Bidenomics Is An Economy Eater! 885,000 Full-time Jobs Lost, 1.127 Million Part-time Jobs Added In September (Mortgage Rates Rise And Are Up 171% Under Biden)

Bidenomics is an economy eater! But at least we know that the southern border is not on Biden’s mind or lips. But as Ronald Reagan once asked “Are you better off now than 4 years ago?” The answer? Most Americans are far worse off due to inflation and the surge in “Would you like fries with your burger?” jobs. And mortgage rates are up 171%.

After last month’s (September) stunning payrolls report, when in our post-mortem we revealed not only a year full of monthly downward data revisions, but also collapse in tull-time jobs and surge in part-time jobs, as well as the worst unadjusted August payrolls since the great recession, we thought that nothing could shock us any more. And then we got the September jobs report.

We won’t spend too much time dissecting the report since regular readers are all too aware of the same old “upward goalseeking” tactics used by the BLS, so here are the highlights.

First, the 336K jump in headline payrolls – the biggest since January – was stunning when considering that it was not only above the highest Wall Street estimate but was a 6-sigma beat to expectations.

How is it possible to get such an outlier print to not only trends but expectations? Let’s try to answer that question.

If, as the BLS claims, in September the jobs market suddenly reversed a year of declines, surely there will be some qualitative validations to this quantitative outlier, right? Unfortunately, looking through the supporting evidence we don’t find any justification to the BLS exuberance.

Let’s start with the Household survey: here instead of a number anywhere close to the 336K jobs gained (as the far less accurate Establishment survey reports), the number of newly employed workers was just 86K, the lowest since May, and the second lowest of 2023!

And since the number of unemployed workers also rose to 6.360 million, the highest number since January 2022, the unemployment rate was sticky at 3.8%, and refused to drop to 3.7% as consensus had expected.

How about the Establishment survey? Well, here too, things stink. Yes, the headline surge was great, but the question here is how much of that was purely seasonals.

The official adjusted data showed this Leisure and Hospitality added a whopping +96k jobs. But unadjusted data showed that the sector lost 466k jobs in Sep. This means that the unadjusted private sector payrolls was -399!

Wait, if unadjusted total payrolls rose by 585K and yet private payrolls dropped by 399K, that means that… you got it: in September, all of the unadjusted jobs came from – drumroll – the government, which added a whopping 984K jobs (mostly teachers).

Translation: for yet another month all the strength in the Establishment was thanks to seasonals and various plugs that made the total number much stronger.

And now, let’s turn again to the much more detailed and accurate Household Survey, where we find the BLS back to its old tricks again.

First, as we pointed out earlier, despite the alleged quantitative surge, the quality of the jobs was anything but good. In fact, looking at the infamous table A-9 of the employment report, reveals that in September, a seasonally adjusted breakdown of jobs shows that part-time workers accounted for the entire increase, rising by 151K; as for full-time workers? Well, for yet another month, this number dropped, sliding by 22K in September.

Indeed, as shown in the chart below, while part-time workers rose for the third consecutive month to 27.336 million,and the highest since January, full-time workers have decline for three straight months, and at 134.167 million, this was the lowest number going back to February!

But hold on, you say, why use Seasonally Adjusted number when we already noted above that there continue to be chronic issues with the BLS’ seasonal adjustments in the post-covid era. True, so let’s use unadjusted numbers instead. What do we get?

Well, we get the following whopper: in September, the number of unadjusted full-time workers collapsed by 885K. This was the biggest monthly drop since – drumroll- April 2020 when the economy was shut down!

And if full-time workers plunged, that must mean that part-timers exploded, right? Why yes, they did: by 1.127 million in one month to be precise, and at 27.109 million the number of part-time workers was the highest since April.

Finally, let’s not forget the number of multiple jobholders: those unlucky souls which have to work not one but two (or more) jobs to make ends meet under Bidenomics. Also, multiple jobholders (which are measured by the Household Survey) are double, and triple- counted when it comes to the Establishment Survey. So how did thy do in September? Well, on a seasonally adjusted basis, the number increased by 123K to 8.151 million, the highest since January 2020. As for the much more accurate, unadjusted number, well that soared from 7.778 million to 8.146 million, an increase of 368K, or more than all the 336K payrolls reported by the establishment survey.

In other words, all of the job gains in September were either from part-time workers or multiple jobholders forced to get another job in addition to their current one, and thus be counted by the BLS as two distinct jobs (or more). One final observation on the multiple jobholders: in September, the subset of multiple jobholders who held both a primary and secondary full-time job just hit an all time high.

Visually, this is what September’s “stunning” jobs report really looked like.

Source for everything: BLS, but one needs to do some actual work to get a sense of what is really going on.

And on top of the blood curdling jobs report, mortgage rates rates and are up 171% under Bidenomics.

And then we have Hillary Clinton pulling a Pol Pot and suggesting de-programming of Trump supporters like in the movie “The Killing Fields.” Pol Clinton??

Bizarro World! How the Fed Destroyed the Housing Market and Created Inflation in Pictures

Thanks to Mish (Mike Shedlock) for this wonderful piece!

The Fed erroneously does not consider rising home prices as inflation. Here’s the result in pictures.

Case-Shiller national and 10-city home prices vs CPI, Rent, and Owners’ Equivalent Rent

Chart Note

Case-Shiller measures repeat sales of the same home over time. This ensures an accurate comparison of room size, yard size, and amenities. The only drawback is the data lags a bit. The most current data is from July representing transactions in May and June.
OER stands for Owners’ Equivalent Rent. It’s the price of rent one would pay to rent one’s own house, unfurnished without utilities.

For 12 years, home prices, OER, Rent, and the overall CPI all rose together. That changed in 2000 with another trendline touch in 2012. Then it was off to the races as the Fed did round after round of QE, suppressing mortgage rates.

Case-Shiller Home Price vs Hourly Earnings, the CPI, and Rent

Case-Shiller national home prices vs CPI, Rent, and Average Hourly Earnings.

As with the previous chart, for 12 years, home prices, rent, the overall CPI and hourly earnings all rose together. That changed in 2000 with another trendline touch in 2012.

How Much Are Homes Overpriced?

If the 12-year trend of home prices rising with average hourly earnings stayed intact, the home price index would be 211, not 308.

From that we can calculate home prices are ((308-211) / 211) percent too high, roughly 46 percent too high. If you prefer, home prices would need to fall ((308-211) / 308), roughly 31 percent.

Alternatively, if home prices stagnate for years, wages may eventually catch up.

Case-Shiller Home Price 1988=$150,000

The same home that cost $150,000 in 1988 now costs $678,366. But wages have gone up too. And mortgage rates have had wild swings.

Mortgage Payment and Wage Adjusted Mortgage Payment

The Least Affordable Mortgages in History

Factoring in wage growth, home prices, and mortgage rates, homes are the most expensive ever.

It’s actually much worse than the chart indicates because property taxes and insurance are not factored into.

Mortgage Rates

Mortgage Rate chart courtesy of Mortgage News Daily.

Through massive and totally unwarranted QE, foolishly hoping to create more inflation, the Fed suppressed interest rates to record lows and mortgage rates followed.

Anyone with an an existing mortgage could and did refinance at 3.00 percent or below.

This increased “affordability” and we now have two classes of people courtesy of the Fed: winners and losers (existing home owners who refinanced low and those who want to buy).

Mortgage Application at 30-Year Lows

Refinance Index courtesy of Mortgage News Daily

Please note Mortgage Application Volume Nears 30-Year Lows

“Mortgage rates continued to move higher last week as markets digested the recent upswing in Treasury yields. Rates for all mortgage products increased, with the 30-year fixed mortgage rate increasing for the fourth consecutive week, up to and above 7.53 percent – the highest rate since 2000,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “As a result, mortgage applications ground to a halt, dropping to the lowest level since 1996. The purchase market slowed to the lowest level of activity since 1995, as the rapid rise in rates pushed an increasing number of potential homebuyers out of the market. ARM loan applications picked up over the week and the ARM share increased to 8 percent, as some borrowers searched for ways to lower their payments.”

What About the Winners?

Good question. The winners refinanced at 3.0 percent or below. This put extra money in their pockets every month to spend.

And rising wages further stimulated ability of the winners to buy goods and services.

Thus the Fed is still paying for its asinine push to create inflation.

Meanwhile, the housing market is dead and will remain dead with mortgage rates approaching 8.00 percent.

What About Rent?

That’s another good question. For 24 months or so, economists have been predicting an ease in rent inflations.

On September 13, I noted Consumer Price Inflation Jumps 0.6 Percent Led by Energy and Shelter

The price of gasoline rose 10.6 percent, rent another 0.5 percent, shelter, 0.3 percent, and new cars 0.3 percent leading the way for a 0.6 percent increase in the CPI in August.

The price of rent has gone up at least 0.4 percent for 25 straight months. Not to worry, Paul Krugman says this is lagging.

When Will Record Housing Units Under Construction Ease Rent Inflation?

On October 2, I asked When Will Record Housing Units Under Construction Ease Rent Inflation?

That’s really a trick question. For a better question, remove the lead “when” from the sentence.

The answer is: I don’t know, nor does anyone else, although people claim to be clairvoyant.

Housing Units Under Construction vs CPI Rent Year-Over-Year

Housing units from Census Department, Rent CPI from BLS, chart By Mish

I saw the theory that rent would collapse as soon as housing units get completed so many times that I almost started believing it myself.

However, the data shows no discernable correlation no matter how you shift the lead or lag times.

The chart looks totally random. So perhaps rent abate. Perhaps not. The data itself provides no reason to believe anything.

Regardless, please note the floor. Year-over-year rent has a floor of about 2 percent except in the Great Recession housing crash.

And these charts are not imputed Owner’s Equivalent Rent prices for which people pay no actual rent. These charts reflect rent of primary residence.

34 Percent are Screwed

Well, don’t worry. Only 34 percent of the nation rents, and besides, rent is lagging.

Sarcasm aside, the Fed blew huge asset bubbles and did not see that as inflation. Nor did the Fed see that three massive rounds of fiscal stimulus would cause inflation.

Real Income and Spending Billions of Chained Dollars

Note the three rounds of massive fiscal stimulus in the Covid pandemic. This triggered the most inflation since the 1970s. Economists debate how much “excess savings” still remains.

For discussion of excess savings, please see Excess Pandemic Savings, How Much is Still Unspent?

The Fed never saw this coming, never saw a housing bubble in 2007, and has never once predicted a recession.

Heck, former Fed chair Ben Bernanke denied a housing bubble and denied a severe recession that had already started.

Expect More Inflation Everywhere

Unfortunately, Biden is doing everything humanly possible to stoke inflation with EV mandates, natural gas mandates, union pandering, student debt forgiveness, and regulations, some of which is blatantly unconstitutional.

As a result, Fed Rate Interest Rate Hike Expectations Are Still Higher for Even Longer

Looking to Buy a Home?

If you are looking to buy your first home and need to finance, good luck.

The longer the Fed holds rates high, the longer the housing transaction crash lasts. But cutting rates will further expand the housing bubble, asset bubbles in general. And bubbles are destabilizing.

That is the Fed’s tightrope dilemma, of its own making.

If you are one of the winners, congrats. But that extra money the Fed put in your pocket every month may stoke inflation for a long time.

The Consumer Just Crashed! Credit Card Spending Unexpectedly Cratered In September At -10.8% While Bank Credit Growth Goes Negative For 9th Straight Week

Coping with inflation caused by Federal spending (and excessive Fed stimulus) is difficult and eventually consumer max out their credit cards. Like now!

Credit card useage nosedived by -10.8% in September, according to Citi. This is the fifth straight month of spending decleration.

Leading the decline was electronics. The leader on the positive sign was … jewelry?? Hey, I thought mobs of people were robbing stores because they were hungry!!

In terms of bank credit, rising rates to fight inflation, bank credit growth Bank credit growth has been negative for nine straigth weeks.

Then we have unrealized losses on bank balance sheets, expected to surge to $700 billion with soaring interest rates.

On a different note, Homeland “Security” head Mayorkas now claims the US has to build a wall to combat the out-of-control immigration on the southern border. Wait! I thought Mayorkas and Congressional members (angrily) claim the border was secure! It doesn’t matter, Mayorkas is simply signalling to blue states that he will build a wall. But how fast is a different question.

Here is a video of tHe Biden Administration arranging for the border wall to be consructed. Mayorkas will likely call O’Reilly the builder to build the border wall.

Slowdown! ADP Jobs Added Slows To +89k As Credit Card Delinquencies At Small Banks Hit Highest Level Even Recorded (7.51%)

The US is experencing a slow down.

The massive Federal government and Federal Reserve Covid stimulus has worn out and we are left with a sagging jobs report and soaring credit card delinquencies.

After ADP’s reports printed almost perfectly in line with BLS last month (+177k vs +187k), all eyes are on today’s print, which was expected to decline to +150k. Instead it plunged to just +89k – that is the lowest jobs addition since Jan 2021.

Credit Card Delinquency rates at small banks have reached 7.51%, the highest level ever recorded.

Bidenomics is taking the 10Y rate higher.

Boom shaka laka.

17 Days Later? Mortgage Demand Decreased -6% WoW In Weekly Survey, Purchase Apps Lowest Since 1995 (Only 17 Days Left For Strategic Petroleum Reserve)

Another week under Biden, another economic disaster. This time, its the mortgage market with mortgage demand (applications) down 6% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 29, 2023.

The Market Composite Index, a measure of mortgage loan application volume, decreased 6.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 6 percent compared with the previous week. The Refinance Index decreased 7 percent from the previous week and was 11 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 6 percent from one week earlier. The unadjusted Purchase Index decreased 6 percent compared with the previous week and was 22 percent lower than the same week one year ago.

The purchase market slowed to the lowest level of activity since 1995, as the rapid rise in rates pushed an increasing number of potential homebuyers out of the market. ARM loan applications picked up over the week and the ARM share increased to 8 percent, as some borrowers searched for ways to lower their payments.

The US 30-Year Mortgage Rate Tops 7.5% for First Time Since 2000.

On the energy front, where we are represented by former Michigan governnor Jennifer Granholm and former South Bend Indiana mayor Pete Buttigieg, we see that the Strategic Petroleum Reserve is down to only 17 days left.

Fear The Talking Fed! Treasury Rates Keep Climbing To Multiyear Highs As Fear Of More Rate Hikes Surfaces (Treasury Yields Decouple From Sinking Manufacturing Numbers)

Fear the talking Fed! Various Fed Presidents are talking this week and when they do. WATCH OUT!

The latest fear mongering will be … inflation is persistent and they might have to keeep raising rates.

The two-year Treasury remains above 5% and the 10Y-2Y T-Curve remains inverted.

Treasury 30-year yield rose to 4.856%, HIGHEST SINCE 2007.

The likelhood of another Fed rate hike is growing.

While inflation is cooling (but still elevated), The Fed could choose to rate hikes again.

Treaury yields have decoupled from US manufacturing data.

Best picture of Lael Brainard, Director of the National Economic Council of the United States and former Federal Reserve member and talking head. Or screaming head.

US Excess Savings Depleted For Bottom 80% Of Households To Cope With Bidenomics (Home Affordability Hits All-time Low!)

Wasting away again with Bidenomics, code for massive Federal subsidies to green energy donors. And incentives to buy impractical EVs. Imagine in an emergency and your car only goes 200 miles (and then you have to wait for an available charger to come open). Well, the top 1% are doing fine. But the bottom 80% of households by income are seeing rapid deplection of savings to cope with the rising costs of Bidenomics.

And then we have shrinking home affordability, now at a record low.

Bidenomics And The BIG Corporate Bias! Smaller Companies Paying Record Interest Without Boost From Interest Income (US Treasury Yield Curve Remains Inverted With Massive Fed Stimulus Outstanding)

We know that the horribly-flawed Bidenomics doesn’t work, unless you are a large corporate donor in green energy. For the rest, particulary small companies, Bidenomics is a total bust.

Under Bidenomics (the Soviet-style command economy), small companies are paying reconrd interest expense WITHOUT a major boost from interest income. Well, ain’t that a kick in the head … to most companies.

Pension funds that invested in “safe” MBS are finding that MBS isn’t so safe under inflation.

Look at the 10Y-2Y yield curve since Covid. I had a slight surge by March 2021, then has flattened then inverted as The Fed’s balance sheet still remains above $8 trillion.

Face it. The Biden Administration and Congress are owned by BIG corporate interests. BIG defense, BIG tech. BIG Pharma, BIG banking, BIG auto, BIG Union, BIG anything.

No wonder the Obamas were seen snorkeling in The Med with Tom Hanks and Steven Spielberg. BIG Hollywood!

Biden’s Idiocracy! Bank Credit Growth Slows To -0.5% YoY, Every Monthly Payrolls Print In 2023 Has Been Revised Lower (Bidenomics Is The Economic Mutilator!)

Mike Judge wrote and directed a masterpiece of cinema called “Idiocracy” where large corporations convince a progressive government to use Brawndo (a Gatorade clone) to grow vegetables resulting in a Dust Bowl. Why? Because the Progressive leadership determine that plants crave … electrolytes.

But the electrolytes in Bidenomics has resulted in bank credit growth of -0.5% YoY.

On the data front, it has become a running joke: the “strong” Bidenomics economy comes with an expiration date, as it is only “strong” for about a month, at which point the initial “strength” is downgraded, and the data is revised sharply lower.

That has certainly been the case with US labor data, where as we first reported last month, every single monthly payrolls print in 2023 has been revised lower (see chart below), a 12-sigma probability and virtually impossible unless there was political pressure to massage the data higher initially and then revise it lower when nobody is looking.

But the BLS is not done: as we reported last week, besides the now traditional one-month lookback revisions the ridiculously high monthly payrolls prints accumulated over the past year will also be slowly but surely revised gradually lower at annual benchmark revisions for years to come. As Morgan Stanley chief US economist Ellen Zentner explained (full note available to pro subscribers)…

Payrolls get revised too, and we expect a downward revision. Payrolls have an annual benchmark revision that is published in February each year. The revision adjusts the level of payrolls through March of the prior year. For example, a new revision will be published in Feb-24, adjusting payroll levels from April-22 to Mar-23. And a preliminary estimation of the upcoming revision points to a decrease in payroll YoY% growth rates of -0.2pp.

But while downward payroll revisions under Bidenomics are as certain as death and taxes, what we wanted to discuss here are the just as striking downward revisions to US consumption which hit this morning alongside the comprehensive once every-five-years historical revisions to GDP. As a reminder:

Today’s release presents results from the comprehensive update of the National Economic Accounts (NEAs), which include the National Income and Product Accounts (NIPAs) and the Industry Economic Accounts (IEAs). The update includes revised statistics for GDP, GDP by industry, GDI, and their major components. Current-dollar measures of GDP and related components are revised from the first quarter of 2013 through the first quarter of 2023. GDI and selected income components are revised from the first quarter of 1979 through the first quarter of 2023.

Earlier today we already noted the disaster that was Q2 Personal Consumption: instead of the 1.7% unchanged print from the second estimate of Q2 GDP, the final number was a dire 0.8%, a 9-sigma miss to estimates…

… and the worst quarterly increase since the Covid collapse in Q2 2020.

But what about other historical data? After all today’s revision impacted all data from Q1 2013? Therein, as the bard says, lies the rub.

Let’s start with personal consumption, and compare the latest post-revision current data (link) with the most comprehensive pre-revision data as of last month (link). It should come as no surprise to anyone that with the (slight) exception of just Q4 2022, personal consumption in every single quarter since the start of 2022 – when the Fed aggressively started tightening and hiked rates by the most since Volcker – has been revised lower, and in some cases dramatically so.

Bloomberg also picks up on the GDP revision and looking at revisions to the historical data, writes that “the pandemic contraction is seen as being a bit less severe than previously thought: GDP is now reckoned to have dropped at a 28% annual clip in the second quarter of 2020, instead by 29.9%, as the government shut down swathes of the economy to fight the spread of the virus. But the recovery since then has been somewhat slower, according to the update. Growth last year was revised to 1.9% from 2.1%.” And of all GDP components, consumption was the weakest.

So not only was the Fed hiking at a time when personal consumption would grow much less period to period than previously expected, but the US economy was generally weaker than previously expected (as discussed here).

There’s more.

When looking at the composition of the US household’s income statement – the summary of economic accounts – we find just what we had expected: US savings were in fact far lower than previously expected.

In the latest negative revision, US households saved $1.1 trillion less than previously thought over the past six years…

… and indeed as the BEA chart below shows, Americans stashed away an average 8.3% of their disposable income annually from 2017 through 2022, down from a previously estimated 9.4%.

The reduction stems from an accounting adjustment that lowered personal income from mutual funds and real estate investment trusts. Additionally, as Bloomberg notes, much of the reduction in personal savings seen in the revised data occurred prior to the pandemic, so its implications for how much extra cash Americans may feel they still have now is not clear cut.

Whatever the reason for the statistical adjustment, however, one can say goodbye to even the faintest speculation that US households have any excess savings left… why they don’t, of course, because even when using the previous methodology which artificially inflated total savings, JPM calculated that excess savings had already run out…

… which means that if Q3 GDP was bad and consumption was “revised” sharply lower (odd how economic data is never revised higher under Joe BIden), Q4 – when savings are virtually non-existant – and where we also get the i) return of student loan payments; ii) the UAW strike; iii) the government shutdown and iv) oil at almost $100 and gasoline at one year highs, is about to fall off a cliff.

Yes, Bidenomics is a form of Brawdo, the economic mutilator!