and bigger paychecks, which means money to be spent. After four straight months of 3/4% rate-hikes, there's a chance anything smaller could be misinterpreted.
"I suspect that when the Fed delivers its 50 basis point rate hike, that we could see a very hawkish [Federal chairman] Jerome Powell making sure the market understands, 'Yes, we're slowing the pace of rate hikes, but we are going to continue to hike rates until inflation comes down,' the markets may not like that," explained Roberts. Inflation and holiday spending is leading to a surge in people singing up for side hustles.
While the markets may not like the continued hikes, consumers will like it even less and borrowing costs will continue to rise. Credit cards, auto loans, and mortgages, indirectly, will all get more expensive. What's worse, the effect of rate hikes is largely 'psychological' for now, while it often takes 9 to 12 months for an economy to fully respond to higher costs.
"This is going to be problematic in the second half of next year, as these rates hikes really start to impact economic activity, which is what the Fed wants," says Roberts. As consumers wait for the economy to really start slowing early next year, now is the time for them to plan. Reducing credit and household debt and finding places in the budget that can be trimmed can save financial resources for a rainy day.
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