I’ll admit to feeling some discouragement over the last few years as I have heard the exasperation in your voices and seen the disappointed looks on your faces after sharing with you the news that your house payment would almost double if you sold your current place in pursuit of just one extra bedroom, a different neighborhood, or some extra garage space. Hopefully, we see some reprieve coming in the near-term. While together we wait for lower interest rates to finally come back around, the “relief” in the next few-ish months may need to be found in managed expectations–which is not what any of us want to hear.
This inflation stuff has been tough. Though still a far cry away from the double-digit price increases (and coinciding interest rates) we saw a couple generations ago, it still hurts to see your paycheck not stretch as far as it did when the current decade began. The cumulative effects of ever increasing prices doesn’t take that long to compound drastically. When I first started in this business, you could buy a “starter homes” along the Wasatch Front for $70,000-$80,000. Fast forward 28 years, and that’s the price of a new truck. Tougher still though for me to swallow is the fact that my meal prepper at Costa Vida yesterday called me “pops”. I pretended that my tears were from the extra hot sauce and jalapeños.
Today we saw the Fed’s favorite gauge of inflation, the report on Personal Consumption Expenditures, indicate that inflation stabilized this month. The PCE shows year-over-year price increases at only 2.8%. This is the “official” register that the Fed has committed to reduce to 2.0% before lowering interest rates. So far today, the markets haven’t move a whole lot–at least compared with the reaction we saw a few weeks ago after similarly stagnant inflation numbers were revealed on other indices (PPI/CPI). That day, most of the volatility occurred subsequent to Fed member commentary several hours after the PPI & CPI were released.
No comment from any officials on the PCE today, since they are on an obligatory gag order this week ahead of the FOMC meeting next Tuesday and Wednesday. Even though there is a 98% chance that they’ll leave rates unchanged, this blackout period void of Fed-speak has brought some welcome tranquility to an otherwise high-strung interest rate environment.
