Beth Burnham Mace headshot
Beth Burnham Mace

The consumer price index increased 7.7% from October 2021 to October 2022, marking the smallest 12-month advance since January. 

“At a still very high 7.7%, the October measure of consumer prices surprised most analysts as being weaker than expected and as an indicator that the year-over-year change in prices may be decelerating,” Beth Burnham Mace, chief economist at the National Investment Center for Seniors Housing & Care, wrote in December’s NIC Insider Newsletter. “There were hopeful signs in the measure, including a slowdown in goods inflation with prices for clothing and used cars falling markedly and declines in health inflation occurring as well.”

CPI isn’t necessarily an indicator of economic growth for senior housing, though, she said, and the senior housing sector still is working its way back from the pandemic-created economic cycle. Occupied units are at an all-time high, but the overall occupancy rate, which considers inventory growth, remains well below pre-pandemic levels. 

“The recent slowdown seen in senior housing construction activity should provide a tailwind for further gains in the occupancy rate, but the broader forces in the economy may limit that progress,” Mace said.

CPI is just one indicator of the economy, according to Mace, and this news can’t be viewed necessarily as a trend, “nor is the actual rate of price growth sufficiently weak to cause a change in policy by the Federal Reserve.” 

The Fed has ushered in four successive 0.75-point interest rate increases this year. Economists speculate that another rate change is coming when the Fed meets this month, although it may be less than previous increases, Fed Chair Jerome Powell said in a Nov. 30 speech

“The time for moderating the pace of rate increases may come as soon as the December meeting,” Powell said.

According to Mace, most mainstream economists still anticipate at least a mild recession next year.

“There is often a significant lag between the time monetary policy is executed and the time the economy fully responds. The labor markets are just now beginning to show nascent signs of softening,” Mace said. “The ability of the Fed to steer the economy into a so-called ‘soft landing’ to avoid a recession is difficult if history is any indicator.”