Economists Discuss FED Policy Amid Iran War Fears and Market Disconnect

Ray Fisman, an economist at Boston University, and Michael Luca, an economist at Carnegie Mellon University, discussed Federal Reserve policy amidst fears of war in Iran. The discussion focused on the disconnect between the housing and stock markets. Since 2015, the S&P 500 has shown annual gains of 235%, while the Case-Shiller Index of home prices has risen 87% since the COVID-era boom began in 2022.

The average 30-year fixed mortgage rate is currently above 7%, as the Fed continues to tighten policy after aggressive rate hikes. This market divergence challenges the long-held American view of homeownership versus renting, forcing a reassessment of long-term financial strategies.

Boston University and Carnegie Mellon University have previously discussed energy consumption trends in the U.S.