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      More Tenants Can Now Add Rent Payments to Their Credit Score

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      Policymakers view the reporting of an on-time pattern as a way to reduce disparities in homeownership.About a third of American households rent, yet in most cases their credit score doesn’t reflect their on-time payments.That’s beginning to change. Renters can increasingly choose to have their timely monthly payments reported to the credit bureaus, with the goal of improving their credit profile to qualify for loans.A bevy of third-party services now offer consumers the option of having their on-time rent payments reported to one or more credit bureaus. The bureaus — Equifax, Experian and TransUnion — can add rent payments to loan data to enhance the credit reports and credit scores that lenders use to evaluate potential borrowers.The services typically report only on-time payments, but consumer experts recommend checking the details first. The reporting of late payments, such as when tenants withhold rent to protest their living conditions, may be a drawback to enrolling, consumer experts say.Zillow, the real estate website, became the latest entrant in the rent-reporting market this month. Some options, like Zillow’s, are available to renters whose landlords or property managers use the company’s rental management system to process payments. Others, like the service offered by Self Financial, are available directly to renters.As it stands, few landlords routinely report rent payments to credit bureaus. Traditionally, only lenders have reported to the bureaus, and rent isn’t considered a loan. Fewer than 5 percent of the roughly 80 million adults who live in rental housing had rental data in their credit files, and it was mostly negative data from missed payments, according to the Urban Institute, a nonprofit research group focused on advancing upward mobility and equity. (Negative rent information can end up in credit files if a landlord reports delinquent accounts or sends them to a collection agency.)But in recent years, policymakers have been exploring whether consumers can benefit from having on-time rent payments included in credit scores, just as payments for mortgages, car loans and credit cards are. Reporting on-time rent payments is viewed as a way to reduce disparities in homeownership.Fannie Mae, the quasi-governmental home finance giant, began a pilot program in 2022 using three financial technology companies that report on-time payments from thousands of renters in multifamily buildings to the credit bureaus. Fannie Mae reported in November that its data “shows a trajectory toward better financial health for many renters.” Well over half the participants increased their credit scores. Those who already had a credit score, and saw an improvement, had an average increase of about 40 points. (Scores range from 300 to 850.) The pilot has been extended to the end of this year.TransUnion has been able to include rent payments in its credit reports since 2016 and has seen increasing interest from property managers, said Maitri Johnson, vice president of tenant and employment screening at the credit bureau. The company’s data show that rent reporting is particularly helpful to consumers who were “unscorable,” meaning they had no or little credit history, Ms. Johnson said.Ariel Nelson, a staff attorney with the National Consumer Law Center, said consumers should be cautious. Reporting on-time payments can make sense, she said, for people who are able to consistently pay on time and may be renting temporarily while saving to buy a home.But there can be risks, particularly for lower income tenants who may struggle to pay on time, she added. If a tenant opts into reporting and pays on time for several months but then hits a rough patch and falls behind, the late payment isn’t reported. But lenders might interpret the absence of rental information on the credit report for a month or two as a negative, Ms. Nelson said.(Fannie Mae said that separate from the pilot, lenders could use its automated underwriting system to supplement their credit evaluations of first-time home buyers by including rent data, and that missing rent payments weren’t counted against the borrower.)The general industry approach so far is to give renters a choice about whether to have their payments regularly reported, and to report only on-time payments.As the practice becomes more widespread, landlords could eventually require reporting of rent to credit bureaus, Ms. Johnson said. The requirement would probably be disclosed during the negotiation of the lease agreement.The reporting of negative information could affect tenants who might want to withhold rent as a way to force landlords to maintain or repair buildings, Ms. Nelson said. If landlords report the withheld payments, tenants may feel pressured to pay to avoid harming their credit. A recent news report suggested that has happened in New York City.Zillow’s service deems payments on time if they are received within 30 days of the due date, said Amy Wipfler, senior product manager for social impact at the company. Payments made after that aren’t reported. The new service is available to “tens of thousands” of renters, she said.Currently, Zillow’s service reports just to Experian. If a participant applies for a loan with a lender that uses one of the other credit bureaus, the positive rent payments won’t have an impact. Zillow aims to add the other credit bureaus, Ms. Wipfler said. (Other services, like Esusu and Self Financial, report to all three.)Here are some questions and answers about using rent payments to help credit scores:Are all credit scoring systems able to factor in rent payments?No. Only the latest, but not yet widespread, versions of credit scoring systems from FICO, the data analytics company, can incorporate rent data, said Ethan Dornhelm, the company’s vice president for scores and predictive analytics. The FICO 8 version, an older but widely used model, cannot factor in rents, he said. All versions of VantageScore, a scoring model owned by the major credit bureaus, are able to factor in rent payments, a spokeswoman, Sarah Cain, said in an email.Is there a charge for rent reporting services?That varies. Some services are free for both landlords and tenants, while others may charge one-time or monthly fees. (Some are free for new rental payments but charge for reporting prior rental history.) It may not be worthwhile for consumers who already have top-tier credit scores to have their rent reported, since they would probably see incremental benefits from an even higher score, Ms. Johnson at TransUnion said.What are other ways to build credit?Options for building credit if you have a scant credit file or marred credit include opening a “secured” credit card. You typically make a deposit and get a line of credit up to that amount, and your payment history is reported to the credit bureaus. Some community banks and credit unions offer “credit builder” loans. The money you borrow is held in a bank account while you make payments, which are reported to credit bureaus. Once you have paid the loan amount, you get access to the funds. More

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      In Race to Replace George Santos, Financial Questions Re-emerge

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      Mazi Pilip, the Republican candidate running in New York’s Third District, drew scrutiny after her initial financial disclosure was missing required information.The Republican nominee in a special House election to replace George Santos in New York provided a hazy glimpse into her personal finances this week, submitting a sworn financial statement to Congress that prompted questions and led her to amend the filing.The little-known candidate, Mazi Pilip, reported between $1 million and $5.2 million in assets, largely comprising her husband’s medical practice and Bitcoin investments. In an unusual disclosure, she said the couple owed and later repaid as much as $250,000 to the I.R.S. last year.But the initial financial report Ms. Pilip filed with the House Ethics Committee on Wednesday appeared to be missing other important required information, including whether the assets were owned solely by herself or her husband, Dr. Adalbert Pilip, or whether they were owned jointly.And despite making past statements that she stopped working there in 2021 when she ran for the Nassau County Legislature, Ms. Pilip reported receiving a $50,000 salary from the family medical practice in 2022 and 2023.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More

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      The Stock and Bond Markets Are Getting Ahead of the Fed.

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      Stock and bond markets have been rallying in anticipation of Federal Reserve rate cuts. But don’t get swept away just yet, our columnist says.It’s too early to start celebrating. That’s the Federal Reserve’s sober message — though given half a chance, the markets won’t heed it.In a news conference on Wednesday, and in written statements after its latest policymaking meeting, the Fed did what it could to restrain Wall Street’s enthusiasm.“It’s far too early to declare victory and there are certainly risks” still facing the economy, Jerome H. Powell, the Fed chair, said. But stocks shot higher anyway, with the S&P 500 on the verge of a record.The Fed indicated that it was too early to count on a “soft landing” for the economy — a reduction in inflation without a recession — though that is increasingly the Wall Street consensus. An early decline in the federal funds rate, the benchmark short-term rate that the Fed controls directly, isn’t a sure thing, either, though Mr. Powell said the Fed has begun discussing rate cuts, and the markets are, increasingly, counting on them.The markets have been climbing since July — and have been positively buoyant since late October — on the assumption that truly good times are in the offing. That may turn out to be a correct assumption — one that could be helpful to President Biden and the rest of the Democratic Party in the 2024 elections.But if you were looking for certainty about a joyful 2024, the Fed didn’t provide it in this week’s meeting. Instead, it went out of its way to say that it is positioning itself for maximum flexibility. Prudent investors may want to do the same.Reasons for OptimismOn Wednesday, the Fed said it would leave the federal funds rate where it stands now, at about 5.3 percent. That’s roughly 5 full percentage points higher than it was in early in 2022. Inflation, the glaring economic problem at the start of the year, has dropped sharply thanks, in part, to those steep interest rate increases. The Consumer Price Index rose 3.1 percent in the year through November. That was still substantially above the Fed’s target of 2 percent, but way below the inflation peak of 9.1 percent in June 2022. And because inflation has been dropping, a virtuous cycle has developed, from the Fed’s standpoint. With the federal funds rate substantially above the inflation rate, the real interest rate has been rising since July, without the Fed needing to take direct action.But Mr. Powell says rates need to be “sufficiently restrictive” to ensure that inflation doesn’t surge again. And, he cautioned, “We will need to see further evidence to have confidence that inflation is moving toward our goal.”The wonderful thing about the Fed’s interest rate tightening so far is that it has not set off a sharp increase in unemployment. The latest figures show the unemployment rate was a mere 3.7 percent in November. On a historical basis, that’s an extraordinarily low rate, and one that has been associated with a robust economy, not a weak one. Economic growth accelerated in the three months through September (the third quarter), with gross domestic product climbing at a 4.9 percent annual rate. That doesn’t look at all like the recession that had been widely anticipated a year ago.To the contrary, with indicators of robust economic growth like these, it’s no wonder that longer-term interest rates in the bond market have been dropping in anticipation of Fed rate cuts. The federal funds futures market on Wednesday forecast federal funds cuts beginning in March. By the end of 2024, the futures market expected the federal funds rate to fall to below 4 percent.But on Wednesday, the Fed forecast a slower and more modest decline, bringing the rate to about 4.6 percent.Too Soon to RelaxSeveral other indicators are less positive than the markets have been. The pattern of Treasury rates known as the yield curve has been predicting a recession since Nov. 8, 2022. Short-term rates — specifically, for three-month Treasuries — are higher than those of longer duration — particularly, for 10-year Treasuries. In financial jargon, this is an “inverted yield curve,” and it often forecasts a recession.Another well-tested economic indicator has been flashing recession warnings, too. The Leading Economic Indicators, an index formulated by the Conference Board, an independent business think tank, is “signaling recession in the near term,” Justyna Zabinska-La Monica, a senior manager at the Conference Board, said in a statement.The consensus of economists measured in independent surveys by Bloomberg and Blue Chip Economic Indicators no longer forecasts a recession in the next 12 months — reversing the view that prevailed earlier this year. But more than 30 percent of economists in the Bloomberg survey and fully 47 percent of those in the Blue Chip Economic Indicators disagree, and take the view that a recession in the next year will, in fact, happen.While economic growth, as measured by gross domestic product, has been surging, early data show that it is slowing markedly, as the bite of high interest rates gradually does its damage to consumers, small businesses, the housing market and more.Over the last two years, fiscal stimulus from residual pandemic aid and from deficit spending has countered the restrictive efforts of monetary policy. Consumers have been spending resolutely at stores and restaurants, helping to stave off an economic slowdown.Even so, a parallel measurement of economic growth — gross domestic income — has been running at a much lower rate than G.D.P. over the last year. Gross domestic income has sometimes been more reliable over the short term in measuring slowdowns. Ultimately, the two measures will be reconciled, but in which direction won’t be known for months.The MarketsThe stock and bond markets are more than eager for an end to monetary belt-tightening.Already, the U.S. stock market has fought its way upward this year and is nearly back to its peak of January 2022. And after the worst year in modern times for bonds in 2022, market returns for the year are now positive for the investment-grade bond funds — tracking the benchmark Bloomberg U.S. Aggregate Bond Index — that are part of core investment portfolios.But based on corporate profits and revenues, prices are stretched for U.S. stocks, and bond market yields reflect a consensus view that a soft landing for the economy is a near-certain thing.Those market movements may be fully justified. But they imply a near-perfect, Goldilocks economy: Inflation will keep declining, enabling the Fed to cut interest rates early enough to prevent an economic calamity.But excessive market exuberance itself could upend this outcome. Mr. Powell has spoken frequently of the tightening and loosening of financial conditions in the economy, which are partly determined by the level and direction of the stock and bond markets. Too big a rally, taking place too early, could induce the Fed to delay rate cuts.All of this will have a bearing on the elections of 2024. Prosperity tends to favor incumbents. Recessions tend to favor challengers. It’s too early to make a sure bet.Without certain knowledge, the best most investors can do is to be positioned for all eventualities. That means staying diversified, with broad holdings of stocks and bonds. Hang in, and hope for the best. More

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      The Betting on the Presidential Election Has Begun

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      While two leading prediction markets are fighting regulatory restrictions in court, wagers on politics and economics are still being made.Financial journalists love Wall Street aphorisms. I use them whenever I can.“Don’t fight the Fed” has been handy this year. “The stock market climbs a wall of worry” is useful whenever investors are fretting.Here’s one I’ve never been able to drop into an article — not yet, anyway: “It is an old axiom in the financial district that Wall Street betting odds are ‘never wrong.’”But nearly a century ago, on Sept. 28, 1924, one of my anonymous predecessors at The New York Times (bylines were uncommon then) used it. That hallowed saying could be repurposed today, except for a formidable problem. It refers to the betting on elections that took place on Wall Street, which was commonplace back then — and covered extensively in The Times and other major newspapers, as an important source of information about national, state and local political contests.Today, except for indirect and elaborate financial hedges on the policy implications of election outcomes, outright betting on elections is no longer a core part of American finance.Legal battles are underway to change that, however. And in the meantime, three prediction markets — PredictIt, Kalshi and the Iowa Electronic Markets — continue to operate and generate compelling insights. With any of them, it’s possible to make bets on who will win the 2024 presidential election and on a host of other consequential matters.Markets Versus PollsI’ve used prediction markets for years, especially during election season, much as my predecessors presumably used the Wall Street election betting markets — not to place bets but to obtain information.I don’t depend on these markets, and don’t buy the notion that they are superior to other means of obtaining information — or that they have the ability to reliably predict the future or change the world.Even so, they are illuminating. Some studies have found prediction markets to compare favorably with polls, especially when you are weeks or months away from voting. And when an issue or an election is important, one can never have enough data.Right now, for instance.The latest New York Times/Siena College poll shows that for the 2024 election, President Biden is trailing former President Donald J. Trump in five of six swing states. Both PredictIt and the Iowa market indicate, however, that most people placing wagers on those sites believe that in the end Mr. Biden will win.Which Question?John Aristotle Phillips, who runs the PredictIt market on behalf of Victoria University of Wellington, a New Zealand institution, said in an interview that there were frequently major differences between the findings of the polls and the prediction markets. That’s entirely normal, he said. “Polls and prediction markets ask different questions.”A poll asks who, right now, you would prefer as a candidate. But a functioning market that demands real money for a trade asks something else, he said, “not who you want to win but who you think will win.”As a sports fan, I understand the difference.If you asked me which baseball team I wanted to win, I’d always pick the Mets. But over many decades, they have usually disappointed me. So if I had to put money down, I’d never bet on them.What do I really think? It depends on which question you ask.The State of PlayKalshi, PredictIt and the Iowa market operate legally but function under specific limitations.One general problem is that “no states allow betting on political events and, if it was allowed, it would be on a state-by-state basis,” said Cait DeBaun, vice president of the American Gaming Association, which represents the gambling industry. You can’t avoid enticements for betting on sports if you watch a game on television in most major markets, but you won’t see ads for bets on politics. They aren’t permitted.But both PredictIt and the Iowa market offer overtly political wagers under academic exemptions granted by the Commodity Futures Trading Commission.The Iowa market, which started in 1988, is the most purely academic of the three. It is devoted entirely to research and teaching, but is open to anyone who wants to place a wager.PredictIt is operating under an academic exemption, too, but it has had to fight to retain it. The C.F.T.C. withdrew its permission in August 2022, and ordered the site to shut down, saying it had strayed from its academic mission. But PredictIt won a court injunction allowing it to continue operating, and it is suing the C.F.T.C., seeking permanent authority to run its market.It has 19 contracts running now, but Mr. Phillips said he expected to offer “hundreds” soon. “We aren’t going anywhere,” he said. “We’re going to keep operating.”Kalshi, the biggest of the three sites, is the most constrained at the moment in betting on politics. As a commercial derivatives market, it can accept trades amounting to scores of millions of dollars.It already runs prediction markets on inflation, unemployment, oil prices, Federal Reserve policy, government shutdowns, the temperature in Austin, who will win an Oscar and President Biden’s approval rating. The consensus forecasts are often on the mark and extremely useful.But what Kalshi has been unable to do is run a market predicting which political party will control Congress. The Commodity Futures Trading Commission has turned it down, saying that would violate prohibitions on election contracts implied by the Dodd-Frank Act of 2010. So Kalshi sued the C.F.T.C. this month.In an interview, Tarek Mansour, a founder of Kalshi, said that he would ultimately like to start markets on presidential elections and on a range of other contests. “Betting on elections is as old as the United States,” he said, adding that if that betting isn’t done through a careful marketplace like his, it will happen elsewhere anyway.Already, he pointed out, sophisticated and well-financed investors can hedge against the risks of election outcomes through bespoke derivative contracts arranged by investment banks. “Why limit these trades to the very rich?” he asked. “We want to make this kind of hedging available to the average investor.”I said that I would call these “trades” bets.He said, “I wouldn’t disagree.”Betting on U.S. elections takes place abroad. Betfair in Britain runs a robust market. And unregulated offshore betting is conducted on Polymarket, which uses cryptocurrency and was fined $1.4 million by the C.F.T.C. for running afoul of its rules. Then there’s FTX, the failed cryptocurrency exchange that was headed by Sam Bankman-Fried, who was convicted this month on seven counts of fraud and conspiracy. It ran an unregulated, offshore prediction market in the 2020 election cycle.“Driving these markets offshore doesn’t make sense to me,” Mr. Mansour said.I’ll leave these legal matters to the courts and the regulatory agencies to decide.But like my journalistic predecessors, I welcome the data trove that betting on elections provides. I’m hoping the entrepreneurs who run prediction markets will keep the information flowing, so we can really test the truth of the old saying, “Wall Street betting odds are never wrong.” More

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      Ron DeSantis’s Entry Into the Republican Race

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      More from our inbox:The Futility of Debating TrumpListen to Trans People, and Detransitioners TooRegulating A.I.: Can It Be Done?Splitting Finances During DivorceMusing About the ‘Best’ Eze Amos for The New York TimesTo the Editor:Re “Hot Mic, Dead Air and Eventually, DeSantis Speaks” (front page, May 25):So Ron DeSantis finally entered the race. Among his highest priorities is a crusade against D.E.I. (diversity, equity and inclusion) and “woke” that we must all witness now.I have three questions for Mr. DeSantis:First: What is wrong with diversity? Ecosystems are more resilient if there is diversity. Likewise for human societies. And diverse societies are more fascinating. Color is interesting; monochrome is boring.Second: What is wrong with equity? Don’t all Americans believe in equality of opportunity and equality before the law? And we know that extreme inequality of income and wealth hurts the economy.Third: What is wrong with inclusion? Which group do we propose to leave out? Don’t all God’s creatures have a place in the choir?Bonus question: D.E.I. is what wokeness is all about. What is so bad about wokeness? Whom does it harm? Where is the angry mob? Why should “woke” go to Florida to die?I put these questions to the governor.Michael P. BaconWestbrook, MaineTo the Editor:While Twitter may have its share of weaknesses, Gov. Ron DeSantis has skillfully demonstrated his leadership qualities and strengths. Choosing facts over fear, education over indoctrination, law and order over rioting and disorder — Mr. DeSantis’s record speaks for itself.Because of his common sense and guidance, Florida is growing now more than ever as people are migrating and planting new roots in the Sunshine State. With Florida as the model, we need look no further than Ron DeSantis as our nation’s future.JoAnn Lee FrankClearwater, Fla.The Futility of Debating Trump Doug Mills/The New York TimesTo the Editor:It is not too early to mention presidential debates. The Times should make an unprecedented recommendation that the sitting president not debate former President Donald Trump during the 2024 campaign.One simply cannot debate an inveterate, incessant liar. I mean that in the most literal sense: Lying is not debating, and it takes two to engage in debate. It cannot be done.Witness the recent CNN debacle, where, even when checked assiduously by the moderator, Mr. Trump repeated nothing but lies. Everyone who could have conceivably been convinced that the former president ignores the truth completely was already convinced. All others will never be convinced.Therefore, there is no upside whatsoever to sharing the stage with such a mendacious bloviator. In fact, it may serve only as an opportunity for the former president to call for another round of “stand back and stand by.” Should President Biden give him that opportunity?David NeuschulzChatham, N.J.Listen to Trans People, and Detransitioners TooChloe Cole, who lived for years as a transgender boy before returning to her female identity, now travels the country promoting bans on transition care for minors. She received a standing ovation at Gov. Ron DeSantis’s State of the State speech in Florida in March.Phil Sears/Associated PressTo the Editor:Re “G.O.P. Focuses on Rare Stories of Trans Regret” (front page, May 17):While the article rightly notes that the campaign to ban gender transition in minors is led by Republicans, it falls into the trap of viewing youth gender medicine and detransition as a right-versus-left issue. Many people who support equality for trans and detrans people insist that a public health lens is crucial.The article doesn’t mention the growing transnational archive of people who detransition, commonly with feelings of regret for having transitioned. If you look at countries with national universal health care systems like Sweden, youth gender care has recently evolved following state-funded reviews of transgender treatment. By contrast, in the U.S., our highly privatized and compartmentalized managed care system contributes to the politicization of this issue to the detriment of all.Perhaps this is why the article seems to downplay the trauma that saturates detransitioners’ testimonies. To mourn the loss of one’s breasts or ability to reproduce is no small matter.Journalists should stop equating detransition with an attack on transgender people. Instead, they should see young people testifying to medical harm as a call for accountability and strive to understand the full range of their experiences without fueling the dangerous right-left divide.Daniela ValdesNew Brunswick, N.J.The writer is a doctoral candidate at Rutgers University who researches detransition.Regulating A.I.: Can It Be Done?Sam Altman, chief executive of OpenAI, believes that developers are on a path to building machines that can do anything the human brain can do.Ian C. Bates for The New York TimesTo the Editor:Re “The Most Important Man in Tech (Right Now)” (Business, May 17):Warnings about the enormous dangers of artificial intelligence are warranted, but mere calls for “regulations” are empty. The question is not whether regulatory regimes are needed, but how to control the uses to which A.I. can be put.Anything human or nonhuman that is capable of creative thought is also capable of creating mechanisms for self-preservation, for survival. The quest for a “precision regulation approach to A.I.” is likely to prove elusive.Norman Cousins, Carl Sagan, Alvin Toffler and many others have presciently warned that technological advances provided both a cure to some of humanity’s afflictions and a curse, potentially threatening human existence.One doomsday scenario would be for tech scientists to ask A.I. itself for methods to control its use and abuse, only to receive a chilling reply: “Nice try!”Charles KegleyColumbia, S.C.The writer is emeritus professor of international relations at the University of South Carolina.Splitting Finances During Divorce Lisk FengTo the Editor:Re “Rebuilding Finances After Divorce” (Business, May 18):Your article is correct in advising spouses that they may “land in financial hot water” unless they seek expert advice concerning splitting retirement assets at divorce. But getting good advice, while a necessity, is not enough.Even if a spouse is awarded a share of a 401(k) or pension benefit as part of a divorce decree, that alone is not enough. Under the federal private pension law ERISA, spouses must obtain a special court order called a qualified domestic relations order (better known as a Q.D.R.O.) to get their rightful share of private retirement benefits.This should be done earlier, not later. Getting a Q.D.R.O. after a divorce is much harder — and sometimes impossible — to get.So, to protect themselves at divorce, the word “Q.D.R.O.” should be part of every woman’s vocabulary.Karen FriedmanWashingtonThe writer is the executive director of the Pension Rights Center.Musing About the ‘Best’ O.O.P.S.To the Editor:Re “Our Endless, Absurd Quest to Get the Very Best,” by Rachel Connolly (Opinion guest essay, May 21):As far as I’m concerned, the best of anything is the one that meets my particular needs, not those of the reviewer, not those of the critic and not those of anybody else.Likewise, what’s best for me is not necessarily best for you. I guess you could say that the “best” is not an absolute; it’s relative.Jon LeonardSan Marcos, TexasTo the Editor:While some may suffer from a relentless pursuit of perfection, some struggle with making choices, period. I’ve witnessed parents trying to get their toddlers to make choices about food, clothing, activities, etc. Hello, they’re 2!I wonder how many suffer from what I call “compulsive comparison” chaos, when one goes shopping after purchasing an item to make sure they got the best deal, even if satisfied with their purchase. True madness.Vicky T. RobinsonWoodbridge, Va. More

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      The Fed’s Struggle With Inflation Has the Markets on Edge

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      The central bank’s success or failure will affect your wallet and, maybe, the next election, our columnist says.Clarity about the future of inflation and the stock and bond markets would be wonderful right now, but that’s just what we don’t have.What we do have are enormous quantities of inconclusive data. There is something for everyone, and for every possible interpretation.The Federal Reserve is intent on whipping inflation now — to borrow an infamous phrase from the Ford administration, which failed spectacularly to “WIN” in the 1970s. But despite a series of steep interest rate increases by the Fed, and its stated intention to raise rates further this year, inflation remains intolerably high.“We’re stuck in the messy middle,” Josh Hirt, senior economist at Vanguard, said in a note this month.It’s a muddle right now, and the lurching stock and fixed-income markets reflect investors’ uncertainty.In testimony before Congress on Tuesday and Wednesday, Jerome H. Powell, the Fed chair, made it clear that the central bank not only intends to keep raising interest rates, but will increase them even more than “previously anticipated” if it deems that necessary to squelch inflation.It’s too soon to say how effective the measures taken by the Fed have been. The economy has been generating a lot of jobs and unemployment is quite low, but corporate earnings are beginning to fall. At some point, the economy is going to slow down — Vanguard thinks that may not happen until the end of the year. We may be heading into a recession. Or we may not be. The verdict isn’t in yet.Really long-term investors can ride out the turmoil, and those who prize safety above all else have reasonably good options now, too: There are plenty of attractive, high-interest places to park your cash.But what transpires in the next few months will still be critical for consumers and investors, and may even determine the outcome of the next presidential election. Considering what’s at stake, it is worth wading a little more deeply into this morass.The Fed and InflationThe Fed finds itself in a difficult spot. It has declared that it intends to bring inflation down to its longtime 2 percent target, but prices keep rising much faster than that.Our Coverage of the Investment WorldThe decline of the stock and bond markets this year has been painful, and it remains difficult to predict what is in store for the future.Value and Growth Stocks: Eight tech giants are no longer “pure growth” stocks, while Exxon and Chevron are, according to a new study. Here is what that means for investors.2023 Predictions: There are plenty of forecasts coming for where the S&P 500 will be at the end of the year. Should you be paying attention to them?May I Speak to a Human?: Younger investors who are navigating market volatility and trying to save for retirement are finding that digital investment platforms lack the personal touch.Tips for Investors: When you invest and where matters for taxes. But a few rules of thumb can stave off some nasty surprises.That 2 percent target is an arbitrary number, without much science to it. Whether 2 percent inflation is better than, say, 1.5 or 2.5 or 3 percent inflation — and how the inflation rate should be measured — are all open for debate. Let’s save those issues for another day.For now, the Fed has drawn a red line at 2 percent, and its credibility is at stake. The Consumer Price Index in January rose at more than three times that target rate.  The Personal Consumption Expenditures price index, which the Fed favors — and which, not coincidentally, generally produces lower readings than the C.P.I. — rose at a 5.4 percent annual rate in January, which was more than in the previous month. No matter how you slice it, inflation is ugly.So the Fed has few immediate options. It will keep raising the federal funds rate, the short-term interest rate it controls, in an effort to slow the economy and squelch inflation. The only questions are how high it will go and how rapidly it will get there. Traders in the bond market, who set longer-term rates through bidding and purchases, have had trouble coming up with consistent answers.  The central bank has already raised the short-term federal funds rate substantially and quickly, to a range of 4.5 to 4.75 percent, up from near zero just a year ago. But the federal funds rate is a blunt instrument, and the economic effects of these rate increases operate with a significant lag,The Fed could easily plunge the economy into a major recession. In a misguided bet that the Fed would beat inflation quickly or that a recession would arrive so definitively that the Fed could reverse course, bond traders began moving longer-term rates lower in October. That optimism also set off a stock market rally.But lately, with inflation and the economy failing to respond as traders had expected, the outlook has turned gloomier. Treasury yields reached or exceeded 5 percent for so-called risk-free securities in the range of three months to two years. That’s an attractive proposition in comparison with the stock market, and it’s no accident that stocks have fallen.Bonds and StocksEven 10-year Treasury yields have ascended to the 4 percent range. Compared with stocks, Treasuries in a murky market are, for the moment, exceptionally attractive.Falling earnings haven’t helped the stock market, either. For the last three months of 2022, the earnings of companies in the S&P 500 declined 3.2 percent from a year earlier, according to the latest I/B/E/S data from Refinitiv. And if you exclude the windfall from the energy sector, where prices were bolstered by Russia’s war in Ukraine, earnings fell 7.4 percent, the data showed.Corporate prospects for 2023 have begun to dim a bit, too, executives and Wall Street analysts are concluding. On Feb. 21, both Home Depot and Walmart warned that consumer spending had come under strain. The S&P 500 fell 2 percent that day, the worst performance for the short year to that date, in what Howard Silverblatt, a senior analyst for S&P Dow Jones Indices, called a “turnaround point” for the stock market.Whipping InflationIt’s early yet in 2023, but so far, stock investors are maintaining a relentless focus on the Fed, whose policymakers next meet March 21 and 22 and are all but certain to raise short-term interest rates further. The only questions are by how much, and how high rates will end up before the Fed concludes that it has accomplished its objective.  But with Mr. Powell aspiring to achieve the performance of his illustrious predecessor Paul A. Volcker, who vanquished inflation in the 1980s and set off two recessions to do it, it’s a fair bet that the Fed won’t back off its rate tightening policy soon.Bring down inflation and you are likely to be remembered as a hero. Bungle the job and you may well be memorialized as officials in President Gerald R. Ford’s administration have been, for their hapless effort to “whip inflation now.” In a widely derided public relations stunt in 1974, when inflation was running above 12 percent, the Ford White House distributed buttons with the WIN acronym, but that administration never beat inflation.It wasn’t until the next president, Jimmy Carter, appointed Mr. Volcker that the Fed even began to get control of inflation — and Mr. Volcker didn’t finish the job until the Reagan administration was well underway.The 2024 ElectionThe outcome of the next presidential election could well depend on whether the Fed gets the job done this time — and whether it causes a severe recession in the process.Ray Fair, a Yale economics professor who has been predicting presidential and congressional elections for decades, points out in a succinct note on his website that the political effects of the Fed’s efforts will be large. In his work, Professor Fair relies only on economic variables — and not the customary staples of political analysis — to forecast elections. His record is excellent.He outlines two paths for the economy. Because President Biden is an incumbent, and is likely to run for re-election, good economic results would be expected to help his cause.“In the positive case for the Democrats, if inflation is 3 percent in 2023 and 2 percent in 2024,” Professor Fair wrote, and if the economy grows at 4 percent rate in 2024 before the election, his economic model says the Democratic candidate is highly likely to win the presidency.On the other hand, he said, “in the negative case for the Democrats, if inflation is 5 percent in 2023 and 4 percent in 2024” and if the economy shrinks 2 percent in 2024 — in a recession — a Republican is highly likely to be the next president. He added, “Somewhere in between regarding the economy will mean a close election.”These statements assume that only the two main political parties mount credible campaigns. A well run third-party candidacy would complicate matters considerably.I’m not making any bets, either on politics or on the economy.  It’s all too complex and confused now.As always, for investments of at least a decade and, preferably, longer, low-cost index funds that mirror the entire markets are a good choice.Bonds are a safe and well-paying option right now. So is cash, held in money market funds or high-yield bank savings accounts.We may well be at a turning point, but taking us where, exactly? Unless you somehow know, it may be wise to play it safe for a while. More