The latest Consumer Price Index (CPI) showed more progress on headline inflation, as consumer prices rose 2.4% for the 12 months ending in September. While this was hotter than expected, it does mark a slowing from August’s 2.5% annual gain and the lowest reading since February 2021.

The core measure, which strips out volatile food and energy prices, increased 0.3% from August, coming in above estimates. The annual reading ticked higher from 3.2% to 3.3%.

Transportation costs, including airline fares and motor vehicle insurance, were key reasons for the pricing pressure that was seen last month. The monthly reading for shelter was encouraging, as it showed signs of softening.

What’s the bottom line? We are seeing progress in consumer inflation, albeit slowly. For example, if we annualize the last three months of readings, the year-over-year rate of inflation would be lower, coming in at 2.1% for Headline CPI and 3% for Core CPI.

Plus, September’s low shelter reading is an important development as it may be the first sign that the shelter component in CPI is finally catching up to market rents. Given that the shelter component makes up nearly 46% of Core CPI, lower shelter readings will make it much easier for inflation to make progress towards the Fed’s 2% target over time. The Fed also acknowledged ahead of the report that they were expecting shelter readings to moderate.

Crucial inflation data will be delivered on Thursday via September’s Consumer Price Index. The Producer Price Index, which measures wholesale inflation, follows on Friday. The latest Jobless Claims will also be reported on Thursday.

Important auctions are ahead, including the 10-year Note on Wednesday and 30-year Bond on Thursday. Plus, the minutes from the Fed’s last meeting will be released on Wednesday and we’ll also hear from several Fed members throughout the week.

It’s National Apple Month and the perfect time to enjoy this Easy Apple Cake courtesy of Allrecipes. Serves 12.

Preheat oven to 350 degrees Fahrenheit. Lightly grease and flour a 9×13-inch baking pan.

Beat 1/2 cup softened butter, 1/2 cup unsweetened applesauce and 3 large eggs together in a large bowl with an electric mixer until foamy. Add 2 cups all-purpose flour, 1 cup packed brown sugar, 2 teaspoons cinnamon, 2 teaspoons vanilla extract, 1 teaspoon baking powder, 3/4 teaspoon baking soda and 3/4 teaspoon salt. Mix until well combined. Stir in 3 cups diced apples (about 2 medium apples).

Pour batter into prepared pan and bake until a toothpick in the center comes out clean, about 25 to 30 minutes. Cool in the pan for 10 minutes.

CoreLogic’s Home Price Index showed that home prices nationwide fell 0.1% in August, though prices were 3.9% higher when compared to August of last year. CoreLogic forecasts that home prices will rise 0.1% in September and 2.3% in the year going forward, though their forecasts tend to be conservative.

What’s the bottom line? CoreLogic’s appreciation data has been weaker than Case-Shiller’s, which is considered the gold standard in tracking changes in residential real estate values. Case-Shiller’s latest report showed that home values nationwide were 5% higher in July than a year earlier, while the Federal Housing Finance Agency also reported 4.5% annual growth over that same period. These reports show that homeownership continues to provide a significant wealth creation opportunity.

Initial Jobless Claims rose by 6,000 in the latest week, with 225,000 people filing for unemployment benefits for the first time. Continuing Claims were basically flat, rising by 1,000, as 1.826 million people are still receiving benefits after filing their initial claim.

What’s the bottom line? Initial Jobless Claims remain subdued, which could be due in part to the gig economy. Some people who are let go from their jobs are choosing to work for companies like Uber instead of filing for unemployment benefits. In addition, many layoffs have occurred in the technology sector, where employees tend to receive generous severance packages, thereby delaying some filings for unemployment.

Meanwhile, Continuing Claims are still at elevated levels, topping 1.8 million for 17 straight weeks and remaining near three-year highs. Generally, companies tend to stop hiring (which keeps people on benefits for longer) before they start firing (which keeps first-time filers tame), and this also explains some of the dynamics in the data.

The latest Job Openings and Labor Turnover Survey (JOLTS) showed that job openings rose from 7.7 million in July to 8 million in August. The hiring rate fell to 3.3%, which is the lowest level since 2013 not including COVID. The quit rate also fell to 1.9%, suggesting there is less poaching from other companies and fewer people feel confident about finding new employment.

What’s the bottom line? While the increase in job openings was unexpected and above estimates, the total may be weaker than the headlines suggest. The rise in remote work has led to job listings being posted in multiple states more frequently.

Plus, the low hiring and quit rates do suggest some labor sector softness, which was also reflected in the latest Job Cuts report from Challenger, Gray & Christmas. Hiring announcements fell to their lowest year-to-date level since 2011.

September’s private sector job growth rebounded after a five-month slowdown, per ADP’s Employment Report, which showed that employers added a higher than expected 143,000 new jobs. In addition, the breadth of job creations was better in September than in August, which had more sectors shedding jobs.

However, small businesses continue to struggle, as those with fewer than 50 employees lost 8,000 jobs. This is compared to 150,000 new jobs added among medium and large companies combined.

What’s the bottom line? The big story in the report was wages, with annual pay gains continuing to decelerate for both job-stayers (+4.7% from +4.8%) and job changers (+6.6% from +7.3%), reflecting a decline in wage-pressured inflation. Nela Richardson, Chief Economist for ADP, noted, “Stronger hiring didn’t require stronger pay growth last month. Typically, workers who change jobs see faster pay growth. But that premium over job-stayers shrank to 1.9 percent, matching a low we last saw in January.”

The Bureau of Labor Statistics (BLS) reported that there were 254,000 jobs created in September, which was well above estimates of 140,000. Positive revisions to July and August also added 72,000 jobs to those months combined. The unemployment rate fell from 4.2% to 4.1%.

What’s the bottom line? This report had a different tone than the softer labor sector data we’ve seen in recent months, as it showed strength on multiple fronts. In addition to the overall beat in job growth, the number of full-time workers rose by 414,000 after declining in August. Average hourly earnings also came in above estimates.

Note that September’s headline job growth figure will be subject to revisions in the next two reports, so we’ll have to see if the data remains as strong as it initially seems.

October 1 is National Pumpkin Spice Day, making the perfect reason to enjoy these Perfect Pumpkin Muffins courtesy of Allrecipes. Yields 14 muffins

Preheat oven to 350 degrees Fahrenheit. Grease 14 muffin cups.

In a large bowl, mix 1 15-ounce can pumpkin puree, 3/4 cup melted butter, 3/4 cup brown sugar, 1/4 cup water, 2 large eggs and 1 teaspoon vanilla. In a separate bowl, mix 1 3/4 cups all-purpose flour, 1/2 cup granulated sugar, 2 teaspoons pumpkin pie spice, 1 teaspoon salt, 1 teaspoon baking soda, 1 teaspoon cinnamon, and 1/4 teaspoon baking powder. Pour flour mixture into pumpkin mixture and mix until fully incorporated.

Spoon batter into prepared muffin cups, filling each 3/4 full. Bake until muffins are slightly browned on top and spring back easily when pressed, around 25 to 30 minutes.

Initial Jobless Claims fell by 4,000 in the latest week, with 218,000 people filing for unemployment benefits for the first time. Continuing Claims rose by 13,000, as 1.834 million people are still receiving benefits after filing their initial claim.

What’s the bottom line? Initial Jobless Claims remain tame, showing that employers are reluctant to let their employees ago. At the same time, Continuing Claims have now topped 1.8 million for 16 straight weeks, remaining near highs from November 2021, suggesting that employers have also slowed down their pace of hiring.

The final reading on second quarter GDP showed that the U.S. economy grew by 3%, per the Bureau of Economic Analysis. This was in line with estimates and much stronger than the pace seen in the first quarter, which was revised higher from 1.4% to 1.6%.

What’s the bottom line? Economic activity was better than expected in the second quarter due in part to increases in consumer spending, private inventory investment and business investment. As of now, expectations are that economic growth in the third quarter of this year will remain around 3% as well.

The Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, showed home prices nationwide rose 0.2% from June to July after seasonal adjustment, breaking the previous month’s all-time high. Home values in July were also 5% higher than a year earlier, following a 5.5% gain in June.

Case-Shiller’s 10-city (+6.8% YoY) and 20-city (+5.9% YoY) indices showed even higher growth than the nationwide figures, showing that big cities are outperforming the rest of the nation. In addition, lower-priced homes appreciated at a faster rate than the overall market, which makes sense as there is greater demand at the lower end of the market.

The Federal Housing Finance Agency’s (FHFA) House Price Index also showed that home prices rose 0.1% from June to July, and they were 4.5% higher when compared to the same time last year. Note that FHFA’s data does not include cash buyers or jumbo loans, only loans financed with conforming mortgages. These factors account for some of the differences in the two reports.

What’s the bottom line? S&P DJI’s Head of Commodities, Brian D. Luke, explained, “Accounting for seasonality of home purchases, we have witnessed 14 consecutive record highs in our National Index.” Despite the negative media, national home prices continue to move higher and provide a significant wealth creation opportunity.

Pending Home Sales, which are signed contracts on existing homes, rose 0.6% from July to August, per the National Association of REALTORS® (NAR), rebounding from their lowest level this year. However, sales remain 3% lower than they were a year earlier.

What’s the bottom line? Signed contracts on existing homes are starting to pick up, but we have not yet seen the full impact of lower rates on contract activity, as it takes time for people to find a home, negotiate and eventually sign a contract. NAR’s Chief Economist, Lawrence Yun, added that the slight move higher in activity “reflects a modest improvement in housing affordability.”

New Home Sales, which measures signed contracts on new homes, declined 4.7% from July to August, though the 716K-unit pace was above forecasts and is the third highest level of the year. Plus, sales in July were revised higher to a 751K-unit pace, which is the highest level of 2024 thus far.

What’s the bottom line? The decline in mortgage rates this summer has clearly led to an increase in activity among buyers. However, more “available” supply (i.e. completed homes ready for buyers to move into) is needed to meet buyer demand. Of the 467,000 new homes available for sale at the end of August, only 105,000 were completed, with the rest either under construction or not even started yet. Also, the median home price of $420,600 marked a 2.9% drop from July, but this was not due to falling home prices, which continue to rise nationwide as noted below. The median home price represents the mid-price of sales, and since we saw a larger mix of lower-end homes sell in August, the median home price fell slightly comparatively.

August’s Personal Consumption Expenditures (PCE) showed that headline inflation rose 0.1% from July, while the year-over-year reading fell from 2.5% to 2.2%. Core PCE, the Fed’s preferred method which strips out volatile food and energy prices, also rose 0.1% monthly. The year-over-year reading ticked higher from 2.6% to 2.7%, remaining near the lowest level in three years.

What’s the bottom line? The trend of monthly Core PCE readings have been favorable and in line with what the Fed wants to see. In fact, if we annualize the last four months of readings, Core PCE would be 1.77%, which is below the Fed’s 2% target. Plus, shelter costs remain the largest contributor to inflation, and they’re still overstated due to the lag effect. Inflation would be even lower if more real-time shelter costs were better reflected in the reporting.