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Climate Change

Climate Change Is One Of The Biggest Contributors To Inflation And Economic Failures

“Climatenomics” is a new book from Bob Keefe, a former White House reporter and director of Environmental Entrepreneurs. In the book, Keefe discusses how the climate crisis is changing international economies and driving prices up in almost all sectors of business.

Covid

China Slowly Recovering From Worst Surge Of Covid-19 Since Pandemic’s Start 

The capital city of Beijing, China took a step towards Covid-19 recovery by allowing restaurants to resume in-store dining this week, after a hiatus of nearly a month. Most other businesses are also able to restore in-person operations. 

Shanghai, which has been locked down for nearly two months, also announced reopening plans for their restaurants and in-person businesses, as well as outdoor activities like camping and local parks. 

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The traffic rates in both major metropolitan areas increased this week after weeks of nearly no congestion due to lockdown procedures. Virus testing in both cities has relaxed from every two days to every three days as well. 

Surges of Omicron cases have been spiking throughout China since March, prompting the nation to reinstate many of their “dynamic zero-Covid” policies. The nationwide daily Covid case cound has now fallen to well below 50, according to official data.

“The unsynchronized lockdowns and reopenings across major cities suggest that China’s ongoing post-lockdown growth recovery should be less steep than the V-shaped one in spring 2020.”

“Our high-frequency trackers suggest that barring another severe Covid resurgence and related lockdowns, mobility, construction and ports operation could recover to pre-lockdown levels in around one month,” said Goldman Sachs China Economist Lisheng Wang in a report.

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Local authorities have been enforcing strict travel bans and stay-home orders to control the spread of the virus, a method they’ve been using since the beginning of the pandemic in 2020. 

The report from Goldman Sachs also stated that “businesses in the service sector that involve close human contact would find it challenging to achieve a full recovery any time soon.”

The Dragon Boat Festival holiday weekend in China indicated to the government that overall economic recovery will likely be slow. Spending on domestic tourism during the holiday dropped 12.2% when compared to last year. 

The Purchasing Managers’ Index in China showed continuous declines in business plans for hiring new employees as well due to a lack of income overall. 

Even with Beijing and Shanghai reopening, many specific apartment complexes and neighborhoods could remain closed off due to contact with Covid cases. 

U.S. Consumer Confidence Slips In May Among Inflation

On Tuesday, The Conference Board reported that its consumer confidence index decreased slightly in May to 106.4, a score that — while still a strong number — is down from 108.6 in April (which saw a small increase itself from March).

Meanwhile, the group’s present situation index, which is based on consumers’ assessments of current business and labor market conditions, declined from 152.9 to 149.6. The expectations index, based on consumers short-term outlooks for income, business, and labor, decreased from 79.0 to 77.5.

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“The decline in the present situation index was driven solely by a perceived softening in labor market conditions,” Lynn Franco, The Conference Board’s senior director of economic indicators, said. “By contrast, views of current business conditions — which tend to move ahead of trends in jobs — improved. Overall, the present situation index remains at strong levels, suggesting growth did not contract further in Q2.”

“That said, with the expectations index weakening further, consumers also do not foresee the economy picking up steam in the months ahead. They do expect labor market conditions to remain relatively strong, which should continue to support confidence in the short run.”

The dip in confidence comes after April saw an 8.3% year-over-year rise, which was down from March’s 8.5% year-over-year hike. Also not helping is the producer price index, which saw a jump of 6.9% in April. That’s down from March’s 7.1%, but up from February’s 6.7%.

Even with the Federal Reserve’s attempts to fight inflation by raising interests rates by 0.5% to 1.00%, the soaring prices will likely continue to be a burden to Americans over the coming summer months. One area consumers are being tortured in are rising gas prices, which now sit at a national average of $4.6 per gallon.

The labor market continues to remain a question mark for consumers even after employers added 428,000 jobs in April, keeping the unemployment rate at a pandemic-low 3.6%. Those numbers helped the country keep a 12-month streak of 400,000 or more jobs added.

However, that steady improvement may be misleading. Politico noted that data released by the Ludwig Institute suggests the “true rate of unemployment” (or TRU) is higher than national or local figures show and accounted for 23.1% of the labor force in April.

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“We think it misleads the American people to say, ‘Oh, we’ve got 3.6 percent of America that is unemployed, ergo, a huge percent of the population is employed,’ when in fact they can’t make above a poverty wage,” Ludwig told Politico.

Additionally, Federal Reserve chair Jerome Powell has previously called the labor market “unsustainably hot,” and — in an interview with Marketplace — explained that the demand of labor is inconsistent with low inflation. “What we need to do is we need to get demand down, give supply a chance to recover and get those to align,” he said.

President Joe Biden met with Powell Tuesday, saying afterwards that inflation has become his top domestic priority. “My plan to address inflation starts with the simple proposition: Respect the Fed, respect the Fed’s independence, which I have done and will continue to do,” Biden said.

How Biden deals with inflation could significantly impact his odds of possessing a second term in two years. According to FiveThirtyEight, the President currently sits at a 54.0% disapproval rating (up from 52.4% May 1), with just 40.8% approving of his work. Biden has pointed to the Ukraine invasion and supply chain issues as culprits of inflation woes.

Ukraine Could Lose Half Of Its Economy Due To War, According To World Bank 

The World Bank released a report this weekend that stated Ukraine could lose almost half of its economy this year as a result of Russia’s invasion and the ongoing war between the two nations. 

The bank estimated that the “country’s GDP could decline by 45.1% this year, although the magnitude of the contraction will depend on the duration and intensity of the war.”

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Since Russia invaded, Ukraine’s infrastructure has endured excessive amounts of damage and destruction. Bridges, neighborhoods, and ports have been hit with multiple blockades, and farmland throughout the nation has become the setting for multiple battles. 

Before this conflict, Ukraine was a major exporter of wheat and sunflower oil, however, the growth of both has been interrupted by fighting. Farmers are also finding it difficult to access machinery and other essential products needed for farming that would typically arrive through Black Sea ports. 

“The magnitude of the humanitarian crisis unleashed by the war is staggering. The Russian invasion is delivering a massive blow to Ukraine’s economy and it has inflicted enormous damage to infrastructure,” Anna Bjerde, the World Bank’s vice president for the Europe and Central Asia region, said in a statement.

“Ukraine needs massive financial support immediately as it struggles to keep its economy going and the government running to support Ukrainian citizens who are suffering and coping with an extreme situation.”

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Ukraine Finance Minister Serhii Marchenko has stated that “the government is still functioning, despite the war.”

“About a third of the country’s economy is no longer functioning as the atrocities continue and millions of people flee as refugees into neighboring countries,” he explained. 

Marchenko added that as of late March, nearly 3 million Ukranians have lost their jobs; preliminary reports show the nation’s economy has already lost approximately $565 billion. 

To keep the economy afloat, the government has “leaned on war bonds, as well as less traditional avenues, such as fundraising in cryptocurrencies and the sale of non-fungible tokens (NFTs),” according to Marchenko.

“I think that the true figures of total economic loss would be clear only after the war,” he said.

“The [best] scenario is to end the war as quickly as possible.”

Russia And Ukraine Conflict Update: Ukraine Rejects Moscow’s Offer Of Safe Housing For Citizens

Moscow announced this week that they would provide corridors for residents of Ukraine’s two main cities if they decided to flee to Russia or Belarus; a move that Ukraine called an “immoral stunt to exploit the suffering under Russian bombardment.” 

Russian and Ukrainian delegations assembled for a third round of talks when the announcement was made. The two previous rounds of delegation didn’t offer many solutions for citizens besides a pledge to open up routes for humanitarian access. 

“In a few minutes, we will start talking to representatives of a country that seriously believes large-scale violence against civilians is an argument. Prove that this is not the case,” Ukrainian negotiator Mykhailo Podolyak said.

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A spokesperson for Ukrainian President Volodymyr Zelenskiy called the move “completely immoral, Russia is trying to use people’s suffering to create a television picture. They are citizens of Ukraine, they should have the right to evacuate to the territory of Ukraine.”

The United Nations refugee agency stated that more than 1.7 million Ukrainians have now fled their home country to seek safe housing in Central Europe. A multitude of international sanctions has also isolated Russia from global commerce. 

Russia is the world’s biggest exporter of oil and gas. Prices of oil spiked above $139 a barrel this Monday, the closest the nation has come in nearly 14 years to reaching the all-time high of $147. Investment banks say that the prices could even approach $200 this year is Russian supply continues to dwindle. 

The general staff of Ukraine’s armed forces say that Russian forces “were beginning to accumulate resources for the storming of Kyiv,” which is a city of more than 3 million people. So far 2,000 citizens have been evacuated from Irpin, a suburb in Kyiv that has been enduring heavy attacks. 

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In a speech to the nation late on Sunday, Zelenskiy described one family “cut down as they tried to escape Irpin on Sunday, Russians responsible for such atrocities will never be forgiven. For you there will be no peaceful place on this earth, except for the grave.”

Ukraine also said on Monday its forces had “retaken control of the town of Chuhuiv in the northeast, a site of heavy fighting for days, and of the strategic Mykolayiv airport in the south.”

The United Nations has called for safe passage for all people who are cut off from lifesaving aid across Ukraine. One psychiatric hospital near Kyiv has been running out of water and medicine with 670 patients trapped inside. The WHO said at least 6 people have been confirmed killed within nine attacks on health care facilities since the start of the conflict. 

Moscow has acknowledged that nearly 500 of their soldiers have been killed, but Western countries and Ukraine said that number is actually likely to be in the thousands. Russian authorities, however, have imposed a near total media blackout on non-official information, making it nearly impossible to verify the actual amount of deaths. 

Evacuation efforts have been stalled in multiple areas around Ukraine due to safety concerns, but ideally leaders will be able to continue to provide aid and refuge through the UN.

Biden Addresses Ukraine, Economy, COVID-19 In State Of The Union Speech

In his first, 62-minute State of the Union speech Tuesday night, President Joe Biden tackled the growing threat of Russia aggression, detailing multiple efforts being undertaken in order to not only assist Ukraine and damage the Kremlin, but to “protect American businesses and consumers” that could face economic collateral damage.

Unity was on full display, with Biden explaining that despite the numerous political differences they hold, he and all other members of Congress are joined “with an unwavering resolve that freedom will always triumph over tyranny.” To show support for Ukraine, lawmakers were asked to stand and cheer.

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“In the battle between democracy and autocracies, democracies are rising to the moment, and the world is clearly choosing the side of peace and security,” Biden declared, noting numerous times the courage and determination Ukrainian citizens have shown in the face of the unprovoked invasion that’s resulted in hundreds of innocent injuries and deaths.

The President announced that the U.S. would join NATO allies like Canada and the U.K. by closing off American airspace to all Russian flights in a further attempt to isolate the country and squeeze its economy, which he mentioned is already showing signs of cracking due to enforced sanctions.

“The ruble has already lost 30 percent of its value. The Russian stock market has lost 40 percent of its value, and trading remains suspended. The Russian economy is reeling, and Putin alone is the one to blame.”

Among other measures being taken include cutting off Russia’s largest banks from the international financial system — which would make “Putin’s $630 billion war fund worthless” — seizing luxury apartments, yachts, and jets from Russian oligarchs, and giving $1 billion in direct assistance to Ukraine. Biden added that U.S. troops are also mobilizing in Poland, Romania, Latvia, Lithuania, and Estonia.

However, as he’s done throughout the past couple months, Biden reiterated that the mobilized forces would not be engaging Russian forces in Ukraine. “Our forces are not going to Europe to fight in Ukraine, but to defend our NATO allies in the event that Putin decides to keep moving west,” Biden said.

Turning his attention back to the homeland, Biden highlighted the impacts of his American Rescue Plan, stating it fueled the efforts to vaccinate and fight COVID-19 while creating 6.5 million new jobs in the last year.

“The economy grew at a rate of 5.7 [percent] last year, the strongest growth rate in nearly 40 years, the first step in bringing fundamental change to our economy that hasn’t worked for the working people of this nation for too long.”

Biden pitched that the key to fighting rising inflation — which he termed “building back America” — is to cut the costs of prescription drugs, energy costs, and child care while relying more on American supply chains as opposed to foreign. Biden also emphasized that no one earning less than $400,000 a year would see additional raises on taxes.

In what is almost two years since the pandemic begun in the U.S., Biden refused to ease back on combating the Coronavirus. “I know some are talking about living with COVID-19. But tonight I say that we will never just accept living with COVID-19.”

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While reaffirming the safety and need for vaccinations and protocols — currently, 65.2% of Americans are fully vaccinated — he stated the launching of a “test to treat” initiative so that “people can get tested at a pharmacy, and if they prove positive, receive antiviral pills on the spot at no cost.”

When it comes to police brutality and police resource allocations, Biden stressed that the answer is not to choose between safety and equal justice or defund the police, but to “fund them with resources and training” that are needed to protect communities, while urging for additional crackdowns on gun trafficking and untraceable ghost guns that can be bought online.

According to FiveThirtyEight, 53.1% of polls currently disapprove of Biden against a 41.3% approval. Biden’s disapproval number is up from around 50% in mid-December, while he hasn’t had a positive approval rating since August, when he sat at 47.2% approval.

Ukraine Flags

Ukraine Pushing For Cease-Fire In Talks With Russia As Fighting Continues 

Russian and Ukrainian officials met on Monday as violence continues around the cities involved in the conflict. Ukraine is pushing for an immediate cease-fire and the withdrawal of Russian troops from the country ahead of the talks.

Kyiv is currently coming under attack from heavy Russian shelling. The city has been resistant to invasion with the help of military assistance from countries across the world and global sanction efforts. In addition to the violence, the Russian military has also stated that its nuclear deterrent forces have been put on high alert after Putin’s orders. 

Russian forces are now being accused of carrying out massive shelling and attack operations inside of Ukraine’s second-largest city, Kharkiv, after graphic videos were posted to social media showing the assault and its devastating aftermath. 

United Nations human rights chief Michelle Bachelet said that 102 civilians, including seven children, were killed across Ukraine since Thursday, noting that those figures were likely an underrepresentation of the national death toll. 

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More than half a million of Ukraine’s 44 million citizens have fled the country according to the head of the U.N. refugee agency. Others are being forced to seek shelter inside metro stations and parking garages while missile strikes and gunfire take over the cities. 

A strict 39-hour curfew was in effect in Kyiv this weekend and was lifted this Monday after Russian troops invaded. Residents were able to go out and replenish essential supplies while dodging the violence. 

There’s been a concentrated effort to make Putin pay for the invasion economically as well. Sanctions imposed by the United States and its allies have greatly impacted Russia’s economy. Russia’s central bank kept the stock market closed and raised its interest rate to 20 percent from 9.5 percent in an attempt to improve the plummeting national currency. 

The United States has also announced that it would be expanding sanctions on Russia’s central bank, making it so Americans will be blocked from doing any business with it, and freeze any assets the banks may hold in the U.S.. 

“Russia’s economic reality has changed due to the heavy sanctions, but they were prepared and able to handle the damage,” Kremlin spokesman Dmitry Peskov stated. 

Russia has also closed its airspace to airlines from the European Union and several other countries as a means of retaliation for the current ban on travel from Russian planes over its airspace. 

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Ukrainian President Volodymyr Zelenskyy has stated that he doubted the talks with Russia would actually produce results, but Ukraine’s forces have slowed Russia’s advance and they still hold the capital, Kyiv, and Kharkiv. 

“The bulk of Putin’s ground forces remain more than 30 km [18 miles] to the north of Kyiv. Logistical failures and staunch Ukrainian resistance continue to frustrate the Russian advance,” Britain’s Ministry of Defense said in a post on Twitter Monday morning.

“With the operation moving slower than anticipated, Russia was bringing in more troops, weapons and equipment. They underestimated the resistance they were going to meet and that’s why they’re making less progress,” according to NATO Secretary General Jens Stoltenberg. 

“Armed with government-issued machine guns, homemade Molotov cocktails and shovels to build barricades, civilians have helped to reinforce their army’s desperate but for now effective resistance. They will soon be joined by prisoners with combat experience who will now be released,” Zelenskyy stated. 

Zelenskyy has stated that Putin is intending to remove Ukraine’s pro-Western government to potentially replace it with a Moscow-friendly regime. Putin also recently issued a directive to increase the readiness of Russia’s nuclear deterrent forces. Russia has thousands of nuclear warheads in its arsenal. 

“The move is reckless and dangerous. There’s no reason for that. NATO is no threat to Russia. Although NATO moved to increase its presence in Eastern Europe in the wake of the Ukraine invasion, it had no intention of becoming involved in the conflict itself. We have a responsibility to make sure that this doesn’t spiral out of control. That will be extremely dangerous,” Stolenberg stated.

Amid Inflation, Retail Sales Rise 3.8% In January

Despite continuing Omicron concerns, retail sales last month rose to 3.8% — a total of $649.8 billion — the U.S. Department of Commerce reported Wednesday morning. Those numbers come after December saw a tough 2.5% slide during the typically-busy holiday season.

Inflation, which quickly rose to 7% in 2021 (the fastest pace since 1982) and 7.5% in January, helped to pump the numbers up. The monthly sales are also up 13% from a year prior, while sales from November to January 2021 were up 16% from that same period in 2020.

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Furniture and home furnishing stores saw a 7.2% change, while online retailers led the way with a 14.5% rise. Rounding out the top producers is motor vehicle dealers with 5.7%. Meanwhile, electronic and appliances stores registered a 1.9% rise, while food and restaurants saw a 0.9% decline due to rising fears and increased precautions over the spreading COVID-19 variants.

Bankrate.com senior industry analyst Ted Rossman explained to ABC News that Omicron cases — along with the cost — could be the culprit for falling gasoline prices as well, which declined 1.3%. However, gasoline stations saw the biggest year-over-year jump with 33.4%. According to AAA, the average price for a gallon of gas currently sits at around $3.5 dollars, up from $2.5 dollars a year ago.

This economic resilience in the face of a new COVID wave is certainly one to be admired. Omicron looked to be more dangerous and contagious than the Delta variant, and the U.S. endured a pandemic-high 1.4 million new cases on Jan. 10. With workers out sick, a shortage began, forcing many stores to cut hours.

However, cases have since seen a decline, with the current seven-day average laying around 141,000. In addition to retail sales, jobs also prevailed despite the surge – nonfarm payrolls rose by 467,000 last month, 150,00 more than Wall Street’s estimate, while the unemployment rate increased by 0.1% to 4%. Wages increased 0.7% on the month and 5.7% for the year, the biggest yearly move since May 2020. Even with inflation, consumers were able to spend more freely with the extra cash.

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“Even taking into account the December decline, retail sales in recent months have been increasing much faster than prices, so households are purchasing larger volumes of goods and services, not just paying higher prices,” PNC chief economist Gus Faucher told CNBC.

Among other monthly declines include sports, music, and book stores (-3.0%, the highest decline endured by any retailer), health and personal stores (-0.7%), and miscellaneous store retailers (-0.1%). The only retailer that saw a year-over-year decline was electronics with -2.9%.

While clothing retailers had a meager 0.7% rise, they finished third overall in year-over-year change with +21.9%, behind gas and food and restaurants (+27%). The overall rate greatly outperformed economists’ predictions, which expected the final total to fall around a 2% rise. The report covers only a third of overall consumer spending, and doesn’t include services like plane tickets.

Economy Stock Market

U.S. Economy Rose 5.7% In 2021, Marking Fastest Growth Since 1984

According to the U.S. Bureau of Economic Analysis, the United States’ gross domestic product (GDP) — a measure of all goods and services produced — rose by 5.7% in 2021, not only rebounding from a brief recession from March 2020 but also marking the fastest growth since 1984’s 7.2% growth.

In the fourth quarter of 2021, thanks to increased consumer spending, real GDP increased by 6.9%. That’s a solid step up from the third quarter, which saw a disappointing GDP rise of 2.3% – the slowest mark since the second quarter of 2020. As CNN Business notes, that fourth quarter final was much better than many economists had predicted.

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All told, it’s a 9.1% swing when looking at the yearly change. In 2020, with COVID-19 sending businesses and people into lockdown, GDP decreased by 3.4% — the lowest since 1946 — with the second quarter hitting a minus 31.4%. During that time, over 22 million saw their jobs lost.

Meanwhile, the price index for GDP increased by 3.9% this year (compared to 2020’s 1.2% raise). Exports — along with inventories, investments, and PCE — were a crucial factor in the growth for both goods and services, with consumer goods, industrial supplies and materials, and food being the leading export contributors.

That export number also helps to offset the rise in imports, which subtracts from the GDP. According to BEA’s goods and services deficit report, the U.S. had accumulated $224.2 billion in exports and $304.4 billion in imports in November.

President Joe Biden commented on the rise in a White House press release, pointing out that for the first time in 20 years, the U.S. economy grew faster than China’s (which saw a 2021 GDP growth of 8.1% and a fourth quarter growth of 4%).

“This is no accident. My economic strategy is creating good jobs for Americans, rebuilding our manufacturing, and strengthening our supply chains here at home to help make our companies more competitive.”

Biden also stated that small businesses have grown by more than 30% since 2019, and that he plans to urge Congress to pass legislation that would keep the U.S. competitive while bolstering supply chains — which have seen continual pandemic issues — and investmenting in families and clean energy.

Speaking to NBC News, Bankrate chief financial analyst Greg McBride explained that the fourth quarter surge can be contributed to rising inventories, which accounted for 71% of fourth quarter growth. However, while degression should be expected early on in the new year due to COVID-19 variants, McBride sees the overall growth continuing in the coming months.

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“Omicron will put a dent in first quarter economic growth — we’re already seeing some of this with increased jobless claims — but demand remains strong, the labor market is tight, and the economy is poised for another year of solid, above-trend growth,” McBride said.

The final quarter of 2021 was able to avoid any potential variant hits due to Omicron first appearing in late November/early December. Consumer activity ramped up late into the year, with holiday sales rising 8.5%, the highest growth in 17 years.

That surge sent businesses spiraling into shortages of both supplies and workers, which in turn affected prices. While the GDP rose, so did inflation, which hit 7% in 2021 (the highest since 1982).

2021 Housing Market Concludes With Price Growths, What To Expect In 2022

The winter housing market in the US started heating up again in December, potentially leading to a hot market in the first quarter of 2022. More buyers have become motivated to hop on real estate transactions due to looming mortgage rate increases as well. 

Listing prices in December returned to double-digits similar to what the market looked like during the spring/summer of 2021 when real estate was seeing some of its most competitive transactions since the start of the pandemic. 

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According to data from Realtor.com’s chief economist Danielle Hale, “December data offered a fitting finish to the frenzy of the past year. Annual listing price growth hit double-digits again nationwide and in many of the hottest markets, after four months of single-digit pace this fall.”

“Despite buyer challenges like rising prices, limited inventory and fast-paced sales, real estate activity maintained a brisk pace throughout 2021 as factors like low mortgage rates enabled home shoppers to persist. With rate hikes now on the horizon, buyers may be trying to get ahead of higher monthly housing costs, in turn driving up competition and prices,” Hale explained.

“Our 2022 forecast anticipates affordability challenges this year, but also that trends like rising incomes and workplace flexibility could offer some Americans a better shot at finding a home.”

“For those who weren’t successful in 2021, we expect better luck in the coming months as more sellers plan to enter the market – and if December’s listings are an indication, with high asking prices in mind,” she explained. 

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 In 2021 the demand for homes was much higher than the supply, which drove prices even higher and will likely continue to drive the prices up in 2022. Realtor.com is also predicting that these price increases will cause a lot of affordability issues in the new year. The average price for a home in the US is now 25% higher than it was in 2019.

Within the past two years the average price for a typical 2,000 square foot single-family home increased by 18.6% consecutively. More than 25% of the US’s largest markets saw double-digit home price gains in 2021. 

While the winter is typically a cooling off period for the market, the past two months have seen historically low listing times, as buyer activity continues to outmatch the limited inventory available throughout the nation. 

When compared to the national pace of the market, time on the market was lower in the US’s 50 largest metropolitans with an average of 48 days on the market, seven days less than last years average and 25 days less than 2019’s average. 

Inventory is expected to increase to ideally meet the demand of buyers in America. December data did show more new sellers entered the market when compared to last year’s numbers, a majority of these listings, however, are in cities.