The US Economy is Doing What?
From economist Patrick Stone, CEO of Williston Financial Group. Here are some highlights:
* Overall we have a fairly healthy economy, if based upon growth, employment and price stability. Consumer spending is great on most things except housing. The GDP (growth) was up 3% in the 2nd Quarter and unemployment is at 4% which is relatively good.
* Inflation is a big problem. And post-election anxiety about the future is up slightly due to inflationary fears hearing about tariffs to come, etc. Consumers are cautious and conservative now but there is high confidence, generally, so Christmas is expected to be a huge boost this year for retailers
* Boomers make up nearly 80% of the wealth in the nation. Personal savings rates for people younger than boomers are much lower than in the past.
* It is predicted that the US population rate of growth by 2040 will be negative!
* The Federal Debt is at 35.7 trillion, an all-time high, due to government overspending. Just 12 years ago, it was at 18 trillion, showing a massive recent increase.
* Housing: Here is where consumer confidence is lagging. New home sales are slow this year while inventory is climbing in most areas. The need and desire for homes by GenZ and Millenials is strong (95%) but we need approximately 150 Million more affordable (lower interest rate) homes for them. Last year, approximately 4 Million homes sold at 5.76% interest or higher. 70% of existing mortgages are at 4% or lower!
* To compound the problem of lack of supply, sociologically, people are not moving as often as before. The rate is now once every 11 years.
* Price appreciation on homes has slowed a lot since pandemic years.
Here are some bankers predictions for when rates will fall below 6%:
-Mortgage Bankers Association Q4 2025
-Fannie Mae Q2 2025
-Wells Fargo Q1 2025
Time will tell. We will keep you updated