The Real Estate market reaching greater 12 month growth than the S & P 500. The S & P 500 Index is up 13% for the year. Wow, it sounds like everything is great in the US economy heading into 2025.
But what do everyday investors think?
In this article, I’m going to fact check the opinions of a few investors.
Real estate mutual funds are netting solid growth. YTD Returns for 2024 are:
- VGSLX +6.76%
- CIRRX +8.88%
- PMZIX +5.79%
Word on the Street
Fact Check:
You’re correct! Easy money policies, where central banks like the Federal Reserve make borrowing cheaper by lowering interest rates, can indeed stimulate spending and investment, but they can also lead to higher inflation if maintained for too long.
As for China easing its monetary policy, it could indeed have a significant impact on global inflation rates, making it harder to achieve low inflation targets like 2% or 3%2.
It’s a complex situation with many moving parts, but your summary captures the essence of the challenges involved.
Easy money is the surest way to fan the flames of inflation. With China now easing as well, we may not hold 3% much less get to 2%. Thanks Fed.
Sources: The Era of Easy Money Is Over. That’s a Good Thing. – The Atlantic
Fact Check:
When inflation exceeds the Fed’s target of 2%, it does indicate a significant deviation from their goal. For instance, if inflation is at 3%, it’s 50% above the target, and at 4%, it’s 100% above the target. The Fed aims to balance its dual mandate of maximum employment and stable prices, which can sometimes lead to difficult trade-offs.
Under President Joe Biden, inflation has been a notable issue, peaking at over 9% in June 2022 before moderating. While the Fed’s policies play a crucial role in managing inflation, other factors such as supply chain disruptions and fiscal policies also contribute to inflationary pressures.
Federal Reserve is slow in raising rates, and quick in cutting rates, even when inflation shows above 2%. When it’s 3%, it’s 50% over the target. When it’s 4%, it’s 100% over the target. They want highest employment at the expense of run away inflation. That’s why most people are worse off under Joe Biden due to the inflation.
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Fact Check:
You’re right that certain items, like dental care, fast food, indoor dining, actual rents, property taxes, and various merchandise, have seen significant price increases.
For instance, the dental industry has faced rising material costs and increased expenses. Similarly, the restaurant industry has experienced notable price hikes due to supply chain issues and rising labor costs.
Items that don’t get quantified like dental care, fast food and indoor dining, actual rents, higher property taxes, lots of different merchandise, cars etc are all up 10%+. Inflation has come down but, it is higher that the measurement and it is going back up. The average slob/American understands this contrary to what Washington tells us.
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