The Consumer Price Index (CPI) made a new cycle high in May, increasing at 8.6%.  Shelter is the largest overall category in the CPI (32%) and Owners’ Equivalent Rent (OER) is the largest component of the shelter category (24%).  OER is an attempt to capture homeowners’ housing consumption by calculating what they think they could...Read More

Consumer spending has been equal to 65-70% of U.S. GDP since the mid-1990s. Source: Macrobond. This means that the health of the consumer, and their ability to continue spending, has a large impact on the growth of the overall economy.  Many consumer related indicators are heading in a negative direction. Consumer incomes on a real...Read More

Labor market data is often one of the last economic indicators to decline as companies often wait to determine if the environment requires that they reduce their costs.  This often involves reducing the number of people they employ.  There are early indicators of this forming, as well as a few other indicators, that we can...Read More

Inflation has become a major focus, impacting economic activity, consumer data, and market prices.  While it is not possible to predict the exact level of future price growth, we can examine prior and current inflation data to determine the likelihood that the current growth rate is sustainable.  We can also look at market-based indicators to...Read More

Consumer spending accelerated at a record pace in 2021, aided by a sizeable increase in fiscal support (direct payments, enhanced and expanded unemployment, and deferred consumer debt payments).  That support has gone away in 2022, the acceleration in 2021 activity is now a headwind to 2022 growth comparisons, and the acceleration in prices is having...Read More

One of the ways that we track investor expectations for economic growth is by looking at the high yield or below investment grade market.  Issuers in that part of the credit market have fewer funding options than investment grade issuers and are sensitive to changes in investors willingness to provide new capital at affordable rates. ...Read More

Commodity price trends are diverging across different classification types.  This is a shift from the trend in the second half of 2020 into the end of 2021, and the initial reaction to the news of the Russian invasion at the end of February, when all commodities were increasing.  This shift in the trend could have...Read More

The U.S. Dollar Index (DXY) got to the highest closing level since December 2002.  The U.S. Dollar has been increasing against all of the major currencies within the DXY index as well as some of the largest emerging market currencies.  Historically, a large increase in the U.S. Dollar exchange rate signals a tightening in lending...Read More

Mortgage rates have been rising throughout 2022, and the pace has accelerated since March, ending the week of April 21st above 5% for the first time since 2011. Source: FRED. This increase in borrowing costs is starting to have an impact on current and future expected single-family activity.  Some of the impact is driven by...Read More

Throughout the course of 2022, we have been reiterating our view that economic growth and inflation would likely slow on a rate of change basis compared to 2021.  One of the reasons we mentioned is that the comparison set would be more challenging in 2022, especially starting in March.  The release of the March retail...Read More