Full Transcript
Happy Friday! Brian Manning here with your weekly update. Let’s get right to it. So, first thing I want to talk about this week is really what happened with the jobs report on Friday. I didn’t give any feedback on this report on Friday because it really takes a while for the markets to digest all the information. The report comes out in the morning. I do this video in the morning, and it’s just not enough time to really dissect everything. So, let’s take a look at that.
So, this is jobs report from the BLS. That’s the Bureau of Labor Statistics. It’s the government’s report. This is for the month of July. It was really announced that there were 528,000 new jobs created in the month of July, which historically is a blockbuster report. You know, the first question is if employment has really peaked here. Looking at employment, we’ve talked about this in the past, is that when you see a turning point in employment, when new hires start to reduce, you start to see an uptick in unemployment. That’s really very strong recessionary sign.
So, one of the questions with this really strong report is, was at the peak of employment? Also, there was a lot of modeling that’s done with this. So, there are two forms of reports that are done here. One is through the BLS, and this is the business survey. So there’s a lot of modeling here. They look at what’s called the birth/death ratio. So, they look at how many businesses were opened, the categories of those businesses were in, and historically, how many employees they would hire. They look at how many businesses closed down or went out of business, what category those businesses were in, and then how many people would get laid off there. So, there’s a lot of modeling in this.
The other challenge in this report is that they look at part-time people and they count part-time employees as a gainfully employed person, which I do agree with, I understand that. But if someone has part-time work and they have two or three part-time jobs, then those two or three part-time jobs are actually counted as two or three jobs in this 528,000 members. So, it’s really murky to say the best of how good or how accurate this number is.
One of the reasons why we say that is because in addition to that report, there’s also a household survey so that’s when, I don’t know, 60 to 75,000 households are called across the US and then that information is dissected. In the household survey, for the month of July, only 179,000 new jobs were created. That’s quite a difference from the 528,000 they say in the business report. So, we’ll have to wait and see what happens with additional employment here. But that really dissects the information we had there.
Tuesday this week, we got CPI. We’ve been waiting for this. This is the Consumer Price Index. This is what we really feel is the more accurate gauge of inflation. The Federal Reserve looks at the PCE. That’s the Personal Consumption Expenditure. The reason why we think CPI is more accurate is because it includes out of pocket housing expenses and out of pocket medical expenses for us as Americans.
So, CPI came back cooler than expected. The headline number was expected to be up 2/10th of a percent, and that number came back flat, which was good to see. On a year-over-year basis, that number went from 9.1% to 8.5%. The expectation was that on a year-over-year basis, you see that number move to 8.7%. So that came back lower than expected.
We also look at the core rate. The core rate is CPI strips out volatile items such as food and energy costs. The core rate was up 3% of a percent, but that was actually expected to be up a half a percent. So, that was better than expected. And then we got a year-over-year basis on the core rate, so that stays at 5.9%. It was expected on a year-over-year basis that would actually rise from 5.9% to 6.1%. So, it was good to see some flattening there.
And then we also got feedback on rents. The rental component showed the rents went up 7/10th of a percent on a month-over-month basis. On a year over-year-basis, rents went up from 5.8% now to 6.3%. But you got to remember, the rental component here is looking at new leases and lease renewals. If you look at like, apartment list for example, and they’re showing rents going up significantly higher, that’s all new rental prices. But this average right now is new leases being signed and also renewals taking place. So, even with these numbers calming down, inflation is still hot. We’re still seeing high inflation everywhere, but we’re seeing a little bit of calming, which is really great to see.
Today, we get some feedback on import prices. Import prices also measure inflation. This was better than expected. This was down 1.4%. The primary reason we’re seeing a benefit in our import prices here is because the US. Dollar is very strong compared to other countries. And part of the reason why the US. Dollar is so strong right now is because our Federal Reserve started to hike rates before many other countries did. So, we’re seeing strength in the dollar and we’re seeing some benefits in the imports there. I’m around a weekend. If you have any questions, let me know. If you want to go through our strategic buyer consultation, give me a call.
If you have any questions on pre-approval, what’s happening in the market, what interest rates are doing, call me anytime, text me on my cell phone. I’d love to help you. Happy Friday. Have a great day!
-Brian
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