Turkeynomics, Jobs Improvement, Inflation Figures

Back in 1986, when the Farm Bureau started tracking the price of Thanksgiving, the cost of a dinner for 10 was $28.74. Last year we hit a 35 year low (when adjusted for inflation) as fewer people hosted large parties which decreased demand. This year the cost is up 14% to $53.31 for the full meal deal. Cranberry prices increased about 11% to $2.98 per pound while the price of 12 dinner rolls increased 14.5% to $3.05. Green beans increased 5.3% and pie filling was up 7% The largest contributors to inflation were turkey (23%) and pie shells (20%). Overall the cost of Thanksgiving is still less than $6 per person – a very affordable meal. If you are like me you can even get a turkey for free (which might be your second or third) when shopping at WINCO

Rates moved higher during the first half of the week but bounced back to last week’s levels yesterday morning in response to news of the Omicron variant which spooked investors. Mortgage Backed Securities (MBS) appear to be trading in gently-sloped downward path which indicates a slow increase of rates. Rates are up approximately 1/4% from this time last year.

Inflation – the Fed’s favorite measure of inflation, the Personal Consumption Expenditures (PCE) showed that inflation rose 0.6% in October and is up 5% year over year, the hottest reading in 30 years. The Core rate (strips out the more volatile food and energy), which is the Fed’s main focus, is up 0.4% in October and 4.1% year over year. It’s important to remember that in October of 2020 inflation was at 0%. Also worth noting in this report is that wages are up 11% year over year showing wage pressured inflation. Q3 GDP’s second reading was released showing an anemic 2.1% growth.

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Jobs – the number of people filing for unemployment claims for the first time dropped below pre-pandemic levels to 199,000 which is a 50 year low. The total number of individuals receiving some type of benefits is down to 2.4M which is more in line with pre-pandemic levels (down from a high of nearly 20M).

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Home Sales – the pace of existing home sales (roughly 90% of the market) increased nearly 1% in October but is down nearly 6% year over year. Inventory is down 12% year over year. The Median home price is now $354,000 up 13% year over year. Sales of homes under $250K fell 24% while home sales above $750K rose 30%. First time home buyers accounted for 29% of sales while cash buyers accounted for 24%. Investors purchased 17% of homes which is up from 13% the previous month.

Mortgage Applications to purchase homes increased 5% from last week and are down only 4% year over year. If you factor in the increase of cash buyers purchase activity is similar. Refinanced increased a nominal 0.4% last week and are down 34% year over year.

Thankful – our family is incredibly thankful for our wonderful clients and business partners. Thank you for referrals and business, it put turkey on our table this year!

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