Economist's Commentary: May 20, 2008
Quick Take on the Economy: May 20, 2008
By Danielle Hale, Research Economist
Producer Price Index
- The Producer Price Index (PPI) rose 0.2 percent in April following a 1.1 percent increase in March. The core index, which excludes food and energy prices, rose by 0.4 percent after a 0.2 percent increase in March.
- April prices led to a slight moderation in the cumulative 12-month rate of increase, which decelerated from 6.9 percent in March to 6.5 percent in April. While the inflation slowdown is welcome, the annual rate of increase has been above 6 percent each of the last seven months-a sustained rate of increase not seen since 1981.
- The core index rose by a greater amount than the overall index due to moderation in food and energy prices. Energy prices decreased 0.2 percent after seasonal adjustment although they are still increasing on an unadjusted basis.
- Gasoline prices decreased 4.6 percent after seasonal adjustment, while increasing 3.2 percent on an unadjusted basis.
- The prices above are based on April data. With today's oil price nearing $130 per barrel, surely the PPI will move up in the coming months.
What does today's data mean for REALTORS® and consumers?
- The Fed is likely finished with its interest rate cuts. It may raise rates next year.
- Green home features will become increasingly more popular. Check out this REALTOR® Magazine article for tips on how to take advantage of this knowledge.
Daily Forecast Update
- NAR's monthly official forecast as of May 7th (15K PDF)
- GDP Q2: 1.1%
- GDP Q3: 2.1%
- Unemployment rate by election time: 5.4%
- Average 30-year fixed mortgage rate in June: 6.1%
- Average 30-year fixed mortgage rate in December: 6.2%
- The next Fed policy change: a rate hike in January 2009.
This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >
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