Question 1

What is the Federal Funds Rate?

Accepted Answer

The federal funds rate is the interest rate banks charge each other for overnight loans. It

Question 2

What is the Federal Funds Rate?

Accepted Answer

The federal funds rate is the interest rate banks charge each other for overnight loans. It's set by the Federal Reserve and ripples through everything—savings yields, credit card APRs, mortgages, auto loans, and business financing. Even a 0.25% change can add or remove tens of dollars per month from your budget.

Question 3

How does the yield curve predict recessions?

Accepted Answer

A normal yield curve slopes upward—long-term bonds pay higher yields than short-term. When it inverts (short-term > long-term), markets are pricing rate cuts to fight a slowdown. The 10-year minus 2-year spread has inverted before every U.S. recession since the 1970s with a typical 12-18 month lead time.

Question 4

How does the yield curve predict recessions?

Accepted Answer

A normal yield curve slopes upward—long-term bonds pay higher yields than short-term. When it inverts (short-term > long-term), markets are pricing rate cuts to fight a slowdown. The 10-year minus 2-year spread has inverted before every U.S. recession since the 1970s with a typical 12-18 month lead time.

Question 5

What does an inverted yield curve mean for my money?

Accepted Answer

It signals recession risk. Defensive moves: boost emergency savings to 6-9 months, pay down high-rate debt, favor quality bonds and cash-like assets, and delay major purchases unless essential. Avoid timing the market completely, but shift risk exposure if you

Question 6

What does an inverted yield curve mean for my money?

Accepted Answer

It signals recession risk. Defensive moves: boost emergency savings to 6-9 months, pay down high-rate debt, favor quality bonds and cash-like assets, and delay major purchases unless essential. Avoid timing the market completely, but shift risk exposure if you're overextended.

Question 7

How should I read the inflation dashboard?

Accepted Answer

Headline inflation shows the broad CPI number; core strips out food and energy volatility. Look at category breakouts (shelter, food, healthcare) to see where your budget gets squeezed, then demand raises or adjust spending targeted to the hotspots.

Question 8

How should I read the inflation dashboard?

Accepted Answer

Headline inflation shows the broad CPI number; core strips out food and energy volatility. Look at category breakouts (shelter, food, healthcare) to see where your budget gets squeezed, then demand raises or adjust spending targeted to the hotspots.

Question 9

What is the prime rate and why does it matter?

Accepted Answer

Prime rate is typically the Fed funds rate + 3%. Banks use it as the baseline for HELOCs, variable-rate mortgages, small business loans, and many credit cards. Every 0.25% move adds ~ per month per 0,000 borrowed on revolving balances.

Question 10

What is the prime rate and why does it matter?

Accepted Answer

Prime rate is typically the Fed funds rate + 3%. Banks use it as the baseline for HELOCs, variable-rate mortgages, small business loans, and many credit cards. Every 0.25% move adds ~$2 per month per $10,000 borrowed on revolving balances.

Question 11

What should I do when recession odds rise?

Accepted Answer

Focus on offense and defense. Offense: keep investing steadily, bargain hard on salary, and pick up recession-resilient income streams. Defense: extend emergency savings, reduce variable spending, lock in lower fixed rates, and push big purchases until the data turns.

Question 12

What should I do when recession odds rise?

Accepted Answer

Focus on offense and defense. Offense: keep investing steadily, bargain hard on salary, and pick up recession-resilient income streams. Defense: extend emergency savings, reduce variable spending, lock in lower fixed rates, and push big purchases until the data turns.

Question 13

What’s the difference between CPI and PCE inflation?

Accepted Answer

CPI tracks out-of-pocket urban consumer costs; PCE is broader, adjusts for substitutions, and is the Fed’s preferred gauge. CPI often runs hotter than PCE. When CPI cools faster than PCE, inflation relief feels slower in the real world.

Question 14

What’s the difference between CPI and PCE inflation?

Accepted Answer

CPI tracks out-of-pocket urban consumer costs; PCE is broader, adjusts for substitutions, and is the Fed’s preferred gauge. CPI often runs hotter than PCE. When CPI cools faster than PCE, inflation relief feels slower in the real world.

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