In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses inflation and the producer price index.
Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update discusses the producer price index and unemployment insurance claims.
Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update discusses mortgage purchase applications and the producer price index.
Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update discusses jobless claims and the producer price index.
Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights PPI and the Home Builder’s confidence index.
Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights mortgage purchase applications and the producer price index.
Consumer prices fell modestly in the past month because of a measurable decrease in energy costs. However, one month does not set a trend. The broad trend points to increasing inflationary pressure. Here is the raw data on prices:
Note the rising producer price index, which reflects what companies are paying for their products. The consumer price may not necessary always follow the producer prices because there are some consumer prices that are purely service, such as prices for a haircut or lawn care, that are not captured in producer prices. Also, producer prices are known to gyrate wildly at times, with big upswings only to be followed by big downswings. However, the recent producer price trend has only been going up and up without any meaningful down. Does the higher producer price inflation, therefore, portend a higher consumer price inflation?
The Federal Reserve is not terribly concerned that consumer prices will rise to uncomfortably high levels (like a 5% inflation rate, for example) despite the massive printing of money. One reason for the slower inflation in relation to the amount of money printed is because the velocity of money — i.e., how many times money exchanges hands in a year — has contracted during this slow economic recovery. But what happens when the velocity picks up? There certainly appears to be plenty of pipeline inflationary pressure that will keep consumer price inflation at above the Fed’s ideal inflation target for the foreseeable future.
Every week the Research staff analyzes key data releases and explain what they mean for you and your business. In this update, we give the highlights of the most important data releases for the week of July 12-July 15, 2011, along with graphs that show the latest movement and overall trends.
Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights retail sales, the producer price index, and jobless claims.
An Ultra-Loose Monetary Policy
The Federal Reserve announced recently that it will not raise interest rates for at least 2 years. Given the current weakness in the economy, the Fed has been forced to keep rates low this year. The Fed, though legally independent from the White House and Congress, generally does not want to do anything during an election year. So the next rate increase from the current rate of zero will be sometime in 2013, assuming that the economy has measurably improved by then. Not every voting member of the monetary policy agreed and there were 3 dissents, which is quite unusual.
What does this mean for real estate practitioners? First, the Fed controls — not mortgage rates — but what is known as the Fed Funds rate. The Fed Funds rate is a very short-term borrowing rate between banking institutions. The banks can always go to the Fed discount window if borrowing from each other proves difficult. This rate is essentially at zero and it will remain that way for the next two years.
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