If CPI and PCE included home prices instead.../Consumer confidence moving sideways but all bulled up on stocks/Richmond mfr'g contraction remains

The deflationista’s are sure lucky that rents are captured in CPI and PCE and not home prices. Since February 2020, right before the Federal Reserve went all in with QE and zero rates, the S&P CoreLogic home price index is up 46%. Owners Equivalent Rent is up ‘just’ 22%. And the bulk of that home price rise happened before the Fed started hiking rates and was clearly in response to the buying of MBS and zero rates. In other words, inflation would have been well into the double digits if home prices were the measure and the Fed was the cause of it. To those in Congress who think the housing market needs lower rates to ease affordability constraints don’t realize the main cause of the unaffordable challenges in housing over the past 20 years was easy money and that any savings on the mortgage rate side will be completely offset by even higher home prices. The housing market needs to work through all the low cost mortgages and baby boomers need to downside in order to create more housing supply. That’s the cure but will take years to play out. Sorry to those looking for a quick fix.

In January, S&P CoreLogic said home prices rose 6% y/o/y, making a purchase for a young family even more expensive and why all those new apartments coming on line this year will be well absorbed.

S&P CoreLogic Home Price Index

The March consumer confidence index as taken by the Conference Board was 104.7 and below the estimate of an increase to 107 from a downwardly revised 104.8 in February (from 106.7 initially). The components were mixed as the Present Situation was higher m/o/m but Expectations fell. One yr inflation expectations were 5.3% vs 5.2% in February and 5.3% in January.