What If the Rental Market Is the First to Break?
Inflation watchers have focused on pulling back the labor market, but tenants blinking in the face of higher rents might be the first step toward cooling off the economy.
Reaching the tipping point.
Photographer: Spencer Platt/Getty Images
There's been an assumption that before inflation can be tamed and housing prices ease, unemployment must rise significantly. But what if it's the other way around?
The Federal Reserve has projected the unemployment rate will rise to 4.4% in 2023, and others have even higher forecasts. The thinking is that a strong labor market has been pushing up inflation and worker incomes, which in turn has led to rising housing costs in a world that hasn't provided enough places to live. Elevated rent growth means overall inflation will remain too hot.