Inflation peaks?

When we look at the data, there are encouraging signs in different sectors. The three most important are automobile, home and labor:

A Automobile: Lack of semiconductors Low supply of new cars and high prices; It has also helped raise the price of used cars. But industry insiders are convinced that half-supply is normal (hopefully, for the rest of the year). And, they see prices starting to rise.

Here is Nick Willard, Trucker’s chief industry analyst:

“We are now beginning to see signs of demand adjustment. High interest rates combined with high fuel prices represent a headwind for demand, which may explain why The average used list price is decliningMay is 1.6% lower than in April 2022. In case of price adjustment compared to the beginning of the month We see more vehicles being identified than during the same period last year. This is true for used cars where we see Half of the list we have been using has been adjusting prices downwards since the beginning of the month. This trend is driven by the part of the full-size vehicle used. “(Emphasize the front)

Supply growth could go a long way, but for now, credit costs could cap on rising new and used car prices.

A Houses: Inventory is rising, with 6 months of supply of new homes under construction. New home sales are declining, feeling the brunt of high mortgage rates.

April New home sales decline sharply – 4th consecutive monthly drop. And existing home sales also declined in April – 2.4% lower than the previous month, and 5.9% lower than the year before.

But we still don’t see the price roll over. The biggest hurdle in reducing prices is that the supply of the house is less than the demand. Prices are the best hope for an increase in supply from the medium. Meanwhile, the improved rate is putting a limit on prices, especially for homes under $ 1 million.

Ideally, the price of a single family home remains stable and then decreases. At the very least, we are looking for signs that the volatile rate we showed yesterday has reached its peak.

A Labor and wages: Epistically, we hear that lots of company hiring spree is over. Some retailers who have hired extra – Amazon, Walmart, Target – are even cutting back.

My colleague Josh Brown observed:

“We will have a very healthy and happy workforce, which will pay more than it did before the epidemic. However, in the second half of this year, the labor shortage is going to decrease a lot. We are already hearing about this simplification in conference calls across several industries. Including both Walmart and Amazon, the largest and second largest private employer in the United States. They say they are extra staff. Other CEOs and CFOs are telling Wall Street that it has become easier to find people this spring. Or they may just need fewer people. The effect is the same. “

Labor has received a big reset in the last few years. It seems to be coming to an end, as wages are stabilizing. There was an extended overdue, but the madness and recruitment bonuses were coming to an end.

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These are encouraging signs that inflation has probably reached its peak, but that falling prices are not happening in every sector. Most notably, we see energy and food improve. Some of this is a function of the Russian aggression in Ukraine, but it is not the only driver of price in the region.

Rents are higher, after declining in 2020, a full recovery in 2021, and rents have continued to rise ever since.

Even so, owning one is still beyond the reach of the average person. . .

Before:
Ambitious pricing (May 25, 2022)

Transit taking longer than expected (February 10, 2022)

How everyone miscalculated housing demand (July 29, 2021)

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