Inflation (PCE), GDP, New home sales, Who was David Mills and someone bought a bank...
Inflation – We are in the two’s!
Both measures of the Personal Consumption Index – Full and Core – did well this past month.
Full PCE came in at 0.2% for December and 2.6% for the last 12 months.
The Fed will be quite pleased with that.
Core PCE – no food and no fuel – came in at 0.2% as well but the annual rate was 2.9%, down from 3.2% last month and in the two’s.
What does this mean, and why are prices still so high?
Folks, the only price that goes up and down on a consistent basis is fuel. Everything else is like your weight. Once it goes up, it pretty much stays up.
Except perhaps eggs and dairy; and some other things, like toilet paper in a pandemic.
What I’m trying to say is that the prices you have for stuff are really not going to come down. For example, overall food costs are up roughly 23% from 2020 through 2023, and we have seen that at restaurants.
And we are still trying to get used to that.
The good news is that severe price increases have tapered off. A 2.9% price increase is manageable as long as your paycheck also goes up by that.
But that’s another segment for another day.
GDP
Who knew? Certainly not economists.
GDP for the 4th quarter came in at 3.3%. That is waaaay better than the 2.0% predicted and a solid finish for the year for the good ‘ol USA.
Q3 was 4.9%, but we talked about that last time – I won’t rehash that here.
New Home Sales
The dip in mortgage rates in December spurred the sales of new homes to 664,000.
To be clear, newly constructed homes as opposed to buying in an existing neighborhood.
And, of course, this is an annualized number based on the number of new homes sold in December.
So, mortgage rates dropped into the 6’s from the high 7’s in the last quarter of the year, with December sales numbers benefitting from that.
The average price of a new home fell from $426,000 to $413,200.
That’s called a ‘down payment’ in California.
Part of this is driven by developers making smaller homes, which cost less.
The higher-than-expected number is also driven by a tight existing home sales market, driving folks to buy new homes.
Who was David Mills?
Born in 1938 with glaucoma, he had limited sight as a boy and attended a school in San Mateo, California for the visually impaired.
In 11th grade, a teacher told him, "You're never going to get to college," which he said was "like waving a flag in front of a bull."
He graduated from the University of Michigan with a PhD in Computer and Communications Science in 1971
And taught for two years in Edinburgh, Scotland.
He then moved his family back to the US to teach at the University of Maryland. After five years, he was denied tenure.
He called this "the best thing that ever happened to me" – and went to work in industry.
Many of you may have some familiarity with internet protocols.
POP, IMAP, TCP/IP, HTTP
And so on.
Early on, like the ‘70s, getting computers on the same time on the ARPANET (the pre-cursor to the internet) was a problem.
Timestamps were unreliable as many computers had slightly different times.
To solve this, Mr. Mills invented NTP, or Network Time Protocol.
This technology allows computers to synchronize their time clocks with one another.
For this, he was often referred to as the internet's "Father Time."
Mr. Mills passed away last week at the age of 85.
So the next time you glance at your phone or your desktop for the time, you are paying homage to David Mills and the protocol that he invented to get every computer on the same time.
And finally… we bought a bank. In Alabama.
For the last 3 years, three of us have been shopping for a bank. Why? Why not?
Three years of covid will make you do funny things.
From concept to the closing last Friday, it was a little over 3 ½ years.
Henry Ford with LifeSteps Financial had the vision and we met outside (of course) at a Starbucks in Upland, California in June, 2020. We then met with Hill Womble, our CEO, in Huntsville, Alabama in 2021 and we were off to the races to find a bank that was for sale.
Technically, it was a marathon.
I can write pages on the journey, but I’ll keep it simple.
A small bank in Alabama was identified, an offer made, countered, countered back, renegotiated and finally cemented.
A crackerjack executive team and board were founded, and investors were solicited.
The FDIC and the Alabama State Banking Department provided their input.
With an existing full-service office outside Montgomery, Alabama, we will be expanding in Alabama.
And I am covering the West. Email or call, and I’m happy to tell you the full story over lunch or a cup of coffee.
In the meantime, I’m a Founder, Board Member, and Western Regional Director of LifeSteps Bank & Trust. I look forward to serving you.
As a Board Member and Executive Officer for a bank, there are a number of responsibilities and conditions that go along with that. First and foremost, I am a representative of the bank and the things I say and do reflect on the bank. Consequently, I will likely become very “bankerish” and a little more even-keeled. And that goes with the Russell Report. We haven’t decided on if the weekly Report will continue, but please, stay tuned!
In the meantime, I can also be reached at adam.russell@lifestepsbank.com.
