U.S. Manufacturing PMI Hits Decade High, Home Price Appreciation Skyrockets, and the Potential Impact on Inflation
February 3, 2021 | FIRESIDE CHARTS
The U.S. Manufacturing PMI has hit a 10-year high in another sign of strength from the sector, though it does look as if it’s also experiencing some margin pressures as prices paid outpace prices received. Will this ultimately filter through to consumers and spark a broader hike in inflation? Another potential inflation trigger: housing costs. Home price appreciation is skyrocketing, approaching 16% per year in some segments of the market, and could put upward pressure on rents. As we move into tax season—starting later than typical this year on February 12 to give the IRS time to account for late-2020 policy changes and the second round of stimulus payments—we’re reminded of just how significantly personal and corporate income tax revenue has diverged in the last ~70 years. And now for some good news: as Covid vaccination gains traction in the U.S., mask-wearing and social distancing virtually eliminated seasonal flu outbreaks in 2020. Could masks be here to stay?
1. While the regional Fed surveys came in a bit mixed this month, U.S. manufacturing—as measured by the Purchasing Managers Index—has not only recovered but is at the highest level in a decade.
Source: The Daily Shot, from 2/3/21
2. There is also evidence of increased inflation from the robust manufacturing recovery:
Source: The Daily Shot, from 2/3/21
3. Housing prices are skyrocketing due to the Covid “flee the city” demand. Yet CPI uses “equivalent rents” so this is not showing up in the CPI…
Source: The Daily Shot, from 2/2/21
4. A stark reminder heading into tax season…
Source: The Daily Shot, from 12/9/20
5. Last week China made two of the largest corn purchases ever. Are they starting to abide by the trade agreements as a sign of goodwill, or is it there a food shortage?
Source: The Daily Shot, from 2/2/21
6. May we presume that senior managements and their boards know when it is a good time to buy and sell their own stocks?
Source: The Daily Shot, from 2/2/21
7. While we will soon cross the 10% vaccinated mark, these levels vary widely by state and regions within states. Herd immunity requires 60-70% vaccination levels.
Source: The Daily Shot, from 2/2/21
8. Well now we know how to virtually eliminate flu outbreaks. Masks may become a more permanent part of life…
Source: World Health Organization, from 2/2/21
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