Bidenomics At Work! Savings Rate Plunges As Spending Soars, Inflation Slows As Govt Wage Growth Nears Record High (Commercial Office Delinquencie On The Rise, San Francisco Soars To 30.4% In Q3)

Biden’s leading “economist” Lael Brainard loves to brag about the strong economy under Bidenomics, and then pulled a brain freeze when asked about crashing savings rates as consumers struggle with inflation.

The good news? One of The Fed’s favorite inflation indicators – Core PCE Deflator – slowed to 3.7% YoY in September (its lowest since May 2021). Headline PCE was flat at 3.4% YoY. Both were in line with expectations… But 3.4% is still far too high compared to The Fed’s target of 2%.

Source: Bloomberg

Now for the bad news. However, while the YoY data slowed, Core PCE rose by 0.3% MoM – the biggest MoM jump in four months.

Services inflation excluding housing and energy accelerated to 0.4%, from 0.1% in the prior month.

The overall PCE price index, meanwhile, rose 0.4%, bolstered by higher energy prices.

Even more focused, is the Fed’s view on Services inflation ex-Shelter, and the PCE-equivalent shows that it is slowing/trending lower but very much still stuck at high levels (and rose a large 0.4% MoM)…

Personal Consumption soared 0.7% MoM while incomes grew at only 0.3% MoM…

Source: Bloomberg

Focusing on the income side alone, private workers wages plunged to 3.9%, down from 4.5% and the lowest since Feb 2021.

So where is the offset to hot wages you may ask? Why government workers: wages of govt workers are up 7.8% YoY vs 7.4% in August and approaching the record high of 8.7% in Oct 2021

All of which means the personal savings rate collapsed even further, from 4.0% to 3.4% of DPI…

Source: Bloomberg

The savings rate is down 4 straight months, back near record lows… AND this is after artificial revisions that artificially boosted the savings rate 3 times in the past year (see above chart)

Bidenomics, hard at work.

On the commercial real estate front, office delinquencies are on the rise again. But in San Francisco (queue the late Tony Bennett), the office vacancy rate soared to 30.4% in Q3.

And if you’re going to San Francisco, be careful where you walk because of exploding crime, feces on the sidewalk, homelessness and used needles.

US Pending Home Sales Fell 7.1% In August, Near Record Low (Down 11% YoY Under Bidenomics As Mortgage Rates Highest Since 2000)

Bidenomics is the gift that keeps on giving … if you are one of the top 1% of income. But if you are in the middle class, Bidenomics is like a horror movie.

Pending home sales fell 7.1% in August 2023, with all four regions of the U.S. posting month-over-month and year-over-year declines in transactions. Rising mortgage rates have reduced the pool of home buyers, who are having to readjust their expectations about the location and type of home they can afford.

Transactions were down 11% from last year.

Pending home sales came off of the lowest print in recent history, but just barely.

On Taylor Swift and Travis Kelce:

Addicted To Gov? US Added $600 Billion In Debt In One Month And $10.47 TRILLION Since Covid Outbreak, Credit Card APR Now 28.93% As Credit Card Debt Exceeds $1 TRILLION, Family Healthcare Costs Surge 7% To $24,000, Q3 Real GDP Rises 4.9%

Bidenomics new theme song is “Addicted To Gov.” Bidenomics needs lots of Federal spending and borrowing to survive. But all this spending and borrowing is causing rapid price increases and other distortions.

The US Federal government just added $600 billion in debt in ONE MONTH. And The Fed’s have borrowed $10.47 TRILLION since Covid in Q1 2020.

Meanwhile, retail credit card APR average just hit 28.93%! While credit card debt outstandnig just exceeded $1 trillion.

On the healthcare front, a family’s health insurance costs nearly $24,000 this year after the biggest increase in more than a decade.

.On the GDP front, Real gross domestic product (GDP) increased at an annual rate of 4.9 percent in the third quarter of 2023, according to the “advance” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.1 percent.

Here is the breakdown.

But inflation is reaacelerating, harming the middle class.

Real weekly earnings growth is falling again, down to 0.8% YoY.

And the US Dollar purchasing power keeps on falling. All together now!

Gavin Gruesom has a great smile like Joe Biden. Perhaps that is all you need to be a Democrat. President. Like Obama.

About Biden’s Claims About Job Creation: Trump Actually Created More Full-time Jobs (10.8 Million) In 8 Months Than Biden Has (9.1 Million) In Almost 3 Years

I admit, Biden lies about everything. Like Biden saying he met with Israel Prime Minister Golda Meir during 1967’s Six-Day War, in which he claimed he served as a “liaison” between Israel and Egypt. He made the remarks during a menorah lighting at the White House Wednesday, apparently referencing a meeting he had with Meir just before a 1973 conflict, Fox News reported. Too bad Biden wasn’t sworn in to the US Senate until 1973.

Then we have Biden lying about job creation under his (disastrous) watch. Biden claims he has created more jobs than any administration in history! Note! Neither Biden or Trump created jobs per se, but help with job creation through policies.

Its all about “How To Lie With Statistics.”

After the Covid outbreak and the government shutdowns (causing a recession), 10.8 million jobs were added under Trump simply by allowing local economies (and schools) to open again. Thanks to ridculous changes in voting laws because of Covid (e.g., online and mail-in ballots), Trump lost the election to Biden. Since Biden’s swearing in, the economy almost 3 three has added 9.1 million FULL-TIME JOBS.

Even FactCheck.org screwed this one up. They claim that 13.9 million jobs were created under Biden, but if we subtract out full-time jobs (9.1 million), that leaves 4.8 million PART-TIME JOBS created. Biden’s new slogan should be “Would you like fries with that burger??”

Biden’s bible. Or just how to lie, which Biden is a master at.

Bidenomics! New Home Sales Exploded In September, As Homebuilders Eat Soaring Mortgage Costs (Highest Mortgage Rate Since 2000 And Still Plenty Of Fiscal Stimulus Distorting The Market)

Bidenflation, a name for the combination of reckless Federal spending and excess monetary stimulus related to Covid, is still causing severe pain for the middle class. The massive Federal spending splurge is still working its way through the economy and causing distortions, like surging new home sales despite higher mortgage rates.

Some background color before the big number – The Mortgage Bankers Association’s index of home-purchase applications tumbled 2.2% WoW to 127 – the lowest level since 1995 – as mortgage rates hit 8% for the first time in 23 years.

Source: Bloomberg

With all that in mind, it was a surprise that new home sales were expected to rise 0.7% MoM (although sales did puke 8.7% MoM in August). Instead – because you just can’t make this shit up – new home sales soared 12.3% MoM in September (and August was revised up from -8.7% to -8.2%). That is the biggest MoM rise since August 2022. and smashed YoY sales up 33.9%…

Source: Bloomberg

That is the highest new home sales SAAR since Feb 2022, as existing home sales hit double-decade lows…

Source: Bloomberg

As rates soar, so homebuilders are eating all that cost!!!

Source: Bloomberg

Mortgage loans have been increasing in size linearly but the last 3 years have seen home-prices rising exponentially… until now…

They should, given that homebuilders can’t be filling this gap – between the current 30Y mortgage rate and the effective rates that borrowers are currently paying on their home loans – (i.e. subsidizing new home sales) forever…

Source: Bloomberg

Supply is tumbling (from 7.7mths to 6.9mths – the lowest since Feb 2022…

With a lack of home-building (as builders’ incentives are crushed), we don’t think Powell will be getting his ‘affordability crisis’ under control (especially if he cuts rates drastically… because imagine what that does to prices).

Mortgage Purchase Demand (Applications) Fell 2% Since Last Week And 22% Since Last Year As Mortgage Rates Hit Highest Level Since 2000 (Almost 8%)

The US is teetering on World War III with tensions soaring in the Middle East, Ukraine, and southeast Asia. And Biden wanders off to Rehobeth Beach Delaware to relax … while over 200 Americans are still held hostage by terrorist group Hamas. The bad news? Biden is back in Washington DC trying to make the border crisis even worse by demanding funding for “border security” in the form of transporting illegal immigrants to US cities. Is The Squad running The White House??

But on the housing/mortgage front, we have another week of declining mortgage demand/applications as mortgage rate hit almost 8%.

Mortgage applications decreased 1.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 20, 2023.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The Refinance Index increased 2 percent from the previous week and was 8 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 22 percent lower than the same week one year ago.

Mortgage rates followed Treasuries higher, with the 30-year fixed mortgage rate jumping 20 basis points to 7.9 percent – the highest since 2000. Rates have now risen seven consecutive weeks at a cumulative amount of 69 basis points.

Hey Joe, I’ll bet those 200+ US hostages held by Hamas aren’t enjoying ice cream cones.

Back In Red! C&I Loan Lending Standards Tightening To Recession Era Levels (Bank Credit Growth Remains Negative For Twelve Straight Week)

Back in red? As US fiscal policy deteriorates further thanks to endless Federal spending (not to mention seemingly endless wars under Biden and Nobel Peace Prize winner Obama), we are seeing pain in the bank lending business.

Commercial and industrial (C&I) loan lending standards is tightening (blue line) to levels typically seen in recessions. Even though Barclays HY-10Y spreads remains low.

Bank credit growth remains negative for the twelve straight week.

Billions Biden’s spending spree has led to the budget gap has doubled in the last year.

CDS is now at 55.24, highest after the Covid shock.

Under Biden/Yellen’s economic model, the appropriate themesong is “Hell’s Bells.”

Shares Of US Firms That Missed Profit Estimates Fell By Most In Four Years (Diesel Prices UP 118% Under Biden, Food CPI UP 20%)

Bidenomics, what can you say? A big payoff to green energy Marxists, and a slap in the face to the middle class.

The shares of US firms that miss profit estimates are falling by the most in four years.

Meanwhile, the price of diesel fuel, the life’s blood of the shipping industry, is up 118% under Biden while food CPI is up 20%.

On the housing front we see a spike in pre-foreclosure sales.

Bidenomics = Distress.

Already Gone! US 10-Year Yield Rises To 5%, Highest Since 2007 As Yield Curve Goes Positive! (Housing Affordability At All-time Low)

The chances for interest rate cooling are already gone!

The 10-year Treasury yield rose to 5% for the first time since 2007 and the housing price bubble, and ensuing financial crisis and Great Recession.

Then promplty dropped below 5% again.

But at least the 30Y-2Y yield curve has turned positive.

And with rising rates, housing affordability is at a record low.

Housing prices are expected to decline later this year, but rebound in 2024.

Its another cheap tequila sunrise under Bidenomics!

But we have video of Biden and his wife Jill walking along the beach on yet another vacation to Rehobeth Beach, Delaware while the world teeters of WWIII, over 200 hostages are still held by Hamas, and housing affordability hits an all-time low. It must be nice not to care.

The most empathetic President in history, my ass.

Biden’s Highway To Hell! Subprime Auto Loan Delinquencies Erupt, Highest Rate On Record (Higher Than Great Recession And Covid Recession!)

Biden’s Highway to Hell!

Bidenomics has been a massive windfall for the top 1% of households in terms of wealth due to the emphasis on green energy transformation. But for the 99%, Bidenomics has been a disaster (unless you consider low-paying job creation a victory).

The auto sector, considered a leading economic indicator, pinpoints the arrival of the crushing auto loan crisis and even the possibility of the onset of the next recession. In late January, we Fitch revealed tat consumers are falling behind on auto payments – the most since the peak of the Great Financial Crisis. Fast forward nine months later, to September, that rate just hit the highest level in nearly three decades.

And with interest rates rising the fastest in history,

And Discover projected charge off rate for 2023 would more than double from its current 1.82% to as much as 3.90%!

In what could be the early innings of the auto loan crisis, something we called a “perfect storm” earlier this year, Bloomberg cites new Fitch data:

The percent of subprime auto borrowers at least 60 days past due on their loans rose to 6.11% in September, the highest in data going back to 1994, according to Fitch Ratings.

“The subprime borrower is getting squeezed,” said Margaret Rowe, senior director with Fitch.

Rowe said, “They can often be a first line of where we start to see the negative effects of macroeconomic headwinds.”

What has been widely known is the consumer has been funding car purchases with even more debt to afford record-high prices, with many monthly payments exceeding $1,000. Factor in the Federal Reserve’s most aggressive interest rate hiking cycle in a generation, elevated inflation, and the restarting of the federal student loan payments, tens of millions of consumers are under immense pressure this fall.

An endless stream of retailers, such as Walmart, Nordstrom, Macy’s, and Kohl’s – all of whom have recently warned about a consumer slowdown. Banks have also raised concerns, such as Morgan Stanley’s Mike Wilson, who believes the consumer is ‘falling off a cliff.’ And the latest high-frequency data from Barclays shows card spending has taken another leg down.

As delinquencies rise, Cox Automotive forecasts that 1.5 million vehicles will be seized this year, up from 1.2 million in 2022. That’s still below pre-pandemic levels, but the numbers could soar if a recession materializes in 2024.

Bloomberg cited Bankrate data that shows consumers with excellent credit can lock in an average interest rate of around 5.07% for a new car and 7.09% for a used vehicle. Those with bad credit should expect a new car rate of 14.18% and 21.38% for a used car.

The perfect storm we described earlier this year is unfolding.

At least residential mortgage delinquency rates remain low. With elevated home prices, the incentive to default on a loan is limited.

So The Perfect Storm hasn’t hit residential real estate … yet. But with households needing $114,000 in annual income to afford a typical home …

But at least home prices aren’t rising as fast as olive oil and orange juice!! Wow, that excesssive stimulypto by The Fed and Federal government is really screwing things up in the economy.

Biden is like George Clooney in “The Perfect Storm” sending the US out into stormy, violent seas while obessing about Ukraine and protecting Iran/Hamas.