BuildersOutlook2023Issue11 | Page 7

2023Issue11

BuildersOutlook

7

Elliot Eisenberg Economic & Policy Blog

Elliot Eisenberg , Ph . D . is a nationally acclaimed economist and public speaker specializing in

making economics fun , relevant and educational .

Incremental Inflation CPI rose 3.2 % Y-o-Y in October , down from 3.7 % in August and September , and barely above the 3.1 % June low , its lowest level since 3 / 21 . CPI peaked at 9 % Y-o-Y in 6 / 22 . More importantly , core CPI rose 4 % Y-o-Y , its lowest level since 8 / 21 and is down from a 9 / 21 peak of 6.6 %. October was core CPI ’ s 12th decline in 13 months . Another Fed rate hike is almost inconceivable .

mortgage holders is Austin at 2.1 %, because prices are 14 % off 2022 peaks , followed by Las Vegas at 1.7 % and Phoenix at 1.6 %.

Continuing Claims For the week ending 11 / 4 / 23 , initial unemployment claims were a very low 217,000 , barely above decade lows . However , continuing unemployment claims came in at 1,834,000 and are up about 250,000 from the decade lows set last year . This suggests that while layoffs are very low , those unemployed and looking for a job are finding it increasingly difficult to find employment . This is consistent with a cooling labor market .

Waning Wages A wage-price spiral looks increasingly unlikely . Y-o-Y wage growth has steadily decelerated from a recent peak of 5.1 % in 22Q2 to now 4.3 %, the lowest reading since 21Q4 . Moreover , the index has slowed four out of the last five quarters . Relatedly , in 23Q3 labor productivity rose at an annualized rate of 4.7 %, the fastest pace in three years . Thus , unit labor costs declined at an annualized rate of 0.8 %.

Costly Cars The average cost of owning and operating a new car in 2023 is $ 12,182 , up significantly from $ 10,728 in 2022 . Annual operating costs consisting of fuel and maintenance are $ 3,864 / year , while ownership costs of depreciation , finance charges , insurance and fees total $ 8,318 / year , based on driving 15,000 miles / year . Compared to 2022 , depreciation rose by $ 882 / year , finance charges almost doubled to $ 1,253 , and insurance costs rose $ 177 to $ 1,765 . Gasoline was unchanged .

Box Behemoth Walmart , the biggest retailer in the U . S ., has 1.5 million U . S . employees , enough to make it the 41st largest state . In FYE 1 / 23 , Walmart had sales revenue of $ 606 billion , which would ( pardon the apples to oranges comparison ) make it the world ’ s 24th largest economy . Between 2 / 1 / 23 and 10 / 31 / 23 , it enjoyed $ 474 billion in sales , but net profit of $ 10.6 billion , a squeaky tight net margin of 2.2 %.

Recession Resistance The U . S . economy is becoming increasingly recession resistant . State , local , and federal government spending as a percentage of GDP has risen from 29 % in 1962 to 35 % today . Similarly , healthcare spending has risen from 5.2 % of GDP in 1962 to 18.3 % in 2021 . Collectively they have risen from 34.2 % of GDP to 53.3 % and most critically , both sectors are not particularly interestrate sensitive .