The potential government shutdown that may occur if Congress does not pass a bill to keep funding the government raises concerns about the impact on the economy. The shutdown would have significant costs for local communities and the national economy. Federal government employees would not be paid during a shutdown, resulting in reduced spending. The businesses located around federal offices would also experience a decline in customers, as federal workers will be on furlough. Previous government shutdowns have already proven to be costly for the economy, with billions of dollars in economic output lost. It is crucial to avoid a shutdown to mitigate its negative effects on workers, businesses, and communities.
Despite expectations of a cooling housing market due to rising interest rates, housing prices saw a rise in July. The demand for housing continues to outpace supply, leading to an increase in prices. High mortgage rates, averaging over 7% nationally, cause potential homeowners to stay put, further exacerbating the scarcity of housing inventory. To address this issue, there is a need to increase housing supply and make homes more affordable, which may involve reforming local zoning and permitting rules. Looking ahead, it is expected that mortgage rates will remain high as the Federal Reserve continues to combat high inflation, resulting in continued scarcity of housing and upward price trends.
Small businesses are feeling optimistic about the future, according to the Q3 MetLife and U.S. Chamber Small Business Index. The resilience of Main Street employers is remarkable, considering the challenges posed by high inflation and the worker shortage. A majority of small businesses report that their business is in good health, and they feel comfortable with their cash flow. However, inflation remains a significant concern, with half of small business owners identifying it as their biggest challenge. Keeping up with employee salary expectations is also a challenge for many small business owners. The positive sentiment among small business owners reflects their confidence in the economy compared to a year ago, with fears of a recession in the past.
New research from the Federal Reserve confirms that economic factors related to supply and demand are the primary drivers of inflation. The trillions of dollars of stimulus from government spending and easy money policies implemented by the Federal Reserve during lockdowns played a role in spurring inflation. Additionally, supply chain disruptions led to a decrease in available goods, contributing to price increases. Analysts and policymakers should avoid simplistic narratives and instead rely on facts and solid reasoning when discussing inflation. The importance of this issue lies in understanding the causes of inflation accurately and developing appropriate strategies to address it.