Those Were The Days? Atlanta Fed GDP Q2 Now At 3.8% (Fed Rate Cut Looks Unlikely)

The dismal days of Biden/Harris/Yellen are gone. Although Chuck Schumer, Nancy Pelosi, Hakeem Jeffries and my in-laws are all singing “Those Were The Days.” Of immense government corruption and waste.

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2025 is 3.8 percent on June 5, down from 4.6 percent on June 2. After recent releases from the US Census Bureau, the US Bureau of Economic Analysis, and the Institute for Supply Management, the nowcasts of second-quarter real personal consumption expenditures growth and real gross private domestic investment growth decreased from 4.0 percent and 0.5 percent, respectively, to 2.6 percent and -2.2 percent, while the nowcast of the contribution of net exports to annualized second-quarter real GDP growth increased from 1.36 percentage points to 2.01 percentage points.

Here is the breakdown.

The Fed still needs to lower rates by 100 basis points, but that looks unlikely.

Into The Mystic? Mortgage Applications Decrease 3.9% In Latest MBA Weekly Survey (Purchase Apps Drop 15%)

Mortgage applications decreased 3.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 30, 2025. This week’s results included an adjustment for the Memorial Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 3.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 15 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index decreased 15 percent compared with the previous week and was 18 percent higher than the same week one year ago.

The Refinance Index decreased 4 percent from the previous week and was 42 percent higher than the same week one year ago.

Most mortgage rates moved lower last week, with the 30-year fixed rate declining to 6.92 percent and staying in the 6.8 to 7 percent range since April.

Biden/Harris/Yellen’s gross economic mismanagement reminds me of the song “Into The Mystic.” Because it requires a mystic to determine WHO was running the Biden/Harris adminstration and using the autopen.

Core PCE Fell In April To Lowest Since April 2021, +2.5% YoY (Fed M2 Money Printing UP 4.3% YoY)

The Fed’s favorite inflation indicator – Core PCE – fell once again in April to its lowest since April 2021 at +2.5% YoY.

And The Fed keeps on printing money!

Supercore inflation is down to -0.023 MoM.

The Fed is thinking that they can help.

US Existing Home Sales Weakest April Since Great Financial Crisis (Weakest April Sales Pace Since April 2009)

US existing home sales dropped 0.5% MoM in April (considerably worse than the +2.0% MoM rise expected), dropping to just 4.00MM sales SAAR, with sales down 3.1% from a year earlier on an unadjusted basis.

This is the weakest April sales pace since April 2009.

And median price of EHS is rising and is on pace to top 2024’s high.

And with M2 Money printing like a bat out of hell.

Mortgage Applications Increased 11% From Preceding Week, Fed Will Remain On Hold (Purchase Apps Up 12%)

The Fed can help, but won’t. We are still struggling to recover from Biden’s cockeyed management of the economy,

Mortgage applications increased 11.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 2, 2025.

The Market Composite Index, a measure of mortgage loan application volume, increased 11.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 12 percent compared with the previous week. The seasonally adjusted Purchase Index increased 11 percent from one week earlier. The unadjusted Purchase Index increased 12 percent compared with the previous week and was 13 percent higher than the same week one year ago.

The Refinance Index increased 11 percent from the previous week and was 51 percent higher than the same week one year ago.

The economic news last week included a negative reading for first-quarter GDP growth and further signs of contraction in the manufacturing sector, mixed with a solid employment report for April. The net impact on mortgage rates was mostly downward but just back to levels from early April. The 30-year fixed rate declined to 6.84 percent.

But there will be no rate cuts today from The Fed.

Mortgage Applications Drop 4.2% From Previous Week (Agency MBS Market Shrank In April)

Money, money!

Mortgage applications decreased 4.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 25, 2025.

The Market Composite Index, a measure of mortgage loan application volume, decreased 4.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 3 percent higher than the same week one year ago.

The Refinance Index decreased 4 percent from the previous week and was 42 percent higher than the same week one year ago.

The Agency MBS market shrank in April.

And MBS daily returns have the highest return volatility.

US Wealth Gap (Top 1% Versus Bottom 50%) Remains Daunting (Trump Urges Fed Chair Powell To Cut Rates)

Republicans are trying to lock in Trump’s tax cuts and Democrats are resisting. We now know that DOGE is trying to end the wasteful spending in DC. But I would really like to see tax rates on the middle class fall.

The wealth gap between the top 1% of taxpayers and the bottom 50% of taxpayers is enormous. And has gotten worse since 1990.

Meanwhile. to fight off the temporary effects of the tariff war, Trump is urging Fed Chair Powell to cut rates.

Powell will likely NOT cut rates. But what does “Lunatic Liz” Warren say about rate cuts??

DOGE Is Working! US Debt Funding Needs $2BN Less Than Treasury Forecast In February

DOGE is working: in Q1, US debt funding needs were $2BN less than the Treasury forecast in February, and in Q2 the Treasury is expected to need $53 billion less than it forecast 3 months ago.

The result?

Good Ol’ Boys! Flows To Treasury Funds Soar, Fed Remittances To Treasury Hits A Quarter Of A Million Dollars

Washington DC is loaded with good ol’ boys. Willing to cut deals with anyone for a slice of financial pie. Like “10% For The Big Guy” Joe Biden.

Money flowing into Treasury funds hit its highest since 2017, by far.

And with the massive expansion of The Fed’s balance sheet with a) the financial crisis and b) Covid crisis, The Fed still has a staggering amount of bonds on its balance sheet, making it vulnerable to interest rate increases.

Like what has happened in 2023 and 2024 under Biden. A fine mess!

Sail away. We are all prisoners of the theft by DC politicians.

The Empire Strikes Out! Business Conditions Expectations Plunged To Lowest Since 9/11

The Emperor is actually China’s Xi Jinping! Causing the Empire Fed Manufacturing index to decline.

Despite the slump in ‘soft’ survey data, analysts expected Empire Fed Manufacturing to bounce back from March’s tumble to one year lows and they were right with the headline index rising from -20.0 to -8.1 (considerably better than the -13.5), but still negative. However, while current conditions jumped, expectations plunged to the lowest since 9/11/.