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To see current market stories scroll down for up to the minute stories and news regarding the stock markets and the interest rate markets.  The following charts show the current Real Estate Trends for the Greater Sacramento Area.

Statistics are for the Greater Sacramento area including Sacramento, Yolo, Placer and Eldorado Counties

How Higher Priced Homes and Technology Killed Inflation:
It has long been the Federal Reserve's Policy to fight inflation by raising interest rates to slow consumers from spending too fast and causing inflation.  So you might ask why with housing prices rising to an almost unaffordable high that the Fed (the Federal Reserve) has not raised interest rates to combat such high housing prices.  Well, the answer might surprise you or it might just be so obvious that you slap your economic head and say wow that's right.  Inflation is a rise in prices of consumer goods and services over time given in a percentage of gain from month to month or year to year.  The rise in housing prices can and is quantified the same way, however, the big difference between goods and services and Housing prices is that consumers need the basics every month like food, consumer goods, and services from plumbers, electricians, etc., but consumers don't buy houses every month.  On average people stay in their housing for an average 5-7 years thus not being affected by housing prices until it is time to move.  In addition, when housing prices go up and people stay in their homes for an average of 5-7 years they end up realizing price gains on their existing home and this is called realized equity.  So when the prices of goods and services increase month to month consumers need the basic items to live so they will buy them realizing no equity as these items are consumed. 
     Household income plays a factor in inflation as well as the more money people make the more they tend to consume.  So if America on the average is making more money they will consume more creating a higher demand for goods and services thus prices will rise to offset the higher demand.  So why doesn't such high priced housing effect interest rates?  Simply put housing is not something consumed it is an asset that has trade value or equity.  In addition, people are not in need of purchasing housing every month or every year for that matter. 
     It has long been the Federal Reserve's policy to keep inflation around 2% and since the 1970's the Fed has done a great job of keeping in check.  However, I believe there are other factors in play the Fed is not taking into consideration.  I will say that the high priced housing has used up far more of the average household budget thus leaving consumers less money to buy goods and services with.  This may either be by design, but I would contend that it is actually a happy accident in the Fed's favor. If you are spending the majority of your income on your housing expenses that leaves you with less money to buy goods and services.  In addition to that technology is such a big part of today's world that people don't need or want for more personal items to keep them entertained or fulfilled thus lower demand for certain physical items.  It is tough to have inflation if the demand for things goes away and that is what technology has done.  An example are college kids these days. College kids need to eat, drink and study, but with their smartphones, they can get everything they need on that device delivered to their door and their entertainment is at their fingertips.   Technology has slowed the need or the demand for goods and services and by doing so has slowed inflation.  I hope this has enlightened you on how the markets work and how they change.  I will predict that we see some changes in the Federal Reserve's approach to fighting inflation by raising interest rates in the future with the onset of even newer technology advances.     

Current News Feeds:

Current Market News:
 
Nasdaq closes at record high even amid coronavirus scare
1/23/2020 3:42 PM
(Please visit the site to view this media)Chris Hyzy, chief investment officer of Merrill and Bank of America private bank, and Stephanie Link, CNBC contributor, discuss markets after the closing bell....(Read More
 
Mnuchin: We planning more tax cuts despite budget deficit continuing to grow
1/23/2020 9:25 AM
(Please visit the site to view this media)Treasury Secretary Steven Mnuchin tells the "Squawk Box" crew that the administration has started work on a second round of tax cuts even as the budget deficit continues to grow....(Read More
 
Leading economic indicators fall 0.3% in December
1/23/2020 9:25 AM
(Please visit the site to view this media)CNBC's Rick Santelli reports on the latest leading economic indicator data for the month of December 2019....(read more)
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JP Morgan Chase Intl. Chairman: Negative interest rates are "a major issue"
1/23/2020 8:30 AM
(Please visit the site to view this media)Jacob Frenkel, chairman at JP Morgan Chase International, sits with CNBC's Sara Eisen to talk negative interest rates, trade and the state of the global economy....(Read More
 
Here"s how the coronavirus outbreak could affect the economy
1/22/2020 3:01 PM
(Please visit the site to view this media)A deadly outbreak of a new coronavirus, which is similar to SARS, has caused concern among health experts and investors. China's economy could be hurt by the disease if consumers skip travel and leisure activities to avoid getting sick....Read More
 
Existing home sales jump 3.6% vs. 1.5% expected
1/22/2020 3:00 PM
(Please visit the site to view this media)CNBC's Diana Olick reports on new home sales data that largely beat expectations....(read more)
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Jamie Dimon: I have some trepidation on negative interest rates
1/22/2020 7:40 AM
(Please visit the site to view this media)Jamie Dimon, CEO and chairman of J.P. Morgan Chase, tells CNBC's "Squawk Box" crew that he has concerns about negative interest rates despite the markets being in a "Goldilocks place."....Read More
 
David Rubenstein: US-China won"t have the same economic tensions they had before
1/21/2020 9:29 AM
(Please visit the site to view this media)The Carlyle Group Co-CEO David Rubenstein joins CNBC's "Squawk Box" team at the World Economic Forum in Davos, Switzerland....(read mo...Read More
 
Trump says in Davos speech that he "could get used to" negative interest rates
1/21/2020 7:43 AM
(Please visit the site to view this media)President Donald Trump spoke at the World Economic Forum in Davos about negative interest rates and took another shot at the Federal Reserve to a global audience....(Read More
 
Economic growth will hit 3% in 2020, says Trump economic advisor Larry Kudlow
1/21/2020 7:30 AM
(Please visit the site to view this media)Larry Kudlow, President Donald Trump's top economic advisor, told "Squawk Box" at the World Economic Forum in Davos that GDP growth in the U.S. should hit at least 3% in 2020....(Read More