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Economic and Real Estate Outlook for December 2022

By Leonardo Rostoker and Michael J. Seiler

The key topic of debate and greatest concern has been and continues to be inflation. Although off its 40-year high of 9.1 percent in June, year-over-year inflation in October was still 7.7 percent,1 far exceeding the long-run target of roughly 2 percent.2 The greatest contributor to the Consumer Price Index (CPI) was shelter, but food and fuel costs also contributed. Within the energy sector, fuel oil rose 19.8 percent in October, which is a whopping 68.5 percent year-over-year increase.

After two quarters of decline, the advanced estimate of GDP for the third quarter of 2022 was +2.6 percent,3 which gave the Federal Reserve a bit of flexibility. To combat the continued inflationary concern, the Fed once again raised rates by 75 basis points a few weeks ago with the explicit intent to quell consumer spending and pump the breaks on the economy. Personal
income increased by 0.4 percent in September, but personal consumption expenditures increased by 0.6 percent, resulting in a reduction in the savings rate.

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