Both the gasoline index and the housing index rose in February. (iStock)
Inflation is rising again, mainly due to rising gas prices and housing costs. for the past 12 months, consumer price index The U.S. Bureau of Labor Statistics reported that the consumer price index (CPI) for all items increased by 3.2%. This was a slight increase from the previous month’s 3.1% rise.
On a monthly basis, the CPI rose by 0.4 percentage points in February. This increase comes after the index rose 0.3 points in January.
Most of the CPI increase in February was contributed by the shelter index and gasoline index. Together these account for 60% of his monthly increase. In February, the shelter index rose by 0.4% and the gasoline index rose by 3.8%.
The overall energy index also rose by 2.3 percentage points in February. In January, it was down 0.9 points. This is primarily due to higher gas prices, with the average price last week being $3.17.
As certain indexes rise, it becomes unclear whether the Fed will cut rates as originally promised.
“We do not expect inflation trends to accelerate again this year, but as developments in the coming months are less clear, the Fed may continue to seek further confidence that inflation is on track to sustainably return to target.” is high,” he said. said Sarah House, senior economist at Wells Fargo. Said.
While other indexes were flat last month, only a few fell. The food index, for example, remained flat after rising 0.4% in January. The new car index fell slightly by 0.1%, and the medical services index also fell.
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Consumer spending and debt rise as US economy begins to recover
Mortgage interest rates remain close to 7%
Inflation and mortgage rates are closely linked, which is why they are still hovering near 7%, despite falling slightly last week.
As of March 7, 30-year mortgage interest rates averaged 6.88%. According to Freddie Mac. This is down from the end of February, when interest rates averaged 6.94%. The current average is still higher than this time last year, when interest rates averaged 6.73%.
“Things are slowly getting healthier. It’s still a seller’s market, not a buyer’s market. There are more buyers than sellers,” said Lance Evans, a member of the Jefferson Lewis Board of Realtors. Said.
Many buyers are holding onto their stocks, waiting for interest rates to fall. In 2023, he expects 4.8 million homes to be sold, his lowest number since 2011. According to Freddie Mac. This decline was primarily related to existing home sales, with the number of existing homes sold at about 4.1 million, the lowest level in 30 years.
The rate-lock effect forced sellers to keep their homes and buyers to compete for new construction.
Interest rates continue to fall, so it’s a good idea to take advantage of this and start looking for a mortgage now. Visit an online mortgage broker like Credible to compare interest rates, choose a loan term, and get pre-approved from multiple lenders.
Almost 32% of homes sold last quarter were new construction: REDFIN
Economic recession fears rise again, consumer confidence slumps
Even though economic indicators suggest the health of the U.S. economy, many Americans are not convinced. The conference board, which explores current consumer thinking about the economy, report The company announced that its consumer confidence index fell from 110.9 in January to 106.7 in February.
The Conference Board index had improved in recent months, but fell last month as consumers worried about another recession.
The index, which measures short-term expectations for income and employment growth, also fell to 79.8 from 81.5 in January. Scores below 80 tend to indicate an upcoming recession.
“For jobs, the market is still strong. It’s just a lot weaker than it was a year ago, when it was easier to change jobs for higher wages,” said Robert Frick, an economist at Navy Federal Credit Union. .
“And now, with a contentious election season looming, national elections are having a huge impact on perceptions of the economy.”
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Many consumers carrying credit balances know it’s a bad idea: Survey
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