Rent Inflation Set To Soar This Summer

As you can see from the chart below, as of May, the hardest-hit markets have all recovered from their troughs in late 2020/early 2021. In fact, rents in New York are only down 12% from March 2020. The comps will be extremely easy this summer, meaning yearly shelter inflation will be very high. As we mentioned in a prior article, 5 small categories drove most of the core PCE expansion in April.

Obviously, shelter is a huge component of inflation. The Fed won’t be able to say small categories drove strong inflation this summer. However, they can still use the transitory argument. If you want to get philosophical, every single economic change is transitory. Nothing lasts forever. This is a great term for the Fed because it’s flexible. It allows the Fed to pursue whatever policy it wants.

Narrative Violation

It’s always fun to look at data that counteracts the prevailing narratives on Wall Street and on financial social media. When data differs from prevailing theories, you have the opportunity to generate alpha. Just make sure to avoid obvious chart crimes where the axes and scales are contorted so the chart goes viral (popular). Manipulated data is more likely to go viral than boring facts, but boring facts are more likely to make you money.

As you can see from the chart above, e-commerce as a percentage of US retail sales is only a few quarters ahead of its previous trend. Some have made the wrong claim that online penetration is a decade ahead of the previous trend. This isn’t necessarily a disaster for e-commerce investments. This chart shows there is less downside risk for e-commerce’s market share. Of course, the decline may have already occurred. It doesn’t need to perfectly follow the prior trend.

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Disclaimer: The content in this article is for general informational and entertainment purposes only and should not be construed as financial advice. You agree that any decision you make will be ...

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