As US inflation persists in 2022 at levels not seen since the 1980s, the US Inflation Tracker captures the trends that provide context in today’s economy.

Housing and Inflation Doom Loop
There seems to be a perpetual doom loop associated with inflation and housing: Inflation goes up → The Federal Reserve hikes rates → Housing affordability worsens as the cost of a mortgage rises → Prospective home buyers get priced out and revert to renting → Rental prices rise → Rent-based housing in the consumer price basket increases → As a result, inflation numbers rise → The Federal Reserve hikes rates… round and round we go.

This will be an interesting dynamic to watch unfold and one that could keep the pace of disinflation higher than most would like to see.

Housing Market Pressures Keep Inflation High
Contribution of Housing to Monthly Core Consumer Price Inflation (1/31/19-8/31/22)

Source: Natixis Investment Managers Solutions, Bloomberg.

Do Small Businesses Know Something?
The August Consumer Price Index (CPI) print was certainly not what the market was looking for, posting a stronger headline and core number for both the month-on-month change as well as the year-on-year.

This sent risk assets plummeting, and many question whether inflation has really peaked. We caution that one print does not make a trend. But more importantly, a significant amount of soft survey data is pointing towards a marked improvement in inflationary and pricing pressures. Even compensation measures are showing signs of easing. Is it simply a matter of time before the hard data catches up?

Small Businesses Have A Knack For Predicting Inflation
Small Business Price Plans for Next 3 Months vs. CPI (9/30/02–8/31/22)

Source: Natixis Investment Managers Solutions, Bloomberg.

Resource

US Inflation Tracker – September 2022
This in-depth chart deck highlights historical data related to:
• Personal consumption
• Inflation surprises
• Goods and services
• Base effects and surges
• Supply chain, shipping, and restocking
• Housing market pressures
• Wage pressures
• Inflation expectations


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This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of Natixis Investment Managers, or any of its affiliates. The views and opinions expressed are as of September 15, 2022, and may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted, and actual results may vary.

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