Rocket Fuel Newsletter – 09/16/2024

In this edition: CPI is down and OJ prices are up. While the economy continues to cool off, one vacation chain is doing all they can to keep you from tightening your belt – Great Wolf Lodge has teamed up with BRACH’s Candy Corn to create an extra sugary travel experience.

Fuel Up! 🚀

Inflation Takes A Chill Pill: Coolest CPI Since 2021

The U.S. Bureau of Labor Statistics released the Consumer Price Index Summary for August. The Consumer Price Index for All Urban Consumers (CPI-U) increased by 0.2% in August 2024, consistent with the raise in July. Over the past 12 months, the all items index rose by 2.5%, the smallest increase since February 2021. The energy index contributed most to the downward pressure, falling by 0.8%. The shelter index showed the highest overall rise, increasing by 0.5% in August. Other notable changes include increases in food costs, airline fares, motor vehicle insurance, education and apparel, while used cars and trucks, household furnishings and medical care saw decreases.

Read the full release here.

Raising Costs Put The Squeeze On Orange Juice

Orange juice prices have skyrocketed recently, reaching record highs due to a combination of factors, including the devastating citrus greening disease and multiple hurricanes that have severely impacted orange crops in Florida and Brazil.

These two regions account for 85% of the world’s orange juice supply. As a result, orange juice futures have climbed to nearly $5 per pound, a significant increase from under $1 per pound in early 2020. Your glass of morning OJ is quickly becoming a luxury item!

Sausage Sizzle: A Tasty Sign of Economic Shifts

Sausage demand has been on the rise recently, and it’s catching the attention of economists. This uptick is seen as a sign that consumers are tightening their belts and looking for cheaper alternatives to more expensive proteins like beef and chicken.

According to a survey by the Dallas Federal Reserve, one food manufacturer reported “modest growth” in their dinner sausage category. This trend often aligns with a slowing economy, as sausage is a cost-effective protein that can help stretch food budgets.

Read the full survey here.

After 2 years of restrictive monetary policy from the Federal Reserve, the global economy is anxiously awaiting the September FOMC meeting on the 17^th and 18^th.

Many have criticized the Fed for waiting too long to cut rates – it's been over a year since the news started featuring op-eds about potential recessions and consumers running out of cash. However, the Fed has been looking to avoid mistakes of the past, where previous Federal Reserve boards had cut rates too soon, and inflation came firing back while growth stagnated.

With the Consumer Price Index from the Bureau of Labor Statistics last week showing another month with a reading in the 2% – 3% range, inflation is beginning to look tame.

As for this week’s meeting, markets are expecting the Federal Funds Rate to drop by ~35 basis points at the September meeting, meaning the Fed will likely move either 25 or 50 bps lower. The Fed Futures markets show expectations that the rate will be 110 basis points lower by the end of 2024.

While Fed Chairman Powell has maintained steadfast in his “higher for longer” rates regime, criticism is coming from inflation doves (who believe we need more monetary easing) that these coming cuts won’t do much to help consumers under strain because even as prices stop rising, they aren’t expected to drop.

Thankfully, for housing, interest rate decreases have a strong impact on demand.

There was chatter of a drop in home prices following the COVID run-up, but similarly to the 1980s, just because home sales slowed, inflation just resulted in higher home prices for all.

Fortunately, Rocket Mortgage is helping by increasing the conforming loan limits early.

Beginning September 13, we increased our conforming loan limits to allow Rocket Pro^SM TPO partners to register conventional loans up to $802,650. This new limit helps partners qualify more clients for conventional loans now, without waiting for the FHFA to reevaluate limits.

Check out Pathfinder for the full details on our 2025 agency early go-live limits.

Two solvers flew through last week’s puzzle – times of 14 and 18 seconds led the next fastest solvers by nearly 30 seconds. In total, six solvers completed last week’s puzzle in a minute or less.

This week’s puzzle gets 5 Rockets out of 5.

Click here to solve!