Since, unfortunately we cannot have a crystal ball, it truly is impossible to predict, accurately, the long term! This is especially true, when, you are looking at economic issues, including investment, property, rates, inflationary pressures, government actions, international factors, etc. What are the ramifications of inflation, recession, rates, Federal Reserve Bank decisions, etc? How can one, hedge – his – bet, so as to minimize unnecessary risks, while acquiring a quality return, also? There is no simple answer, as a general rule factors, have significant influences. With, that under consideration, this article attempt to briefly, consider, examine and review potential factors, so as to help readers, have a very more – complete perception of the possibilities.
1) Interest rates: We have experienced a chronic period of historically – low – rates. This has created fast money, for the reason that cost of borrowing can be so low. Both individuals and corporations have benefited, a minimum of, inside the immediate- term, permitting house buyers to purchase more house, as their monthly charges, are low, as a result of low home loan rates. Corporate and government bonds, and banks, have paid low returns. It has stemmed, inflation, and made a rise in house values, we have not witnessed, in recent memory. The Federal Reserve Bank has signaled they are ending this propping – up, and this will raise rates, probably 3 x, in 2022. What do you think which will cause.
2) Auto loans, consumer loans, borrowing: The auto industry is, significantly, influenced by supply chain challenges. When rates rise, automotive loans and leases, are often more costly.
3) THis pattern began as soon as the Tax Reform legislation, passed following 2017, which made the initial, new, trillion dollars deficits
4) Government spending, brought on by the financial suffering and challenges, as a consequence of shut downs, etc, on account of the pandemic, created trillions more indebted. Unfortunately, debt need to be eventually addressed.
5) Perception and attitude: The past year or two,apparently, designed a public perception, plus many fears, having a crippling economic impact.
Either, starting to plan, effectively, with common sense with an open – mind, cut on interest rates be at – risk. Wake up, America, and demand better leadership, service and representation.