Trump’s economic policies, real estate market, and fed rate cut outlook

00:00:24 Realtor.com chief economist Danielle Hale joins Brad Smith to discuss her best advice for homeowners moving from their starter home into their second home. “The first, I would say, is to be aware of what are your non-negotiables,” Hale says, explaining this could be the school district, the square footage, or the location, among other things. “Whatever your non-negotiables are, figure that out and lock it in upfront. It will make it easier for you to make trade-offs down the road because we know that consumers have to make trade-offs.” “The other thing to consider is being willing to buy during the off-season. You’ll get better pricing. You might sacrifice options. We do see more for sale homes in the peak spring season, but you’ll get sellers who are potentially a little bit more flexible if you’re buying during the shoulder season, which is typically in the fall,” she tells Yahoo Finance. “The other thing that you want to do is focus on the things you can control. You cannot control inflation. You cannot control the [Federal Reserve] policy and what’s going to happen to mortgage rates. But there are things that you can do to get a better rate for yourself. Those include improving your credit score, lowering your debt to income ratio … [and] focusing on your loan to value ratio.”
00:06:19 Following January’s hotter-than-expected inflation print in the form of the Consumer Price Index (CPI) and Producer Price Index (PPI), Federal Reserve Bank of Atlanta President Raphael Bostic finds the “bumpiness” in inflation progress to be not “super surprising.” “The biggest question right now is whether that data point represents a new trend or just a bump in the road. And that’s what me and my team will be looking at over the next several months to make sure that we get we draw the right conclusion from those January number,” Bostic tells Yahoo Finance senior Fed reporter Jennifer Schonberger. When asked how central bank officials are accounting for the economic impact of the Trump administration’s policies, such as tariffs and immigration, Bostic states: “We don’t have a final policy in place. So, right now we’re just kind of trying to keep our eyes on the ball and make sure we understand what’s going on. Until that’s the case, though, I had an outlook that 2025 would proceed at a very positive level.” He also cautions that certain policies may not end up being as inflationary as many currently expect. Also, watch this video to hear Raphael Bostic’s commentary on why US consumers have “pretty much tapped out” around future price hikes fueled by inflation and tariffs.
00:14:39 US retail sales saw the biggest drop in January in nearly two years, falling 0.9% in the month. Forrester Research retail analyst Sucharita Kodali joins Wealth with Brad Smith to discuss what the decline signals. “These numbers are very deceptive” since the decline is month-over-month, Kodali says, explaining that “looking at year-over-year numbers, the numbers are actually incredibly strong.” “We saw almost a 5% lift in this January versus January sales in 2024, and even when you normalize that for inflation, that is still growth. And that is part of the reason [why] the economy is still hot. Consumers are still spending.” Watch the video above to catch Sucharita Kodali’s sector-specific analysis and more.
00:19:40 This economist says consumers are ‘fatigued with higher prices’
Consumer spending experienced its largest drop in over a year in January, declining by 0.9%, surpassing the expected 0.2% decrease. This coincided with a surge in Morning Consult’s price sensitivity index, which hit a record high of 16.7. Morning Consult economist Sofia Baig joins Catalysts to explain that “over the years, we’ve seen that tick up slightly more and more and more as consumers become more fatigued with higher prices.” The index measures how consumers react to unexpected price hikes, with higher scores indicating greater price sensitivity. While consumers show increased price sensitivity in categories like durable goods and discretionary services, grocery spending remains steady.

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