Inflation pressures rose in December as Fed members look for a general increase in prices and fall in the purchasing value of money. The Fed's favorite inflation gauge, the Core PCE, rose 1.5% annually in December, up from 1.4% in November and above the 1.3% expected. Monthly Core PCE was up 0.3% versus the 0.1% expected. Inflation has been slowly rising with commodity prices steadily increasing. Lumber prices are surging to near $900 from $264 in March 2020 and up from $478 at the end of October. Oil prices have also surged from negative territory in April to $53/barrel today. And that's just two of the vast amount of commodities traded each day.
The National Association of REALTORS® reports that Pending Home Sales fell a meager 0.3% in December from November while annual contract signings jumped 21% to 125.5. A sale is listed as pending when the contract has been signed but has not closed. Sales were up in the Northeast and South, down in the Midwest and flat in the West. Chief economist Lawrence Yun said, "There is high demand for housing and a great number of would-be buyers, and therefore sales should rise with more new listings."
Consumer Sentiment was unchanged in the final reading of January up from the early number in the month and just below the 80.7 in December. The index is well below the 2017-2019 average of 97. Also, the Chicago Manufacturing Index rose 5 points to 63.8 in January and is at the highest level since July 2018. With the manufacturing report, it showed that production saw the biggest monthly gain followed by new orders while the employment component declined.