Broken Transmission: Real Effective Fed Funds Rate Still Negative, Real 30 Year Mortgage Rate At 1.87%, Real Avg Hourly Earnings YoY Is Negative (As Real Home Prices Growing At 4% YoY)

This is a syndicated repost courtesy of Online Course Notes For Financial Markets and Banking. To view original, click here. Reposted with permission.

If we look at the Consumer Price Index for all Urban Consumers (All items) on a year-over-year (YoY) basis, we can see that “inflation” has been rising and is above 2.5% YoY.

cpiyoy.png

Now, if we look at the effective Federal Funds rate (the rate at which banks lend to each other) on a REAL basis, we can see that it is negative. And has been negative since The Fed’s QE program started (except for a brief period in 2015).

realefffedrate.png

30-year mortgage rates are under 2.5% in real terms at 1.87%.

30yreal

And REAL average hourly earnings growth in NEGATIVE.

avgreal

REAL housing prices are growing at around 4% YoY.

realfhfaprices

Let me get this straight. REAL house prices are growing at 4% while REAL hourly earnings YoY are declining?

We better call AAMCO since The Fed and Federal government policies aren’t working properly.

aamco-technician.jpg

 

 

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