PCE, Home Prices, Zooming Service Calls, Olympics, and your Independence Day
2.6% Core PCE
By now, many readers, when they see the letters PCE, know that it means Personal Consumption Index. Just like when you see the letters CPI, you know it means Consumer Price Index.
Both are a measure of inflation.
Both measure similar things; the Federal Reserve just likes the PCE better for reasons that will make your eyes glaze over and go to the next email.
So, the monthly increase in the PCE was… 0%.
That’s right. Overall, prices for goods and services stayed even. That’s not to say there were no price increases; it’s just that they were offset by other costs decreasing. The net effect was 0.0%. For the month.
The annual increase was 2.6%. It’s slowly going down to the Fed target of 2.0%.
As inflation continues to stay down or perhaps even fall further, what will be the impact on jobs? Stay tuned.
Talking Points
Housing: The median price of an existing home in the U.S. hit its highest ever: $419,300. That’s not the average.
The median is the number reflecting 50% of sales above and 50% of sales below—in other words, the middle price.
The average is $513,300.
Before the pandemic, the median was $327,100.
Here’s a big reason the inventory of homes for sale is low: 66% of outstanding mortgages in the United States have a rate below 4%.
It’s tough to sell a house and leave a 3.5% mortgage for a new mortgage with double the rate.
Service Call: Ever heard of FrontDoor? You may soon enough.
In recent years, home-repair service calls have risen in cost.
Coincidently, most folks have grown accustomed to video calls.
So, why not combine the two?
And indeed, that is being done.
With home repair service calls quickly increasing in price, there is a trend to do service calls remotely.
For $3/minute, qualified technicians will walk you through how to repair an appliance, troubleshoot electrical wiring, or repair a plumbing problem via FaceTime.
Most calls take 15 minutes. $45 beats a $100 service call any day of the week.
I guess you have only yourself to blame for the cleanup.
The Olympics
Equestrian – no, don’t go to the next segment, this is good, trust me. I promise I won’t try horsesplaining what ‘Eventing’ is, except that it’s basically a horse triathlon.
By the way, Equestrian is the only sport in which men or women can compete against each other. That is a great trivia question; it also sounds like a great bar bet.
That doesn’t include co-ed team sports, folks. These are individual competitors and the gals have bested the guys many times.
For the Paris Olympics, Equestrian will be held at the Palace of Versailles. You can really go down the Wikipedia rabbit hole on the history there.
Laura Collett is a competitor in Eventing for Britain and is 34 years old.
In a competition in 2013, her horse fell on top of her.
She suffered a fractured shoulder, two broken ribs, a punctured lung, a lacerated liver, kidney damage and was resuscitated five times. Five times.
After considerable time in rehab, she won the gold medal in that event at the 2020 games in Tokyo and is a favorite in Paris.
That’s the definition of ‘Cowboy Up’, and that’s why I love watching the Olympics.
Your Independence
Many of you on this distribution list are business owners, but why are you a business owner? Most of you, at some point, worked for someone. You had a boss, and you worked for a company.
One day, the revelation set in that you could do what they were doing, and you could do it better, faster, or cheaper. And so you did. You declared your independence from the company or boss running your life.
Just like you, the founding fathers felt the same way. They could do it better, and they did, just like you.
But not without considerable risk. Just like you.
One day, you got your last, steady company paycheck; the next, you were working to create that unsteady cash flow that you now call your business.
You got to work 80 hours a week, so you didn’t have to work 40 hours for someone else.
Like you, Thomas Jefferson, George Washington, Benjamin Franklin, John Adams, John Jay, Patrick Henry, and many others had families that depended on them, just like your family depends on you. If you were married, that was a long conversation with your spouse—“Do I go out on my own?” Crazy, right?
The day the Founding Fathers declared their independence from England, these new, thirteen United States, with its brand-new territory, became the competition to England, just like you became the competition to your former employer.
And, like you, these 13 states, with their 56 delegates, had a business plan.
It started with “When, in the course of human events…”
The second sentence may be the most well-known:
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain inalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”
The critical difference was that they had to keep their rifles close by because no one else was going to protect their goal of starting a new country.
They even had to form a partnership with France, a potential competitor, to prevent their former employer, England, from working against them.
And 248 years later, here we are.
As a business owner, you are constantly pivoting, perhaps making service calls remotely. Or you are crushed by some unforeseen challenge with everyone counting you out, but like an Olympian, you come back because success is the best revenge. Or you decide to leave the mothership and go out on your own, just like the 56 signatories of the Declaration of Independence, and feel the full wrath of your former employer.
And for that, you have my greatest respect. Thank you.
The Quote of the Week is from a 1970 graduate of BUD/S class 48E:
Sweat is the Cologne of Success.
