Real estate is a big concern, and we're going to have to watch it carefully.
The major components of inflation for us are energy costs and housing costs and medical costs, and I don't see any major break in any of these. I wouldn't be surprised to see still 3.5 percent to 4 percent CPI for us for this year.
Right now, as long as the prices are steady and people have their jobs, I think they will do what is needed to make their payments and avoid the foreclosure process.
I don't think a lot will change right away.
We already know the number of permits drawn by builders has decreased and is going to continue to decline because of the cool-down in the housing market. We won't need as many construction workers.
Consumers, with higher energy prices and higher interest rates, are going to have cut back somewhere.
That's a huge revision. The economy of the Inland Empire is much stronger than they were originally reporting.
The employment numbers are pretty decent. But the concern I have is that two of the sectors showing the most strength – construction and financial activities – are very interest-rate sensitive.
If it stays at this level for about six months or so, you will see the prices of other products and services increase.
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