Apartment rents in Manhattan are up 40% over the past 12 months, and the median rent is now $3,900, see charts below. The ongoing increase in housing costs across the country is beginning to have a negative impact on other types of consumer spending. The more money households have to spend on paying for their rent or mortgage, the less money is available for consumer discretionary purchases such as buying a new phone, replacing a washer or dryer, and eating at restaurants. The Fed is trying to cool down the economy, including the housing market, and they will succeed, and the risks are rising that we will get a U-shaped recession as the Fed keeps rates high to make sure inflation comes down from the current level of 8% to their 2% target.
