“I attract to my life whatever I give my attention, energy and focus to, whether positive or negative.”
-Michael Losier-
Let’s Celebrate Summer 2021
As the 1st half of the year is already upon us, I’d like to recognize what this year has already brought us and what to look forward to:
Are we back to normal yet? – I have been noticing an emotional shift regarding the COVID-19 pandemic as people are looking to move on and get back to normal. While infections are down and vaccinations are increasing, many parts of the country are beginning to reopen and most people are returning to close to normal lifestyles. I myself am looking forward to life without masks, travel and spending time with friends and family I have been unable to see in person since last March. I hope you all are as optimistic about the future in front of us. With that said, please continue to protect yourselves and others so we can put this pandemic in our past.
It’s Graduation Time – Even though many of the class of 2021’s school year and graduation ceremonies have been hijacked by the pandemic, just remember that surviving means that you have come through the catastrophe but you’re still relatively intact. Thriving is about learning and growing as a result of the event. That’s what graduations are all about. Congratulations to all the Graduates!
Have a Happy & Proud Juneteenth – Juneteenth is the oldest nationally celebrated commemoration of the ending of slavery in the United States. From its Galveston, Texas origin in 1865, the observance of June 19th as the African American Emancipation Day has spread across the United States and beyond. Today Juneteenth commemorates African American freedom and emphasizes education and achievement. It is a day, a week, and in some areas a month marked with celebrations, guest speakers, picnics and family gatherings. It is a time for reflection and rejoicing. It is a time for assessment, self-improvement and for planning the future. Its growing popularity signifies a level of maturity and dignity in America long over due. In cities across the country, people of all races, nationalities and religions are joining hands to truthfully acknowledge a period in our history that shaped and continues to influence our society today. Sensitized to the conditions and experiences of others, only then can we make significant and lasting improvements in our society.
U.S. inflation is still climbing and now higher labor costs are adding to the pressure, By Jeffry Bartash
Surging U.S. inflation tied to reopening of the economy is supposed to start to fade by the end of the year, but rising wages threaten to upset the conventional wisdom.
The Federal Reserve, the nation’s inflation watchdog, has insisted for months that higher inflation is largely the result of the U.S. businesses fully reopening. as vaccination rollouts result in a sharp decline in coronavirus cases and deaths.
The unleashing of pentup demand, the thinking goes, would drive up prices temporarily as Americans rushed to spend money on all the things they couldn’t do during the pandemic.
The central bank got the first part exactly right. The yearly rate of inflation leaped to a 13-year high of 3.6% in April, using the Fed’s preferred PCE price gauge. By another measure inflation hit a 28-year peak.
Inflation likely rose sharply again in May. Economists polled by Dow Jones and The Wall Street Journal predict the consumer price index rose 0.5% last month.
If so, that would push the yearly rate close to 5% from 4.2% in April.
Consumer prices have only risen that fast twice in the past 30 years, most recently in 2008 when the cost of a barrel of oil topped $150.
These prices increases almost certainly won’t last, economists widely agree. The biggest source of inflation, they say, is a temporary mismatch between supply and demand.
Put another way, consumers want to buy a lot of things and spend money on services such as travel or entertainment they avoided during the pandemic. But companies still recovering from a collapse in demand last year can’t produce enough yet to satisfy them.
The result: Rising prices for everything from lumber to used cars to vacation rentals.
It’s not going to last. Sooner or later, companies will catch up and satisfy all the pentup demand. Major shortages of key supplies such as computer chips will go away. And prices of raw materials will come back down.
What the Fed might not have expected, however, was a big increase in wages. That’s the single biggest cost for lots of companies, though not as big as it once was.
Many businesses say they can’t find enough people to fill a record number of job openings despite a still-high unemployment rate. And that’s forcing them to raise wages, in some cases extravagantly so, to get people to accept a job.
In just the past two months alone, wages grew at an astonishingly high 7.4% annual pace. That’s three times the normal annual average. Most of the increases are taking place in lower-wage occupations at hotels, restaurants, casinos and the like.
It’s not just lower-paying industries, either. Take manufacturing.
Wages for assembly-line workers grew in the first three months of the year at the fastest pace in 20 years, Bank of America economists calculated. And those who quit one manufacturing job for another saw a 13% jump in pay, the firm found.
“If new labor doesn’t re-enter the labor force soon, labor shortages could intensify adding to wage and inflation pressures across a broader cross-section of the economy,” said chief economist Scott Anderson of Bank of the West.
Higher wages alone are not a cause of inflation, it should be kept in mind. If workers are productive enough, companies can increase pay without any harm to their bottom line or a general increase in inflation.
Yet it’s far from clear that workers being hired now will turn out to be more productive.
The cost of labor is not like the cost of raw materials and other business supplies. Unlike the cost of commodities, wages rarely go down .
If wages keep rising, companies will be tempted to pass along higher labor costs to consumers in the form of high prices. And that could result in higher inflation for a longer period of time than than the Fed expects.
“Wage premiums for job switchers suggest inflation may persist,” Bank of America said.
The central bank, for its part, has stuck to its prediction the current spike in inflation is “transitory,” saying it will drop back toward 2% by next year. But many are beginning to wonder.
“The writing is on the wall: The Fed’s temporary-inflation mantra is sounding more dated by the week,” said senior economist Sal Guatieri of BMO Capital Markets.
What the World’s Most Successful Real Estate Investor is Buying
To read the article go to https://www.bloomberg.com/news/articles/2021-06-11/home-price-bubble-in-the-us-blackstone-s-gray-on-real-estate-investing
I am now an ADU Specialist
I recently received my ADU Specialist Credential and am assisting homeowners, investors and developers understand site eligibility, local regulations, development process/costs and the return on investment.
Accessory Dwelling Units (ADU) are also known as secondary units, in-law units, granny flats, backyard cottages, etc. No matter what you call them, ADUs are an innovative, affordable, effective option for adding much needed housing in California. They are self contained residential units on the same property as a single-family home or a multi-family building. ADUs must have a kitchen (or efficiency kitchen), bathroom, place to sleep and a separate entrance from the main property. You can use an ADU to house family or friends, or lease to a rent-paying tenant. New policies are making ADUs more affordable to build, in part by limiting development impact fees and relaxing zoning requirements. By design, ADUs are more affordable and can provide additional income to homeowners and often the rent generated from the ADU can pay for the entire project in a matter of years.
If you or someone you know might be interested in learning more how to help solve the current affordable housing crisis while also creating some additional and passive income, please contact me.
