Hey there,

So, guess what? The big news is that the likelihood of a rate cut in June has dropped below 60%. Can you believe it? 

Just a week ago, we were sitting at a comfortable 74%, and a month ago, it was even higher at 82%. Crazy, right? It seems like the economy is flexing its muscles and showing some serious resilience.

But let's dive into the nitty-gritty:

First off, CPI inflation has been climbing steadily for two months straight, now hitting 3.2%. Basically, that means the prices of stuff like transportation, food, and medical care are going up. It could be a sign of a booming economy, but it might also mean trouble if wages don't keep pace with these rising prices.

Then there's the PPI inflation, which almost doubled, shooting up to 1.6%. This index measures how much producers are charging for their goods and services. So, when that number jumps, it usually means they're charging more. Whether it's because of higher demand or increased production costs, it's a sign things are heating up.

And check this out: US GDP has been on the rise for six quarters in a row, and this quarter, it's soaring past 3%. That's some serious growth, fueled by things like consumer spending, business investments, and government expenditures.

And let's not forget about jobs – we've added a whopping 4.9 million since 2020, signaling a solid recovery from the pandemic-induced slump.

But here's the kicker: despite all this good news, housing prices are on the rise, thanks in part to higher interest rates. That might sound counterintuitive, but it's a sign that demand for housing is still strong, even if it's making it tougher for first-time buyers to get in the game.

Now, you might be wondering why the Fed would even consider cutting rates in this environment. Well, typically, they'd do it to give the economy a little boost – you know, make borrowing cheaper to spur spending and investment. But with things looking pretty rosy overall, it's a bit of a head-scratcher.

But here's the thing: if people start tightening their purse strings and spending less, it could slow things down real quick. And the latest data on US retail sales? It's a mixed bag. Sure, they're up nominally, but when you adjust for inflation, they're actually down. Not exactly what you want to see if you're hoping for continued growth.

And as if that weren't enough, last week's job report got revised – again. This time, they found they'd miscounted by a whopping 112,000 jobs. How does that even happen?

Plus, there's this trend of more Americans taking on multiple jobs, which could be a sign folks are feeling the squeeze financially.

And don't even get me started on housing inventory – it's on the rise, and sellers are starting to feel the heat. Price cuts are becoming more common, but most folks still have enough equity to weather the storm.

According to Zillow, the housing market is showing signs of increased activity: 

Significant Increase in New Listings: New listings in February surged by 20.3% month-over-month, marking the largest monthly gain since at least 2018. This increase is notably higher than recent trends, with new listings 20.8% higher than the same time last year. 

Rising Total Inventory: Total inventory in February rose by 3.4% from January and was 12% higher than in February 2023. However, it's important to note that inventory levels remain well below those of previous years. 

Price Cuts More Common: The share of listings with a price cut reached 20.1%, indicating that price reductions are becoming more common than usual. Despite this, Zillow suggests that most sellers still have enough equity to absorb a price cut and remain profitable compared to their purchase price. 

Regional Variations: There are significant regional differences in the increase of new listings. For example, Dallas saw a 50.7% year-over-year rise, while Minneapolis, Austin, and Tampa also experienced substantial increases. 

Anecdotal Observations: In Los Angeles, there has been a noticeable uptick in listings and for-sale signs, a change from the previous scarcity of supply. Even unusual occurrences like midday open houses on a Tuesday are being reported. 

Home Value Growth: The value of a typical home in the United States has risen by 40.8% compared to pre-pandemic levels, now standing at approximately $350,000. The data suggests that the housing market is experiencing a shift towards more listings and increased inventory, although it still varies by region. 

So yeah, the economy's firing on all cylinders right now, but there are definitely some storm clouds on the horizon.