Chairman Powell’s FED Flip: Rate Cuts Coming in September?

The Fed Just Flipped

The Federal Reserve just hinted at possible rate cuts this September, and everyone, from Wall Street to Main Street, is buzzing. But here’s the real question: Is the economy so weak that lower rates won’t matter?

Jerome Powell’s Jackson Hole comments gave us some key insights. He used the phrase “restrictive territory,” signaling that the Fed believes rates are above neutral. That means the economy is slowing. And as an investor, you need to understand exactly what that means for jobs, housing, and ultimately, your money.

What Powell Really Said at Jackson Hole

Powell stated:

“With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.”

In Fed-speak, this means interest rates are above the neutral rate, think of it like cruise control on a car. Neutral means the economy is cruising smoothly. Restrictive means the brakes are on. And accommodative means the gas pedal is down.

Right now, the Fed admits we’re slowing down. But they’re split on how to respond:

• 10 members expect two cuts by year-end

• 9 members expect fewer or none

Meanwhile, the big banks, JP Morgan and Goldman Sachs are betting on up to four or five cuts. Why? Because cuts mean more lending, more refinances, and more home and car sales. And that’s good for their business.

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The Job Market and the AI Factor

Powell also pointed to the labor market being in a “curious kind of balance,” where both supply and demand for workers are slowing. Translation: jobs aren’t as strong as the headlines suggest.

We’re already seeing AI reshape entire industries:

• Intel cutting 20% of its workforce

• Paralegal and legal assistant jobs being automated

• Marketing, design, and content roles under pressure

• Accounting and back-office work being streamlined

If you’ve got friends or family in these sectors, you know the reality: the job market is far weaker than reported. That’s one reason the Fed is under pressure to cut rates.

How Rate Cuts Could Impact Housing

So, what happens if rates drop? Let’s break it down:

1. Refinances Will Spike
   Homeowners stuck with 7–8% mortgages from 2022–2023 could refinance into something more manageable. That will keep more people in their homes instead of being forced to sell.

2. First-Time Buyers Get a Boost
   Rate cuts directly affect affordability. Most buyers don’t start with the price, they start with the monthly payment. A lower rate means more house for the same payment. This could unfreeze the lower end of the market.

3. Short-Term Market Movement
   Even before major cuts, we’re already seeing buyers step off the sidelines. In the past few weeks, mortgage rates have ticked down a quarter point, and suddenly bidding wars are returning in some markets.

4. Long-Term Price Pressure
   If cuts continue into 2025, expect home prices to rise again. More affordability = more demand = higher prices.

Political Pressure: Trump’s Housing Agenda

Politics will play a big role here. Trump has been pushing for housing affordability measures, including:

• The Vantage Score: A new credit scoring system that factors in rent, utilities, and phone bills, not just loans and credit cards. This could bring millions of renters into the homebuying pool.

• 40-Year Mortgages: Just like student loans and car loans, extending the term lowers the monthly payment. That helps first-time buyers, but also risks inflating prices long-term.

Both policies could open doors for new buyers, but they’ll also drive prices higher if supply doesn’t catch up.

What Investors Should Do Now

Here’s my advice if you’re watching this unfold:

1. Don’t Panic or Rush
   Rate cuts take time to work through the system. You have months, not days, to watch how this plays out.

2. Look for Opportunity in Refinance-Relief Markets
   Areas where homeowners bought at high rates in 2022–2023 could stabilize, as refinancing keeps more inventory off the market.

3. Prepare for More Activity in Q4 and Q1
   Historically, there’s a surge in real estate activity at the end of the year and into the first quarter. Rate cuts could accelerate that.

4. Focus on Fundamentals, Not Headlines
   Whether rates are at 5% or 7%, a deal must cash flow. Investors who got addicted to “cheap money” in the 2010s are struggling now. But if you can make a deal work at today’s rates, you’re building long-term resilience

Final Thoughts

I’ve been investing for over 30 years, through booms, busts, and rate cycles. Here’s what I know:

• The Fed’s decisions matter, but they aren’t everything.

• The job market and AI disruption are bigger risks than most people realize.

• Real estate always comes back to fundamentals: cash flow, location, and affordability.

So yes, the Fed may cut rates. But don’t build your strategy around what Jerome Powell says in Jackson Hole. Build it around what the numbers on your deals are telling you.

Because while everyone else is waiting for the Fed, the best investors are already out there buying.

Ready to uncover more truths. They’re lying to you about the FED too. I expose the deceit surrounding the FED in this tell-all piece.

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