Inflation Watch

The Consumer Price Index moved up 0.1% in May. This represents a 3.2% year/year rate, but is only 1.2% if annualized. The biggest decrease was 11.5% for energy prices, countered somewhat by a 5% rise in food prices. Shelter prices continue to push this number upward. 

The chart below from the U.S. Bureau of Economic Analysis shows that inflation is biting into household savings. This is important in our area because of the increased demand for higher savings to meet down payments on homes for first time buyers. 

The Conference Board ‘s Leading Economic Index (LEI) declined in May by 0.7%. This followed the 0.6% decline in April and tallied a 4.3% six month drop, and adds to a 8.1% drop for 12 months, and a general decline since 2021 as inflation became a central focus of the economy. The ten indicators used tend to signal where the economy will be headed. This is important in comparison with similar downward levels in the 21st century hit this low in the middle of the last three recessions. The contrast with the three preceding lows is the relatively low unemployment, strong S&P 500 performance, strongest opening six months for tech since 1983, tepid but not terrible manufacturing orders, and private housing building permits that are still positive. There still seems to be plenty of blue sky among the clouds. Not mentioned in the LEI is the potential banking crisis should office space renewals fail.

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These three reports were echoed in the California Community Poll for June showing a low of only 10% of Californians satisfaction with their housing and other living expenses. This dropped from 21% two years ago. Four in ten surveyed are thinking of moving out of the state. This thought has yet to materialize in actual moves as the properties for rent or purchase remain well below average.

Please give me a call at Premier Funding Network to answer any of your mortgage questions at 714-283-9900.

 


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