Housing Disinflation Planned For H2

During a recent event hosted by The Economic Club of Washington, Federal Reserve Chair discussed how his efforts over the past six months have led to a reduction in inflation.

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However, he acknowledged that one economic component that has not experienced disinflation is housing.

Powell explained that housing is measured as a lagging indicator in the data the Federal Reserve considers, but he expects to see disinflation in housing in the second half of 2023.

“Increase in housing prices contributed for half of the monthly rise,” wrote Credit Union National Association Senior Economist Dawit Kebede. When excluding food & energy, this becomes even higher at 60%

Powell emphasized that inflation is not going to go away quickly and painlessly and that the process is probably going to be bumpy.

The country added more than a half-million jobs in January, the lowest unemployment rate since May 1969, and with the Fed announcing a quarter-point hike in the prime lending interest rate, it seems that the country is making more progress than it was previously to getting back to the 2% range.