We are back with some breaking economic data.
Inflation rose by
0.4% in March. On the monthly basis,
it's the same as the February figure.
But here's the key year over year inflation rose by
3.5% more than expected, more than we saw last month.
Here to discuss the report is
Investopedia's editor in Chief, Caleb Silver.
Yikes. What What's your reaction to this?
And breakdown some of the categories where we're seeing these,
these higher than expected numbers.
Yeah, inflation is still out of the Fed's control right
now.
We see higher prices month after month for gas,
energy and shelter prices and food prices.
If you strip out food and energy,
I don't know why it would because we have to
pay for them every single day.
You have a 3.8% inflation rate,
much higher than the Fed's target.
Remember, the Fed would like this closer to 2%.
We have been stuck above 3%.
And if you look at the trend and this is
what we care about,
is this a blip or is this a trend going
on for the past several months?
It's a trend. Inflation is creeping higher,
not lower. That's going to impact the Fed's decision to
lower rates.
They may not rates at all this year.
Yeah, I was just going to say obviously this is
not what the Fed wants to see.
We were thinking what maybe June we could start to
see rates go down.
Realistically, what could this mean now?
What should people prepare for?
People should pair prepare for the fact that prices are
going to be high for a while and those interest
rates that the Fed is kept at a 14 year
high, they're going to remain high too.
That means higher AP Rs on your credit cards.
That means higher mortgage rates,
which means the housing market is going to be stuck
some more.
That means higher interest on everything you're borrowing money for.
Money is tight right now.
That said, we're spending. We say that the cure for
high prices is high prices.
Eventually consumers tap out. They're not tapping out.
You just run a piece about airline fares and people
willing to pay them this summer.
Consumers continue to spend, spend themselves in debt,
but they should readjust for the fact that high prices
and high interest rates are here for a while.
So it should be, yeah,
I mean is that the bottom line here,
people should just understand this is the way things are
now and it might be this way for a while.
Yeah, this is the adjustment you need to make for
your household,
for yourself, for your small business,
because prices are not going down.
We're not having deflation. We're only in certain areas,
like used cars and trucks,
but everything else, especially energy prices,
are getting more expensive. Just gasoline,
which is the one that everybody has to deal with,
that is $3.60 a gallon right now is
$3.40 a month ago. That is driving prices higher.
Higher fuel prices and energy prices just makes everything more
expensive.
Look at commodities like sugar,
Look at cocoa, Look at copper.
Everything is more expensive. To be clear,
the Fed is not going to raise rates anymore,
right? That's highly unlikely, but they're probably going to stay
where they are.
What is the impact for the average consumer then if
you are so looking?
There are a lot of folks are probably OK the
summer this fall,
that's when we're going to buy a house because things
are going to drop.
What's the message to those people?
The message is you might have to wait a little
while longer even though there's a lot of pent up
demand,
but mortgage rates are still north of 7%.
That just keeps the housing market in the deep freeze.
If you're borrowing money and you owe interest,
got to pay that high interest credit card down right
now because rates are not coming down anytime soon.
And and maybe if you,
you just, do you think a lot of people are
just going to say,
OK, I'm going to buy the house anyway,
not waiting anymore because folks have money to spend and
that's the deal.
People that need a house and have been waiting for
a long time and have the down payment are going
to do it.
You're going to see a lot of cash buyers in
the market right now.
You're going to see some movement.
But the general uptrend in the housing market,
we're probably have to wait till Midsummer or fall for
that.
All right. Caleb Silver breaking it down.
Appreciate it. Thank you so much.