Do Tariffs Help Consumers and Save Jobs? Biden is predicted to continue Trump’s tough-on-China trade policy that is touted as a way to protect American jobs. Essentially tariffs are taxes on imported goods from other countries. The tariff that Biden is expected to finalize includes Lithium-ion batteries and electric cars from China. The latest studies are showing that these tariffs result in a loss of 140 -175,000 jobs across industries as well as increased prices and costs for consumers. Cleary there are mixed results on tariffs, and I find the example of iron/steel product tariffs to protect domestic jobs illustrative. While iron/steel tariffs protect a few specific jobs in the US, any company that is using iron and steel (which is a lot!) will have to pay higher than market prices which will result in layoffs and higher consumer prices.
Mortgage Rates – moved sideways this week after briefly reaching 15-month lows. Rates are down approximately 0.75% from this time last year.
Inflation – the Fed’s preferred inflation Index, the PCE, was released today and it showed that all-in inflation rose 0.155% in July. Year over year inflation remained flat at 2.5%. The core rate, which strips out food and energy rose 0.161% and the year over year reading remained at 2.6%. If the 0.161% number reading was annualized, it would equal 1.93% annual inflation which is below the Fed’s goldilocks target of 2%. Shelter remains the largest contributor to inflation. It rose 0.39% in July and is up 5.27% year over year.
Home Values – the Case Shiller Home Price Index , considered the ‘gold standard’ of appreciation showed that prices rose 0.2% in June to another all-time high. Prices are up 5.4% year over year which is slight moderation from the previous report of 5.9%.
Rents – Apartment list released their monthly National Rent Report which showed new rents declined 0.1%. Rent levels typically decelerate this time of year. Year over year rents are down 0.7% and they have been negative since last August. The vacancy rate is at 6.7%, the highest level since August 2020 This level is expected to remain elevated with all of the multifamily new construction coming on the market.
Mortgage Application to purchase homes rose 1% last week and are down 9% year over year. Refinance activity was flat but is still up 85% compared to last year. Refinances made up 47% of total application volume.