Like a bad “good news, bad news” joke,. June employment numbers are out from the Feral governement. The good news? Jobs added increased by 206k, more than expected.
The bad news? The unemployment rate hit 4.1%, the highest in 3 years.
Meanwhile, 1/3rd of jobs created were NON-PRODUCTIVE government jobs.
Since June 2023, the US has added 1.8 million part-time jobs and lost 1.6 million full time jobs.
While nominal wage growth grew, REAL wage growth rose a measly 0.8% YoY.
The share of total new worth held by the top 1% is 30.4% while the total net worth held by the bottom 50% is a measly 2.5%.
So much for politicians’ promises to make everyone equal in wealth! Oddly, they keep getting wealthier and the bottom 50% keep losing ground.
Housing in the US is simply unaffordable. Particularly since home prices and mortgage rates have soared undier Biden.
.Owning a house is less affordable for average earners in the US than at anytime in 17 years.
The costs of a typical home — including mortgage payments, property insurance and taxes — consumed 35.1% of the average wage in the second quarter, the highest share since 2007 and up from 32.1% a year earlier, according to a new report from Attom.
Growth in expenses, along with mortgage rates hovering around 7%, have outpaced income gains as a persistent shortage of listings pushed the median home price to a record-high $360,000, Attom said. In more than a third of US markets, ownership costs ate up 43% of average local wages, far above the 28% considered to be a guideline for affordability.
The latest data “presents a clear challenge for homebuyers,” Rob Barber, chief executive officer of Attom, said in a statement. “It’s common for these trends to intensify during the spring buying season when buyer demand increases. However, the trends this year are particularly challenging for house hunters.”
Pricey markets in the West and Northeast had the biggest declines in affordability, including Orange and Alameda counties in California, and Brooklyn and Nassau County in New York.
Among the 589 counties analyzed, 582, or 98.8%, were less affordable in the second quarter than their historic affordability averages, Attom said.
On the mortgage side, mortgage applications decreased 2.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending June 28, 2024.
The Market Composite Index, a measure of mortgage loan application volume, decreased 2.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 8 percent compared with the previous week. The Refinance Index decreased 2 percent from the previous week andwas 29 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index increased 7 percent compared with the previous week and was 12 percent lower than the same week one year ago.
During the first three months of 2023, U.S. office vacancy topped 20 percent for the first time in decades. In San Francisco, Dallas, and Houston, vacancy rates are as high as 25 percent. These figures understate the severity of the crisis because they only cover spaces that are no longer leased. Most office leases were signed before the pandemic and have yet to come up for renewal. Actual office use points to a further decrease in demand. Attendance in the 10 largest business districts is still below 50 percent of its pre-COVID level, as white-collar employees spend an estimated 28 percent of their workdays at home.
A new report from Moody’s offers yet another grim outlook that the commercial real estate downturn is nowhere near the bottom. Elevated interest rates and persistent remote and hybrid working trends could result in around 24% of all office towers standing vacant within the next two years. The office tower apocalypse will result in more depressed values that will only pressure landlords.
“Combining these insights, with our more than 40 years of historic office performance data, as well as future employment projections, our model indicates that the impact on office demand from work from home will be around 14% on average across a 63- month period, resulting in vacancy rates that peak in early 2026 at approximately 24% nationally,” Moody’s analysts Todd Metcalfe, Anthony Spinelli, and Thomas LaSalvia wrote in the report.
In a separate report, Tom LaSalvia, Moody’s head of CRE economics, wrote that the office vacancy rate’s move from 19.8% in the first quarter of this year to the expected 24% by 2026 could reduce revenue for office landlords by between $8 billion and $10 billion. Factor in lower rents and higher costs, this may translate into “property value destruction” in the range of a quarter-trillion dollars.
In addition to remote working trends, Moody’s analysts pointed out that the amount of office space per worker has been in a “general downward trend for decades.”
At the peak of the Dot-Com boom, office workers used an average of 190 sq ft. The figure has since slid to 155 sq ft in 2023.
“The argument for maintaining or even increasing remote work practices remains compelling for many businesses,” the analysts said, adding, “If productivity remains stable and costs can be reduced by forgoing physical office spaces, the rationale for mandating in-office attendance diminishes.”
Related research from the McKinsey Global Institute forecasts that office property values will plummet by $800 billion to $1.3 trillion by the decade’s end.
Moody’s expects vacancy rates to top out as office towers are demolished or converted to residential ones in the coming years.
“Right-sizing will continue over the next decade as the market shakes out less efficient space for flexible floorplans that support our relatively new working habits,” they said.
Earlier this year, Goldman analyst Jan Hatzius pointed out that a further 50% price decline would make office tower conversions financially sensible.
The jointly signed letter, first reported by Axios, says the economic agenda of U.S. President Joe Biden, a Democrat, is “vastly superior” to Trump’s, the former Republican president seeking a second term.
Read the source article from Reuters for the rest of the Marxist clown show. What Joe Stiglitz and other Leftist economists are cheerleading in the excessive post Covid spending spree that Biden and Congress went on. There is a different between a free market system and government directed spending, usually on large donors.
One source of crippling inflation under Biden is (wasteful) government spending, up 37.7% under Biden. Federal debt is up a nauseating 50% under Biden. These levels of spending and debt are NOT sustainable!
Another souce of inflation under Biden has been The Federal Reserve. With Covid. The Fed entered like gangbusters dropping their target rate to 25 basis points and massively increasing their balance sheet. Call this BIDEN 1. Then to squelch inflation, The Fed raised their target rate and slowly started to unwind the balance sheet. We saw a slowing of inflation. Nothing to do with Biden, although I am sure he will take credit for it at Thursday’s debate with Trump.
Inflation was growing rapidly in Biden 1, but inflation started to slow (Biden 2) as The Fed rapidly raised their target rate.
But, below the hood of the last one we see some more interesting dynamics evolving as revenues and employment decline while prices re-accelerate…
Source: Bloomberg
This is the 25th straight month of contraction (sub-zero) for the Dallas Fed Services index and judging by the respondents’ comments, there is a clear place to point the finger of blame:
Poor national leadership and lack of confidence have eroded the business environment.
The Federal Reserve’s recent announcement of no rate cuts in the near future is concerning regarding the immediate and lag effect it could have on the local economy. We have received direct feedback from many of our clients in various industries, and they are increasingly concerned. They are freezing hires and spending, with many reducing spending. The primary reason is the economic stagnation locally and nationally affecting their businesses.
People are adjusting to new economic realities. Few are expecting salary increases and are instead making lifestyle adjustments to deal with higher living costs. Reality is also setting in for the apartment owners we serve. They understand rents aren’t going up and interest rates aren’t coming down. As rate caps expire and loans mature, lenders are having to adapt as well. Ultimately, a lot of private equity (much in the form of individual retirement savings put into syndications) is getting wiped out.
We need a rate cut before we will see any revenue improvement from home sales.
As elections draw near, the political environment worsens, creating more uncertainty in our business.
We feel inflation and fear of more inflation plus the rise in cost of living are holding consumers back. Hopefully we will adapt to the new realities soon.
Customers are concerned about the election, so they are holding off on large purchases.
The lack of building activity is shutting down the appliance industry.
Affordability has become an ever-increasing problem for new car dealers. The price increases of new cars combined with higher interest rates have put new cars out of reach for more and more people.
[Car] inventories continue to swell, and interest rates remain high. Our grosses are off, and margins continue to decline. Profits are down 20 percent from the prior year.
The economy is slowing. The consumer is more cautious and more reluctant to purchase at higher prices and payments.
And finally, this seemed to sum up just how business-owners feel in general about the current occupant of The White House:
“Our outlook depends heavily on the presidential election.
S&P/Case-Shiller released the monthly Home Price Indices for April (“April” is a 3-month average of February, March and April closing prices). The pace of appreciation has slowed from the previous month, reflecting the toll of 7% mortgage rates and low inventory.
This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index.
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 6.3% annual gain for April, down from a 6.5% annual gain in the previous month. The 10-City Composite saw an annual increase of 8.0%, down from an 8.3% annual increase in the previous month. The 20-City Composite posted a year-over-year increase of 7.2%, dropping from a 7.5% increase in the previous month. San Diego continued to report the highest annual gain among the 20 cities in April with a 10.3% increase this month, followed by New York and Chicago, with increases of 9.4% and 8.7%, respectively. Portland once again held the lowest rank this month for the smallest year-over-year growth, with a 1.7% annual increase in April. … The U.S. National Index, the 20-City Composite, and the 10-City Composite upward trends decelerated from last month, with pre-seasonality adjustment increases of 1.2%, 1.36% and 1.38%, respectively.
After seasonal adjustment, the U.S. National Index and 10-City Composite posted the same month-over-month increase of 0.3% and 0.5% respectively as last month, while the 20-City reported a monthly increase of 0.4%.
“For the second consecutive month, we’ve seen our National Index jump at least 1% over its previous all-time high,” says Brian D. Luke, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices. “2024 is closely tracking the strong start observed last year, where March and April posted the largest rise seen prior to a slowdown in the summer and fall. Heading into summer, the market is at an all-time high, once again testing its resilience against the historically more active time of the year.
“Thirteen markets are currently at all-time highs and San Diego reigns supreme once again, topping annual returns for the last six months. The Northeast is the best performing market for the previous nine months, with New York rising 9.4% annually. Sustained outperformance of the Northeast market was last observed in 2011. For the decade that followed, the West and the South held the top posts for performance. It’s now been over a year since we’ve seen the top region come from the South or the West.
Of course, Fed Money Printing is helping drive home price growth. Perhaps too much!
Here is Jerome Powell, Chairman of The Fed Bubble Blowing Machine!!
Where the jobs aren’t! Calfironia under Gavin Newsom and their Marxist elected officials.
Based on the most recent release of the early benchmarks, payroll jobs declined by 32,000 from September 2023 through December 2023. On the contrary, the preliminary monthly reports showed a solid increase in job growth (+117,000 jobs) at the time. With the fourth quarter revision, calendar year 2023 saw essentially no net job growth (+9,000 jobs overall). Data since January 2024 has not yet been rebenched. As such, the figure includes the Early Benchmark Revision for these recent months growing at the same rate as the official CES estimates.
Given Calfornia’s burdersome taxes and regulations, not to mention $20 per hour for fast food workers, it is not surrprising that job growth in California has been minimal.
In politics, it is usually discussed whether you are better off today than 4 years ago. Well, not if you are a renter or need to buy a home with mortgage financing.
If you are a homeowner, you are better off in terms of home equty. With the Case-Shiller National home price index up 34% since Biden’s selection as President. That is the good news.
The bad news? Property taxes are soaring and home insurance rates are up.
The worst news? The 30 year conforming mortgage rate is up 147% under Biden.
If you are a renter, you are worse off because of rising rents and the diffculty of transitioning to homeowership. Despite slowing, rental CPI is still growing at 5.3% YoY.
Well, perhaps bot a genuine surprise. We are aware that the US economy has been slowing as the massive fiscal and monetary stimulus from Covid is wearing out.
The economics surprise index slumped to -28.10, the lowest since 2022.
I feel like the US economy is experiening a Ragnarok change. With the giants (World Economic Forum/UN. etc) winning.
I am no forune teller, but this doesn’t look to good for old Joe (Biden).
Existing home sales fell -2.8% YoY in May.
US existing home sales fell for the third straight month in May (-0.7% MoM vs -1.0% exp). This left home sales down 2.8% YoY (YoY sales have not increased since July 2021)…
Source: Bloomberg
The total home sales SAAR is push back towards COVID lockdown lows once again at 4.1mm, but prices accelerated to a new record high…
Source: Bloomberg
“Home prices reaching new highs are creating a wider divide between those owning properties and those who wish to be first-time buyers,” NAR Chief Economist Lawrence Yun said in a statement.
“Eventually, more inventory will help boost home sales and tame home price gains in the upcoming months.”
And given that mortgage rates remain stubbornly above 7%, existing home sales show no signs of improving anytime soon…
Source: Bloomberg
The supply of homes on the market increased 18.5% from the same month last year to 1.28 million, but it’s still well below the level seen before the pandemic when mortgage rates were much lower.
Source: Bloomberg
About 67% of the homes sold were on the market for less than a month in May, roughly flat from the prior month, while 30% sold above the list price. Properties remained on the market for 24 days on average in May, compared with 26 days in April, NAR’s report said.
Confounded Interest - Anthony B. Sanders 
You must be logged in to post a comment.