Happy Friday! Brian Manning here with the weekly update. Let’s get right to it. Let’s see. So, Monday this week, we started to see an inverted yield curve. That’s a comparison of the two-year and the ten-year treasury. Historically, it’s a very good recession indicator when those two become inverted. It doesn’t mean we’re going to go into recession tomorrow. It could be a year, it could be 16 months. But it’s definitely an indicator and something for us to pay attention to. Tuesday, we had Case-Shiller giving us feedback on housing. So, in the month of January, in a month-over-month basis, we had housing go up by 1.1%. On a year-over-year basis, we had housing appreciate by 19.2%. So still just a smoking hot housing market.
We also got the FHFA. FHFA looks at appreciation on homes with conventional mortgages. So, it looks at lower price homes, whereas Case-Shiller just looks at every home. In the month of January, FHFA had appreciation at 1.6% and on a year- over-year basis had appreciation at 18.2%. Another item was that Zillow came out with their forecast and Zillow says they anticipate from February 2022 to February 2023 to see an 18% increase in housing appreciation. So still very robust housing. One chart I want to show you here… real quick is just how housing usually fares as far as recessions are concerned, because recession is not necessarily a bad thing. And usually housing interest rates do really well. So, if we go back here in the 60s and starting there, every dark vertical line is when we had a recession. So… had a recession in the 60s, housing mostly went flat. Had a recession, in the 70s, housing went up a little bit. Mid 70s had a recession, housing went flat, and then it went up a little bit. Into the 80s, into two recessions, we had housing go up in the beginning of the 80s. Looking into the 90s, we had a recession. We also had housing go up. In the beginning of 2000, we had a recession with housing go up as well. I would say to me, this is a blip right here because this is 2008 when mortgages were just ridiculous. So, you could have a 580 credit score, stated income, stated asset, 100% loan. So, if we… So if we took this blip out and we stayed on the trajectory, it would still keep going up. Had a very minor fast recession in 2020 right before COVID, and now, we’re still seeing housing go up there as well. So… Historically, if we look at recessions, it’s very favorable for interest rates. It’s very favorable for housing. So, we’re not overly concerned right now about the recessionary indicators as far as housing is concerned.
Wednesday of this week, we got ADP. ADP is the largest provider of private payrolls in the US for the month of March and the first Wednesday of every month, we get an employment report. So, ADP had 405,000 jobs created in the month of March. So still a very strong report. We also had Freddie Mac this week release some information on inventory. And Freddie Mac thinks that on a national level housing is short as far as inventory is concerned by about 4 million homes. So for sure, even in the headwinds of rising interest rates, our inventory is still so low on a national basis. But even the rising rates right now are not curtailing. That’s what we’re seeing as far as the housing demand. Thursday of this week we got PCE, that’s the Personal Consumption Expenditure. This is the Federal Reserve’s favorite gauge of inflation. I’m going to say we don’t agree with that. The reason why we don’t agree with it, because it does not take into account out-of-pocket housing expenses and out-of-pocket medical expenses. So, we think there’s a big gap that’s left out of it. But anyway, it is the Federal Reserve’s favorite gauge of inflation. This is for the month of March. On a month-over-month basis, you had inflation up 4/10th of a percent. And then on a year-over-year basis, we had inflation running at 5.4%. So inflation still really high. Also got some feedback from apartment list. And in the month of March, we had new leases up 17.1%. It’s down a little bit from where it was before in the 18% range, but still really high. And definitely putting first-time home buyers in a position to look at… I’m sorry. Putting renters in a position to become first-time home buyers because you’re just looking at escalating rental costs and then you have a renewal. So, renewals are averaging an increase of anywhere from 7.9%. So, certainly in the rental market, you’re seeing high rates there as well.
Today, we get the BLS report, that’s the Bureau of Labor Statistics. The first Friday of every month, we get the BLS report. For the month of March, we had 431,000 new jobs that were created. We also had unemployment creep down from 3.8% to 3.6%. Something I want to show you here on unemployment as well in regards to recessions is… This is a chart that shows unemployment being a trigger into a recession in the US. Again, this goes back to the fifties. So… right now, yes, we’re at very low unemployment rates. We went from 3.8% to 3.6%. But we have to watch it because as you see here, back in the 60s, you get a low of unemployment. You go into a recession and then change of unemployment. Here again, mid 50s, low of unemployment. Same thing in the 70s, hit a low of unemployment, went into a recession. Mid 70s, low of unemployment. Again into the 80s, unemployment low. 90s, unemployment low. 08 unemployment low. So, history is definitely going to show itself that every time we see a low in unemployment, when that starts to turn, that’s going to be a recessionary indicator as well. So, right now, we’re still seeing unemployment move towards lower levels. It has not turned yet. It’s something that we’re just going to want to pay attention to because when we do see unemployment get to his lowest levels and then we start to see a turn, at that point in time, that’s going to be a really great recession indicator as well. Again, it doesn’t mean that… you know, unemployment terms we’re going to go into recession tomorrow. It could be 12 months, 16 months, 18 months out, but it’s definitely an indicator for us to pay attention to. I’m around all weekend. If you have any questions, let me know. Call me on my cell phone, text me. If you want to go through our strategic buyer consultation, I’m available. Also, we’re still in our initiative with supporting community food share. We went there and volunteered yesterday. They’re just an incredible organization. We’re trying to raise money for them through May 31. So, if you are inclined to contribute into the community, it would be very much appreciated. Happy Friday. Have a great day.