Economic Data: US Households Face New Inflation and Housing Headwinds

American households are entering a new congressional session with persistent financial strain. Voters gave Democrats full control of Congress in the mid-term elections, a shift that follows a year of high costs for gasoline and groceries. The economic outlook is complicated by the ongoing war with Iran, which began in February and reduced global oil supplies, alongside President Donald Trump’s trade conflicts with major global partners.

The current economic environment is the result of several converging factors. The U.S. conflict with Iran started in February, leading to a sharp rise in energy prices. This spike coincided with a tariff dispute that kept inflation stubbornly high. By March, the Consumer Price Index had already climbed above 3% and has remained there since. The housing market has also deteriorated, with home prices rising for 39 consecutive months while the average 30-year mortgage rate sits near a three-year high.

Key data releases are scheduled for this week. On Tuesday, the government will release the October Consumer Price Index. Economists project the inflation rate rose to 3.9% from 3.7% in September. Later that week, on Friday, the Producer Price Index will be released. This metric tracks costs before they reach consumers. The September report showed the largest increase since December 2022, driven largely by diesel prices that affect transportation and storage costs.

The housing sector faces continued stagnation. The National Association of Realtors will publish its October report on existing home sales on Thursday. Analysts expect the figures to remain flat compared to September. Home sales have hovered near a 4 million annual pace since 2023, well below the historical standard of 5.2 million. The Federal Reserve is expected to consider another rate hike in December to combat the high inflation, which may keep borrowing costs elevated.

Labor market indicators suggest resilience despite underlying tension. The weekly jobless claims report, due Thursday, shows applications remaining at historically low levels. Employers added 165,000 new jobs in October. However, wage growth has lagged behind inflation, reducing the purchasing power of workers. While layoffs have stayed relatively low, finding new employment has become more difficult for those who lose their current positions.

Corporate earnings will also provide insights into specific industries. CoreWeave, a data center company, reports on Tuesday after its stock fell approximately 20% in the past week due to rising debt costs. Cisco and Applied Materials are scheduled to report on Thursday. In the entertainment sector, SkyDance will release its first results on Monday following its studios’ $81 billion acquisition of Warner Bros. Discovery.