Past, Present and Future

We have experienced, either directly or indirectly, all sorts of changes over the last few years. We are paying more at the pump each time we fill up, we are waiting longer for certain products that may or may not show up and we probably know companies that are desperate to hire workers that simply cannot turn up.

As we continue through a summer of uncertainty, the questions are not just increasing but also getting tougher. Everyone wants answers but few know where to look. This month, I’m going to review some of the most common economic indicators. When viewed collectively, these can provide significant insight.

Gross domestic product (GDP)

This is a basic measure of overall production for the U.S. economy, including the value of all finished goods and services that were produced in a given time period. During times of expansion,
the GDP will increase. Real GDP will include the impact of inflation while nominal GDP considers the current market prices. This measure is produced by the Bureau of Economic Analysis, which is a division of the Department of Commerce. It is reported each quarter, generally released within four weeks of
the end of the quarter. Most will use the associated change, on a percentage basis, from one quarter to the next. For the most recent quarter as of press time, first quarter 2022, GDP decreased 1.6%.

Consumer price index (CPI)

This tracks the changes in prices for what is considered a market basket of
consumer goods and services. These include items such as energy, food, apparel, education, new vehicles and medical services, among others. As such, it is also the most common measure of inflation. CPI is tracked and produced by the Bureau of Labor Statistics and can be sorted by various base indexes and geography, but the most common is the All Urban Consumers (CPI-U). This index increased 1.0% in May 2022 and 8.6% over the trailing 12 months. The report is produced monthly and is generally available within two weeks after the end of the month.

U.S. unemployment rate This measures the total number of workers currently unemployed as a percentage of the total workforce. It is also tracked and produced by the Bureau of Labor Statistics and, similar to CPI, it can be broken down by job sector, such as Transportation & Warehouse, Construction and Manufacturing, as well as by geography. The unemployment rate for May 2022 was 3.6%. This index is produced monthly and generally available the Friday following the last day of the month.

Consumer spending
This tracks consumer spending on goods and services by U.S. residences. It is similar to GDP in a few ways. First, it will increase during times of expansion. Second, it illustrates the change, on a percentage basis, from a previous time period. And finally, it is produced by the Bureau of Economic
Analysis, who also produce GDP. This index was up 0.9% in April and 6.3% over the trailing 12 months. It is produced monthly, generally released by the end of the last weekday of the following month.

As we head into a summer of uncertainty, the questions are not just increasing but also getting
tougher. Everyone wants answers but few know where to look.

Home sales
This measures sales volume and prices of existing single-family homes in the U.S., including condos. It also breaks down the country by geographic regions. As with many of the indicators, a common metric is the percentage change from the prior period. This measure is tracked and produced by the National Association of Realtors (NAR), who publish it monthly. It is typically released on or about the 20th of the following month. For April 2022, home sales decreased 3.4% but the median sale price exceeded $400,000 for the first time ever, coming in at $407,600.

Housing starts
This report tracks housing starts, as well as building permits and housing completions, associated with privately owned, single-family homes. Like many of these indexes, the information can be separated on a regional basis and is produced each month. It is produced on a joint basis by the U.S. Census Bureau and the U.S. Department of Housing. For May 2022, there were 1,549,000 housing starts, which was a 14.4% decrease over the starts in April. It is typically released on or about the 15th of the following month.
Federal Reserve beige book
If anyone has their finger on the pulse of the U.S. economy, it’s the Federal Reserve – or, as discussed next, perhaps they are the pulse. Eight times a year, they publish a compilation of reports
collected from each of the 12 regional banks that make up the system. The result is a sampling of information; some is anecdotal, and some is statistical but all of it is insightful. The most recent
edition came out June 1, with future editions scheduled for July 13, September 7, October 19 and November 30.
Federal Reserve meeting
Few events have more impact on the U.S. economy than the regularly scheduled meeting of the Federal
Reserve Board. At these meetings, all sorts of decisions are made directly related to monetary policy, including the (in)famous discount or federal funds rate. The most recent meeting in June 2022 sent shockwaves worldwide when the Fed raised interest rates by 0.75%. This is the largest increase
since 1994. The Fed meets a total of eight times a year, with the remaining meetings scheduled for July 26 & 27, September 20 & 21, November 1 & 2 and December 13 & 14. The list above is by no means all inclusive, as there are all sorts of other meaningful and insightful indexes, reports and surveys available. The key is to focus in on a group and consistently track it every month. As the old saying goes – the past is history, and the future is a mystery. But indexes and reports can definitely help to make today a present.

Few events have more impact on the U.S. economy than the regularly scheduled meeting of the Federal
Reserve Board. At these meetings, all sorts of decisions are made directly related to monetary
policy, including the (in)famous discount or federal funds rate.

July 2022 Properties Magazine