Meet Kevin: Forget Recession – The Fed will Crush us into Depression
The latest inflation data has been a disappointment. After months about talking tough to bring inflation down, we’ve only seen one month drop in July. The number then reversed higher in August.
While August saw a rise of only 0.1 percent, investors now feel that inflation remains out of control. And it will likely stay that way through the end of the year. That suggests that interest rates will continue to rise higher.
Tuesday’s inflation report was so bad that every single stock on the Nasdaq 100 closed in the red that day. The last time such a move occurred was in March 2020 during the pandemic crash.
This time around, however, interest rates are going up, not down. And fiscal spending is more muted. After all, there’s no reason for increased unemployment benefits or direct stimulus payments with the job market looking strong right now.
The data also caused the inverted yield curve to increase, a further sign that economic weakness will continue into 2023. And the Nasdaq has now seen its 7th decline of 4 percent or more so far this year.
High inflation will mean higher interest rates for longer. As interest rates are the cost of money, that rate and its changes can be key to economic growth. With mortgage rates rising to 2008 levels as well, housing prices are set to drop.