Gregory Heym is Chief Economist at Brown Harris Stevens. His weekly series, The Line, covers new developments to the economy, including trends and forecasts. Read on for the latest report and subscribe here to receive The Line in your inbox.
It's been a busy week for economic data, so welcome to yet another bullet-point edition of The Line.
Rising Gas Prices Pushed Consumer Prices Up Sharply in August
- The consumer price index rose 0.6% last month, fueled by a 10.6% surge in gasoline prices. This is the biggest monthly increase in prices this year.
- Core inflation—which excludes food and energy prices—was up 0.3% in August, 4.3% higher than a year ago.
- Here’s a breakdown of price increases over the past year by category.
- Real hourly earnings—basically wages adjusted for inflation—fell 0.5% last month. While this data sounds concerning, it’s not as bad as it seems. Don’t believe me? Well, read this.
- In case you didn’t read that article, it basically says the monthly change in core inflation is the key metric to look at, and it’s been trending lower for the past year.
- Even with the uptick in prices, economists don’t expect the Fed to hike rates this month.
Rising Gas Prices Pushed Retail Sales Up Sharply in August
- Yes, I intentionally copied the previous headline to make my point.
- Retail sales are not adjusted for inflation, so any increase can be due solely to higher prices. Spoiler alert!
- Sales rose 0.6% in August—the same increase as consumer prices. So, more money is being spent for the same amount of stuff.
- Over the past year, retail sales are up 1.6%, much lower than the 3.7% increase in prices during that time. So, more money is being spent, but for less stuff.
- Sales at gas stations rose 5.2% last month, by far the biggest increase of any category.
Mortgage Rates Tick Up
- After two weeks of declines, the average 30-year mortgage rate rose to 7.18%.
- Freddie Mac attributed the rise to the "reacceleration on inflation" and "strength of the economy."
- It’s weird to say, but the economy is not a friend to the housing market right now. As long as it remains decent, rates will not come down enough to get buyers excited.
Tough Break, Aaron
- As I’m sure you’ve already heard, Aaron Rodgers tore his Achilles tendon on his fourth play of the season.
- While "completely heartbroken," he has vowed to "rise again."
- I wish him the best of luck in his comeback.
- This is why I never bet on the Jets.