HIGH DEMAND, LOW SUPPLY
- U.S. Home-Price Growth Rose to Record in April The S&P CoreLogic Case-Shiller National Home Price Index rose 14.6% in the year that ended in April, the highest annual rate of price growth since the index began in 1987.
The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 14.6% in the year that ended in April, up from an 13.3% annual rate the prior month. April marked the highest annual rate of price growth since the index began in 1987. (…)
“My thinking is, is this going to slow down with people being vaccinated and wanting to go on vacation? [But] it is still incredibly active.” (…)
“Affordability is worsening,” said Mark Fleming, chief economist at First American Financial Corp. “That’s what will eventually cause house prices to not continue to accelerate and then eventually begin to slow down.”
From John Authers:
(…) Eric Brescia, economist at Fannie Mae, makes these concerning conclusions:
- due to how shelter costs are measured, the housing components of the indices decelerated considerably over the past year, despite strong home price appreciation. This has kept topline inflation from being even higher.
- Lagged effects from the past year’s house price appreciation and more recent rent recovery could begin to flow into inflation measures as soon as the May readings. House price gains to date suggest an eventual acceleration in shelter inflation from the current rate of 2.0 percent annualized to about 4.5 percent. If house price growth continues at the current pace, shelter inflation would likely move even higher.
- Timing lags suggest increasing shelter inflation will last through at least 2022, meaning “transitory” increases to the rate of overall inflation may be more prolonged than many are expecting. Due to the heavy weight given to shelter, housing could contribute more than 2 percentage points to core CPI inflation by the end of 2022 and about 1 percentage point to the core PCE. Both would be the strongest contributions since 1990. (…)
- More Vehicles Are Selling Above Sticker Price U.S. car dealers are able to get more than the factory price for some of their vehicles as strong demand and production shortfalls have made for a seller’s market.
(…) In mid-June, about three-quarters of all vehicles sold in the U.S. went for the sticker price or above, according to research firm J.D. Power. That is up from 67% at the end of May and higher than the average of around 36% before the pandemic, the firm’s data shows. (…)
(…) The Organization of the Petroleum Exporting Countries and its allies are holding some high cards at the moment. More and possibly explosive growth in demand is expected in the coming months as economies recover from the coronavirus pandemic. Crude oil production in the United States, a nemesis for OPEC in recent years, has been slow to recover from a precipitous drop in 2020 as investors in producers lean on the management to restrain spending. (…)
Oil companies reacted to the steep drop in prices and demand in 2020 by slashing investment in drilling for oil and gas. Pressured by regulators, courts and investors to curb their carbon emissions, oil companies have begun to pump more capital into clean energy like wind and solar. As a result, they may be slow to increase spending to bring additional oil to market just as more drivers take to the road and airlines schedule more flights.
“The supply side and its financiers are losing their appetite for oil more quickly than the world’s consumers, putting key OPEC Plus countries firmly in the driver’s seat,” analysts from Energy Aspects, a research firm, wrote in a recent note to clients, which forecast $100-a-barrel oil in 2023-25. (…)
“I take my guidance from what I see today,” he [Prince Abdulaziz bin Salman, the Saudi oil minister and chair of the OPEC Plus meetings] said during a news conference June 1. “I am not taking any guidance from a projection.” (…)
A new Indeed survey finds that many job seekers don’t express a sense of urgency about finding a new job, but say they are likely to pick up the search for work in the months ahead.
The vast majority of job seekers want a new job in the next three months, but even among those who say their job searches are urgent, more than 20% don’t want to start a new position immediately.
Many unemployed workers say increased vaccination against coronavirus, shrinking savings, and the opening of schools in the fall will be key catalysts for stepping up their job searches.
Workers without college degrees — who also tend to be in lower-wage jobs — give these reasons for delaying the job search:
- 25% are afraid of COVID, and are waiting for vaccination rates to climb before getting back to work.
- 20% say they have a financial cushion.
- 20% are staying home due to childcare responsibilities.
- 12% say their unemployment insurance is the reason they’re not rushing to get a job.
(Bloomberg)
Short-Staffed Restaurants Prop Up Table Service With Technology Labor shortage encourages full-service chains to deploy serverless ordering and payment strategies that were pioneered in fast food
(…) more full-service chains have begun integrating so-called tabletop technology into the dining experience because it has demonstrated its value, both for the customer’s experience and the restaurant’s bottom line, said Deepthi Prakash, global director of product and marketing TBWA\Worldwide, an Omnicom Group Inc. advertising agency. (…)
“People order more and the tables turn over faster, because they can get their orders and they can get their bills sooner,” she said. (…)
“If the guest is uncomfortable and is looking for the server experience we can adapt, but what’s been interesting is in both of these situations we’ve had high guest adoption,” Ms. Manning said.
(…) the servers love these tablets because it makes their job easier and allows them to make more money,” John Cywinski, president of the grill and bar chain, said in a call to investors.
- Mohamed El-Erian: The inherent instability of the Goldilocks market consensus Too much confidence is placed in the view that inflation rises will be transitory
El-Erian warns that the Fed’snew approach to monetary policy to being dependent on outcomes in economic data rather than the traditional forecast-based approach, “it is likely to be very late in adjusting strategy should its transitory inflation call not materialise. A late slamming of the brakes, rather than an earlier easing off the accelerator, would significantly increase the risk of an unnecessary economic recession.”
Euro-Area Inflation Slows to Below 2% in Dip Seen as Temporary
Consumer prices rose 1.9% from a year earlier, down from a more than two-year high of 2% in May. Core inflation, a less volatile measure that excludes volatile items such as food and energy, slowed to 0.9%. (…)
Bloomberg Economics predicts that upward pressures will also resurface from August as the recovery strengthens, and because of statistical effects such as a comparison with a German sales-tax holiday last year. (…)
United Bets on Travel Revival With Biggest-Ever Plane Order The airline will purchase 200 Boeing 737 MAX jets and 70 larger Airbus A321neos to fuel its post-pandemic growth plans.
China’s Economy Flashes Hints of Weakness Expansion in the factory sector slowed in June, while the services sector softened as Covid-19 outbreaks dampened consumer sentiment.
(…) On Wednesday, China’s National Bureau of Statistics said its official manufacturing purchasing managers index fell slightly to 50.9 in June, from 51.0 in May. (…)
Beneath the headline number, the subindex measuring production declined to 51.9 in June, from 52.7 the previous month, as recent shortages of semiconductors, coal and power held back output at many factories, the statistics bureau said. (…) The subindexes measuring the oil, coal and metal industries also weakened, weighing on total demand, officials said. (…)
Operations at Shenzhen’s Yantian Port, one of the world’s busiest, were cut to 30% of capacity beginning in late May and have only started to recover in recent days, according to port officials.
Meantime, the subindex of new export orders fell deeper into contractionary territory to 48.1 in June from 48.3 in May, signaling weakening external demand for Chinese goods. (…)
China’s official nonmanufacturing PMI, which includes gauges of services and construction activity, fell in June to 53.5 from 55.2 in May, the statistics bureau said Wednesday.
The subindex measuring service activity fell to 52.3 from the previous month’s 54.3, while new orders received by service providers dropped into contractionary territory, to 49.5 in June from 52.0 in May, reflecting a quick cooling of market demand. Subindexes tracking air transportation, catering and accommodation also fell into contractionary territory. (…)
Meanwhile
With credit flows in retreat, authorities are getting creative in resolving messy situations. Bloomberg reports that retail giant Alibaba will assist the Jiangsu regional government in bailing out stricken peer Suning.com, after the latter had fallen into distress following a string of ill-advised acquisitions. Alibaba is likely eager to get back in the Communist Party’s good graces after chairman Jack Ma ran afoul of the government last year. Alibaba coughed up a hefty $2.8 billion fine in April to settle allegations of monopolistic behavior. (Almost Daily Grant)