by Calculated Risk on 6/11/2025 11:22:00 AM

The Cleveland Fed released the median CPI and the trimmed-mean CPI.

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% in May. The 16% trimmed-mean Consumer Price Index increased 0.2%. "The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report".

Click on graph for larger image.

This graph shows the year-over-year change for these four key measures of inflation. 

On a year-over-year basis, the median CPI rose 3.5% (unchanged from 3.5% YoY in April), the trimmed-mean CPI rose 3.0% (unchanged from 3.0%), and the CPI less food and energy rose 2.8% (unchanged from 2.8%). 

Core PCE is for April was up 2.5% YoY, down from 2.7% in March.  

by Calculated Risk on 6/11/2025 08:53:00 AM

Here are a few measures of inflation:

The first graph is the one Fed Chair Powell had mentioned two years ago when services less rent of shelter was up around 8% year-over-year.  This declined and is now up 3.5% YoY.

Click on graph for larger image.

This graph shows the YoY price change for Services and Services less rent of shelter through May 2025.

Services were up 3.7% YoY as of May 2025, unchanged from 3.7% YoY in April.

Services less rent of shelter was up 3.5% YoY in May, up from 3.3% YoY in April.

The second graph shows that goods prices started to increase year-over-year (YoY) in 2020 and accelerated in 2021 due to both strong demand and supply chain disruptions.

Durables were unchanged YoY as of May 2025, up from -0.4% YoY in April.

Commodities less food and energy commodities were at 0.3% YoY in May, up from 0.2% YoY in April.

Here is a graph of the year-over-year change in shelter from the CPI report (through May) and housing from the PCE report (through April)

Shelter was up 3.9% year-over-year in May, down from 4.0% in April. Housing (PCE) was up 4.2% YoY in April, down from 4.3% in March.

This is still catching up with private new lease data (this includes renewals whereas private data is mostly for new leases).

Core CPI ex-shelter was up 1.9% YoY in May.  This key measure has been at or below the Fed's target for 9 of the last 13 months.

by Calculated Risk on 6/11/2025 08:30:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent on a seasonally adjusted basis in May, after rising 0.2 percent in April, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.4 percent before seasonal adjustment.

The index for shelter rose 0.3 percent in May and was the primary factor in the all items monthly increase. The food index increased 0.3 percent as both of its major components, the index for food at home and the index for food away from home also rose 0.3 percent in May. In contrast, the energy index declined 1.0 percent in May as the gasoline index fell over the month.

The index for all items less food and energy rose 0.1 percent in May, following a 0.2-percent increase in April. Indexes that increased over the month include medical care, motor vehicle insurance, household furnishings and operations, personal care, and education. The indexes for airline fares, used cars and trucks, new vehicles, and apparel were among the major indexes that decreased in May.

The all items index rose 2.4 percent for the 12 months ending May, after rising 2.3 percent over the 12 months ending April. The all items less food and energy index rose 2.8 percent over the last 12 months. The energy index decreased 3.5 percent for the 12 months ending May. The food index increased 2.9 percent over the last year.
emphasis added

The change in CPI was slightly below expectations. I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.

by Calculated Risk on 6/11/2025 07:00:00 AM

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey

Mortgage applications increased 12.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 6, 2025. Last week’s results included an adjustment for the Memorial Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 12.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 23 percent compared with the previous week. The Refinance Index increased 16 percent from the previous week and was 28 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 10 percent from one week earlier. The unadjusted Purchase Index increased 20 percent compared with the previous week and was 20 percent higher than the same week one year ago.

“Coming out of the Memorial Day holiday, mortgage applications increased to the highest level in over a month, driven by growth in both purchase and refinance applications. Treasury rates saw some movement during the week, which resulted in additional opportunities for borrowers,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The rate for 15-year fixed rate loans and FHA loans saw declines last week, while the 30-year fixed rate was largely unchanged. Purchase applications were 20 percent ahead of last year’s pace, continuing to show strength compared to a year ago. Despite ongoing uncertainty surrounding the economy, homebuyers seem to be taking advantage of loosening housing inventory in certain markets.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) increased to 6.93 percent from 6.92 percent, with points decreasing to 0.64 from 0.66 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.

The first graph shows the MBA mortgage purchase index.

According to the MBA, purchase activity is up 20% year-over-year unadjusted. 

Red is a four-week average (blue is weekly).  

Purchase application activity is still depressed, but above the lows of October 2023 and is 13% above the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

The refinance index increased but remained very low.

by Calculated Risk on 6/10/2025 07:45:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Wednesday:
• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 8:30 AM, The Consumer Price Index for May from the BLS. The consensus is for 0.2% increase in CPI (up 2.5% YoY), and a 0.3% increase in core CPI (up 2.9% YoY).

by Calculated Risk on 6/10/2025 02:44:00 PM

Note: I've received a number of requests to post this again.  So here is another update of tracking employment during Presidential terms.  We frequently use Presidential terms as time markers - we could use Speaker of the House, Fed Chair, or any other marker.

Important: There are many differences between these periods. Overall employment was smaller in the '80s, however the participation rate was increasing in the '80s (younger population and women joining the labor force), and the participation rate is generally declining now.  But these graphs give an overview of employment changes.

The first graph shows the change in private sector payroll jobs from when each president took office until the end of their term(s). Presidents Carter, George H.W. Bush, and Biden only served one term.

Mr. G.W. Bush (red) took office following the bursting of the stock market bubble and left during the bursting of the housing bubble. Mr. Obama (dark blue) took office during the financial crisis and great recession. There was also a significant recession in the early '80s right after Mr. Reagan (dark red) took office.

There was a recession towards the end of President G.H.W. Bush (light purple) term, and Mr. Clinton (light blue) served for eight years without a recession.   There was a pandemic related recession in 2020.

First, here is a table for private sector jobs for each term. (Blue for Democrats, Red for Republicans)

Term	Private Sector Jobs Added (000s)
Biden	14,327
Clinton 1	10,875
Clinton 2	10,104
Obama 2	9,924
Reagan 2	9,351
Carter	9,039
Reagan 1	5,363
Obama 1	1,889
GHW Bush	1,507
Trump 2	5071
GW Bush 2	453
GW Bush 1	-822
Trump 1	-2,178
1Through 4 months

Click on graph for larger image.

The first graph is for private employment only.

Private sector employment increased by 9,039,000 under President Carter (dashed green), by 14,714,000 under President Reagan (dark red), 1,507,000 under President G.H.W. Bush (light purple), 20,979,000 under President Clinton (light blue), lost 369,000 under President G.W. Bush, and gained 11,813,000 under President Obama (dark dashed blue).  During President Trump's terms (Orange), the economy has lost 1,671,000 private sector jobs.

 A big difference between the presidencies has been public sector employment.  Note: the bumps in public sector employment due to the decennial Census in 1980, 1990, 2000, 2010 and 2020. 

The public sector grew during Mr. Carter's term (up 1,304,000), during Mr. Reagan's terms (up 1,414,000), during Mr. G.H.W. Bush's term (up 1,127,000), during Mr. Clinton's terms (up 1,934,000), and during Mr. G.W. Bush's terms (up 1,744,000 jobs).  However, the public sector declined significantly while Mr. Obama was in office (down 263,000 jobs).  During Mr. Trump's terms, the economy lost 536,000 public sector jobs (mostly teachers during the pandemic).

And a table for public sector jobs. Public sector jobs increased have increased the most during Biden's term (mostly state and local employment), ahead of the number during Reagan's 2nd term.  Public sector jobs declined the most during Obama's first term.

Term	Public Sector Jobs Added (000s)
Biden	1,813
Reagan 2	1,438
Carter	1,304
Clinton 2	1,242
GHW Bush	1,127
GW Bush 1	900
GW Bush 2	844
Clinton 1	692
Obama 2	447
Trump 2	11
Reagan 1	-24
Trump 1	-537
Obama 1	-710
1Through 4 months

by Calculated Risk on 6/10/2025 11:55:00 AM

The Consumer Price Index for May is scheduled to be released tomorrow. The consensus is for a 0.2% increase in CPI, and a 0.3% increase in core CPI.  The consensus is for CPI to be up 2.5% year-over-year (YoY), and core CPI to be up 2.9% YoY.

From Goldman Sachs economists:

We expect a 0.25% increase in May core CPI (vs. +0.3% consensus), corresponding to a year-over-year rate of 2.89% (vs. +2.9% consensus). We expect a 0.17% increase in headline CPI (vs. +0.2% consensus), reflecting higher food prices (+0.4%) and but sharply lower energy prices (-1.2%). ...

Going forward, the impact of tariffs will likely provide a somewhat larger boost to monthly inflation, and we expect monthly core CPI inflation of around 0.35% over the next few months. Our forecast reflects a sharp acceleration in most core goods categories but limited impact on core services inflation, at least in the near term. Aside from tariff effects, we expect underlying trend inflation to fall further this year, reflecting shrinking contributions from the auto, housing rental, and labor markets. We expect year-over-year core CPI inflation of +3.5% and core PCE inflation of +3.6% in December 2025.

From BofA:

For the May CPI report, we forecast headline CPI rose by 0.2% m/m (0.16% unrounded) which would push the y/y rate up a tenth to 2.4%. Core inflation, meanwhile, likely will print at a firm 0.2% m/m (0.24% unrounded). This would result in the y/y rate increasing from 2.8% to 2.9%. We expect to see more signs of tariffs driving prices higher, but favorable seasonal factors for autos and declines in certain services categories will keep a lid on the top line inflation numbers.

Note that month-to-month inflation was soft in May and June 2024.

Click on graph for larger image.

This graph shows the month-to-month change in both headline and core inflation since January 2024.

The circled area is the change for last May and June when inflation was soft. So even somewhat benign readings over the next two months will push up year-over-year inflation. Then the tariff related inflation will start to kick in.

by Calculated Risk on 6/10/2025 08:23:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Part 2: Current State of the Housing Market; Overview for mid-June 2025

A brief excerpt:

Yesterday, in Part 1: Current State of the Housing Market; Overview for mid-June 2025 I reviewed home inventory, housing starts and sales. I noted that the key story right now for existing homes is that inventory is increasing sharply, and sales are essentially flat compared to last year. That means prices will be under pressure (although there will not be a huge wave of distressed sales). And there are significant regional differences too.

In Part 2, I will look at house prices, mortgage rates, rents and more.
...
The Case-Shiller National Index increased 3.4% year-over-year (YoY) in March and will likely be lower year-over-year in the April report compared to March (based on other data).
...
The MoM decrease in the seasonally adjusted (SA) Case-Shiller National Index was at -0.30% (a -3.5% annual rate). This was the first MoM decrease since January 2023.

There is much more in the article.

by Calculated Risk on 6/09/2025 08:07:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates a Hair Lower to Start The Week

As hoped, Friday's big rate spike did not carry additional momentum into the new week. This is occasionally a risk when rates are responding to big surprise in the jobs report, but slightly less of a risk when the other economic data had been weaker. [30 year fixed 6.95%]
emphasis added

Tuesday:
• At 6:00 AM ET, NFIB Small Business Optimism Index for April.

by Calculated Risk on 6/09/2025 04:12:00 PM

The ICE Home Price Index (HPI) is a repeat sales index. ICE reports the median price change of the repeat sales.

From ICE (Intercontinental Exchange):

• Recent data shows home price growth continued to cool, dropping to an annual growth rate of +1.4%, down from an already low +1.6% mid-month.

• On a seasonally adjusted basis, prices fell by -0.01% in the month – the first decline in this metric since 2022.

• In fact, if you back out outliers, such as the Fed rate hikes in 2022 and the COVID shutdown in 2020, this is the first time we’ve seen home prices decline, on an adjusted basis, in any month since 2012.

• Condos were the first to turn, with condo prices now down nearly a full percentage point from the same time last year. Single family residences, on the other hand, are still up a modest +1.7%.

Almost a third (30%) of all major home sales markets have seen prices fall by at least a full percentage point, with 20% falling by 2% and seven markets (Austin, Cape Coral, North Port, San Francisco, Phoenix, San Antonio, and Boise City) falling by more than 5%.

The largest drops from the peak in 2022 have been in Austin (-19.2%), Cape Coral (-12.1%), North Port, Fla. (-10.2%) and San Francisco (-8.3%)

Why is this happening?

Mortgage rates have ticked higher in the wake of recent tariff and government spending announcements, which increased inflationary concerns and decreased the number of Fed rate cuts expected by the market in 2025. Higher rates and moderated demand are allowing inventory levels to build, especially in the western U.S. with 40% of markets now seeing more homes for sale than they averaged from 2017-2019 and another 10% on pace for inventory to ‘normalize’ by the end of the year. Denver now has twice as many homes for sale as it did in the years leading up to the pandemic, with California’s 10 largest markets seeing 40-75% more homes available for sale than at the same time last year.

Andy Walden, head of mortgage and housing market research for ICE, says:

“We continue to see an inflection in the housing market as home-price softening expands beyond the Sunbelt into the West. With inventory levels beginning to normalize across much of the country, prospective homebuyers are finally beginning to see some long-anticipated price relief.”

As ICE mentioned, cities in the South have been leading the way in inventory increases and price declines (especially Florida and Texas). Now the West Coast markets are following.