Debt Star! US Debt Has Increased $22.8 TRILLION (264%) Since Pelosi Became House Speaker In 2007 (M2 Money Increased By 200% Since 2007 While M2 Money Velocity Collapsed)

Nothing has been the same since Nancy Pelosi (CA-D) became Speaker of the House in January 2007. In fact, US public debt was at $8.68 trillion when she was handed the gavel and US public debt now sits at $31.55 trillion. That is a whopping 264% increase in the nation’s debt under free-spending SanFranNan. To Pelosi, there is no such thing as too much debt.

To be fair, Pelosi had plenty of help. We had Barack Obama and Joe Biden assume the Presidency in 2009 and in between we had RINOs (Republicans in name only) John Boenher and Paul Ryan as House speakers. In the Senate, the US has had Harry Reid (NV-D), Chuck Schumer (NY-D) and breifly Mitch McConnell (KY-R) as majority leaders. Of course, he had Donald Trump as President for 4 years then a return to the Obama-Biden Presidency with Old Joe as President for the past 2 years.

This chart show how deranged Congress and the Administration became since 2007. On October 3, 2008, President George W. Bush signed the $700 billion Emergency Economic Stabilization Act (EESA) of 2008 after Treasury Secretary Henry Paulson asked Congress to approve a bailout to buy mortgage-backed securities that were in danger of defaulting.

I find it sad that a House panel voted to designated Pelosi as House Speaker Emerita for her “leadership” in helping to spend the US into bankruptcy. Look at the trajectory of public debt since Pelosi assumed the position of Spender of The House in 2007.

Since 2007, the US has expereienced a housing bubble burst and ensuing financial crisis (2008/2009), then a Covid economic shutdown in 2020 requiring (in the mind of Statists) massive Federal spending in the form of Covid Relief (aka, the American Rescue Plan) for $1.9 TRILLION, then Infrastructure Spending bill for $1 TRILLION, the Inflation Reduction Act (really a green energy spending bill dressed up as an inflation reduction measure) and the infamous pork-laden Omnibus bill. All this Federal spending has driven up M2 Money by 200% since Pelosi first became House speaker.

Look at the chart of M2 Money Velocity (GDP/M2 Money) since Pelosi became House Speaker. It has collapsed.

Pelosi is also notable for her “You have to pass the bill to see what’s in it” speech on the Affordable Care Act and childishly tearing up on camera a copy of Donald Trump’s State of the Union address.

Meanwhile, the US has $181.5 Trillion in UNFUNDED LIABILITIES that will require MORE debt to be issue. Social Security unfunded liability is now $22.46 trillion and Medicare unfunded liability is up to $35 trillion. But if you dare mention “reform” to these massive entitlement boondoggles, President Biden and Senate Majority Leader Chuck Schumer will say “Republicans want to take away your Social Security!” That isn’t what Rick Scott (FL-R) said.

Unfunded liabilities per citizen is now $542,457. I propose that all illegal immigrants crossing the Mexican border (or Canadian border) per forced to pay their share of unfunded liabilities as an entry fee..

While Congress debates cutting spending (Hint: Childish Biden and Schumer said no to any cuts to spending), the US Debt Star gets closer to completion.

Don’t Be Misled By The Low US Unemployment Rate, It Goes Low Just Prior To A Recession (Treasury Curve Remains Deeply Inverted, Mortgage Rates Rise)

Biden’s State of the Union address saw him bragging about his record job creation (actually, it was the private sector, not Biden than created jobs) and historic unemployment rate. What Biden didn’t mention (along with not discussing the porous Mexican border with fentanyl pouring across or why he failed to shoot down a Chinese spy balloon until after it has passed over numerous military reservation) is that the unemployment rate always hit a low point just prior to a recession.

So, here we sit at 3.4% unemployment. But we also see the US Treasury yield curves (10Y-3M and 10Y-2Y) remaining deeply inverted.

The US Treasury 10-year yield is up 5.5 basis points today.

And Bankrate’s 30-year mortgage survey rate is up slightly today.

Help US, McCarthy! Price of Insuring Against US Debt Default Remains Elevated As No End In Sight (Effective Rate Of Interest On US Mortgage Rate Rises)

Everyone seems to have amnesia about Joe Biden’s hatred of Social Security and Medicare. He has tried to cut Social Security, Medicare and Veteran’s benefits as a US Senator. In addition, it was Biden that led the charge to TAX Social Security benefits for seniors. Now Biden has pivoted and is claiming that Republicans are the ones that want to cut Social Security. Wow. Biden simply goes where the political winds blow.

Here is where we set today. The cost of insuring for a US debt default remains elevated as the US has hit its statutory debt limit. This is happening at the effective rate of interest on US mortgage debt is rising.

Help us McCarthy! Because Biden and Schumer don’t want to cut ANY spending.

We need somebody like Mr. Garvey from Key and Peele to lead the debt ceiling debate.

But never fear! Congress LOVES to spend your money, so will eventually raise the debt ceiling.

Just Like The Fed! Despite Cooling Inflation, Forecasts Of Fed Rate Hikes Increase To Peaking In July 2023

It’s just like The Fed to ignore what is going on and do something else.

The one statement that Biden made in his State of the Union Address that was factually accurate was that inflation is coming down. Of course, he then blew it by saying he inherited inflation from Trump which was not true. Headline inflation (CPI YoY) was only 1.4% when Biden was sworn-in as President and rose to 9.1% YoY by June 2021 before finally starting to decline.

But despite the cooling of inflation (and M2 Money growth), The Fed seems hell bent on increasing their target rate, now forecast by Fed Funds Futures to peak in July 2023 at 5.123% before pivoting.

The Fed’s themesong. Drinking with my low-companions, dancing with a woman that’s not my wife, laughing at a joke I’ve heard before, welcome to a night in their life.

Wooden Head! Biden’s Claim Of More Jobs Created In His First Two Years Was Blatantly False, Trump Added 12,539k Jobs In 9 Months After Covid While Biden Added 12,104k Jobs (Nonfarm Payrolls UP 517k In January While ADP Jobs Lost Almost 1 Million?)

While Joe Biden may not have a wooden heart, he definitely has a wooden head. Particularly given the number of whoppers he told during the State of Joe Biden’s Mind speech last night.

Biden took credit for creating more jobs in two years than any administration had in four years. Well, that is incredibly misleading (but it is Joe Biden after all). The US economy saw an economic shutdown in 2020, then a “revival” after the government shutdowns ended.

What Biden failed to mention in his SOTU address was that 12,539k jobs were added under Trump from May 2020 through January 2021. Once Biden was installed as President, jobs added under Biden was 12,104k through January 2023. Heck, Biden didn’t even beat Trump’s last year in office!

I am using the BLS numbers which showed that amazing January jobs report of 517k jobs added. Amazing, particularly since M2 Money growth YoY has stalled.

But ADP jobs added in January shows a different picture: -986,000 jobs lost in January.

BLS or ADP, what’s it going to be?

Fragility! The Federal Reserve Is Slow-Walking Its Shrinking Of Mortgage-backed Securities As M2 Money Growth Goes Negative (Mortgage Purchase Demand Down -37% Since Last Year And Down -45% Since February 5, 2021)

Starting in 2009 with the housing bubble burst and ensuing financial crisis, The Federal Reserve bought agency mortgage-backed securities (MBS) in an effort to provide stability to the then suffering housing and mortgage markets. Flash forward to today and The Federal Reserve still has $2.62 TRILLION in Agency MBS in its System Open Market holdings. And declining very slowly.

All this is happening as M2 Money growth YoY has gone negative and both mortgage rates and home price growth are slowing.

Is the US mortgage market that fragile that requires The Fed to support it?

The answer is yes if we look at the Mortgage Bankers Association weekly applications index. The Refinance Index increased 18 percent from the previous week and was 75 percent lower than the same week one year ago. The unadjusted Purchase Index increased 4 percent compared with the previous week and was 37 percent lower than the same week one year ago.

I noticed that Biden didn’t mention how mortgage purchase applications since he was installed as President have fallen -45%. Mortgage refi applications have dropped -88% since February 5, 2021.

At least the US house payment to income ratio has declined since the peak. But still higher than at the peak of the US housing bubble in 2006.

The Tighten Up! Banks Tightening Credit Boxes As Median Age Of US Homebuyers Rises From 31 To 47

The Federal Reserve is doing Archie Bell and The Drells “Do The Tighten Up!”

Over the fourth quarter, significant net shares of banks reported having tightened standards on C&I loans to firms of all sizes.

Banks also reported having tightened all queried terms on C&I loans to firms of all sizes.

Actually, banks are tightening standards across the various credit boxes.

And as banks tighten up their credit box, we are seeing the median age of US homebuyers rising from 31 to 47 years.

As banks tighten, we are seeing a slow down in the growth rate for C&I lending and 1-4 unit mortgage lending.

This is reminding me of Germany where you save for your entire life to buy a home.

Somehow, I don’t think Biden will mention any of this is his State of the Union address tonight.

About That Surprisingly Strong Jobs Report: 3.30% Growth In Jobs Added On YoY Basis As Fed Slow Walks Shrinking Balance Sheet (Negative REAL Hourly Earnings Growth Not Something To Brag About)

The Hill has an interesting story: 5 takeaways on a surprisingly strong jobs report.

“The U.S. economy added 517,000 jobs in January, more than doubling Wall Street expectations and turning up its nose at prognosticators of an imminent recession. The unemployment rate dropped to 3.4 percent, the lowest level since 1969. Analysts were expecting it to move in the opposite direction, ticking up to 3.6 percent.”

Yes, I was expecting U-3 unemployment to increase to 3.6% as well. What happened? Seasonal adjustments (BLS doens’t provide non-seasonally adjusted data). But the shocking headline (mostly due to seasonal adjustements) was not as surprising if we consider that jobs added in January grew at 3.309% year-over-year. Well, THAT isn’t all that surprising. Particularly since The Fed is slow walking its shrinking of The Fed balance sheet.

And with over 100 MILLION not in the labor force (apparently, the US labor force never really recovered from the Wuhan China virus), the U-3 unemployment rate touted by the media is misleading.

Bear in mind that employment is a LAGGING indicator. For example, the unemployment rate was 4.7% in November 2007 just prior to the beginning of the 2008-2009 Great Recession. So Biden’s bragging about the lowest unemployment rate since 1969 is meaningless in predicting recessions.

So, the January jobs report isn’t as surprising and strong as talking heads screamed about. I wish BLS would release non-seasonally adjusted (raw) data. But since we have a dysfunctional Federal government, I am not holding my breath.

And I wouldn’t consider averrage hourly earnings growth YoY of 4.42% when headline US inflation is 6.42% particularly brag worthy.

Of course, Biden lied about inheriting inflation from Trump. Inflation was 1.28% YoY in December 2020 just before Biden was sworn-in as President. Then again, Biden lies about everything. At least he just refused to comment on the Chinese Spy Balloons.

Strange Days! US Adds 517k Jobs In January While ADP Adds Only 106k Jobs (Avg Hourly Earnings At 4.4% YoY While Headline Inflation At 6.5%)

Strange days indeed!

Today’s jobs report from the Bureau of Labor Statists (BLS) was stunning. 517k jobs added! Very strange since the ADP jobs added report on Febuary 1st was only 106k. THAT is a huge discrepancy (probably a seasonal adjustment in the BLS reporting).

Average hourly earnings rose to 4.4% YoY. Too bad headline inflation is still roaring at 6.5%. So, the inflation tax is still overwhelming wage growth.

The spread between the January jobs report (BLS) and the ADP jobs added report (ADP) is similar to the infamous jobs report that the Philly Fed “corrected” (orange circle).

Here is the summary of the BLS numbers.

And on the strange jobs report, US Treasury 10-year yields are up 10+ basis points.

Where were the jobs added? How about “Hey Bartender!” since leisure and hospitality added 128k jobs in January.

Leisure and hospitality added 128,000 jobs in January compared with an average of 89,000 jobs per month in 2022. Over the month, food services and drinking places added 99,000 jobs, while employment continued to trend up in accommodation (+15,000).
In January, employment in professional and business services rose by 82,000, led by gains in professional, scientific, and technical services (+41,000). Job growth in professional and business services averaged 63,000 per month in 2022.
Government employment increased by 74,000 in January. Employment in state government education increased by 35,000, reflecting the return of university workers after a strike.
Health care added 58,000 jobs in January. Job growth occurred in ambulatory health care services (+30,000), nursing and residential care facilities (+17,000), and hospitals (+11,000).
Employment in retail trade rose by 30,000 in January, following little net growth in 2022 (an average of +7,000 per month). In January, job gains in general merchandise retailers (+16,000) and in furniture, home furnishings, electronics, and appliance retailers (+7,000) were partially offset by a decline in health and personal care retailers (-6,000).
Construction added 25,000 jobs in January, reflecting an employment gain in specialty trade contractors (+22,000). Employment in the construction industry grew by an average of 22,000 per month in 2022.
In January, transportation and warehousing added 23,000 jobs, the same as the industry’s average monthly gain in 2022. Over the month, employment in support activities for transportation increased by 7,000.
Employment in social assistance increased by 21,000 in January, little different from the 2022 average gain of 19,000 per month.
Manufacturing employment continued to trend up in January (+19,000). In 2022, manufacturing added an average of 33,000 jobs per month.
Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; wholesale trade; information; financial activities; and other services.

The source of the jobs miracle? Changes in how jobs are measured.

Changes to The Employment Situation Data |
| |
| Establishment survey data have been revised as a result of the annual benchmarking |
| process, the NAICS 2022 conversion, and the updating of seasonal adjustment factors. |
| Also, household survey data for January 2023 reflect updated population estimates. |
| See the notes at the end of this news release for more information. |
|_________________________________________________________

Fed Slows Rate Increases, Raises Only 25 Basis Points, As Expected (Future Rate Hikes Projected To Slow As Inflation Slows)

The Federal Reserve slowed its drive to rein in inflation and said further interest-rate hikes are in store as officials debate when to end their most aggressive tightening of credit in four decades.

Policymakers lifted the Fed’s target for its benchmark rate by a quarter percentage point to a range of 4.5% to 4.75%. The smaller move followed a half-point increase in December and four jumbo-sized 75 basis-point hikes prior to that.

The unanimous decision by the Federal Open Market Committee was in line with financial market expectations.

Markets are forecasting a pivot after the June meeting in 2023.

The face of The Federal Reserve. Although Yellen is now Biden’s Secretary of Treasury.