Rocket Fuel Newsletter – 04/15/2024

Looking for the next once-in-a-lifetime event now that the solar eclipse has come and gone? Get ready for trillions of cicadas to emerge across the Midwest and South this spring as two broods simultaneously emerge from their years-long hibernation.

In this edition: home buying and selling by generation, an in-depth look into inflation and a huge announcement from Rocket ProSM TPO about this month’s NFL Draft!

And finally, where to stay inside as the cicadas overtake the skies (we’re looking at you, Illinois).

Fuel Up! 🚀  

Rocket Pro TPO Announces Its Next Pro Talks Guest

Did you hear? Fawaz will be sitting down with none other than Kirk Herbstreit for the next Pro Talks!

Join Fawaz as he chats with Kirk Herbstreit, NFL and NCAA football’s preeminent analyst, ESPN College GameDay analyst for nearly 3 decades and former Ohio State quarterback. They are sure to touch on Kirk's broadcasting career and numerous accolades, including five Sports Emmy Awards.

Save your seat!

Home Buying By Generation

The National Association of REALTORS® has released a home buyers and sellers report since 2013.The graphic below shows Gen Xers as the most active generation in the home buying and selling process, and Baby Boomers the most likely to sell their home.

Check out the full report here

Happy Tax Day

April 15 marks the deadline for income tax filings, which means individual federal taxes are due today unless an extension is filed. Pew Research Center recently released some eye-opening (and some seemingly obvious) statistics on Americans and taxes, including:

  • 94% of people e-file their taxes
  • The United States tax code is over 4,100 pages!
  • Income taxes are the federal government’s largest source of revenue

Read the full article from Pew Research Center

Inflation 101

“What’s going on with inflation?”

It’s the hot topic at the dinner table, for talking heads on cable TV and, especially in an election year like this, politicians. But what is truly meant by inflation, what drives it and who determines if it’s a good reading or a bad one?

The Basics – What Is Inflation?

Inflation is the rate at which the general level of prices for goods and services in an economy rises over a period of time, generally year-over-year when measured in metrics like CPI and PPI. This indicates a decrease in the purchasing power of money, as each unit of currency buys fewer goods and services.

The root cause of inflation is an increase in the money supply. This can occur in numerous ways, such as printing and distributing additional currency, legally devaluing the currency or creating new money through the banking system by purchasing government bonds from banks on the secondary market. This last method is the most common approach to expanding the money supply.

It’s important to also remember that a bit of inflation is a good thing. In fact, it’s part of the Federal Reserve’s dual mandate. Having a low, steady rate of inflation, such as the 2% that the Fed targets, lets businesses confidently set prices and ensure that the overall economy continues to grow.

Get Egg-cited!

For an example of inflation, let’s look at something simple like the price of eggs.

Remember when you could get a dozen eggs for just a dollar or two? Over time, the price of eggs has been creeping up; while eggs cost an average of just $0.91 a dozen back in 2000, this price rose to about $1.40 in 2019.

But then, in the midst of the pandemic, the average price for a dozen eggs peaked at $4.82. Almost $5! For twelve eggs! Thankfully, the price now sits more comfortably at around $2.99 a dozen, but this is still up drastically from just 5 years ago.

Now, let's connect the dots. As the price of eggs increases over time, it's not just about the cost of breakfast – it’s about the broader impact of inflation on our wallets.

Each time the price of eggs goes up, it means that consumers need to spend more money to purchase the same quantity of eggs. This decrease in the purchasing power of money is a direct result of inflation eroding the value of currency over time. So, while we may still be able to buy a dozen eggs, our dollars aren't stretching as far as they used to. It's a subtle but significant reminder of the effects of inflation on our daily lives.

Inflation Drivers

At its core, inflation is driven by a handful of key factors: changes in supply and demand, production costs and monetary policies set by central banks.

  • When demand for goods and services exceeds supply, known as demand-pull inflation, prices tend to rise.
  • When production costs increase, such as wages or raw materials, this can also push prices higher. This type of inflation is known as cost-push inflation.
  • Central banks use tools like interest rates and monetary supply to control inflation and stimulate economic activity.

Projections And Actuals

Now, when it comes to setting projections for inflation, who’s behind the curtain doing all the work? Why do they seem to have a crystal ball that's always a little cloudy?

As it turns out, it's a diverse group of experts, including economists, central bankers, government officials, and financial analysts who are tasked with this challenging job. These are the folks who crunch numbers, analyze economic trends, and closely monitor a wide range of indicators to try to predict where the economy is headed. They look at things like consumer spending, employment figures, and global events to provide their best predictions about future inflation rates.

Knowing it’s a group of econo-studs setting these projections each month, what’s particularly interesting is the entire economy and stock market’s responses to actual inflation figures in comparison to said projections.

When reality matches up with the projections or even come in below the projections, it's like a collective sigh of relief. This means the economy isn’t heating up as much as initially feared and can lead to positive sentiment in the markets and among consumers.

When inflation numbers come in above what was projected, there tends to be a fair amount of concern. Higher-than-expected inflation rates, as seen last week when March CPI was revealed, can stir up uncertainty, and policymakers and central banks may respond in a number of ways, including tightening monetary policy by raising inflation rates, intervening in financial markets to stabilize prices, and even conducting reviews of forecasting models to better understand this deviation from actual inflation numbers.

As we navigate through the complexities of inflation, one thing remains clear: It's an ever-present force lurking in the background, affecting everything from the price of eggs to how we plan for the future. Maybe we'll all learn to embrace the unpredictability of it all!

  1. Producer Price Index Increases 0.2% In March
  2. Consumer Price Index Increases 0.4% In March
  3. March Real Earnings Summary Shows No Change
  4. Mortgage Applications Increase In Latest MBA Weekly Survey
  5. Initial Jobless Claims Fall

After a brief hiatus, Michael Bazavilvazo returned to the top of the leaderboard with his time of 21 seconds, defeating his closest competitor Jim by 6 seconds. Shoutout to all 800+ solvers who completed last week’s puzzle!

This week’s puzzle gets 3 Rockets out of 5.

Click here to solve!