Inflation has continued to decrease, with the Bureau of Labor Statistics reporting consumer price growth at 2.5% in August, the lowest since 2021. Despite this, prices have still risen significantly over the past four years, leading to concerns over the economy. Housing costs have seen a 5% annual increase, while food costs have only risen about 1%. Rental prices have increased by 25% nationwide since the start of the pandemic. Eviction rates are rising in some cities, while mortgage delinquencies are also increasing alongside a slowing job market and a potential recession on the horizon. The Federal Reserve is expected to cut interest rates by 0.25% in response to the current economic conditions. Some economists are optimistic about the state of the economy, citing wage growth, consumer spending, and GDP. However, others are more pessimistic, pointing to weak job data and the need for more significant interest rate cuts to prevent a potential “hard landing” for the economy. Investors will be closely watching Fed Chair Jerome Powell’s remarks to determine the central bank’s future actions in response to the evolving economic situation.
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The Implications for Consumers and Businesses
