John’s Finance Corner: Inflation, Retail Sales & Jobless Claims in the Spotlight
Welcome back to John’s Finance Corner, where we break down the latest economic readings and explain what they mean for your mortgage strategy.
Consumer Inflation: Mixed Signals
Consumer Price Index data showed a modest 0.2% rise in July, keeping year-over-year inflation steady at 2.7%. Lower energy costs—down 1.1% overall and 2.2% at the pump—helped cap gains.
Core CPI, which excludes food and energy, climbed 0.3% for the month and 3.1% year-over-year (up from 2.9% in June), hotter than forecasts. Shelter costs drove more than half of the core increase, while anticipated tariff impacts have yet to materialize in consumer prices—a welcome reprieve for shoppers and homeowners alike.
Wholesale Inflation: Tariffs Finally Arrive
The Producer Price Index jumped 0.9% in July, with both headline and core readings far above the expected 0.2%. On an annual basis, headline wholesale inflation rose from 2.4% to 3.3%, while core PPI climbed from 2.6% to 3.7%.
This spike suggests that tariff costs are filtering into producer prices—even if many suppliers are still absorbing higher import fees. Watch wholesale inflation closely: persistent gains here often flow through to broader consumer costs over time.
Retail Sales: Consumers Still in Spending Mode
July retail sales increased 0.5%, fueled in part by a 0.3% upward revision to June’s figures. It’s tough to tell whether resilience comes from stronger paychecks or simply dipping into savings, but one thing’s clear: shoppers are spending despite higher prices and ongoing trade tensions.
For borrowers, healthy retail activity can signal continued economic growth—and support mortgage demand—so long as it doesn’t stoke runaway inflation.
Jobless Claims: A Subtle Labor-Market Warning
New unemployment claims dropped by 3,000 to 224,000 last week, and continuing claims fell by 15,000 to 1,953,000. Yet this marks the 12th straight week of continuing claims above 1.9 million.
While both metrics eased slightly, elevated benefit rolls imply the labor market isn’t as tight as it looks. The Fed watches these figures closely; sustained weakness could bolster the case for rate cuts down the road.
What This Means for Mortgage Rates
- Rising core inflation readings tend to push mortgage rates up.
- Wholesale price pressures add another layer of risk if sustained.
- Strong retail sales point to economic momentum but also keep inflation on the Fed’s radar.
- Soft labor-market signals may eventually temper rate hikes or trigger cuts.
If you have a purchase or refinance on the horizon, consider how these mixed signals affect your timing. Locking a rate before key data releases could provide certainty, while waiting may pay off if the Fed leans dovish.
Data Calendar & Fed Watch
Later this week, keep an eye on:
- Builder Confidence and Housing Starts
- Existing Home Sales
- Fed Minutes from July’s meeting
- Jackson Hole Symposium, where Chair Powell will outline the Fed’s September outlook
Each release has the potential to sway bond yields—and by extension, mortgage rates—so stay tuned.
Even when data feels all over the map, understanding the interplay between inflation, consumer spending, and labor trends is your edge. Have questions or ready to lock in your rate? Let’s talk strategy tailored to your goals.
John Lamberg
MORTGAGE LOAN ORIGINATOR
NMLS 189233
