What are AI data centers doing to your power bill? As a country we are now spending more to build AI data centers than we did to build the entire interstate highway system even when you adjust for inflation. There are estimates that put AI and approximately 1.5% of total GDP and that AI data center investments accounted for 92% of GDP growth in the first half of 2025. Where is all this power coming from?
Mortgage Rates have moved mostly sideways over the past 3 months. We had minor improvement this week and rates are down about 0.5% this year.
Existing Home Sales which measure closings on existing homes, rose 0.5% to an annualized pace of 4.13M in November. A normal market is closer to 5-5.5M Units which shows there is continued buildup of demand. There is 4.2 months’ supply of homes which is close to a normal market of 4.6 months. Homes are now on the market for average 36 days, up from 32 this time last year.
Inflation – The Bureau of Labor and Statistics released their November Consumer Price Index. Inflation ticked up only 0.2% over the last month and is up 2.7% year over year (down from 3%). The Core rate, which strips out food and energy prices, rose 0.1% per month in Oct and Nov. and is up 2.6% year over year. Overall this was a good inflation report for the bond market, hopefully we continue to see deceleration in inflation.
Retail Sales the US Census released their Retail Sales report for October which was relatively flat. If you strip out autos, Retail Sales rose 0.4% (the EV tax credit just ended).
Mortgage Applications to purchase homes declined 3% last week but are still up 14% year over year. Refinances fell 4% last week and are up 86% year over year. Refinance applications make up nearly 60% of applications.