Bank of America analyst Aditya Bhave said in a note this week that the holiday table could be full of “cold weather [and] heated debates,” with families likely to ask pointed questions about inflation, housing, the labor market and the Federal Reserve.
As a result, the bank outlined “10 questions you might get asked,” and how to answer them.
On prices, BofA says bluntly: “Inflation is running at nearly 3%,” adding that “tariffs are one reason why your holiday budget won’t go as far this year.”
While some goods, including computers and clothing, are cheaper than a year ago, BofA warns, “I’m not sure you’ll be too happy when you go to pay your credit card bills.”
Housing is unlikely to offer relief. According to BofA, “housing affordability remains a major problem because both mortgage rates and home prices are very elevated,” with 30-year mortgage rates around 6.4% and home prices “around 16% above their pre-pandemic trend.”
The bank notes that the median age of a first-time buyer has climbed to 40, an “all-time high.”
Relatives questioning why the Fed doesn’t cut rates faster may hear that “if the Fed cuts rates too much, the economy could over-heat.”
BofA points out the 10-year Treasury yield, not the Fed funds rate, drives mortgage borrowing costs, and warns that cutting too aggressively could push long-term yields higher.
Despite a soft labor market, BofA highlights a “K-shaped” economy, with tech stocks buoyed by AI optimism and wealthy households continuing to spend. #bank #bitcoin
