Today's Scoop:

Hey friends, it’s Climate Week in NYC. If you’re in the area, there are a ton of free events diving into everything businesses, cities, and investors are doing to adapt to a changing world. You can tune into live sessions here, too.

Here’s what you need to know…

1. The economy is doing better than expected.

2. Policymakers don’t expect to make borrowing cheaper anytime soon.

3. Mortgages keep getting more expensive.

S&P 500: 4,402.20
1Mo: 0% | 1Yr: +16% | 5Yr: +50%

The market sank lower after the Federal Reserve's policy meeting this afternoon - a mix of good and bad news.

Policymakers are surprised by how well the economy is doing. The Federal Reserve raised its economic growth and employment projections for the year. Its median real Gross Domestic Product (GDP) expectation for 2023 more than doubled from 1% to 2.1% since its June projections. The median expected unemployment rate for the end of the year went down from 4.1% to 3.8%, the historically low level it’s at now.

The strong economy has the Federal Reserve worried that inflation isn’t going away soon. While the Fed chose not to raise baseline interest rates again this month, it expects to keep interest rates higher for longer. High rates will make it more expensive to charge your credit card, lease a new car, borrow for school, or take out a mortgage - slowing economic activity that’s causing inflation. [🤓]

Mortgage rates keep going higher. The Mortgage Bankers Association reported the average 30-year fixed-rate mortgage increased last week to 7.31%, the highest level in decades. That makes mortgages almost 20% more expensive than a year ago. Mortgage refinancing applications unexpectedly surged by 13% last week despite rising rates, possibly driven by concerns they could get even more costly.

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• Airbnb built a successful party-pooping system

• Chevron turns to a last legal resort to resolve worker strikes

• Colgate Palmolive makes big progress with renewable energy

• Amazon invests in more carbon capture in baby steps to carbon neutral

• Apple targets all carbon-neutral products by 2030

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How does the Federal Reserve control the economy?

The Federal Reserve, aka the Central Bank, aka The Fed, is in charge of our whole money system. When the economy is struggling, the Fed lowers baseline interest rates to make it cheaper for consumers and businesses to borrow and spend (lower rates on business loans, mortgages, credit cards, car leases, etc.)

The Fed also pumps more money into the system by buying bonds with new dollars that it essentially speaks into existence. The additional cash keeps the pipes flowing as the borrowing and spending heat up, stimulating economic activity.

Once the economy's strong enough to stand on its own, the Fed starts to raise interest rates and pull back some of that money to ensure the economy doesn't overheat. Inflation is the Fed's heat gauge. The gauge was reading very hot but has been cooling lately.

So everyone's watching how long the Fed will keep restricting the economy with high rates if inflation keeps cooling. The Fed hopes to get living costs under control without sparking mass unemployment.

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