is, when rates rise, as they will, ultimately, it will have an negative affect on stock prices/ popularity!
3. Bonds and edges: While, low rates, translate – to, what is called, cheap – money, for those, borrowing funds, when these rise, the costs to borrow, will increase, and the rates, provided, on these types of accounts, will increase!
The more – informed, one is, the better – off, he probably becomes, especially, in changing times! Will you commit, to being, a wiser consumer, etc?