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
Inflation continues to dominate headlines, now reaching a 39-year high in the month of November. We are now at a year-over-year rate of 6.8% and forecasters are now expecting 2021 to end with 6.4% annual inflation (Q4 over Q4). The last time the country saw inflation this high in 1982 was in the middle of a protracted recession. In stark contrast, we are in an expansion with high demand and limited supplies fueling the current growth in prices. Inflation is also being driven by the tight labor market. Employers are increasing wages to attract employees among a labor market where there are far more job openings than there are unemployed people.
All of this has created substantial complications for business planning and is continuing to impact consumer confidence. And while current forecasts expect inflation to moderate in 2022 down to 2.7% that does not spell relief for consumers or businesses. The increase in wages and the price of finished goods are here to stay for the foreseeable future.
Despite the headaches being delivered by inflation and supply chain woes, economic forecasts remain robust for the final month of 2021 and for 2022. COVID remains a continuing threat to our economic progress, but health care solutions have allowed the economy to remain open and hopeful for a permanent solution.
U.S. Snapshot:
Inflation accelerated to a 39-year high this past November. Year-over-year, the Consumer Price Index increased 6.8%. On a monthly basis, the rate slowed to 0.8% from 0.9%. Core inflation increased 4.9% for the year and 0.5% for the month. Inflation is outpacing household income growth and will continue to affect consumer confidence.
Despite major inflation and COVID variants, the Blue Chip Economic Indicators continues to forecast above average growth of 5.6% (an increase from last month) in 2021 and 4.0% in 2022.
Labor productivity in the third quarter fell at the fastest rate in 60 years. Annualized growth declined from 2.4% in the second quarter to -5.2% in Q3. Unit labor costs rose at an annualized rate of 9.6%. The decline in productivity exacerbates inflation as companies have to cover increases in labor costs.
Job openings increased and reached 11 million in October while the number of hires outpaced separations 6.4 million to 5.9 million, respectively. The pressure remains on employers to fulfill orders and meet consumer demands that continues at high levels.
Consumer sentiment preliminary reading of 70.4 had a slight increase in the first half of December, up from 67.4 in November but down from 80.7 a year ago.
Arizona Snapshot:
The total number single family and condo sales across Maricopa Country dropped to 10,262 in November, according to the Information Market’s latest data. November’s level was down 0.8% from a month ago. The decline was in resales with a decrease of 1.4% to 8,870 and the number of new builds increase 3.1% to 1,392. The median sales price for new build increased 19.9% and resales grew 27.5% from a year ago.
