Mohacsy's Safe Portfolio Member Forum

[santafe2]

While we wait for PCI and PPI reports this week I'm beginning to track PCE more closely, (Personal Consumption Expenditures). You can track that here on the BEA site. It can also be tracked on FRED.

https://www.bea.gov/data/personal-consumption-expenditures-price-index

PCE as reported through April is still robust at an aggregate of over 4.75%. It's fallen to 4.3% in the last two months but still nothing to be concerned about. I'm looking out 6-12 months and I'm concerned that the cost of borrowing will begin to show up as a fall in PCE later this year. That is, high interest mortgage debt, student debt and revolving credit debt. All are much higher than they were a year ago and student debt has been on hiatus for three years while it compounds daily.

I was able to do some on-the-ground research this weekend as we had an open house for our current residence. Our realtor managed the main house while I worked in the guest house, (locally referred to as a casita). The most interesting conversations were with millennial couples. Some just starting out and others with a starter home and a couple of kids who want to move up and closer to their kid's schools. Uniformly they've gotten beaten up by all cash Boomer offers from CA and TX. It's only been two days so we'll have to wait and see if any younger families step up. A couple of them heard horror stories from their parents about the 1970s when rates kept moving up to 18-20%. After these conversations I've decided that you can no more rationalize an explanation regarding the '70s than you can tell a Christian that Noah's flood was simply ice melting from the last ice age. Interesting times.