Freddie Mac economist on inflation concerns
July 23, 2021
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Today’s HousingWire Daily episode features a crossover episode of HousingWire’s Housing News podcast. In this episode, HousingWire Editor in Chief Sarah Wheeler interviews Ajita Atreya, a senior economist at Freddie Mac. During the episode, Atreya discusses Freddie Mac’s latest quarterly forecast, which indicates that the housing market will remain strong despite setbacks.
Atreya also discusses how the new Delta COVID-19 variant is affecting the market and shares her housing and economic projections for the remainder of 2021.
Here is a small preview of the interview, which has been lightly edited for length and clarity:
Sarah Wheeler: Freddie Mac’s latest quarterly forecast expects continued strength in the housing market despite some of the headwinds. Inflation has been a hot topic over the last few weeks — is inflation a worry as far as you’re concerned?
Ajita Atreya: Yes, inflation is hitting up the core CPI, which is a measure of inflation. It grew by 4.5% in June, so the first target for the core CPI is at 2%. So, it is concerning. But if you look at the components of CPI growth, it is mostly driven by the goods market and certain rapidly recovering segments. What I mean by that, for example, if you look at the pandemic affected goods, vehicles, vehicle parts, and rentals were affected the most during this pandemic in terms of goods. And those are the major forces driving inflation higher this time around. This seems like pent-up demand coming to life now, which is pushing inflation higher temporarily. And even in the service sector, which grew by 3% in June, airlines, hotel, holding events are the ones mostly contributing to inflation.
So, our team at Freddie Mac talks a lot about inflation and we’re in the camp that believes the inflationary pressure that we’re seeing now is transitory, but definitely something that we should be watching out for, because that’s going to have a major implication in the housing market and especially if the Fed decides to correct it.
HousingWire Daily examines the most compelling articles reported across HW Media. Each afternoon, we provide our listeners with a deeper look into the stories coming across our newsrooms that are helping Move Markets Forward. Hosted by the HW team and produced by Alcynna Lloyd and Elissa Branch.
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