Local Market Monitor’s National Economic Outlook for October ’22
National Economic Outlook
By Ingo Winzer
The surge in home prices appears over, finally flattened by mortgage rates near 7 percent, but investors’ hopes for steady prices and higher rents hang largely on a growing US economy – which right now seems uncertain.
Consumers are the bulk of the economy, and their spending pattern through the first eight months this year suggests very slow growth ahead. Most telling is how much money they spent on food. Compared to last year, people paid 8 percent more for food. They haven’t bought more food – the population hasn’t grown – they’ve just paying more for it, our best measure of inflation. One of the reasons is a 40 percent increase in how much they spent for gas; the war in Ukraine has boosted the cost of energy, which goes into making and transporting almost every product we buy, especially food.
Higher prices for food and gas mean that people have less money for other things. Spending for cars and shopping at Wal-Mart were up just 3 percent. Overall, spending was up 10 percent, but if inflation is 8 or 9 percent, the increase in real spending was very close to zero.
In September, jobs were up 3.4 percent over last year (but they remain stuck at the same number of jobs right before the pandemic, almost three years ago). Jobs were up 3.5 percent in construction, 3.3 percent in manufacture, 4 percent in business services, 2.9 percent in heathcare, 7 percent at restaurants, but just 1 percent in the large government sector.
Jobs are usually a good measure of economic activity, but if recent gains only get us back to zero, we’re not seeing strong growth.
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