×

We use cookies to help make LingQ better. By visiting the site, you agree to our cookie policy.


image

CNBC, Where Inflation Is Worst In The U.S.

Where Inflation Is Worst In The U.S.

Americans moved around a lot over the past two years.

And many have generally gone either south or west.

And those destinations also happen to have the highest

inflation rates in the US.

The story of inflation is more a story about hotbed

migration destinations and how that changed during the

pandemic.

Phoenix, Atlanta and Tampa are among the metro regions

seeing both hot inflation and the pandemic surge of

home buying.

The reason why Atlanta is one of the hot spots in

terms of inflation in the country is because people

are moving into Atlanta.

Two or three times a week we get phone calls, people

wanting to buy our house for cash, complete

strangers.

We saw right away that inflation was highest in

Phoenix and the lowest in San Francisco.

Nationally the Consumer Price Index rose by 8.3% in

April 2022.

They're effectively becoming poorer as prices rise.

Now, once people get here, they find, 'Wow, this

inflation is so high' compared to where they moved

from.

It's important as ever to pay attention to how

migration is impacting things like inflation.

Here's where inflation is burning red hot and how

migration across the country has affected it.

Many Americans relocated from expensive coastal

cities to more affordable urban areas, according to an

analysis from real estate broker Redfin.

However, this kind of inflation migration trend

seems new.

In 2021, where we started to see an acceleration of

migration driven by the pandemic into these hot

places like Tampa and Phoenix and Atlanta.

Where we really started to see the relationship expand

and pull out, where the hot migration destinations are

driving the big increases in inflation.

According to Redfin's analysis, Phoenix has the

highest inflation rate of any US metro area.

Prices spiked 10.9% in the first quarter of 2022.

Plus, Phoenix was one of the most popular places to

move yo, second only to beachy Miami, Florida,

according to Redfin.

Housing is definitely a large component that is

driving that. Housing costs in Phoenix, as of the first

quarter, are about 12% growth right now.

Most people in Phoenix that are homeowners are watching

the home price inflation with a great deal of

enjoyment. Essentially, home prices are darn near

double what they were two or three years ago.

Hot housing market like Atlanta.

We have a lot are the people moving in.

That's definitely the increased demand for goods

and services and especially housing.

Redfin said Atlanta had the second highest inflation

rate at 10.6%, and the Georgia metropolis also

happened to be the 10th most popular migration

destination.

People have more work flexibility and they are

also looking for more affordable places compared

to San Francisco, New York and all the other bigger

metropolitan areas.

Atlanta is still much more affordable.

That margin is definitely shrinking.

The Sun Belt trend continues with Tampa, Florida, having

the third highest inflation rate at 9.9% and is being

the third most popular migration destination.

Meanwhile, the city that saw the most people moving away

was San Francisco.

And San Francisco had the lowest inflation rate in

Redfin's analysis at 5.2%.

We know a lot of people that we've been tracking

throughout the pandemic have been leaving in places

like the Bay Area and moving and pouring into

these hot migration destinations through the

pandemic.

The New York City area had the second lowest inflation

rate at 5.4% and saw the third most migration away.

And keep in mind, this is price change, not price

level. So we're not saying it's less expensive to live

in New York. It's just that their current inflation rate

is a little bit lower.

Measuring inflation as the percentage change of the

price index, it's the consumer price index.

So that is a basket of representative goods that

people consume and housing accounts for one third of

that basket.

The Consumer Price Index, the CPI, is a measure of the

average change over time in the prices paid by

consumers, according to the Bureau of Labor Statistics.

That basket of stuff is developed from information

provided by families and individuals on what they

actually bought.

But the prices calculated from each item in the basket

are weighted.

And we have a sample of all sorts of goods and services

that we collect data from every month.

In about 75 areas across the country.

We're collecting in the neighborhood of 80,000

prices a month, so around a million per year.

And we're using that to compute both overall price

change, how much the price has risen for that whole

market basket.

So if the CPI represents the average weighted prices of

goods across the country, regional CPI measures have

their own unique weighted baskets of prices, just

slightly different weights.

And that variation depends on the region.

It can be different from place to place.

Now our data shows that there's substantial

inflation in every area of the country, a little bit

less than the Northeast, a little bit more in the south

and west. The first place to look is sort of the

weight of gasoline and also just the shelter or rental

costs, because that's where we see the most variation.

In the most recent 12 month period gas prices in Phoenix

are up over 40%.

People buy a lot of cars, some people buy used cars.

Prices of both of those have really increased

nationally. But also here in Phoenix, that's been a

big driver.

People feel the pain at the pump.

The gas price increase?

That will increase the cost of many other things.

And why you're going to see the food price and the

overall other services, so that definitely affects the

cost of living.

Even though the national housing market is showing

signs of a cool down, Phoenix, Tampa and Atlanta

will remain attractive to out-of-town homebuyers,

according to Redfin.

Thanks, in part, to pandemic fueled remote work.

I think there's a long term migration in the US towards

sort of the Sunbelt, towards the south and west,

away from the northeast and that's probably continuing.

Homes are becoming less affordable more quickly in

the Sun Belt metros than in coastal areas.

Does that affect migration?

I don't know. It hadn't seemed to as of this point

because prices are going up everywhere.

Big factor that will drive both inflation and migration

pattern is the housing market.

The rate hike now the Fed is conducting now, we know

right, when the mortgage rate is higher, it will cool

down the housing market a little bit.

Right? But specifically how the Atlanta housing market

will move. That is hard to say.

Redfin suggests that the financial benefits of moving

to relatively affordable areas may eventually

diminish.

The cost of living might be really affordable to someone

who is moving into the area. But for an existing

resident who is already there, they might be feeling

more of the pains if they haven't had a strong income

gains and they are still facing higher prices.

That's why wages are the key component that ties this

together, especially for locals.

Locals are simply priced out and they have to either move

much further out or to a place like Dallas instead,

where it's relatively more affordable.

If your wage and your salary cannot increase and keep up

with the pace of inflation, your purchasing power will

be hurt.

Wage increases nationally were 5%.

Phoenix wages were up 6.4%.

Now, that's, of course, not really keeping up with

inflation.

People will be hurt a lot more.

And that is more pronounced and more of an issue in

these hot migration destinations. What do we

need to do to address that?

Raising interest rates at the Fed is going to continue

to do will be one way to mitigate inflation into to

tame it. That's one strategy. Another strategy

shows up with this analysis that we need to build more

homes in these hot migration areas to add

housing supply, to also ease the burden of renters

and that are experiencing growth in their rents.

There's also transportation infrastructure that people

could invest in and maybe ease the burden of relying

on cars in these very car dependent metro areas, like

Atlanta and Phoenix, that are experiencing really high

growth.

There's a lot of uncertainty in the economy about what is

next. You have the issues related to labor

availability, labor shortages.

When you have that kind of churn in the labor market,

it puts upward pressure on wages.

So what is the big unknown?

Of course, its several unknowns, really.

What the effect of Federal Reserve policy, you know, is

it going to be a soft landing?

Is it going to be a catastrophe?

Who knows?


Where Inflation Is Worst In The U.S.

Americans moved around a lot over the past two years.

And many have generally gone either south or west.

And those destinations also happen to have the highest

inflation rates in the US.

The story of inflation is more a story about hotbed

migration destinations and how that changed during the

pandemic.

Phoenix, Atlanta and Tampa are among the metro regions

seeing both hot inflation and the pandemic surge of

home buying.

The reason why Atlanta is one of the hot spots in

terms of inflation in the country is because people

are moving into Atlanta.

Two or three times a week we get phone calls, people

wanting to buy our house for cash, complete

strangers.

We saw right away that inflation was highest in

Phoenix and the lowest in San Francisco.

Nationally the Consumer Price Index rose by 8.3% in

April 2022.

They're effectively becoming poorer as prices rise.

Now, once people get here, they find, 'Wow, this

inflation is so high' compared to where they moved

from.

It's important as ever to pay attention to how

migration is impacting things like inflation.

Here's where inflation is burning red hot and how

migration across the country has affected it.

Many Americans relocated from expensive coastal

cities to more affordable urban areas, according to an

analysis from real estate broker Redfin.

However, this kind of inflation migration trend

seems new.

In 2021, where we started to see an acceleration of

migration driven by the pandemic into these hot

places like Tampa and Phoenix and Atlanta.

Where we really started to see the relationship expand

and pull out, where the hot migration destinations are

driving the big increases in inflation.

According to Redfin's analysis, Phoenix has the

highest inflation rate of any US metro area.

Prices spiked 10.9% in the first quarter of 2022.

Plus, Phoenix was one of the most popular places to

move yo, second only to beachy Miami, Florida,

according to Redfin.

Housing is definitely a large component that is

driving that. Housing costs in Phoenix, as of the first

quarter, are about 12% growth right now.

Most people in Phoenix that are homeowners are watching

the home price inflation with a great deal of

enjoyment. Essentially, home prices are darn near

double what they were two or three years ago.

Hot housing market like Atlanta.

We have a lot are the people moving in.

That's definitely the increased demand for goods

and services and especially housing.

Redfin said Atlanta had the second highest inflation

rate at 10.6%, and the Georgia metropolis also

happened to be the 10th most popular migration

destination.

People have more work flexibility and they are

also looking for more affordable places compared

to San Francisco, New York and all the other bigger

metropolitan areas.

Atlanta is still much more affordable.

That margin is definitely shrinking.

The Sun Belt trend continues with Tampa, Florida, having

the third highest inflation rate at 9.9% and is being

the third most popular migration destination.

Meanwhile, the city that saw the most people moving away

was San Francisco.

And San Francisco had the lowest inflation rate in

Redfin's analysis at 5.2%.

We know a lot of people that we've been tracking

throughout the pandemic have been leaving in places

like the Bay Area and moving and pouring into

these hot migration destinations through the

pandemic.

The New York City area had the second lowest inflation

rate at 5.4% and saw the third most migration away.

And keep in mind, this is price change, not price

level. So we're not saying it's less expensive to live

in New York. It's just that their current inflation rate

is a little bit lower.

Measuring inflation as the percentage change of the

price index, it's the consumer price index.

So that is a basket of representative goods that

people consume and housing accounts for one third of

that basket.

The Consumer Price Index, the CPI, is a measure of the

average change over time in the prices paid by

consumers, according to the Bureau of Labor Statistics.

That basket of stuff is developed from information

provided by families and individuals on what they

actually bought.

But the prices calculated from each item in the basket

are weighted.

And we have a sample of all sorts of goods and services

that we collect data from every month.

In about 75 areas across the country.

We're collecting in the neighborhood of 80,000

prices a month, so around a million per year.

And we're using that to compute both overall price

change, how much the price has risen for that whole

market basket.

So if the CPI represents the average weighted prices of

goods across the country, regional CPI measures have

their own unique weighted baskets of prices, just

slightly different weights.

And that variation depends on the region.

It can be different from place to place.

Now our data shows that there's substantial

inflation in every area of the country, a little bit

less than the Northeast, a little bit more in the south

and west. The first place to look is sort of the

weight of gasoline and also just the shelter or rental

costs, because that's where we see the most variation.

In the most recent 12 month period gas prices in Phoenix

are up over 40%.

People buy a lot of cars, some people buy used cars.

Prices of both of those have really increased

nationally. But also here in Phoenix, that's been a

big driver.

People feel the pain at the pump.

The gas price increase?

That will increase the cost of many other things.

And why you're going to see the food price and the

overall other services, so that definitely affects the

cost of living.

Even though the national housing market is showing

signs of a cool down, Phoenix, Tampa and Atlanta

will remain attractive to out-of-town homebuyers,

according to Redfin.

Thanks, in part, to pandemic fueled remote work.

I think there's a long term migration in the US towards

sort of the Sunbelt, towards the south and west,

away from the northeast and that's probably continuing.

Homes are becoming less affordable more quickly in

the Sun Belt metros than in coastal areas.

Does that affect migration?

I don't know. It hadn't seemed to as of this point

because prices are going up everywhere.

Big factor that will drive both inflation and migration

pattern is the housing market.

The rate hike now the Fed is conducting now, we know

right, when the mortgage rate is higher, it will cool

down the housing market a little bit.

Right? But specifically how the Atlanta housing market

will move. That is hard to say.

Redfin suggests that the financial benefits of moving

to relatively affordable areas may eventually

diminish.

The cost of living might be really affordable to someone

who is moving into the area. But for an existing

resident who is already there, they might be feeling

more of the pains if they haven't had a strong income

gains and they are still facing higher prices.

That's why wages are the key component that ties this

together, especially for locals.

Locals are simply priced out and they have to either move

much further out or to a place like Dallas instead,

where it's relatively more affordable.

If your wage and your salary cannot increase and keep up

with the pace of inflation, your purchasing power will

be hurt.

Wage increases nationally were 5%.

Phoenix wages were up 6.4%.

Now, that's, of course, not really keeping up with

inflation.

People will be hurt a lot more.

And that is more pronounced and more of an issue in

these hot migration destinations. What do we

need to do to address that?

Raising interest rates at the Fed is going to continue

to do will be one way to mitigate inflation into to

tame it. That's one strategy. Another strategy

shows up with this analysis that we need to build more

homes in these hot migration areas to add

housing supply, to also ease the burden of renters

and that are experiencing growth in their rents.

There's also transportation infrastructure that people

could invest in and maybe ease the burden of relying

on cars in these very car dependent metro areas, like

Atlanta and Phoenix, that are experiencing really high

growth.

There's a lot of uncertainty in the economy about what is

next. You have the issues related to labor

availability, labor shortages.

When you have that kind of churn in the labor market,

it puts upward pressure on wages.

So what is the big unknown?

Of course, its several unknowns, really.

What the effect of Federal Reserve policy, you know, is

it going to be a soft landing?

Is it going to be a catastrophe?

Who knows?