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inflation: Recession or Inflation? Even Fed Members Don't Know For Sure. - 03/05/08 07:47 AM
With Friday's jobs report looming, mortgage markets are especially skittish about whether the economy is in a recession, or facing inflation.
Four Fed speakers Tuesday did little to quell the debate:
9:00 A.M.: Fed Chairman Bernanke stayed on message that foreclosures and falling home values are dragging down the economy. 10:00 A.M.: Fed Vice Chairman Kohn said that banks will "face challenges" but will not fail en masse. 1:00 P.M.: Federal Reserve Governor Mishkin said that deflation is more concerning to him than inflation 1:00 P.M.: Dallas Fed President Fisher said fighting inflation is more important than fighting recession.Four speeches, four different perspectives.  … (3 comments)

inflation: What High Oil Prices Mean To Mortgage Rates - 03/04/08 08:24 AM

After briefly exceeding its all-time high, oil closed Monday at $102.45. 
Rising energy costs can lead to inflation because American Business eventually passes on its higher costs to American Consumers.
When consumers have to spend more money for the same amount of product, it's called "inflation". 
Another way to look at inflation is like an erosion in the value of a dollar.
The presence of inflation causes mortgage rates to rise because mortgage debts are repaid in dollars.  If those dollars are losing their value, the rates tied to those debts have to increase to "cancel out" the erosion.
This is why mortgage rates spiked … (2 comments)

inflation: $100 Oil Could Mean More Than High Gas Prices For Americans - 01/03/08 02:06 PM
The price of oil briefly touched $100 per barrel yesterday, just short of the all-time inflation-adjusted high of $102.81 in April 1980.
According to economic forecasting firm Global Insight, each $10-per-barrel increase in oil prices:
Increases gas prices by 19 per gallon Cuts consumer spending by one-third of a percent Reduces employment by 100,000 Adds one-half percent to consumer prices And, because oil prices have nearly doubled from the $51/barrel levels of January 2007, the above figures calculate out to:
$0.95 more per gallon in 2007 because of oil prices 1.67% cut to consumer spending in 2007 because of oil prices … (3 comments)

 
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