The S&P is still up 13% from pre-pandemic. That's slightly below historic the historic average, but nothing to be alarmed about.
Home prices are still WAAAAAAY above historic averages. Even if they drop 20%, they'll still be way up.
The only people that will get hosed are speculators.
You didn't "lose" money if you lost "unrealized gains".
It was pretty much all avoidable if policymakers had been more responsible. But they weren’t.
Dropping rates to pull wealth from the future into the present finally hit the brick wall of inflation.
This whole scenario has made it clear we’ve been abusing monetary policy for what fiscal policy should have been used for
They either need to engineer a quick and sharp recession, or give up the inflation fight and drop short term rates.
With option one the US can fund debt liabilities on the long end. With option two, the short end.
Otherwise the US government will become insolvent within a few years. To me it’s clear they’re choosing option one.
Letting inflation run wild for a decade is probably the less painful path all else equal, but for legacy reasons Powell won’t choose that route. He would be remembered as a failure, just as Arthur Burns is.
I would add that goods inflation is actually coming down, it’s much more about services inflation now which is labor supply driven, primarily.
Services make up a majority of the CPI and aren’t impacted by logistics for the most part.