Let’s Talk Turkey: The economics of Thanksgiving dinner
Good morning Rise&Shredders! We hope you have a great Thanksgiving planned! Rise&Shred will break for the holiday, but look for a Black Friday special email! We will resume normal operations Monday.
Let’s get to work! The good news is, even with a pandemic happening, the cost of putting together Thanksgiving dinner did not marginally increase.
Consumer prices for other uncooked poultry including turkey did not change from November 2018 to November 2019. From 2000 to 2019, the change in consumer prices for other uncooked poultry including turkey averaged 1.9 percent from one November to the next, according to the latest Consumer Price Index from the US Bureau of Labor Statistics.
Along with turkey, Thanksgiving is not complete without mashed potatoes. In 2019 the consumer prices for potatoes increased 5.6 percent for the year ended in November. Consumer prices for potatoes increased by 3.5 percent, on average, for the 12 months ended in November from 2000 to 2019.
To accompany the mashed potatoes, one must have gravy. Consumer prices for sauces and gravies decreased 0.9 percent over the year in November 2019. Consumer prices for sauces and gravies averaged a 1.4 percent increase for the year ended in November from 2000 to 2019, the report states.
Lastly, after dinner-sweets complete the entire Thanksgiving meal. Consumer prices for frozen and refrigerated bakery products, pies, tarts, turnovers increased 0.4 percent for the year ended in November 2019. Consumer price increases for these items averaged 1.8 percent per year from November 2000 to November 2019.
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Everyone loves Biden’s Treasury pick
Stocks on Wall Street rallied to records on Tuesday, as key states certified Joseph R. Biden Jr.’s victory in the presidential election and news that Janet Yellen will be the next Treasury secretary raised expectations for a big push for government spending to aid the economy (NYT, paywall).
The S&P 500 rose 1.6 percent, passing a high reached earlier in the month. The Dow Jones industrial average topped the 30,000 mark for the first time, also besting a record reached not long ago.
The mortgage bond market also expressed gratitude for the move.
“On behalf of the Structured Finance Association, I applaud President-elect Biden’s decision to nominate Janet Yellen to serve as Treasury secretary,” wrote Michael Bright on his LinkedIn page, the CEO of the Structured Finance Association, representing the secondary markets. “While serving as a senior financial policy advisor on Capitol Hill, I was fortunate to get to know Chair Yellen during her confirmation process and worked with her on a number of different issues.”
“She is a brilliant economist and a great leader, and I expect her nomination to receive broad industry support. If confirmed, SFA looks forward to working with her and her team on a variety of issues,” Bright concluded.
🔥 Record Year In 2021 Coming BUT… 🔥
With The REsource TV
ICYMI: Here’s why the FHFA raised conforming loan limits
Rise&Shred sent a breaking news alert yesterday when the FHFA announced the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2021. In most of the U.S., the 2021 maximum conforming loan limit (CLL) for one-unit properties will be $548,250, an increase from $510,400 in 2020.
Here’s why the FHFA made that decision.
The Housing and Economic Recovery Act (HERA) requires that the baseline CLL be adjusted each year for Fannie Mae and Freddie Mac to reflect the change in the average U.S. home price. Earlier today, FHFA published its third quarter 2020 FHFA House Price Index report, which includes estimates for the increase in the average U.S. home value over the last four quarters. According to the seasonally adjusted, expanded-data FHFA HPI, house prices increased 7.42 percent, on average, between the third quarters of 2019 and 2020. Therefore, the baseline maximum CLL will increase by the same percentage.
There are exceptions, however.
For areas in which 115 percent of the local median home value exceeds the baseline CLL, the maximum loan limit will be higher than the baseline loan limit. HERA establishes the maximum loan limit in those areas as a multiple of the area median home value while setting a “ceiling” on that limit of 150 percent of the baseline loan limit. Median home values generally increased in high-cost areas in 2020, driving up the maximum loan limits in many areas. The new ceiling loan limit for one-unit properties in most high-cost areas will be $822,375 — or 150 percent of $548,250.
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