Another interest rate hike – what it means for NJ residents
💵 Inflation is dropping but the Fed is raising interest rates again
💵 Consumers are expected to keep spending
💵 Looking ahead, there’s plenty of uncertainty
The Federal Reserve will once again raise interest rates Wednesday afternoon, but this time they’re only expected to bump them up a quarter of a percent, not half a percent like we’ve had for the past several months.
According to Rutgers University economist James Hughes, even with the cost of borrowing money going higher and higher Garden State workers don’t seem worried and we continue to see economic positive signs.
He said while getting a mortgage or borrowing money in other ways keeps getting more expensive “inflation has come down, we’re getting some spikes up like in eggs because of the avian flu decimating chicken flocks but for the most part the worst of the inflation is over.”
The labor market in NJ is still strong
He said another positive signal is the labor market remains robust.
“New Jersey’s unemployment rate at 3.4% is below the nation’s 3.5%, they’re have been layoffs in the economy but they’ve been in the tech sector and some in the business sector.”
Are we headed for a downturn?
Hughes said we continue to get mixed signals but until we see some sort of broader increase in layoffs “consumer spending is going to remain positive, it may not be as robust as it was through 2022 but it’s certainly not going to turn negative.”
What happens in the coming months?
There is a consensus the economy is slowing down somewhat, especially with pandemic stimulus funding drying up, but a dramatic slowdown seems highly unlikely.
Hughes said as we move further into 2023 a great deal of uncertainty remains because the Fed will keep raising interest rates until they feel inflation is totally under control “and there’s a lag between raising interest rates and their ultimate effect as it filters down through the entire economy.