The Effects of Rapid Rate Hikes on Activity

Mark O'Mara: We do see evidence that rapid rate hikes are having an effect. One example is residential investment, which has been declining at a fairly rapid pace for over a year. This may be in part because home builders enter this cycle with a record stock of houses still under construction and where understaffed during the pandemic. He says manufacturing would be a natural place to see the effect of higher interest rates but right now fiscal policy is providing some significant momentum in the opposite direction.