It’s an arbitrary target IMO, but real prices are still over inflated. Everyone is used to living off cheap rates and corporations don’t want to lower prices. People don’t want to reel in spending. The interest rate is actually historically normal i.e. reasonable. I’ve been saying for over a year now he needs to keep the rates exactly where it is and let the economy adjust(correct) to it. And I think we’re close to that point, it’s gonna take some more pain in the market though.
I like tracking the car market for fun and to get an overall barometer of things in general since cars are one of the last expenses Americans continue to pay when times get tough. For example, my car got totaled out last September. I purchased the car in April ‘22 for $45K(at the height of the over inflated car market and low interest rates). A year and a half later they offered me $24K to total it out. That gave me a major wake up call. I followed my instincts and bought a cheap car cash and said I’ll wait this market out. Fast forward to now, the same car with similar miles is selling for $20k retail. So now the car market is fucked. Dealers gouged customers during pandemic and now the same customers are upside down and can’t trade in their car because of the debt load, so banks won’t even finance them. Dealers fucked their own meal ticket. A lot of dealers are still being stubborn with prices, but look for a lot of fires sales on cars this year and some dealerships going out of business. Their daily inventory is up a lot and new cars are piling up on lots. It’s a great time to lowball these fucks if you‘re in the market for a new car.
People have maxed out their credit cards and are now dipping into their 401k’s. It’s a stubborn behavior Americans have a hard time breaking and that’s spending. Somehow, Christmas spending was up last year, year-over-year, but the credit card debt and 401k withdrawals tell the story behind that. People forgot how to live under their means and stop putting everything on credit. I consolidated all my credit card debit last year at 12%. It’s hard with kids trying not to overspend on them, but I’m trying do that shit now while it’s tough to make the lesson and behavior stick. I’m probably one of the few homeowners that bought during pandemic that’s hoping home prices go down. It’s needed for the long term health of the ecomony and future affordability. Lower prices>Lower rates