MReport July 2019

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58 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST GOVERNMENT A Complicated Question Here's what experts say about the possibility of a recession in 2020 and how the Fed is preparing for it. I s a recession heading our way in 2020? If so, what is The Federal Reserve do- ing to fight it? Well, that answer may change depending who you ask. A recent article from The New York Times stated while the current economic expan- sion is on track to become the longest on record, Fed officials are beginning the most extensive rethinking of how they set mon- etary policy since they set a formal target for inflation seven years ago. The results will help determine how long it can keep the good times going and how effectively it will be able to fight the next downturn. The Times added that any changes are likely to tilt policy in the direction of maintaining lower interest rates for longer periods, looking to get inflation to more consistently average 2%. Earlier this year, however, Tendayi Kapfidze, Chief Economist at LendingTree, said that, while the housing market is ex- pected to slow down in 2020, it should not be a cause for concern. Kapfidze explained that LendingTree does not anticipate a recession this year on account of a strong labor market that will form the basis for growth. However, he added that politi- cal tensions will add to uncertainty and volatility, which may result in a loss of confidence and suppressed business and consumer spending. However, the question of whether a recession is imminent is a complicated one. In March, the three-month and the 10-year Treasury yields inverted for the first time since mid-2007. "Historically, an inverted yield curve is a significant sign that points to the develop- ment of an economic slowdown in the near to medium term," said Ed Delgado, President & CEO of Five Star Global. "This latest development is another in a series of economic markers that support the possibility of a future recessionary cycle." Ted Bauman, Senior Research Analyst and Economist at Banyan Hill Publishing, told MReport's sister publication, DS News, at the time, "For forecasters, inverting yield curves have about the same significance as voodoo-cursed totems for followers of that religion. That's because they have preceded the last seven official U.S. recessions. They are, therefore, not to be taken lightly." With the inversion coming on the heels of the Federal Reserve's announcement that it was not planning further interest rate hikes this year, along with other concerns that an economic slowdown may be on the horizon, the inverted yield curve sent stocks plummeting. Diane Swonk, Chief Economist at Grant Thornton, told PBS Newshour that the inversion was "the straw that broke the camel's back" for many investors. According to a recent Gallup Poll, about 39% of Americans think the economy is slowing down, while 17% think we're already in a recession or depression. Windows of Opportunity Learn why HUD's seeking public input on using its authority for the beneficial impact of Opportunity Zones. T he U.S. Department of Housing and Urban Development (HUD) recently announced that is seeking public input on how the Department can use its existing authorities to maximize the beneficial impact of Oppor- tunity Zones for residents and their communities. The Request for Information (RFI) is a call for the public to share existing knowledge and provide recom- mendations to HUD regarding the use of public and private invest- ments in urban and economically distressed communities, including qualified Opportunity Zones. "Opportunity Zones present tremendous promise for America's distressed communities," HUD Secretary Ben Carson said. "Through this request, we are looking to better understand how HUD can better tailor its policies and help Opportunity Zones create more positive economic outcomes for the millions of Americans that live in these areas, and for our country as a whole." After being designated as "oppor- tunity zones," low-income and high- poverty areas have seen a surge in sale prices. Investors, keen to receive a discount on capital gains taxes for investing within these areas, flock to these opportunity zones, according to an analysis by Zillow. According to Zillow, sale prices in all eligible areas "grew faster than prices in places that weren't, but after opportunity zones were selected, price-growth trends diverged among eligible tracts." In HUD's RFI, the Department is seeking advice on how it should use its existing authorities to maximize the beneficial impact of public and private investments in urban and economically distressed communities, whether it should create an information portal and what information it should include, what types of technical assistance should be offered through HUD, how HUD can properly evaluate the impact of Opportunity Zones on communities, and more. "Opportunity Zones are a pow- erful vehicle for bringing econom- ic growth and job creation to the American communities that need it the most," HUD states. "On av- erage, the median family income in an Opportunity Zone is 37% below the state median. Overall, more than 8,700 communities in all 50 States, Washington D.C., and five U.S. Territories have been designated as Opportunity Zones. Nearly 35 million Americans live in communities designated as Opportunity Zones."

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