Pollack: The Great Recovery

The Monday Morning Quarterback
A quick analysis of important economic data released over the last week

By Elliot D. Pollack & Co | Rose Law Group Reporter

The Great Recovery is expected to continue!

The Blue Chip panel raised their economic growth outlook again in June. Their GDP expectations for 2021 is now 6.7% and 4.4% for 2022. The expected growth is the result of job openings, a red-hot real estate market, and pent-up demand for goods, services, travel, and everything that has been denied the public for the past year.

The CPI reached its highest rate (5.0%) since August of 2008 and inflation will remain a concern for the rest of the year. The two main drivers are pent-up demand and supply chain bottlenecks. Forced work stoppages have led to shortages ranging from furniture to cars. As the reopening expands, more and more consumers are willing to spend their savings on goods and services, increasing the pressure of already strained supply chain. As of now, the Fed remains optimistic that the inflation effects are transitory and no changes to their policy are expected. They are scheduled to meet this week.

Locally, Greater Tucson’s low level of existing inventory continue to push prices higher.

U.S. Snapshot:

  • The Blue Chip panel has increased their expected GDP growth for 2021 to 6.7% and the 2022 forecast to 4.4%. The increase in growth has been accompanied by an increase in inflation. Labor shortages will contribute to inflationary pressures.
  • The consumer price index increased at its fastest pace (5.0%) since August 2008. Expectations remain that the Fed will not react to the latest data. The Federal Open Market Committee is scheduled to meet this week.
  • The University of Michigan consumer sentiment increased to 86.4 in June from 82.9 a month ago. Inflation remained the top concern for consumers.
  • Job openings increased rapidly in April and reached 9.3 million. Hiring outpaced separations by 6.1 million to 5.8 million. The increase in job openings points to the difficulty of employers finding workers.
  • Consumer credit increased $18.6 billion in April. The entirety of the increase occurred in non-revolving credit ($20.5 billion), while revolving credit decreased by $1.9 billion. Consumers focused on paying down revolving credit lines (credit cards).

Arizona Snapshot:

  • Low levels of existing inventory in Tucson’s real estate market continues, according to the Tucson Association Realtors latest data. Total listings are down 61.1% to 752 from a year ago. The number of sales dropped from April but increased 12.9% from a year ago. Lower inventory and more sales pushed the median sales price to $329,500.
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