Inflationary pressures continue to remain a non-issue. The United States consumer price index increased .10% in September over the prior month. Year over year inflation stands at 1.70 percent. We’ve been reporting over the last several weeks’ energy costs have been declining, which should keep inflation muted.

The US 30-year fixed mortgage rate as reported by the Mortgage Bankers Association averaged 4.10 percent in the week ending October 18th, which is down from the prior week average of 4.20 percent.   Lower interest rates are beginning to create a tailwind for housing as mortgage applications increased 11.6 percent for the week ending October 18th. Existing home sales rose 2.40 percent and new home sales rose .20 percent in September.

US initial jobless claims came in at a seasonally adjusted 283,000 in the week ending October 18th. The recent trend for initial jobless claims below 300k confirms strength in the employment market. The Chicago Fed National Activity Index, which is designed to gauge overall economic activity and related inflationary pressure increased to .47 in September from -.25 in August. A positive index reading corresponds to growth above trend.

The data from the prior week points to continued expansion within the US economy. Lower energy prices should improve consumer’s wallets as we head into the all-important holiday shopping season. Additionally, benign inflation places less pressure on the Federal Reserve to increase rates thus providing support to the stock market.