Tech titan Alphabet Google has just confirmed the market forecasts about economic stagnation and price inflation that the L.A. Loft Blog has been reporting for the past few years. The sentiment was just echoed by Germany’s Finance Minister Christian Lindner, who warned yesterday of stagflation in his country too. These all come on top of last week’s downgrade of the IMF International Monetary Fund’s economic forecasts for most countries. Just about everyone is aware of the impending downturn to be expected after the greatest virus panic and the most wasteful bout of hysteria ever. Consumer sentiment has been drooping down in several regions.
High inflation is a new reality. According to the latest data, the consumer price index in the US rose by 8.5% in March.
Core Producer Price Index jumped a record 9.2% Year Over Year in March. This was above market expectations of 8.4%. The Producer Price Index is considered a forward indicator, as the increase in production costs is subsequently passed on to consumers. Real estate mortgage interest rates have jumped above 5%, according to one prospective Downtown Los Angeles Area condo buyer.
Risk of stagflation
Some experts say that it’s too early to talk about stagflation, considering the relatively low current unemployment in the United States. These so-called experts don’t seem to be watching what is happening to the middle class, or what is happening at the gas pump and grocery store. They’re also not looking at the obvious results to come as the Fed tightens monetary policy. Continued supply chain problems lead directly to higher and higher prices. Add these persistent disruptions in supply chains to volatility in financial markets, and the outlook is not optimistic. If the economy starts to shrink as unemployment rises, the Fed will be unable to do anything. The Fed’s impotence amid stagflation will hit the market hard.
Real estate is showing signs of cooling in most areas of the U.S. Read more about stagflation and the property market on the Loft Blog.
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Copyright © This free information provided courtesy L.A. Loft Blog with information provided by Corey Chambers, Realty Source Inc, DRE 01889449. We are not associated with the seller, homeowner’s association or developer. For more information, contact 213-880-9910 or visit LALoftBlog.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.