Americans are feeling the effects of inflation, especially on expenses like gas and groceries. While inflation moderated compared to a year ago, housing costs, classified as housing, contributed significantly to the overall increase in the Consumer Price Index (CPI). In August, housing costs rose 0.3%, marking the 40th consecutive monthly increase and reflecting a… Read more
Americans are feeling the effects of inflation, especially on expenses like gas and groceries. While inflation moderated compared to a year ago, housing costs, classified as housing, contributed significantly to the overall increase in the Consumer Price Index (CPI). In August, housing costs rose 0.3%, marking the 40th consecutive monthly increase and reflecting a 7.3% increase over the previous year.
Even when adjusted for inflation, home prices have increased by approximately 10% compared to 2008. Inflation-adjusted home prices now sit a notable 55% above their historical average . At the same time, the availability of single-family homes for sale is approximately 60% below the historical average. As supply dwindles, existing home sales saw a 15.3% decline compared to last year, the largest decline since 2010.
Linking perception and reality to data
The economic outlook for the United States suggests an expectation of slower growth in the coming months, although a general recession is not expected. Analysts predicted a significant slowdown, with estimates ranging from a 0.6% annual growth rate in the fourth quarter to a rate of 1.3% in the next quarter. Throughout 2023, strong consumer spending and historically low unemployment have boosted the US economy despite the Federal Reserve’s efforts to combat inflation by raising interest rates.
However, there is a strange disconnect between the authorities, who point to the cooling of inflation indicators as a sign of progress, and ordinary consumers, who continue to face rising costs of basic commodities such as food, fuel and insurance. Core inflation, which excludes volatile items such as energy and food, remained at a remarkable 4.3%.
This disjunction between official data and lived experiences presents a challenge for Joe Biden as he seeks to convey the state of the economy to voters in his 2024 re-election campaign. inflation and high prices.
Federal Reserve Chairman Jerome Powell acknowledged this sentiment, saying that while households are generally in good financial shape, people are expressing dissatisfaction with the economy and its impact on their daily lives. spending.
The tension continues in the real estate market
The US housing market continues to struggle with a low inventory of homes for sale, which is driving up prices and making it more difficult for potential buyers. The National Association of Realtors reported that the nation had a 3.3-month supply of housing inventory in July, only about half of the 5 to 6 months needed for a balanced market.
While some expect inflation to decrease in the coming months, it is important to note that this does not mean that house prices will decrease. Instead, it could mean that prices will continue to rise at a more moderate pace or remain stable. This slow appreciation of home prices can allow incomes to catch up, making home buying more affordable.
Jared Bernstein, president of the US Council of Economic Advisers, noted that the purchasing power of consumers has increased significantly. He noted that inflation has grown more slowly than wages for low- and middle-wage workers. According to him, this is evidence that the economic policies associated with the Biden administration, often called “Bidenomy,” have benefited the American people.
For sellers, the current housing shortage may represent an opportunity to get higher prices. However, those looking to buy a new home will face the same competitive market conditions and higher mortgage rates as other buyers.
While a correction in the housing market is necessary, it is unlikely to resemble the crisis of 2008 due to different market conditions. However, any correction is likely to take some time.
In addition, Americans are becoming more pessimistic about the economy. President Biden has fallen amid concerns about inflation and his economic policies, setting the stage for a challenging political landscape as he heads into a possible re-election campaign.
Disclaimer. The information provided is not trading advice. Cryptopolitan.com takes no responsibility for any investment made based on the information provided on this page. We recommend independent tron dent and/or consultation with a qualified professional before making any investment decision.