4 ms·

Tell me why I'm wrong... The federal interest rate applies to loans, so the main first order effect for consumers is via mortgage rates and car loans. However,

Tell me why I'm wrong... The federal interest rate applies to loans, so the main first order effect for consumers is via mortgage rates and car loans. However, home sales are low because prices have been sticky despite the higher interest rates, leading to far fewer sales as people can't afford the higher mortgage costs. Meanwhile, people who already own houses are completely insulated from mortgage rate changes. So, consumer spending is relatively insulated from first order effects of the federal interest rate, especially for existing homeowners.

sdenton4 3y ago
(also seems kinda weird to measure this with black Friday sales... Which could simply be an indicator of people trying to get further with the money they have by spending less during non sale periods. But I assume there's more evidence than what's at the top of the article.)
- Aloha 3y ago
  Do people actually wait for black friday to buy a house?!
  - sdenton4 3y ago
    No, but consumer spending on black Friday is the top-line metric reported in the article. And my point is that not spending on houses (combined with the bonus of fixed rate mortgages for those who got them before the rate hikes) means there's more cash around for so called "Yolo" expenditures.
  - fostware 3y ago
    No, however, Australian housing rent prices are now higher than mortgage repayments in some areas due to housing availability. Also, those who have paid off their house, have been profligate during the recent sales. The timing are co-incidental, but the media loves mixing correlation and causation.
battery_glasses 3y ago
You're only insulated so long as don't have to move. Very few people stay in 1 house for thirty years. If you own a house you are now stuck there - hope you don't need to move for a new job, hope you don't want to have another kid, hope your parents don't age into needing substantially more care, etc.

sdenton4 3y ago

(also seems kinda weird to measure this with black Friday sales... Which could simply be an indicator of people trying to get further with the money they have by spending less during non sale periods. But I assume there's more evidence than what's at the top of the article.)

Aloha 3y ago
Do people actually wait for black friday to buy a house?!
- sdenton4 3y ago
  No, but consumer spending on black Friday is the top-line metric reported in the article. And my point is that not spending on houses (combined with the bonus of fixed rate mortgages for those who got them before the rate hikes) means there's more cash around for so called "Yolo" expenditures.
- fostware 3y ago
  No, however, Australian housing rent prices are now higher than mortgage repayments in some areas due to housing availability. Also, those who have paid off their house, have been profligate during the recent sales. The timing are co-incidental, but the media loves mixing correlation and causation.

battery_glasses 3y ago

You're only insulated so long as don't have to move. Very few people stay in 1 house for thirty years. If you own a house you are now stuck there - hope you don't need to move for a new job, hope you don't want to have another kid, hope your parents don't age into needing substantially more care, etc.