Last week was all about inflation which we talked about. Consumer inflation came in at 3.7% which was higher than projected, and STILL really far away from the Fed’s 2% overall inflation target. Too many people on TV just fan the flames of market optimism, completely void of any recollection of economic history. In the past we’ve seen inflation weaken as an initial sign of progress, only to rear it’s ugly head again, right before deflation finally kicks in and wrecks a bunch of stuff in a lot of sectors of the economy. This is showing those same markers, but ok maybe it’s for different reasons. I agree with that. And Fine, those of you who are asking “why isn’t he talking about PCE?!?!” which is the Fed real marker for whether we’re making a dent in inflation…we’ll it’s still positive too, and until it starts reporting zeros in growth of even some negative numbers…we’re still in a month over month ascending line chart. By the way, I’m willing to bet that Fed members were probably aware of this during their Jackson Hole Symposium meeting recently. Remember a number of them hit the press stating that they’re prepared to raise rates higher if they need too, and then hold them there for longer….maybe its time we start believing what they’re telegraphing.
If anything has a chance of making the Fed pause rate hikes this week it will be softening jobs data. As we’ve been telling you, they want to see 4.5% unemployment rate – which is a combination of increasing numbers of American’s hitting the jobless line at the same time that companies are telegraphing hiring freezes, and making less new jobs available. Look no further than the most recent JOLTS report that was 700,000 LESS JOBS available than the previous month. And don’t even get me started on the hundreds of thousands of combined tech layoffs that have happened this year. Maybe you even forgot about all that because they have drifted off into the furthest recesses of the news headlines and collective attention span. And while weakening unemployment is bad for the economy, it’s actually good for the Fed…which somehow is also good for the economy…but on a much longer timeframe than we’ll probably be comfortable with. September 20 will either be a HUGE day for the Fed or a massive disappointment that forces everyone’s attention on their November meeting. If they need to take more action, I’d honestly like to see them do it now RATHER than whack the economy one more time in November right before the holiday shopping season.
At this point opportunities in the real estate market need to be looked at the MICRO level, meaning YOUR specific scenario and what will help YOU advance your real estate and mortgage goals. Yes, we know that certain market conditions like lower rates, reduced home prices, and more inventory will help more people, but you know what?…THIS is the time where maybe you have to compete against YOU. What does your life circumstances call for? Is renting STILL in your future? What are you capable of doing that can help you increase your income, decrease your debt, and raise your credit score. Let’s start digging in and going after our personal financial goals like they mean something and go hit those goals!
So with that, let’s take a quick look at what’s coming up in the markets this week.
Tuesday: Building Permits and Housing Starts. Both of these are critically important to real estate and mortgage. We need more inventory any way we can get it. And with existing home sales really coming up short this year, our hopes for more buyer options in housing in 2024 will come from these batches of data. Hey Builders – we’re watching and hoping you step to the plate with more homes in the new year!
Wednesday: Is the biggest day of the week, Month, and maybe even the year. Jerome Powell will announce the Federal Reserve Interest Rate decision, give his prepared remarks, and hold a press conference. Will they hike or will they pause? If they hike, what will they tell us about that decision? If they Pause, can they tell us that we’re finished or not?
Thursday: Unemployment Claims, Philly Fed Manufacturing Index, Existing Home Sales will be released. Mostly par for the course here, but keep an eye open for any surprises.
Friday: Flash Manufacturing PMI and Flash Services PMI both come out.
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