NICK GOSNELL
Hutch Post
HUTCHINSON, Kan. — Creighton University economist Ernie Goss sees some softness in the economy in his Mid-America Business Conditions survey, but that doesn't mean that the Federal Reserve will try to stimulate the economy at this point.
"We've got a whole generation of Americans that have lived on low interest rates," Goss said. "Now, you've got higher interest rates on the long end, mortgage rates and also on the short end in terms of credit card balances. This is new to a lot of folks and it's going to continue. We're going to continue to see higher interest rates. Those who are betting that the Fed's going to reduce interest rates, I would say, you're betting too heavily. You probably need to pull that bet back."
The interest rate hit that current homeowners would take to move up is keeping many of them from making that move.
"That's one of the big factors slowing down the sale of existing houses," Goss said. "On the flip side, it has encouraged, or incentivized new home sales. New home sales have been doing very well there, even despite the higher mortgage rates. You're going to see an end to that. I think that will slow down in the weeks and months ahead. Existing home sales, you're probably going to see an increase there, as some Americans get new jobs, they are going to have to put their house on the market and buy a new house."
The struggles in the large banking sector are of more concern to Washington than the mergers of community banks in this part of the country, according to Goss.
"The Fed is committed to juicing the economy, whatever it takes," Goss said. "Like I said, they are not going to reduce interest rates on the short end. They are going to increase liquidity in case we have a downturn. They did that back when the Silicon Valley Bank failed and the other two banks, Signature Bank and First Republic. They juiced the economy back then. They will juice it again when they need to in the fall. It's not going to be a real hard, hard landing, it's going to be a bumpy landing."
Goss doesn't believe there will be a full-blown recession, but he does see a downturn on the horizon, just maybe not for long enough to technically qualify as a recession.
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