The Producer Price Index — which measures inflation pressures at the wholesale level — surged 2% in November, the largest advance in more than three decades, the Labor Department said December 19. The 2% jump was four times bigger than the 0.5% increase economists had forecast. Core wholesale inflation, which excludes energy and food, rose 1.3%, the biggest gain since July 1980.
Undaunted by the humbug of higher wholesale prices, consumers increased their spending by 0.5% in November, just missing the 0.6% gain economists had forecast, the Commerce Department reported December 22. November’s increase in consumer spending was the best since July and suggests the nation’s economic expansion is not in danger of fizzling out.
Although Americans were spending, they weren’t saving. Americans’ personal savings rate — savings as a percentage of after-tax income — dipped to a negative 1% in November, the worst showing since August.
The pace of U.S. home building rose 6.7% in November, beating economists’ expectations and reversing a sharp decline in October. However, permits for future groundbreaking fell 3%, a level not seen since December 1997.
U.S. mortgage applications decreased 10.2% for the week ending December 15, the Mortgage Bankers Association said December 20. Purchase applications fell 5.9%, while refinancing applications were off 14.6%.
Interest rates on 30-year mortgages inched up for the second week in a row, Freddie Mac reported December 21. Nevertheless, 30-year mortgage rates are still lower than they were for the corresponding week a year ago.
John R. Thomas – Certified Mortgage Planner – Primary Residential Mortgage, Inc.
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