On The Money – Housing market plunges deeper as rates rise

Home sales tumble off a cliff as rising interest rates, persistent inflation and weak housing construction weigh on the market. We’ll also look at ways to prepare for a recession and hopes for a bipartisan cannabis breakthrough.

📄 But firstfind out why President Biden and the National Archives are being sued over JFK’s assassination records.

welcome to money, your nightly guide to everything related to your bills, bank account, and bottom line. For The Hill, we are Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Did someone forward this newsletter to you? Subscribe here.

The United States saw a record drop in home sales in September

Home sales suffered the biggest drop on record in September, according to a new report, as mortgage rates jumped and pushed potential buyers out of the once-popular real estate market.

A report by real estate firm Redfin shows the number of homes sold fell 25% and new listings fell 22% last month, marking the biggest declines ever in both categories – excluding numbers at the start of the coronavirus pandemic in April and May 2020.

Adam Barnes from The Hill has the details here.

The decline is due to higher mortgage rates and a slowing economy. Several new data released on Wednesday reveal how the Federal Reserve’s rate hikes have transformed the housing market:

LEADING THE DAY

How to prepare for a possible recession in 2023

Many market watchers are predicting a recession in 2023 as the Fed continues to raise interest rates in its fight against 40-year high inflation.

Due to a still-hot labor market, a recession is not a certain fate, but the economy has already contracted for two straight quarters, and a period of cooling after the meteoric resumption of pandemic shutdowns is not only logical, according to some analysts.

Here are some ways to be financially fit for a recession:

  • Take advantage of a hot job market while it lasts: At least one economic projection has put the probability of a recession in the next 12 months at 100%, but there is little consensus on when or even if a recession will occur. One of the main drivers of this uncertainty is the labor market, which is showing strong demand for workers, implying continued growth in the economy.
  • Keep an eye on the housing market: In the United States, the housing market is another major driver of inflation, with rents and mortgage rates soaring amid a nationwide housing shortage running into millions of units, according to various studies and trade estimates. .
  • Adjust your personal finances: With the Fed raising interest rates, paying for goods and services with financing will become more expensive. So experts say postponing big purchases and paying off debt is now a good way to save money as interest rates climb to 4.6% in 2023, according to the Fed’s latest median estimate.

Tobias Burns from The Hill has more advice here.

nascent hopes

Biden’s order adds momentum to bipartisan marijuana bill

President Biden’s decision to reevaluate the legal status of marijuana and pardon federal weed convictions has reinvigorated the momentum for congressional action to boost the struggling cannabis industry.

Lawmakers view the lame session as their best chance yet to pass the SAFE Banking Act, a bipartisan measure that would give cannabis companies easier access to banking and loans.

  • Rep. Ed Perlmutter (D-Colo.), who first introduced the bill in 2019, told The Hill this week that there’s been “a lot of activity” around the legislation, that he said some senators have called it “SAFE Banking Plus.” amid ongoing negotiations.
  • The bill – which would be a boon for cash-only dispensaries that are plagued by theft and exorbitant bank charges – has already passed the House six times in recent years. But he has stalled in the Senate amid concerns from leading Democrats who have said he is not doing enough to support communities disproportionately affected by national drug laws.

Karl and Aris dig deeper into that here.

COURT BATTLES

Supreme Court urged to suspend Biden’s student loan forgiveness plan

A group of Wisconsin taxpayers on Wednesday asked the Supreme Court to block the Biden administration’s student loan forgiveness program while an appeal unfolds in a lower court.

The emergency request, filed with Judge Amy Coney Barrett, who handles emergency cases arising from Wisconsin, comes shortly after the administration began accepting applications for the program.

  • The challengers, the Brown County Taxpayers Association, urged the court to rule that the president’s national debt cancellation plan illegally encroaches on Congress’s exclusive spending power.
  • In their filing Wednesday, the challengers urged the Supreme Court to find that Biden’s debt cancellation policy would have major political and economic consequences, despite clear authorization from Congress – violating what the court dubbed the “Major Issues Doctrine”.

John Kruzel of The Hill breaks it down here.

Good to know

The IRS on Tuesday announced rule adjustments to account for inflation for the
Tax year 2023, including changes in tax brackets and standard deduction.

The IRS releases inflation adjustments every year, but this year’s announcement comes amid heightened economic concerns about high inflation and a potential recession.

Here’s what else we’ve got our eyes on:

  • The Treasury Department on Wednesday sanctioned a Russian national and two of his companies for allegedly transferring sensitive US-based military technology to Russia.
  • A political advocacy group created to support President Biden’s agenda released an ad on Wednesday touting the administration’s student loan relief program.
  • Speaker Nancy Pelosi (D-California) said in a new interview that Democrats need a better message on inflation, which was a priority for voters ahead of next month’s midterm elections.

That’s all for today. Thanks for reading and check out The Hill’s Finances page for the latest news and coverage. Well see you tomorrow.

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