In today's essay, you're going to find out what's happening in the market for three bullets that are killing the market. What's going to happen in 2019 and how you should be thinking about investing in 2019? Oh, yeah. And you're also going to find out if you're a noob or you're a pro. And we're coming to you from Avantika Tura, Florida. See, here's the thing. A new bill says the market's falling. What's happening in the market? I don't know what happened in the market today. A pro will say, oh, the stock market's pretty red. But let's try to understand what's going on. And is this sort of a seasonal pattern? Is this a temporary trend or is this something bigger? See a new bill. Say it's better to sell right now. Well, the market's up where a pro will say before you make a rash decision, but try to understand exactly what's happening, because anytime people make rash decisions, they're more likely to miss the upswings of the market. And that's a statistic for you. Eighty percent of people who react to the marketplace end up missing out on market highs, a.k.a. upswings. Now, look, this isn't to say you shouldn't be reactive. You should 100 percent react to what's happening in the market. You should understand what's happening first. Three major things are affecting the market right now. We're going to call those bullets. This is where a newb says, wait. Well, it's what now we're talking about. Like people are killing people where a process.
No, it's a reference to the three things that have injured the market so dramatically that have us wondering, is the market going to die? Is the global economy going to collapse or is this just an injury? Are we getting stitched up? And while we might be bleeding out, are we going to survive and come out ahead? Bullet number one, the Donald Trump Tax Cut and Jobs Act of 2017 was an adrenaline shot to the economy, a massive boost in the amount of spending, investment, and tax cuts for businesses. It was a great thing for businesses. But what are the implications of an adrenaline shot? Well, as with any form of dope, things have side effects and adrenaline happens to have the side effects of shakiness, anxiety, and something else. I can't remember what it is right now. And see, this was a jolly boost to our economy. Where we had an average GDP growth of around 2.2 percent per year, we had growth in the first half of 2018 of between 3.5 and four point seven percent. The tax cuts and the investment incentives led to so much spending. That, of course, the economy essentially skyrocketed in the first part of 2018. Well, now we're on the outside of the gates. That is, we don't know what's happening next, except we can try to figure out and predict what's going to happen in 2019. And this is where the news goes with GDP and the pro goes.
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GDP, gross domestic product. It's a measure of the success of the economy of a specific market. In this case, the United States had a given period, usually measured in Annam or years, but oftentimes measured as a quarter. Q One, two, three, four. So it was not and so on because it ends in the fourth quarter. And see, this all sounds great so far. But what was the additional impact of the tax cut plan? Well, when you cut taxes, things have to be made up somewhere. And what was one of the things that was changed? The doubling of the standard deduction, which for most people was a tax cut, but for real estate, it was a big incentive. That is essentially now gone. That is the tax benefits of real estate are now pretty dang watered down. In fact, in high-tax states, the tax benefits of buying real estate might have gotten watered down by as much as 17 percent in non-high-tax states. You saw purchasing powerful real estate decline by about 7 percent. That might sound tricky, but understand this if one side of the market that is businesses get a tax cut, but real estate gets a big penalty, what happens then? Well, you get in trouble, right? I work for myself. You want to be on my YouTube essay, blah, blah, blah. Instead, the big takeaway here is that people who were not already interested in buying houses were disincentivized from buying houses.
And see, this is where the NUPE says, oh, that's kind of like supply and demand. And this is where the process is. No, it doesn't work that fast. And real estate see, real estate's a little bit slower. The ready people, and set on buying ended up picking up on the market's enthusiasm. In the first half of 2018 and jumped into buying because they were already planning on buying. It was only the buyers who came out this second half, probably starting in June, July, somewhere on their of two thousand eighteen that started realizing, oh, I can't afford as much as I thought I could see. This is why people say that real estate lags in supply and demand and the curve that's associated with a fast bowler. Number two, interest rates skyrocketed about one and a quarter percent. That's crazy because one and a quarter percent. If you watched my Tenix essay link above over there at the little I button on how much interest rates affect purchasing power, you'll know the 10x rule for interest rates. Interest rates went up one and a quarter percent. And what is new, say interest rates used to be high. Just does that matter? Whereas the process interest rates used to be high because of high inflation. A one-and-a-quarter percent increase in interest rates today means purchasing power is down by twelve point five percent. C then the NUC says that where the process.
So a 12 and a half percent reduction in purchasing power from that coupled with a seven to 17 percent reduction in purchase. Howard, from the tax plan, no wonder real estate is seeing a softening. But what does this mean for the future? Where are we ever going to find our medication for this adrenaline shot withdrawal before we go there? Bullet number three. Well, it is so hawkish. Really with us. They're saying, oh, I made it. Wait. The Fed just talking about how the market affects rates. I always knew they were corrupt, says the new pro-investor, yeah, it could have a big impact on the market. Market pricing isn't a factor of what the market is today, but rather what people's expectations are for tomorrow. Now here's what this means for 2019. Not much. Seriously, 2019 isn't going to see any of these bullets. Here's more likely what's going to happen in 2019. Think about it. We're not going to see a new tax plan that's going to throw a wrench into how the entire market expects to operate. We're not going to see a hawkish Fed because, in the last two weeks of December, we've already started to chill out a little bit by 2019. And guess what? That's done to rates, NUPE says. I don't know. I don't look at rates, Pro says. I've been watching rates and I'm in your course and see you talk about the changes in rates.
And they've fallen about a half percent. That's right. Second half of December. Interest rates have fallen a half percent. What does it mean for 2019? For the first part of 2019, I think things are going to be pretty rough. And no, I don't mean Ralfe like Hollister is the amount of sales after you get over an adrenaline shot. That is all the side effects of that. You tend to remain a little shell-shocked, at least for the first three months of 2019. I'm expecting a lot of housing inventory that's going to hit the market and we might continue to see price drops before we see increases again. However, the latest drop in interest rates could make it an opportune time to pay something from sellers who have to sell, I think Jan is going to be a horrible time to put places on the market because everybody who's been waiting to sell and has to sell is going to be doing just that. It will be the perfect opportunity to find deals because right now deals are far and few between. So what is the newbs say? The newbie says I'm going to wait until the markets are at the bottom like it was in 2011. And the process, if I can find a good deal now where I can guarantee 20, 30, 40 percent equity. How much jump on that? Honestly, there ain't no indicators that suggest another 2008.
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