Will Surging Home Prices And Stocks Be An Issue In The U.S. ?
Experts Believe U.S. Inflation Won’t Be An Issue Despite Surging Home Prices And Stocks.
When America’s baseball stadiums and amusement parks will no longer be used as coronavirus vaccination venues, some top stock brokers and economists believe that families benefiting from government stimulus packages will start spending money extravagantly or freely, and this might have some effect on stock prices and inflation.
Currently, stocks are surging and home prices are increasing, but how far will this go? Will the stimulus package cause all these to come tumbling down? Those are questions that only financial experts can answer.
Investors believe that consumer splurge may initially help some sectors of the U.S economy that were devastated by the COVID-19 pandemic, but their fear is that spending money extravagantly for a long time may cause a dramatic increase in prices of services and goods. Not only that, but it may also cause property values to shoot, lower the value of financial assets, and finally increase the living cost of all, thanks to inflation.
According to Elizabeth Schulze of CNBC, governments and central banks have pumped substantial amounts of cash into the economy as a measure to fight the coronavirus-triggered global recession. This is a good measure, but it is causing concerns. When Congress passed the stimulus funding running into trillion of dollars, there were concerns that commodity prices could surge.
Matt Stucky said he thinks inflation is alive. Matt Stucky works with the Northwestern Mutual Wealth Management Company as the equity portfolio manager. He argues that it’s the desire of policymakers to have it, and that desire is stronger than ever. He warns that Americans should brace themselves for inflation.
The best international trading brokers, top financial analysts, and investors on Wall Street have become concerned about the potential of the planned $1.9 trillion stimulus package to cause increased inflation rates. The package targets households that were/have been hit hard by the coronavirus pandemic.
On Friday 12 February 2021, senior economists from Oxford Economics said they expect the inflation to stay above 2% longer, but they believe it’s unlikely to breach 3% sustainably.
According to the top stock brokerage firms, severe inflation will cause a decrease in stock prices, pinch profits, and ratchet up costs, thereby, hurting businesses.
Another main concern by investors and financial players is that high inflation rates would push mortgage rates up and this may force the government to lower its monthly bond purchase or raise interest rates to 0.25% from the current 0% sooner than anticipated and startle markets.
Already, some financial assets have been inflated by the government’s fiscal policy of making credit flow easily and at low rates. The Nasdaq Composite and the Dow Jones Industrial Average were up by 0.5% and 0.09% by the close of the day on Friday 12th February 2021. Most of the U.S. stocks closed at an all-time high on the same date, while companies overburdened by debts have been allowed to borrow at rates as low as 4%.
Rallying bonds and stocks aside, the U.S. home prices have spiraled upwards during the coronavirus-driven recession, although the country still needs to recoup the many jobs that have been lost.
Many experts and trusted stockbrokers expect high inflation rates, but how long it would last is a matter of debate.
Janet Yellen, the Treasury Secretary, said on 12th February 2021 that the inflation outbreak won’t be sustained or large. She emphasized that the government is focused on recovering lost jobs and rolling out a vaccination program, adding that these measures will reduce the need for another direct incentive to those affected by the coronavirus pandemic, which, in turn, will help check inflation.
Janet said what the country needs now is a massive fiscal stimulus to jumpstart the economy. Such a stimulus would increase government spending and reduce regulations and taxes, which will boost economic activities. Investors and top online stock brokers are optimistic that things will normalize as soon as the coronavirus vaccine is rolled out on a large scale and the government takes drastic recovery measures.