Investors are ahead of today’s inflation and more rate hikes ahead
It has been almost five months since the Federal Reserve turned its full attention and force of action toward fighting inflation.
We may see if it’s having any material affect with the July inflation data released in the week ahead.
There are two versions of the inflation figures wholesale inflation and consumer inflation. The consumer inflation is what gets all the attention.
It June, fueled by high gasoline and food prices, consumer inflation was 9.1 percent higher than a year earlier. It was the latest in a string of 40-year high records this year. Russia’s war in Ukraine has pushed up energy and food prices. And there is nothing the U.S. Federal Reserve can do about the war, and little it can directly do to bring down food and fuel costs.
The central bank’s tool to fight inflation is interest rates. Raising its shortterm target interest rate is designed to soak up money, keeping it out of economic circulation and thus cooling down demand. Interest rates are a sponge in the economic ocean that was flooded with pandemic money. The Fed isn’t trying to drain the economy so much as sopping up the cash. It can be a slow process.
July’s inflation reports should show price hikes are cooling off. Gasoline prices have been falling. That alone will help the headline inflation number. However, core inflation (excluding food and gas) could slightly rise compared to a year ago.
Some speculators believe the central bank may slow its rapid rate hikes in the months ahead. Perhaps the speed may slow, but not the direction. Several regional Fed leaders have tried to damp down such talk. The Fed is “nowhere near” done raising rates and “going to continue to do what we need to do” to bring down inflation, said two of them recently.
The stock market rally in July shouldn’t be read as an indication of inflation easing this summer, nor the
Federal Reserve about to reverse course. Instead, it’s a sign that investors believe those will be the conditions in early 2023.
Consumers are shopping and spending in the hereand-now. Investors aren’t.
While the Consumer Price Index may not be the Fed’s preferred inflation gauge, the enduring strength of price hikes in July would lend weight that the central bank is far from finished with hiking interest rates.
Tom Hudson hosts ‘The Sunshine Economy’ on WLRN-FM, where he is the vice president of news. Twitter: @HudsonsView
1,691 closings, up from 1,387.
Miami-Dade, in comparison, saw more deals but a slowdown in year-overyear activity. The county saw a 2% decline in transactions, to 3,146 closings from 3,217 during that same period.
“I’ve watched the luxury market evolve in the last decade in direct correlation with the market improving here,” said Julie Jones, vice president of ultra luxury sales at Douglas Elliman Real Estate. Jones specializes in selling luxury condos in Broward. Why the attraction?
“It’s easier to get around than Miami,” she said. “There’s less traffic. Someone who sells their house on Miami Beach can enjoy the same family lifestyle with less congestion and make a profit on their Miami homes.”
Broward benefited from the same windfall that Miami-Dade experienced during the pandemic. Out-of-towners from Boston, Chicago, Maryland and New York poured into Broward in search of housing as more companies allowed their employees to work remotely or expanded to South
Florida. The newcomers wanted to benefit from tax savings, year-round warm climate and loose COVID-19 public health rules.
Also boosting Broward: Miami-Dade’s higher home prices, which drew luxury buyers a little north to the neighboring county. Just like prospective buyers shopping the median sales price, luxury shoppers crossing the county line would have noticed a big price difference.
Miami-Dade has an average $1,107 price per square foot for condos and $831 price per square foot for single-family homes; Broward has $967 price per square foot for condos and $667 price per square foot for single-family