Consumer price increases cooled further in March, which is welcome news for the Federal Reserve, which made the challenging choice at its March meeting to continue with its federal funds rate hikes despite the failures of Silicon Valley Bank and Signature Bank.
The Consumer Price Index (CPI) rose by 5.0% in March, before seasonal adjustment compared to one year ago, a dramatic decrease from the 6.0% year-over-year jump posted in February, according to data released Wednesday by the Bureau of Labor Statistics (BLS).
This was the smallest 12-month increase since the year ending in May 2021 and the ninth consecutive month of declines. Indexes that contributed to the annual increase were food (+8.5%), motor vehicle insurance (+15.0%), household furnishings and operations (+5.6%), recreation (+4.8%), and new vehicles (+6.1%). Shelter also posted a significant increase, rising 8.2% year-over-year and accounting for over 60% of the total increase in the all items less food and energy index, which was up 5.6% compared to March 2022.
In contrast, the energy index was down 6.4% compared to a year prior.
“Inflation was down significantly in March, but we are still not down to the magic number the Fed is looking for. Housing costs are still a key driver of inflation, accounting for the largest part of the monthly increase in the CPI,” Lisa Sturtevant, the chief economist at Bright MLS, said in a statement.
The CPI also cooled on a month-over-month basis, posting a 0.1% monthly increase in March compared to a 0.4% monthly increase in February. Just like the annual index, the energy index was down month-over-month dropping 3.5%, while the index for shelter jumped 0.6% from the month prior as the indexes for rent and owners’ equivalent rent both rose 0.5% from a month prior.
Other indexes that posted monthly increases included motor vehicle insurance (up 1.2%) and airline fares (up 4.0%), while the indexes for medical care (down 0.3%), used cars and trucks (down 0.9%), and food at home (down 0.3%) all fell. This was the first time the food at home index posted a decline since September 2020.
Despite the slower pace of inflation, economist do not believe home buyers facing still elevated prices on top of higher mortgage rates will be out of the woods any time soon.
“The challenge with housing is that there are so many factors beyond the control of the Federal Reserve keeping housing costs high. High inflation led the Fed to raise interest rates, leading to higher borrowing costs, including making it more expensive to finance a home purchase. Higher mortgage rates have slowed demand by pricing some would-be buyers out of the market,” Sturtevant said. “Although home prices have fallen in some housing markets, the year-over-year price declines have generally been modest and affordability is a growing challenge, both on the ownership and rental side.”
Sturtevant recommends the government look into policies to slow price or rent growth, as she says higher interest rates alone will not ameliorate the situation.
“Rate hikes will not solve the housing affordability problem when lack of supply is what fueled rising home prices. What we need is more housing supply to bring down prices and make housing more affordable to more people,” Sturtevant said. “The Federal Reserve is not going to solve the problem, no matter how much some people hope that is the case. In reality, the solution is tough choices at the local level to reduce regulation and responsibly encourage more housing in the places that are best connected to jobs, transportation, services and amenities.”
Eight times every year, the Federal Reserve’s Federal Open Market Committee (FOMC) meets to discuss and possibly alter their position on monetary policy.
There are several different courses of action they could take, the most common being quantitative easing, buying and selling government securities, and raising or lowering the federal funds rate.
Most recently, the fed’s tool of choice has been adjusting the federal funds rate.
What is the federal funds rate?
The federal funds rate is the rate at which depository institutions (banks and credit unions) charge each other for overnight deposits.
Why would they need to lend each other money? All banks are required to have a certain amount of funds in their reserves (usually 10%), and sometimes customers withdraw enough money from the bank that the bank’s reserves are below the requirement. They now have two options: to borrow money from the fed or from another bank. The federal funds rate determines how much interest a bank will have to pay for that loan.
Click here for today’s mortgage rates.
How the federal funds rate affects the economy
The federal funds rate is an important base rate that has trickle down effects on the entire economy. After all, if the federal funds rate goes up and banks have to pay more for overnight loans, then it goes to reason that they are going to have to make up the higher cost by raising their own rates. Conversely, if the federal funds rate is lowered, banks can pass lower interest rates on to their borrowers.
With the benchmark federal funds rate lowered, rates on credit cards and business loans also decline, encouraging lending for both businesses and consumers. Businesses are able invest in infrastructure and hire more employees, while consumers make more payments on credit knowing that they don’t get charged as much on the interest.
This results in more financial transactions, ultimately contributing to economic growth of the nation at large. That’s why when the Fed wants to promote economic growth they lower the federal funds rate, and when they think the economy can handle it, they raise the federal funds rate.
Mortgage rates and the Federal Reserve
Understanding mortgage rates can be tricky. The way the situation with the Fed raising and lowering rates is portrayed in the news leads many people to believe that the Fed controls mortgage rates. This is not true—the Fed does not directly set mortgage rates at all. However, that’s not to say that it has no influence over mortgage rates.
Fedspeak
At the Federal Reserve, the forward guidance “fedspeak” that officials offer up to the markets is one of the most powerful tools they have. It’s actually a little bit of the opposite of that old saying that “Actions speak louder than words.”
Generally, when a fed official comes out and gives even the slightest hint that they are in favor of rising rates, investors move away from “safe” government bonds and into riskier assets like stocks. That’s good for the economy, but it causes mortgage rates to rise.
As we’ve seen several times this year, the fed can create a buzz about raising the fed funds rate (which can drive up mortgage rates), but then retreat back from that position and not raise rates (causing rates to fall back down).
It’s this cat and mouse game of talking and not delivering that has landed the Fed in hot water, with some critics claiming the Fed has a credibility problem. Regardless of whether or not you agree with them, it’s undeniable that what the Fed says can influence markets.
Click here for today’s mortgage rates.
How mortgage rates are actually set
If the Federal Reserve doesn’t set mortgage rates, who does?
Good question.
Just as is the case with many other aspects of the economy, market forces are to thank (or blame). Most of the action takes place on the secondary market, where mortgage-backed-securities (MBS) are bought and sold.
These mortgage bonds have prices and yields that move up and down just like stocks and bonds do. If the economy is performing well, investors expect higher yields, and vice versa when the economy is under-performing. So in a way, mortgage rates are a reflection of how well the economy is doing. Specifically, the three major drivers of mortgage rates are:
Stock prices
The labor market
Inflation
As stated, when stock prices are going up, so are mortgage rates. That’s because mortgage-backed-securities are traded as bonds, and conventional wisdom says that when investors are moving money into stocks, they’re taking money out of bonds.
With a decrease in demand for bonds, prices drop and yields rise–pushing rates higher. In the event that investors flood back into bonds, the opposite will happen, causing mortgage rates to drop.
It’s not a perfect relationship, but it’s generally how the market behaves. The relationship between bonds and mortgage rates is best illustrated by the yield on the U.S. 10-year treasury note, which is the best market indicator of where mortgage rates are going.
On any given day, looking at the 10-year yield will give you a fairly accurate picture of where mortgage rates are headed. If the yield is rising, mortgage rates most likely are too, and vice versa.
With the labor market, it’s all about how high unemployment is. The Bureau of Labor Statistics (BLS) releases a monthly employment situation report that is the most-watched report on the matter. If the U.S. economy added fewer jobs than expected and the unemployment rate rises, that’s bad news for the stock market, which as we now know pushes mortgage rates lower.
Most people understand inflation as a rise in the cost of living. That’s true, but what’s really happening is the devaluing of the dollar. As the value of the dollar declines, the purchasing power of the dollar diminishes, causing prices to rise.
Mortgage-backed-securities, like every other bond, are denominated in U.S. dollars. Since investors don’t want to own assets that are losing their value over time, they move away from MBS in times of high inflation. With a decrease in demand for MBS, the yields rise, driving mortgage rates higher.
Bottom line
When you’re trying to understand mortgage rates, remember: the Federal Reserve and the federal funds rate do not control mortgage rates. There are several other economic factors at play that anyone trying to track and predict where mortgage rates are going should pay attention to.
That being said, the Federal Reserve does play a major role by influencing how the economy functions, and it’s always important to keep an ear out for what they’re saying.
1. chart via wikipedia
Carter Wessman
Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.
The Economy, Though Volatile, Has Shown Resilience in the Face of Rising Interest Rates
The housing market has also been impacted by high rates as millions of homeowners locked into previously low mortgage rates and are content to remain in their current homes, therefore helping to keep inventory low
The U.S. economy has been resilient in the face of rising interest rates and grew at its long-run average rate of 2% during the first quarter of 2023. The labor market remains strong with an unemployment rate below 4% and rising labor force participation for the 25–54-year-old age group. The housing market has also been impacted by high rates with millions of U.S. homeowners locked into previously low mortgage rates and content to remain in their current homes, helping to keep inventory low and the balance tilted in favor of home sellers over buyers in most markets. In this month’s spotlight we show that this “mortgage rate lockin effect” is the largest ever in U.S. history, and is likely to impact the housing market for years to come.
Recent developments in the U.S. economy
Per the U.S. Bureau of Economic Analysis, the third and final estimate of first quarter 2023 Real Gross Domestic Product (GDP) was much stronger than previously reported. Quarterly growth was revised up 0.7 percentage points to an annualized rate of 2%. While real GDP was revised upwards, the pace of growth continues to slow mainly due to the drag from the interest rate-sensitive sectors such as residential fixed investment and business investment. But the undaunted U.S. consumer has remained resilient, and consumer spending grew at an annualized rate of 4.2% in the first quarter, contributing to the upward revision of real GDP growth.
Consumer confidence and sentiment play a pivotal role in boosting consumer spending. The Conference Board’s June 2023 measure of consumer confidence jumped to the highest level since January 2022, reflecting improvements in the current conditions as well as in the future expectations. Expectations of inflation fell in June to 6%, the lowest reading since December 2020.
On the labor market side, according to the Bureau of Labor Statistics Employment Situation Summary for June 2023, the economy added 209,000 jobs in June led by the government, health care, social assistance, and construction sectors. The unemployment rate ticked down to 3.6% to remain near 50-year lows. The prime age (25–54-year-old) labor force participation rate has been rising and is now at the highest level since April 2002 (Exhibit 1). This suggests that the tight labor market is bringing many of the younger workforce, who were on the sidelines, back into the market.
The economy added 209K jobs in June, and the unemployment rate ticked down to 3.6% to remain near 50-year lows.
Inflation has been cooling in recent months, and the measure tracked by the Federal Reserve, the U.S. Bureau of Economic Analysis’ “core” price index for personal consumption expenditures, excluding food and energy (Core PCE), came in at 4.6% year-over-year in May. While housing continues to be the largest contributor to the increases in inflation and prices, it has started to cool off. Another inflation measure that the Federal Reserve has been tracking recently is the supercore service inflation (core services excluding energy and housing). Supercore inflation has been decreasing and the year-over-year change in May 2023 came in at the lowest since March 2022.
Inflation has been cooling in recent months, and the U.S. Bureau of Economic Analysis’ “core” price index for personal consumption expenditures came in at 4.6% year-over-year in May.
Recent developments in the U.S. housing market
The divergence between existing home sales and new home sales has grown wider in recent months. Existing home sales receded 20% from a year ago, while new home sales surprised on the upside and increased 20% from a year ago in May. The mortgage rate lock-in effect continues to impact the listings of existing homes, which are down 35% as of April 2023, compared to the pre-pandemic average between 2016-19 (Exhibit 3). Pending home sales, which are a forward-looking indicator for existing home sales, also declined during May and were down 2.7% over the month and 22.2% over the year according to the National Association of Realtors®.
On the other hand, according to the NAHB/Wells Fargo Housing Market Index builder confidence improved to the highest level in nearly a year due to continued housing demand and easing of supply chain issues, as well as the lower level of existing homes for sale. All three subcomponents of the HMI increased: the sales expectation component saw the greatest increase of 6 points to 62, current sales conditions increased 5 points to 61, and buyer traffic rose 4 points to 37.1 The current sales conditions and the sales expectations rose to levels above 60 for the first time in a year as homebuyers warm up to mortgage rates in the 6-7% range.
This increased builder confidence was also reflected in the housing starts, which jumped 21.7% in May. Furthermore, the monthly increase in total starts at 291,000 units was the highest in over three decades. Permits also increased over the month of May and were up 5.2% on a month-over-month basis, despite being down 12.7% year-over-year.
House prices may have bottomed and continue to firm up in the short run. Per the FHFA’s Purchase- Only House Price Index, house prices increased nationally 0.7% from March to April 2023. While house prices increased across all the divisions over the month of April—ranging from +0.1% in the Pacific division to +2.4% in the New England division—the variation is wider when we consider the house price appreciation as compared to a year ago. The 12-month changes ranged from -3.8% in the Pacific division to +6.1% in the East South-Central division.
Recent developments in the U.S. mortgage market
The 30-year fixed-rate mortgage as measured by our Primary Mortgage Market Survey®, settled at 6.7% in June, partly due to the Federal Reserve’s decision to pause increases in the Fed Funds Rate. Partially in response to the stabilization in mortgage rates, purchase applications increased 7.1% over the month of June, while refinance applications increased 2.8%, both after seasonal adjustment according to the Mortgage Bankers Association Weekly Applications Survey.
Delinquency rate went down 11 basis points in May to 3.1%, close to the historical low of 2.92%; foreclosure starts remain 41% below 2019 levels.
With respect to mortgage performance, the delinquency rate, as measured by loans 30 or more days past due went down 11 basis points in May to 3.1%, close to the historical low of 2.92%, according to Black Knight’s May Mortgage Monitor. Serious delinquent loans (90 or more days past due) also fell by 18,000 over the month and are down around 30% since May 2022. While foreclosure starts increased 2.2% over the month of May, they remain 41% below 2019 levels.
The outlook
The outlook remains volatile as we enter the second half of the year. The Federal Reserve’s pause on interest rate hikes after ten consecutive increases since March 2022 was a welcome breather for the economy. The labor market remains strong with low unemployment and inflation appears to be moderating. Downside risks as a slowing economy could tip into recession, but on balance our outlook is cautiously optimistic.
General economy, rates, inflation
The U.S. economy will continue to grow, unless consumers pause their spending. While the labor market is gradually moderating, it remains sufficiently tight, and combined with consumers’ excess savings and recent wage gains, consumers will continue to spend and the economy will continue to expand, although at a reduced pace.
While the labor market is gradually moderating, consumers will continue to spend, and the economy will continue to expand, although at a reduced pace.
Under our baseline scenario, we expect inflation to continue cooling as the long and variable lags of monetary policy work through the economy. The slowing growth in prices of goods and services will further reinforce consumers’ purchasing power. However, even though inflation is expected to slow it will be gradual and the pressure on long term rates including mortgage rates will not likely abate this year. Therefore, we expect mortgage rates to stay above 6% for the second half of 2023. High mortgage rates will increase the cost of owning a home, likely leading to a reduction in other spending. However, savings from cooling inflation could be enough to offset the increased housing costs. If this is the case, consumers will keep spending, and the economy will continue to grow unless the labor market further moderates significantly.
Home sales
On the housing front, home sales are plagued by a combination of a lack of inventory of existing homes and high mortgage rates. Due to the mortgage rate lock-in effect (described further below), many existing homeowners are unwilling to list their homes for sale, and we do not expect sufficient existing homes to come on the market any time soon to significantly boost existing home sales. Therefore, we expect existing home sales to remain low through the rest of 2023. However, new home sales are expected to pick up through the rest of the year. Although new home sales’ contribution to the total sales has been increasing in recent months, they are a fraction of the total home sales, we expect total home sales to remain muted for the rest of the year.
Home prices
Our official corporate forecast for the next 12 months has house prices falling by 2.9% and an additional 1.3% over the subsequent twelve months. However, given the current housing market conditions with historic low inventory and an early read on our data, we will likely revise our home price forecast in the next iteration of the Economic, Housing and Mortgage Market Outlook. We expect tight inventory will push sales volume down, and we expect it to keep home prices up.
Mortgage originations
Due to lower home sales, purchase origination volumes are expected to remain muted this year, while high mortgage rates keep refinance activity low. As homebuyers get accustomed to the new normal in terms of mortgage rates, we expect home sales to pick up and purchase originations to resume modest growth in 2024.
JULY 2023 SPOTLIGHT:
Mortgage rate lock-in and the housing market
The recent rapid increase in mortgage rates from historical lows to 20-year highs has created a scenario that we have not seen in more than 40 years. Because so many households have a fixed-rate mortgage, which exists in part because of financing from Freddie Mac and Fannie Mae, they were able to refinance into low interest rates in recent years. This contrasts with variable-rate mortgages, which have increased significantly as a result of rising mortgage rates. Nearly 6 out of 10 borrowers now have a mortgage rate at or below 4%. Given current market rates, many of those homeowners have locked in payment savings, but they also may have locked themselves into a forever home. Throughout this spotlight we use the term “mortgage rate lock-in effect” to refer to the ownership of a mortgage on favorable terms compared to current market interest rates.
Nearly 6 out of 10 borrowers now have a mortgage rate at or below 4%. While those homeowners have locked in payment savings, they also may have locked themselves into a forever home.
The mortgage rate lock-in effect is a benefit to homeowners with fixed-rate mortgages. To illustrate the benefit of the mortgage rate lock-in effect, suppose a lucky homeowner has refinanced their mortgage of $250,000 at 2.65% in January of 2021. Their current monthly principal and interest payment would be $1,007 and after 29 months of payment their current outstanding balance would be $236,379. If the borrower obtained a new 30-year mortgage of $236,379 at the prevailing market interest rate of 6.81%, their monthly payment would increase to over $1,500 a month.
Following Quigley2, we compute the net present value of the mortgage rate lock-in effect by taking the difference between the outstanding balance of the mortgage and the present value of the mortgage at prevailing market interest rates.3 The value of mortgage rate lock-in is $86,136 in our example.4
Except for certain limited cases, the mortgage is not portable or assumable. In today’s market, most mortgages have due-on-sale clauses, requiring the borrower to terminate the mortgage when they sell the property. To enjoy the benefit of the value of their low mortgage rate, the borrower must continue to live there, maintain it as second home, let it sit vacant or rent it out. In our example, the homeowner is only going to be willing to sell their current home, and thus give up their low mortgage rate, if the net benefit of a move is worth at least $86,136. For some households who are pursuing a new job opportunity or moving to be closer to family the move could be worth it, but others may opt to stay put.
The national average mortgage rate lock-in effect for 30-year and 15-year fixed rate loans is $55,000.
For each 30-year and 15-year fixed rate loan in Freddie Mac’s portfolio active as of June 2023, we computed the value of the mortgage rate lock-in effect.5 Per these calculations, the national average mortgage rate lock-in effect is $55,000 per household but because of differences in average loan sizes and the timing of originations and the history of refinance activity, the average value varies considerably across the country and by year of origination. Across geographies the average mortgage rate lock-in effect varies from a high of $91,000 in Hawaii to a low of $32,000 in West Virginia. Considering year of origination, the highest average values are for loans originated in 2020 and 2021 with average mortgage rate lock-in effect of $77,000 and $85,000, respectively. But, as rates continue to increase, even mortgages originated in 2023 have an average mortgage rate lock-in effect of $10,000.
To get a sense of how significant the mortgage rate lock-in effect is for the U.S. economy, we can sum the mortgage rate lock-in effect over the Freddie Mac portfolio. Considering only 30-year and 15-year fixed-rate mortgages financed by Freddie Mac, the aggregate mortgage rate lock-in effect for borrowers in Freddie Mac’s portfolio is substantial. We estimate that, considering the company’s single-family mortgage portfolio, homeowners with fixed-rate mortgages financed by Freddie Mac have locked in savings of a collective $700 billion dollars in total value. This is equal to about 25% of the outstanding unpaid principal balances in Freddie Mac’s single-family mortgage portfolio.
Our aggregate estimate of 25% of outstanding mortgage balances is significant and shows that many have truly benefitted from their fixed-rate mortgage when rates hit record lows. For comparison, Quigley calculated the average mortgage rate lock-in effect equal to $1,800 in 1981 for households with mortgages, which represented about 5% of outstanding mortgage balances versus about 25% today.6 In Exhibit 4 (on the following page) we show a time series of quarterly average mortgage rate lock-in effect in the Freddie Mac portfolio since 2018. From March 2019 through December 2021, the average lock-in effect was negative, meaning that the average borrower had significant incentive to refinance. But since March 2022, the average lock-in effect has surged, reaching over $50,000 in each
of the past four quarters.
The mortgage rate lock-in effect is already having a significant impact on the U.S. economy and will likely continue to do so for years to come. One of the major challenges to the current U.S. housing market is a lack of available-for-sale inventory. The lock-in effect is yet another layer contributing to the dearth of available inventory. How much so is an active area of research.
Footnotes
1 The Housing Market Index is a diffusion index normalized so that a value of 50 indicates sentiment balanced between positive and negative. Any value above (below) 50 indicates that on average survey respondents have a positive (negative) sentiment. For more information on the index see https://www.nahb.org/news-and-economics/housing-economics/indices/housing-market-index.
2 Quigley, J.M., 1987. Interest rate variations, mortgage prepayments and household mobility. The Review of Economics and Statistics, pp.636-643.
3 The net present value of the mortgage rate lock-in effect is denoted by V and computed by using the value of the current mortgage balance (B) and the present discounted value of the payments (P) using prevailing market interest rates (r) discounted over the remaining (n) periods of the loan:
4 In our example, the borrower’s current balance B is $236,379, but the present value of the monthly payments (P=$1,007) discounted for the remaining (n=331) months at 0.005675 (r=6.81/1200) equals $150,243. Thus, the value V is $86,136 ($236,379-$150,243) which represents the value the borrower gets by having locked in a low mortgage interest rate.
5 Due to curtailment, or early payment of principal, our formula is slightly more complicated than the one presented above. To adjust for cases of curtailment we use the modified formula:
Where n is now the remaining months left adjusting for curtailment and F is the residual partial payment due in period n to pay off the remaining balance.
6 Per the 1981 American Housing Survey (https://www2.census.gov/prod2/ahsscan/h150-81a.pdf page 10 Table A-2) there were about 27 million households with a mortgage in the U.S. Multiplying $1,800 by 27 million gives us a little less than $50 billion in aggregate mortgage rate lock-in effect in 1981. Per the Financial Accounts of the United States, the total mortgage debt outstanding on 1-4 family housing was $1 trillion in 1981. $50 billion / $1,000 billion = 5%.
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You could easily make $3000-$4000 monthly, working on your own schedule.
Remember, practice and precision can help you achieve a lucrative transcription rate.
9. House Cleaning
Cleaning can be a rewarding gig, especially if you like tidying spaces.
Despite recognizing the need for a clean home, many people often struggle to find the time or energy to routinely clean their homes. This is where the prospect of a housecleaning business arises.
Busy homeowners, parents juggling work and childcare, elderly individuals needing assistance, and even businesses needing regular cleaning services are all potential clients for a housecleaning business. This demand provides a consistent income flow for those offering cleaning services.
In fact, individuals transitioning into this field of work can negotiate their wages with clients, potentially earning more than $15 an hour based on the complexity and demands of the job.
10. Sell Printables on Etsy
Selling printables is an effective and lucrative method to generate passive income.
Once printables such as planners, calendars, and journals are designed, created, and listed for sale on platforms like Shopify or Etsy, they can consistently produce income without requiring continual input or maintenance.
According to several experts, one of the keys to making substantial profits from printables is to differentiate your products.
Building upon this idea of making money from printables, the free Printables Workshop by Gold City Ventures offers comprehensive insights into the process of creating and selling aesthetically pleasing printable products online. This accessible course can be an excellent starting point for beginners looking to navigate the printables market.
Selling printables on Etsy might be the perfect venture for you!
11. Dog Walking
Looking for a fun-filled way to make some quick bucks?
Dog walking could be the right side hustle for you, especially if you’re an animal lover.
Easy to find jobs for dog walking.
Suitable for people with flexible schedules.
Offers an active way to earn money.
Option to select your rates with platforms like Rover.
High demand especially due to increasing pet adoptions and busy pet owners.
You can work when you need to and not take clients when you don’t want too.
12. Make Money Blogging
Blogging is a popular and prevalent way to earn money. Many blog owners are women who want the flexibility to earn significant money at their own pace and schedule.
Earning money through blogging allows you to focus on something you’re passionate about. Any topic that can provide value to an audience can be blogged about. Targeting a niche that has been overlooked by existing blogs can increase your blog’s potential earnings.
Starting a blog doesn’t require formal training, but it does require a willingness and ability to write effectively for an audience.
By employing monetizing avenues, like affiliate marketing and advertising, a blogger can boost their earning significantly.
Despite the vast number of existing blogs, the industry is very accommodating toward new voices, especially female voices. Thus, knowing how to monetize a blog can offer women many opportunities.
Remember, blogging is not just about earning fast bucks, it also needs consistent efforts. It’s rewarding but can start slow.
13. Ride-Sharing
Ridesharing is an excellent opportunity for women looking to make fast money. With apps like Uber and Lyft, you can earn an income simply by offering transportation services.
Here are a few tips to increase your earnings:
Consider driving during peak hours, weekends, or during special events to cash in on higher demand.
Choose busy locations such as city centers and nightlife spots to increase your chances of getting rides.
Maintain good customer service and ensure safe driving to uphold your rating and receive more ride requests.
14. Office Cleaning
Considering the hustle and bustle of the daily grind, office cleaning can be an untapped treasure trove for women seeking quick cash. Given the high demand and flexible hours, it’s an ideal source of extra income.
You must identify office premises needing cleaning services. Reach out to the owners or management, and propose your services.
Think about offering your services to offices in your local area. It’s a fast way to make extra money while managing your other commitments.
15. eBay Arbitrage
Looking to earn some quick money? eBay Arbitrage could be the game-changer you need.
Aimed mostly at women who love shopping, it’s about buying products cheaply and selling them on eBay for a profit.
First, hunt for bargains in thrift stores, sales, or online markets.
Go with high-demand items; electronics, collectibles, or brand sneakers are a good start.
Then, create your eBay store and list your finds at a competitive but profitable price.
Track each item’s demand through keyword research and buyers’ reviews.
Remember to calculate potential profits inclusive of shipping costs and eBay fees.
Armed with the right strategies, you can start earning with eBay in no time!
16. Freelance Writing
Did you know your writing passion can become a quick buck-making engine? That’s right, freelance writing is a gold mine you ought to tap.
First, identify a writing niche you love. It’s easier to excel when you’re passionate about your work.
Continually hone your writing skills. The more you practice, the better you become and the more valuable your skills. Finally, don’t be shy to market your skills. Reach out to small businesses and startups—they often need freelance writers.
Remember, quality over quantity will earn you a solid reputation in the long run. Now, go turn those wordy wonders into wealth!
17. Online Surveys
Curious about making a quick buck? Engaging in online surveys can be a fast money-making method just for you!
You don’t earn a huge amount per survey but when taking multiple surveys, it will add up fast.
Here are the top legit survey platforms:
Use your free time wisely. Take surveys during work breaks or leisure hours.
Redeem points for PayPal cash or gift cards.
18. YouTube Channel Building
Building a YouTube channel can be an interesting and rewarding venture.
It provides an incredible platform to share your content, express your creativity, and engage with a global audience. Whether you want to showcase your talents, teach something unique or simply entertain, having a YouTube channel opens up many opportunities.
Effective engagement with your audience is vital.
Last but not least, patience is something you will need in abundance. Building a successful YouTube channel takes time, so don’t lose hope if you’re not seeing immediate results.
Remember, there’s no limit to what you can achieve with your YouTube channel. It all comes down to how creatively you can use this platform to engage with your audience and grow your presence.
19. Bookkeeper
In our increasingly digital age, online bookkeepers are in high demand, with more businesses choosing to move their financial operations to the online platform. This shift in business operations has created a robust opportunity for those trained in bookkeeping to tap into the market and earn income while working from the comfort of their homes.
To be successful as web-based bookkeeper, you need to be well-organized and have previous experience dealing with numbers. However, even without a formal accounting education, individuals can take advantage of online learning platforms like Bookkeepers.com to learn and sharpen their bookkeeping skills for free.
Becoming a virtual bookkeeper is not just a fantastic full-time job opportunity; it’s also an excellent side hustle for women and mothers proficient with numbers. It provides flexible hours and allows the freedom to work from anywhere, making it ideal for those juggling multiple responsibilities.
The financial compensation for an online virtual bookkeeper is quite significant. On average, bookkeepers can earn at least $50000 a year helping business owners manage their finance and bookkeeping online.
20. Start a Dropshipping Store
Dropshipping is a viable option with low startup costs that lets you run an online store without handling any physical products.
There is still plenty of time to get into the dropshipping business.
Start by deciding what products to sell. Find a niche you’re passionate about for a higher chance of success.
Remember, a successful dropshipping venture involves effective marketing as well. So invest time and effort into perfecting your advertising tactics.
21. Do Clerical Work
Clerical work offers flexible, remote opportunities for women to make quick money.
With adequate admin experience and internet access, you can explore roles like Virtual Assistant, Online Data Entry Professional, or Court Transcriptionist.
This is one of the best non phone work from home jobs.
Experts tip: Perfection and punctuality are key. Attention to detail and meeting deadlines can make you stand out.
22. Resell Clothes
Reselling clothes online is a savvy way to turn your clutter into cash, especially if you love digging for hidden gems.
It’s a popular method for fast cash flow, with Poshmark and Facebook Marketplace being perfect platforms. One of my friends is very successful with this!
Begin with your own closet, and sell kids clothes they have outgrown too.
Reinvest your earnings, by buying second-hand clothing to resell can boost your profits.
Don’t forget quality. Run a quick check for authenticity and brand labels.
Visuals sell. Stage items and capture high-res photographs.
Providing a great customer experience is key, ensuring prompt shipping and maintaining politeness.
Play your cards right, you could earn anywhere between $100 to $1,000 a month or even reach a six-figure yearly income.
23. Do Home-Based Child Care
Home-based child care is a viable option to earn money, leveraging the natural maternal instincts and caregiving skills of many women. It can be a lucrative side hustle and a means to financial independence.
This is especially a great avenue to pursue when you are already at home raising your own children.
Make sure to follow any state regulations about running a daycare out of your home.
Begin by determining the number of children you can handle at a time, taking care not to overbook.
24. Podcasting
Podcasting is a wonderful opportunity for delivering narratives. It enables you to weave compelling stories while inspiring, instructing, or simply entertaining your listeners.
The unique format of podcasting lets you connect with your audience on a personal level. They listen to your voice, engage with your thoughts, and feel a stronger connection to you.
By starting a podcast, you are joining an increasingly popular trend, with the global number of podcast listeners has grown to 464.7 million listeners in 2022 (source).
Podcasting also opens up doors for networking and collaboration. You can invite experts, artists, or like-minded individuals as guests on your show, thus expanding your network.
There’s a potential to earn from podcasting. With affiliate marketing, sponsorships, and advertising, the commercial possibilities of podcasting are extensive.
25. Merch by Amazon
“Merch by Amazon” is a print-on-demand service that allows you to design and sell your merchandise.
It’s a great money-making alternative as it offers massive exposure and doesn’t require any upfront costs.
One of the significant advantages of using Merch by Amazon for passive income is that you are not required to maintain inventory or deal with shipping. Amazon handles these aspects, allowing you to focus on the creation process and customer satisfaction.
Amazon’s royalty system ensures that you get paid instantly whenever your merchandise is purchased. This allows you to earn money passively with every sale.
When your designs meet the current market trends and the preferences of your customers, they are more likely to be popular, leading to an increase in sales, hence, higher passive income.
26. Become an Influencer
Becoming an influencer is a smart, quick way for women to make money. While most people just stumble upon becoming an influencer, you can decide to pursue this avenue.
With earning potential that is unlimited, this opportunity is flourishing, requiring no specific degree or job experience.
Remember, platforms like TikTok, Instagram and YouTube reward new, engaging creators.
Dedication and consistency could lead you to major earnings where you make thousands for each post.
27. Work as a Translator
Having mastery in more than one language opens up a world of opportunities, particularly in the realm of translation services. The ability to translate language effectively and accurately is a skill that’s in high demand in the current globalized world.
A top benefit of being a freelance online translator is the flexible work environment. You have the freedom to choose when, where, and how much you want to work. This flexibility for work-life balance is more appealing now than ever, especially in the unsteady job market.
Freelance translators also have access to a wider client base. Unlike full-time translators who work for specific organizations or agencies, freelance translators can work with various clients from all over the world, widening their potential income streams.
The need for translators is projected to grow substantially. In the United States alone, the U.S. Bureau of Labor Statistics reports that employment for interpreters and translators will increase by 20% from 2021 through 2031, which is much faster than the average for all occupations.
Among other freelance professions, translation can often provide a more stable income.
As most sectors including education, legal, business, medical, and technological firms continue to globalize, they regularly need translators to bridge the language gap, making freelance translation services a steady income source.
31. Become a Flipper
Becoming a flipper is a high-return, low-investment way to make money fast. It involves buying low and selling high, perfect for those wanting a profitable side hustle.
Here are actionable steps to kickstart your flipping journey:
Identify items to flip: Popular options include toys, clothes, electronics, books, and furniture. Pro-tip: Sell things you have around your house to start risk free.
Choose a selling platform: Sell locally via Facebook groups or Craigslist, use reselling apps like Decluttr, or open an online store on eBay.
Price it right: Pricing items competitively garners buyer interest and maximizes profit.
Learn more: Free webinars, like Flipper University and the Flea Market Flipper, offer insights for a successful flipping business.
Remember, flipping can be more than just a side hustle; it’s a potential full-time career.
32. Micro-Tasking
Micro-tasking offers a quick way for you to earn money by completing short and simple tasks.
As its popularity grows, so does the list of platforms where you can find micro-jobs. Here are the popular platforms.
This allows your the flexibility to work whenever you want. Plus no special skills or degrees are needed.
Just note… This is not a stable income source
Tips for Finding the Best Way for You to Make Money
As you can see, there are many different ways to make money fast as a woman.
You can find the best way for you by considering your skills, interests, and the amount of time you have available.
Here are some helpful tips to make sure you are earning money quickly.
1. Identify Your Skills and Offerings
You’re already gifted, let’s transform those skills into fast cash.
Make a list of your skills, passions, and expertise; you can tap into anything from programming to knitting.
That is where you want to start.
From personal experience, I can tell you it is way easier to work on a side hustle or business when you are passionate about the topic.
Remember, the digital world is your playground, so play, innovate and cash-in.
2. Research the Best Ways to Make Money
Now, that you know the skills and experience, look at the list above and determine which ones match up.
You will need to spend time watching a free webinar to learn more.
Compare different money-making ideas. From part-time jobs to freelancing, there’s a plethora of options. You need to pick what works best for you.
Remember, generating a consistent income requires effective strategies and the right mindset. So choose wisely!
3. Try Different Ways to Make Money – Not Just 9-5 Jobs
It’s vital to explore different money-making strategies as a woman for financial stability and independence.
Just because one avenue didn’t work out doesn’t mean you should throw in the towel.
Remember, the key to success is perseverance, so pick something you’re passionate about and stick to it. Try not to jump from one idea to another out of impatience; success takes time.
Also, as your revenue increases, start building a lifestyle business for passive income.
4. Focus on the Things You Are Good at
Unlock your financial potential by recognizing and utilizing things you’re excellent at.
To cash in fast:
Identify your standout skills. These could range from writing, fine arts, math, e-commerce to digital marketing or even passions such as sports and hobbies.
Assess the viability of earning via your skills. Research shows that the digital economy is filled with opportunities.
Exploit platforms that cater to your expertise. For freelance gigs, you can try platforms like Upwork, Fiverr, or Guru.
There are so many ways to make money online as a beginner. So, indulge in the digital playground, embrace exploration and innovation, and let your skills earn for you.
5. Find Opportunities That Allow You to Work Flexibly
You can choose when to work and when not to, rather than being constrained by a 9 to 5 workday. The flexibility to create your schedule means you can operate at your most productive times, whether that’s early in the morning or late at night.
Working from home or any location across the globe enables a better work-life balance, reducing stress and improving productivity. This is particularly beneficial for those who have families or are committed to other obligations.
When working for yourself, you may have the potential to earn more than traditional salaried roles.
Lastly, making a living from your passion is huge!
You are being paid to do what you love anywhere, anytime which is rare and precious.
6. Consider Specializing in a Niche Subject
Specializing in a niche subject can elevate your earning potential quickly, owing to smaller competition and a personalized audience.
Being a subject matter expert in a specific area can provide you with an edge over your competitors.
Specializing in a niche can help you stand out and garner a dedicated audience, ultimately leading to faster earnings.
Remember, the key to making money faster in your specialized area is persistence and patience. It may take time to build a strong following, but once you do, the financial rewards can be substantial.
Stick to your chosen area, continuously learn and improve, and consistently deliver high-quality content to make your mark in your chosen niche.
7. Take Advantage of Trending Opportunities
Jumping on trending opportunities can be a gold mine, especially for women who want to make money fast from home. These ever-evolving trends tap into various skill sets, interests, and experiences, potentially translating into a lucrative gig.
For many, it may have been TikTok when the company first started.
Remember, the digital world holds limitless potential. Just needing to innovate and execute your ideas!
8. Invest in the Right Tools and Equipment
The key to making money, either online or offline, is making an informed investment of your time into the right tools, equipment, and learning resources.
While this can initially seem like an expenditure rather than a money-making step, it is, in fact, a cornerstone of your financial growth strategy.
Investing time in learning and increasing your knowledge base is vital. This could mean spending your time reading about new insights in your area of work, attending webinars, or enrolling in online courses. The ROI of this proactive learning is immense.
Consider this an opportunity or a catalyst that speeds up your journey toward substantial income generation and financial freedom.
9. Commit to Consistent Efforts
Commitment to consistent efforts is the cornerstone of any successful endeavor, more so when running your own side hustle.
One of the fundamental principles for making money is the dedication to keep improving your craft, always learning, and always evolving.
This continual effort involves a long-term commitment to staying updated with the latest writing trends, styles, and industry standards.
With persistence and patience, the fruition of your investments will lead you toward the fulfillment of your financial dreams.
10. Utilize Social Media Platforms to Promote Your Business
Social media platforms are powerful tools for business promotion, and when used strategically, they can lead to fast monetary gains.
Understanding how to effectively utilize these platforms can drastically enhance your chances of making quick bucks.
Start by creating a robust online presence for your business on various social media platforms. Remember, consistency is key to building your brand.
Engage with your audience frequently and respond to their comments. This boosts engagement on your posts.
Post content that is engaging, relevant, and aligns with your business values.
Always monitor your performance using social media analytics to understand what works best for your audience.
Which side hustles for women have you tried?
Personally, here are the side hustles I have done or currently do:
Stock Trading as a swing trader
Online Content Creation
Social Media Influencer
Online Consulting
Pet Sitting or House Sitting
Teaching Dance Lessons
Personal Organizer
However, I know many people that have tried the ones listed above.
So ladies, which of these enticing hustles appeals to your skills and schedule the most?
FAQ
Stay-at-home moms have numerous opportunities to earn money from the comfort of their homes. Plus being able to bump up your household income while juggling parenthood is the perfect combination.
Find the best jobs for moms specifically!
Any of these opportunities requires dedication and consistent effort, but with time they can all yield substantial returns.
Thankfully, there are many ways for women to make money online.
Above we covered all of the interesting ways and many are online.
Remember, opt for an avenue that suits your skills, interests, and time availability.
Well. the answer to this will depend on who you speak with.
Personally, I find ways to build passive income with your side hustle as the best option. Then you aren’t trading your time for money.
As a woman, many opportunities are right at your fingertips. The most popular and profitable include:
Start a blog: With consistent readership, you can make thousands from ad revenue and sponsored content.
Virtual assistant: Services can fetch around $10-30/hour.
Social Media Management: Businesses are willing to pay up to $1000-2000 per month for proficient managers.
Bookkeeping: On average, freelance bookkeepers earn around $34/hour.
Selling products online: Sites like Etsy, Amazon FBA, or your own platform can earn you a substantial income with a successful shop.
Trading Stocks or Options: by improving your investing knowledge, you can quickly increase your net worth.
Remember – it all starts with a step. Your side hustle could turn into a full-time passion!
This is How to Make Money from Home as a Woman
In conclusion, as a woman, there are plenty of genius and fast ways for you to make money.
The article underlines the significance of grabbing the reins of your financial future.
Through the strategies shared – including investing in stocks, working from home, or using budgeting hacks, you can boost your income significantly.
One of the concepts, I’m big on is making sure you know how to make your money work for you.
With wise decisions and being open to possibilities, your financial independence is within reach.
Remember – the ball is in your court, so make sure to take that shot and score your financial goals. It’s high time to cash in on your potential!
Know someone else that needs this, too? Then, please share!!
U.S. home prices haven’t changed much this quarter. But regional trends looked wildly different, a report by the National Association of Realtors says.
“Just like the weather, large local market variations exist despite the minor change in the national home price,” NAR’s chief economist Lawrence Yun said in a press release.
The national median single-family home price reached $402,600 this quarter, the organization’s Metropolitan Median Area Prices and Affordability report found. It’s a dip of only 2.4% year-over-year and 0.2% month-over-month.
Why such a small change? Regional housing market price shifts almost canceled each other out.
In around 60% of the nation, homes got more expensive this quarter, NAR found. Most of these markets are in the northwest, up 3.2%, and midwest 1.4% higher. Prices increased the most in Fond du Lac, Wisconsin, New Bern, North Carolina and Duluth, Minnesota.
Homes became cheaper in the rest of the country. Prices slid by 2.2% in the south and 5.8% in the west year-over-year. In Austin, Texas, prices dipped 19.1%, the biggest market decrease, followed by San Francisco, Salt Lake City and Las Vegas.
Even California prices fell — San Jose, San Francisco and Anaheim were the top three most expensive cities; each still had a median sales price of over $1 million, but depreciation of 5.3%, 11.3% and 3.8%, respectively.
“Interestingly, price declines occurred in some of the fastest job-creating markets,” Yun said. “Prices in these areas are trying to land on better fundamentals after several years of skyrocketing increases.”
Nevada, Texas and New Mexico saw the highest job growth rates this year, all around 4%, according to the Bureau of Labor Statistics. The rest of the country saw modest growth, too: only Vermont and Rhode Island had lower nonfarm employment versus last year.
The south made up 46% of sales this quarter, the largest share of all U.S. regions. Yun thinks this means prices will soon bounce back, noting “the number of homes receiving multiple offers, alongside continuing job and wage gains, signal price slides may already be a thing of the past.”
Affordability worsened because of high mortgage rates, NAR said. An already-built house with a 20% down payment would cost around $2,051 a month, which is 11.6% more than last year and 10% more than last quarter. This eats up 27% of the average family income, the report says.
And first time homebuyers have it even harder: the monthly mortgage payment on a median-priced home with a 10% down payment reached $2,012 this quarter, $200 more a month than the same time last year.
New buyers “needed a qualifying income of at least $100,000 to afford a 10% down payment mortgage in 40.3% of markets,” the report said. Last quarter, buyers only needed an income that large in 33% of markets. Families with an income of $50,000 could only afford to buy a home in 6.3% of markets.
From BLS: The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent in July on a seasonally adjusted basis, the same increase as in June, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all-items index increased 3.2 percent before seasonal adjustment.
However, once you strip out rent — which is what the Fed has told us they want to focus on because of the lag in rent data — the growth rate of inflation is falling more noticeably. The Fed is focused on core service inflation less shelter.If you take CPI data in total and subtract the shelter data, inflation data has collapsed.
90% of the inflation growth came from the shelter data, which we know needs to catch up to the reality that the data line below is much lower in real terms.
How can this lead to a 2024 pivot if we don’t have a job-loss recession? This is a good question, as I am not a Fed pivot person until the labor market breaks. For me that means jobless claims data gets above 323,000 on the four-week moving average. Today we did see a spike in claims data. However, the four-week moving average is still 231,000, far from my Fed pivot level.
So why would we see a Fed pivot if labor is still good? In a recent interview with the New York Times, the Fed mentioned something that can set the groundwork for the Fed to cut rates without a job-loss recession. They talked about real yields being restrictive. A simple way to think about this is that with inflation falling and rates up as much as they are now, the Fed believes their Fed Funds rate is at restrictive levels currently.
At first, that could make it sound like they don’t want to hike again. However, if the growth rate of inflation falls even more, then the Fed can change its tune in 2024, even cutting rates next year to make policy less restrictive.
Of course, economic data matters here; if the economy picks up steam and inflation picks up again, this variable changes. However, if the labor market weakens, they have given the marketplace a signal that fed rate cuts will happen. Even if the labor market stays firm, cuts could happen next year if inflation’s growth rate falls. This doesn’t mean we will see massive rate cuts soon, but it does lay the foundation for a less hawkish Fed going into 2024.
So far the bond market has had a mild response to today’s data. Even with the weaker jobless claims data, we haven’t seen any significant moves this morning. As of this second, the 10-year yield is at 4%.
My 2023 forecast range for the 10-year yield was 3.21%-4.25%, meaning mortgage rates between 5.75%-7.25% for 2023, and that the labor market would be the big driver on bond yields, not inflation. As we can see in the chart above, the growth rate of inflation has fallen, but bond yields are near the highs, not the lows. The economy has stayed firm, and labor hasn’t broken. So far in 2023, my premise of bond yields and labor has held as the economy has stayed firm.
The inflation report was slightly better than expected: we see how much rent inflation now holds up the core side of the CPI data. However, I believe the more critical storyline here isn’t the inflation report today, it’s what it can mean next year if this trend continues. I discuss this topic with HousingWire Editor in Chief Sarah Wheeler on today’s HousingWire Daily podcast.
One of my economic themes over the past year is that you don’t need a job-loss recession to have the growth rate of inflation fall — this isn’t the 1970s. We had a global pandemic, and historically global pandemics are very inflationary early on and then things get better over time. I hope the Fed sticks to this theme for next year and that we don’t need jobless claims to get worse for the Fed to pivot.
A strike is an action taken by a group of employees who stop working in an attempt to pressure their employer into meeting their demands. Workers strike over a wide array of issues, but the most common demands include higher wages, safer working conditions and better benefits.
A strike is a powerful tool for workers looking to effect change in their workplace. Halting production can impact a company’s bottom line and draw public attention to workers’ complaints.
For example, you have probably seen reports of screenwriters and actors striking in Hollywood over fair pay and other issues. The strikes include members of the Writers Guild of America, a union representing 11,500 screenwriters, and the Screen Actors Guild and the American Federation of Television and Radio Artists (SAG-AFTRA), which represents 160,000 performers. The strikes effectively shut down Hollywood, canceling or postponing new movies and new seasons of TV shows. The strikes will do more than interrupt people’s media consumption, though. The last time TV and film writers went on strike in 2007, the economic impact was calculated at $2.1 billion, including 37,700 lost jobs, according to a report by the Milken Institute, a think tank focused on economic development.
Even the threat of a strike (especially one involving hundreds of thousands of workers), can compel an employer to make the changes called for by employees. Recently, the Teamsters union, which represents 340,000 UPS workers, threatened a strike over demands for higher pay, more jobs and new workplace protections. UPS and the Teamsters reached a deal on a tentative five-year contract just days before the strike was set to start.
A strike would’ve disrupted package delivery on a massive scale, wreaking havoc on businesses and the economy. According to one estimate by Anderson Economic Group, a consulting firm, a 10-day UPS strike could’ve cost the company more than $800 million. The wider economic impact could’ve reached $7 billion.
How a strike works
The National Labor Relations Act of 1935 gives U.S. employees the right to strike.
Deciding to strike
Workers decide to strike for a variety of reasons. In 2022, the top reason was pay, followed by health and safety issues and staffing, according to the Labor Action Tracker, an annual report on work stoppages by unionized and nonunionized workers compiled by researchers with the Cornell University ILR School.
Often, strikes are organized by labor unions, which have the role of representing their members in contract negotiations with employers. For a union to go on strike, it has to have support from union members who cast secret ballots in a strike authorization vote. Voting to authorize a strike doesn’t guarantee a union will go on strike. Instead, authorizing a strike shows the employer on the other side of the bargaining table that the threat of a strike is credible because members have authorized union leaders to call for a strike.
SAG-AFTRA, the performers’ union, authorized a strike in early June. Then, on July 13, its national board held a second vote to launch the strike.
Can you strike without a union?
U.S. workers don’t have to be part of a union to go on strike.
The Fight for $15 campaign is a high-profile example of nonunionized workers organizing a strike. In 2012, fast-food workers in New York walked off the job in protest of low wages and poor working conditions. That soon grew into a nationwide campaign to demand a $15-per-hour minimum wage. As it has grown, Fight for $15 has amassed an eclectic group of low-wage workers. The impact of a Fight for $15 strike held in November 2016 rippled across the service sector, with workers walking off the job at airports, restaurants, child care centers and other job sites.
What happens to a striker’s job?
Because striking is a legally protected action, workers have some job protections when they go on strike. How much protection depends on the purpose of the strike. The purpose of a strike can be categorized in a couple of ways:
Economic strikes include workers who go on strike over demands like higher wages, shorter hours and better working conditions. When workers strike for economic reasons, they can’t be fired by their employer, but they can be replaced. If an employer hires permanent replacements, strikers don’t automatically get their jobs back at the end of the strike. Instead, strikers are given the first chance to be rehired if a job opens with the employer.
The threat of being replaced during an economic strike is real. Since the 1980s, when the Reagan administration took a harder stance against organized labor, employers followed suit and more often have used or threatened to use their right to permanently replace workers. However, that isn’t without consequences. Researchers have noted that replacing striking workers can escalate tension and prevent a resolution of the strike.
Also, employers who hire permanent replacements could have their motives closely scrutinized. The National Labor Relations Board, which protects workers’ right to collective bargaining, issued a ruling in 2016 that said Piedmont Gardens, a care facility in Oakland, California, committed an unfair labor practice by replacing strikers because that action was motivated by a desire to punish strikers and avoid future strikes, which violates workers’ right to strike.
Unfair labor practice strikes include workers who go on strike because their employer broke the law. Common unfair labor practices by an employer include interfering with employees’ right to organize or join a union or refusing to bargain in good faith with a union. When workers strike over unfair labor practices, they can’t be fired and they can’t be permanently replaced. Employers can hire temporary replacements during an unfair labor practice strike, but once the strike ends, workers are entitled to have their jobs back.
However, there are some instances when a strike violates the law. When that happens, workers’ jobs aren’t protected. Here are a few cases where the right to strike is limited:
Workers at health care institutions must give 10 days’ notice before going on strike.
Workers can’t go on strike to compel an employer to commit an unfair labor practice or to support an unfair labor practice committed by a union. For example, workers can’t use a strike to pressure an employer to fire someone who’s not paying union dues.
Even if their strike is legal, workers could lose their jobs if their behavior during the strike violates the law. For example, workers who strike can’t physically interfere with people attempting to work or threaten workers who aren’t striking.
Being part of a union during a strike can add a layer of job protection. During a strike, when a union and employer reach an agreement on a new contract, it’s common for the union to insist that all striking workers be reinstated to their original jobs. Knowing that condition would likely be part of the contract, employers are unlikely to hire permanent replacements for workers who strike.
Do workers get paid while on strike?
Workers are in a tough spot financially while on strike. They don’t collect a paycheck and, in most states, they don’t qualify for unemployment benefits, according to LawInfo, a legal services site owned by Thomson Reuters. One exception is in New York, where striking workers can collect unemployment if a strike goes longer than 14 days.
Unions typically manage a strike fund — a pot of money used to keep workers afloat during a strike. Union members may be entitled to a certain amount from the strike fund, depending on union rules.
Workers who receive medical benefits through their employer may lose coverage if their employer stops paying its share of their insurance premiums. Workers on strike can maintain coverage under COBRA — a federal law that requires employers to temporarily extend coverage after employment ends. But, in that case, striking workers are on the hook for their insurance premiums during a strike. Some unions can afford to help members cover these added costs.
How long do strikes usually last?
In 2022, the majority of strikes lasted less than five days, according to Cornell’s Labor Action Tracker. About a third of strikes lasted more than five days, including some that went on for more than a month.
That’s a drastic change from earlier decades. In 1979, which is the last year comprehensive work stoppage data is available from the Bureau of Labor Statistics (BLS), strikes lasted 32 days, on average. And half of strikes lasted more than 16 days.
The decline of strikes in the U.S.
Strike activity has declined dramatically in the U.S. in recent decades.
In 2022, U.S. workers were involved in 424 work stoppages, which included 417 strikes and seven lockouts, according to Cornell’s Labor Action Tracker.
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A lockout is a work stoppage initiated by an employer. It prevents workers from returning to work until they agree to certain terms.
Compare that to 1979, when 4,827 work stoppages were recorded, according to BLS. That year, work stoppages involved 1.7 million workers. At the time, that was typical. BLS stopped tracking work stoppages involving fewer than 1,000 people in 1980, making 1979 the last year for which comprehensive data is available. But data going back to the 1930s shows it was normal for millions of U.S. workers to engage in thousands of strikes per year.
Strikes have declined because striking has become riskier. Since the 1980s, employers have been more forceful with unions by threatening to replace strikers. At the same time, union membership became less common as the U.S. economy shifted away from traditionally unionized industries like manufacturing. In 1983, about 20% of U.S. workers belonged to a union. Now, it’s just over 10%, according to BLS.
A resurgence of strikes in the U.S.
Despite the long-term decline, strikes appear to be having a resurgence now, according to Johnnie Kallas, a Ph.D. candidate in labor relations at the Cornell University ILR School. Kallas leads the Labor Action Tracker project.
Without comprehensive strike data from BLS, historical comparisons are tricky. But the Labor Action Tracker shows work stoppages increased by 52% from 2021 to 2022. The number of workers involved in work stoppages also increased last year, from 140,000 in 2021 to 224,000 in 2022.
In part, the uptick in strike activity stems from the pandemic, Kallas says. Since COVID-19 shut down businesses, maxed out supply chains and made in-person interactions riskier, there have been numerous examples of frontline workers organizing strikes over staffing issues and safety procedures. Those concerns spanned multiple fields, including education, health care, trucking and food service.
“The pandemic had a huge impact on labor activism and strikes in the United States,” Kallas says. “Not that these issues didn’t exist beforehand, but I think they were exacerbated.”
More generally, organized labor seems to be having a moment. The number of unionized workers in the U.S. is on the rise again, according to BLS. And workers at well-known companies like Starbucks, Google and Apple are leading unionization efforts. Meanwhile, public support for unions is at its highest point since 1965, according to an August 2022 Gallup Poll. The survey found that 71% of Americans approve of labor unions. That figure has climbed steadily since 2009, when just 48% of Americans approved of labor unions.
With Taylor Swift propping up the economy, the Federal Reserve has a difficult decision to make.
The central bank will hold its next Open Market Committee meeting on July 25-26 and with it comes the question of another rate hike. While the annualized inflation rate proved to be stickier than expected, it continues to dwindle, falling from 4% in May to 3% in June — both its lowest point and first time below 4% since March 2021.
The Fed ultimately wants long-term inflation settling near 2%. While it’s moving in the right direction, further, lesser hikes could be coming.
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Will the Fed stop raising rates in 2023?
The Fed has the responsibility of maintaining an inflation rate around 2% over time. Keeping inflation near that pace stabilizes prices for consumers and aids affordability.
Once the annualized rate of inflation climbed above 8% in 2022, the Federal Open Market Committee (FOMC) devised a plan of hiking the federal funds rate to tame it.
As the national inflation rate gradually declined for 12 straight months — from June 2022’s 41-year high of 9.1% to 3% in June 2023, according to the U.S. Bureau of Labor Statistics — the Fed adjusted its tightening policy. The fed funds rate target went from hikes of 50 and 75 basis points, to 25 basis points in February, March, and May, and skipping a hike altogether in June.
However, experts fully anticipate a small rate hike following July’s FOMC meeting. After June’s wait-and-see approach, Fed Chair Jerome Powell said, “the committee clearly believes that there’s more work to do, that there are more rate hikes that are likely to be appropriate.”
Interest rate growth could continue
Interest rates mostly trended up through the first half of 2023, with the average 30-year fixed mortgage ranging from 6.09% to 6.79%, according to Freddie Mac. They went even higher to open the third quarter, climbing to 6.96% on July 13.
Although the annualized pace of inflation is falling, it’s still above the Fed’s goal. Because of this, more hikes and tightening monetary policies could continue until inflation gets brought down to a normalized level.
Interest rates are notoriously difficult to predict but typically rise in response to Fed tightening. Because of the rapid rate growth we saw in 2022, some lenders will allow you to lock in a rate for 90 days at little or no cost so you’re protected from higher rates if you don’t close quickly.
A few examples of lenders offering this include AmeriSave Mortgage, Quicken Loans, and Rocket Mortgage.
Some lenders are even offering borrowers refinances without repeat lending fees or appraisal fees when rates eventually hit a down cycle. When mortgage shopping, be sure to ask your loan officer about these services.
Mortgage rates and the Fed’s role
The Federal Reserve doesn’t determine mortgage rates. Instead, rates are intrinsically tied to the Fed’s actions. Last year, the Fed announced plans to hike its federal funds rate at each of its meetings in 2022 and likely in 2023 as well.
The fed funds rate is the amount banks pay to borrow money from each other overnight and an increase signals higher inflation and economic expansion. Mortgage interest rates typically rise in response to growth in the fed funds rate.
How mortgage rates respond in the immediate aftermath of these FOMC meetings has been a mixed bag over the last year. Most recently, they declined four basis points (0.04%) the day after the 25-point hike on May 3, and inched down two basis points (0.02%) following June’s paused hike.
Advice for borrowers
Inflation keeps dissipating but the Fed will continue taking necessary action to get it down to around 2%.
While rates could grow at any point, they’re still below average historically and many experts and housing authorities predict them to decline over the course of 2023. Even if you missed out on the rock-bottom rates from the last couple years, you can always refinance once they eventually decrease. It’s also important to note that many people build wealth through homeownership and home equity.
If you’re ready to apply for a mortgage, speak with a local lender to see what loan type and interest rate you can qualify for ahead of July’s Fed meeting.
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Data from the July jobs report released Friday fell roughly in line with expectations. Job gains came in lower than both the 278,000 monthly average for the first half of 2023 and the 399,000 average of 2022. Total nonfarm payroll employment increased by 187,000 jobs, compared to 209,000 in June, according to data released by the Bureau of Labor Statistics.
The unemployment rate changed little at 3.5%, compared to 3.6% in May, with the total number of unemployed persons falling to 5.8 million. The unemployment rate has remained between 3.4% and 3.7% since March 2022.
In June, job openings eased back to 9.6 million, bringing the openings rate to 5.8%. Meanwhile job quits slipped to 3.8 million or 2.4%.
“The incoming economic data continue to convey conflicting signals about the strength of the economy. Indicators of manufacturing and service sector health remain lackluster, measures of inflation have moved lower, while GDP growth in the second quarter was stronger than expected and consumer spending remains resilient,” said Mortgage Bankers Association VP and Deputy Chief Economist Joel Kan.
While job growth is weakening, and wage growth is holding steady, both metrics are still above the pace that would be consistent with the Federal Reserve’s inflation target, noted Kan.
“However, we expect that the FOMC will hold the federal funds target at its current level given the declining trend in inflation,” he added.
The lion’s share of the job growth in June came from gains in health care (+63,000), social assistance (+24,000), financial activities (+19,000), and wholesale trade (+18,000), according to the report.
Employment in the construction industry continued to trend up in July, adding 19,000 jobs, especially in the residential construction space. The ongoing shortage of housing inventory helped spur an increase in home building and home improvement activity, Kan said.
On average, the industry added 16,000 jobs per month in the second quarter of the year, after employment was essentially flat in the first quarter. Over the month, a job gain in real estate and rental and leasing (+12,000) partially compensated for a loss in commercial banking (-3,000).
Furthermore, residential building construction employment was flat year-over-year in July, while non-residential was up by 5.9%, according to First American Economist Ksenia Potapov. Compared with pre-pandemic levels, residential building employment is up 10%, while non-residential building is up 3%.
“Like June, the fastest monthly growth came from residential specialty trade contractors. This sub-sector comprises establishments whose primary activity is performing specific activities, such as pouring concrete, site preparation, plumbing, painting and electrical work,” said Potapov.
Employment in the professional and business services sector and in the leisure and hospitality sector changed little in July.
What’s next ?
At the July Fed meeting, the FOMC hiked the benchmark rate by a quarter percentage point, as widely expected. During the press conference that followed the meeting, Fed Chair Jerome Powell said that another rate hike in September is “certainly possible,” but so is a pause.
According to Realtor.com‘s chief economist Danielle Hale, today’s report is unlikely to sway the Fed.
“Today’s jobs report is unlikely to change those odds significantly as it is one of several pieces of additional data that the Fed will have to consider before the next decision. The Fed will see not only an additional jobs report, but also two more readings each on consumer prices and producer prices along with several other indicators before its September 19-20 meeting and decision,” said Hale.
On the housing market, she said that conditions are still favorable for households, supporting housing demand. However, climbing mortgage rates remain a substantial obstacle for homebuyers. Hale expects more “coping strategies” on the buyer’s end, such as moving further away to find affordability. Another outcome will be that affordable markets, such as those in the Midwest, will continue to see an outsized level of housing activity for both homeowners and renters, she said.
As existing homeowners remain rate-locked into their homes with no financial incentive to move, homeowners are likely to increasingly turn to renovating their homes to suit their evolving needs, added Potapov.