Biden Administration, financial advisors unsure on likelihood of recession
MEMPHIS, Tenn. (WMC) - With rising fuel and food prices, many Americans are wondering what does this mean for the long term? Is a recession next?
But some financial advisors say even if a recession seems inevitable, they aren’t so sure.
It seems we’re getting a couple of messages about the likelihood of a recession.
Bloomberg Economics says there’s a 70% chance a recession happens by the first quarter of 2024 whereas the Biden Administration says nothing is inevitable about a recession at the moment.
In any case, financial planners say their clients are asking them how they can weather this storm of rising prices and growing inflation.
Financial planner and CNBC contributor Delano Saporu says it’s all about going back to the basics and looking at your budget.
“People are cutting subscriptions to streaming services, people are going back to the staples,” said Saporu. “Even at the grocery. Kroger put out a report saying people are going back to store brand and the amount in each trip that they buy.”
As for the housing market, prices are continuing to go up, but not as many are selling compared to the last two years.
The median price for a home is now $407,000 in the U.S. the first time it’s been over $400,000 according to the National Association of Realtors.
But, compared to the downturn the housing market took before the 2008 recession, experts say the market is much more healthy because of new lending practices put into place following the 2007-2008 fall in the market.
Saporu said many things are at play when a recession hits.
“So many factors go into it,” said Saporu. “So many people are still 50/50 that we’ll go into a recession. It’s going to be based on a lot of things like how consumers are feeling, if they’re still going out and buying and traveling, if the income is still there and wages continue to grow.”
On Tuesday, the National Association of Realtors released its latest sales report for May 2022. It says existing sales are down nearly nine percent over the year. From April to May existing home sales went down slightly by 3.4 percent making it the fourth straight month of a decrease in those sales.
However, the housing market in Memphis remains a bit more stagnant.
According to the Memphis Area Association of Realtors May 2022 Sales report existing home sales increased about four percent from this time last year and the median price on those sales increased six percent to $215,000
Local realtors say people are still ready to buy even as prices for every day goods increase.
“Things are steady,” Managing broker for Prime Realty Ludora Cooper said. “As you know there are slight changes but for the most part we see people have made up their minds to buy and sell their homes right now. They’re doing it and they’re moving forward. Those numbers are remaining steady for those who believe home ownership is for them right now.”
Cooper says do not wait if you are thinking of buying a house. The Fed is expected to raise interest rates again and there’s not forecast in a large price drop in the near future.
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