Here’s some good news for everyone but Hamptons landlords: Rental prices in the Wall Street playground are sliding, and veteran market forecaster Ed Hyman says it’s a harbinger of declining inflation.
“The tanking in the rental market in the Hamptons in August is just one sign that we need to take into account that the Fed tightening, and the slowdown of the money supply, and the increase in mortgage rates, and the decline in consumer net worth, is all having an impact,” the Evercore ISI vice chairman told Bloomberg Television’s Surveillance on Wednesday. “I could go on about 25 different examples like that. I’m big on putting the dots together.”
Realtors in the exclusive Long Island beach communities have talked about rental prices dropping this summer, and even some sales are showing a markdown. For Hyman, the discounts fit the picture of a Federal Reserve policy tightening and rate increases leading to a slower economy and a deceleration of the fastest US inflation in four decades.
“Last year, money growth was almost 30%, which is why inflation picked up so much,” he said. “But now that’s come down. That explains why inflation is slowing. The economy is doing fine now, but it’s going to slow. Inflation will slow significantly.”
The Fed already has raised overnight lending rates three times this year and increased the fed funds rate by another 75 basis points when its policy decision was announced Wednesday. An increase of that size would bring the lending benchmark to 2.5%.
“The Fed has gotten a lot of bang for their buck,” Hyman said. “The drop in the stock market has pushed down consumer net worth, which puts a drag on consumer spending.”
Like most market participants, he expects more of the same from the central bank, at least in the near term. “In three months, we’re on a track here that’s going to end when funds get to 3%,” Hyman said.
-With assistance from Lisa Abramowicz and Jonathan Ferro.
This article was provided by Bloomberg News.