By: Srini Meka
In 1992, Bill Clinton’s political advisor, James Carville, famously said that when it came to elections, it was the economy, stupid. Despite excellent market performance, trillions of economic stimulus, and lower unemployment, this year’s election results flipped the ruling party.
Blame it on fiscal expansion. In the past four years, the consumer price index has increased 19.18%, meaning our purchasing power has dropped one-fifth. Since 2020, the median house price has increased from $338,000 to $420,000. Apart from a limited supply of new houses, mortgage rates suddenly increased.
The thirty-year mortgage rate shot up from a historically low 2.67 percent to 6.79 percent, and the fifteen-year mortgage rate went up from 2.17 percent to 6 percent. The short-term fed rate shot from zero percent to 4.83 percent.
Beyond all, the primary culprit is food price inflation, which increases by a whopping two hundred and sixty percent. When necessities are unbearable, and housing prices are unaffordable, regime change is inevitable despite how popular the leadership is.
PHOTO CREDIT: https://www.shutterstock.com/g/DeanDrobot
VIA SHUTTERSTOCK
REFERENCES:
- https://www.bls.gov/
- https://www.dol.gov/
- https://www.stlouisfed.org/
- https://www.usinflationcalculator.com/
DISCLOSURES:
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This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information is not intended to be individual or personalized investment or tax advice and should not be used for trading purposes. Please consult a financial advisor or tax professional for more information regarding your investment and/or tax situation.
