Paul Krugman and others are cheering the defeat of inflation (odd since it is on the rise again). But how does our Federal government “grow” the economy and inflation? Borrow and spend, baby!
I still want to hear Biden (or any other elected official, Democrat or Republican) to explain to me how the US is going to honor its unfunded liabilities (Social Security, Medicare, etc) which is $664,000 PER CITIZEN. Again, this figure does not included the 8-11 million illegal immigrants who have stormed our borders under Biden. Hey, how about an entry fee for each immigrant of $664,000?
“Billions” Biden loves to spend money along with members of Congress and the Administrative State.
When Arnold Schwarzenegger was Governor California, his budget chief, a former high school pal of mine, called me to look at California’s budget. He sent me his spreadsheets with forecasts and asked me what I thought. Even back then, I called back and said “California is on an unsustainable fiscal path and seems to be committing suicide.” He agreed, but noted that Schwarzenegger would not like that conclusion. I told him to blame me for the report, as an unpaid consultant to The Golden State. But even back then, I could foresee the absolute mess that the California State legislature would make, particularly if they elected a Democrat governor.
California’s budget deficits look a lot like Biden’s (call him Newsom’s elderly intellectual grandpa) budget deficits where Biden and Congress went on a spending spree from “the honey pot” (US Treasury) and borrowed funds.
California’s budget crisis is projected to expand more than previously thought and could hit a record deficit of $73 billion, according to a new report from the state’s nonpartisan Legislative Analyst’s Office (LAO).Her
“The actual increase in the state’s budget problem will depend on a number of factors, including formula-driven spending changes, most notably Proposition 98 spending requirements for schools and community colleges,” the report said.
H.D. Palmer, the deputy director of the California Department of Finance and Newom’s spokesperson on budget matters, responded to the new LAO report by telling Fox News Digital that their budget shortfall differs from the $38 million they estimate.
“From now through April, more than $51 billion in income and corporate tax receipts are forecast to come in,” Palmer said. “No one can say today with certainty how those numbers may change the budget estimate of a $38 billion shortfall.”
“A responsible step would be for the Legislature to act now on the early action budget measures needed for $8 billion in solutions to help close this gap,” he added.
The projected bad news comes as Newsom has worked to increase his profile nationwide. It also occurred as California experienced a mass exodus.
California saw its first-ever population decline in 2020 when the state imposed rigid lockdowns during the COVID-19 pandemic. From January 2020 to July 2022, the state lost well over half a million people, with the number of residents leaving surpassing those moving in by almost 700,000.
Census data has shown that Texas is the most popular destination for residents fleeing the state, followed by Arizona, Florida, and Washington. (Of course, Arizona where I used to live has flipped from a Red state to a Blue state with immigration and Democrats are working hard to flip Texas to a Blue state. Washington, has already flipped Blue. Florida remains a Red state under Ron DeSantis).
Here is Biden’s budget deficit chart under the hilariously termed “Bidenomics.” Ah, so maybe Governor Newsom is a perfect fit for the wild spenders in Washington DC.
Lest we forget, Biden/Congress can borrow endless funds and stick the bill to Gen Zers and the unborn.
And remember, US politicians have promised $213 TRILLION in unfunded payments that will require cuts (LOL!) or a massive increase in Federal debt.
Biden and Newsom could sing “Fiscal inferno” together! “Here is my demented, doddering grandfather!”
The Federal Reserve (aka, The Keep) is back in the saddle again. The Fed has been unable to control inflation since Federal government spending was so fast and furious after Covid that little thought was given to the long-term ramifications of insane spending. Not to mention The Fed’s overreaction to Covid.
Example?
Home price growth is rising again. Home prices in traditional “bubble cities” out west were cooling, but are reaccelerating. Even Detroit and Cleveland are seeing rapid home price acceleration.
Yes, housing inflation is sticky.
In retrospect, this wholesale dovish euphoria may have been rather short sighted, because after several strong economist reports hit the tape (with the Nov 2024 election growing closer by the day, that should hardly have been a surprise), March rate cut odds collapsed from over 100% in late December, to just 12% currently…
… as first the January CPI printed red blazing hot– with core coming in at 3.9% far higher than the 3.7% expected, with the 3-month annualized rate jumping to 4% from 3.3% and the 6-month annualized rate spiking to 3.7% vs 3.2%, but the biggest highlight was SuperCore CPI (i.e., core CPI services ex-Shelter) which soared 0.7% MoM, the biggest jump since Sept 2022…
… and then the January PPI print come in even hotter, with a core component surging in January by 0.5%, smashing expectations and beating estimates by the most since Jan 2021.
The result: not only has the market rapidly priced out what if formerly saw as many as 6 rate cuts in 2024, but growing speculation that a rate cut may not come at all unless the Fed tightens some more first (and with the S&P500 now over 5000, it is pretty clear that the market has already priced in virtually all rate cuts and has cornered the Fed).
Of course, the mass migration across the Mexican border (who knows? could be up to 11 million under Biden’s Reign of Error). While Paul Krugman, the resident lunatic economist for the New York Times, extols the virtues of mass immigration for driving up GDP, fails to recognize that mass migration is helping drive up prices. This is inflation that The Fed can’t control. And Biden/Mayorkas want even MORE mass immigration.
“Progress on inflation has brightened the economic picture despite a slowdown in hiring and pay. Wages adjusted for inflation have improved over the past six months, and the economy looks like it’s headed toward a soft landing in the U.S. and globally,” says Nela Richardson, Chief Economist, ADP.
ADP National Employment Report
The ADP National Employment Report shows Private Sector Employment Increased by 107,000 Jobs in January; Annual Pay was Up 5.2%
Job Switching Payouts
Year-over-year pay gains for job-stayers reached 5.2 percent in January, down from 5.4 percent in December.
For job-changers, pay was up 7.2 percent, the smallest annual gain since May 2021.
Median Change in Annual Pay (ADP matched person sample) Job-Stayers 5.2%, Job-Changers 7.2%
ADP Notice
January’s report presents the scheduled annual revision of the ADP National Employment Report, which updates the data series to be consistent with the annual Quarterly Census of Employment and Wages (QCEW) benchmark data for March 2023. In addition, this revision introduces technical updates, namely, in re-weighting of ADP data to match QCEW data. The historical file was updated to reflect these revisions.
Notice Translation
ADP revises its data to match annual BLS data from March of 2023. The BLS will do the same in its annual revisions.
The BLS does not even back adjust the numbers so its historical record is bogus. And despite being incredibly lagging, the Fed makes key decisions on the data.
Job Openings Rise in December But Quits Tell the Real Story
There’s lots of meaningless chatter yesterday about job openings. However, actions speak louder than openings.
This report comes after Fed Chair Jerome Powell said “No Sugar Tonight” as in no expected rate cuts. That is, until it becomes obvious that Biden will lose the election, THEN The Fed will start cutting rates like crazy.
An example of the trash that Biden and Democrats are importing from Latin America, Africa and China. Among other sewers. I am sure that employers are lining up to hire this guy. … NOT! Correction: Biden may appoint this creep to his cabinet with the other losers.
Yikes! Bidenomics is a disaster! MBA mortgage purchase applications are down 54% from Pandemic Peak. I was going to play “The Wreck of the Edmund Fitzgerald” by Gordon Lightfoot and rename it “The Wreck of The US Economy.”
Mortgage demand fell to a new 30-year low in January 2024, down 54% from the pandemic peak. Mortgage demand is down 14% over the last year and 40% from pre-pandemic levels.
Mortgage applications decreased 7.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 26, 2024. Last week’s results included an adjustment to account for the MLK holiday.
The Market Composite Index, a measure of mortgage loan application volume, decreased 7.2 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 increased 2 percent from the previous week and was 3 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 11 percent from one week earlier. The unadjusted Purchase Index increased 6 percent compared with the previous week and was 20 percent lower than the same week one year ago.
Housing is simply unaffordable under Bidenomics, a strange brew of big corporate green subsidies, political handouts (any wonder why Biden is forgiving student loans in an election year?) and bad Fed policy errors.
But young Americans don’t always have a sugar daddy like Hunter Biden has who are willing to pay for rent for political parasites like those in Washington DC.
Young adults used to dream of moving out of their parents’ homes and into their own apartments, but living alone has become a luxury not everyone can afford. Not surprising, since home prices under Biden have risen 32.5% while 30-year mortgage rates are up a staggering 140.5% under Clueless Joe.
But in growth terms (year-over-year), White House Propagandists Karine Jean Pierre and John Kirby will no doubt focus on the cooling of housing prices and mortgage rates … although both are reaccelerating.
Rent CPI is up 19.2% under Clueless Joe.
How does this impact younger Americans? According to a recent study by Intuit Credit Karma, 31% of Gen Zers are living with their parents because they can’t afford to rent or buy their own place. Overall, 11% of American adults still live at home with their parents.
“The current housing market has many Americans making adjustments to their living situations, including relocating to less-expensive cities and even moving back in with their families,” said Courtney Alev, a consumer financial advocate at Intuit Credit Karma.
Even young adults who live alone are reconsidering their living arrangements because costs are too high.
About a quarter (27%) of Gen Zers reported that they could no longer afford rent and 25% said they’ll have to move back in with family to make ends meet.
Millennials are in the same boat: 30% say rent is unaffordable, and 25% are thinking about moving back in with their parents.
The research is consistent with a 2021 study conducted by the U.S. Census Bureau, which showed that one in three adults ages 18 to 34 live with their parents.
In a 2022 study, Pew Research also found that the percentage of Americans living with their parents has increased steadily since 2000. Pew calls these living arrangements “multigenerational households,” and said young adults ages 25 to 29 are most likely to cohabit with their parents.
Different studies, but all tell the same story: Finances are the top reason young adults are still living with family.
Housing and rental costs rise
It’s hardly surprising that young adults are struggling to make ends meet. Housing costs and living expenses have skyrocketed since the pandemic, and younger generations have faced the most financial hardship.
As Creditnews Research reports, Millennials and Gen Zers have been locked out of homeownership due to rising home prices, elevated interest rates, and stagnant real wages (adjusted for inflation).
For example, in 2023, Millennials accounted for only 28% of homebuyers despite being in their prime home-buying age. Gen Zers barely made a dent in the housing market, accounting for a paltry 4% of all buyers.
According to Fed data, average home prices were $431,000 as of the third quarter of 2023.
The rental market isn’t much better. Although rent costs have declined for three straight months, landlords are still asking for $1,964 per month on average, per Redfin data. Average rents were below $1,650 at the start of Covid.
But the problem of surging rents goes back much longer than that. According to a report from Moody’s Analytics, rent prices grew 135% between 1999 and 2022, while average incomes for all age groups were up 77% over the same period.
In terms of earning potential, younger generations are at the lower end of the totem pole, so they’re more likely to be affected by rising rent prices.
Where’s the “strong economy” everyone always talks about?
While the U.S. economy has steered clear of recession and unemployment remains near historic lows, Americans are still struggling to afford basic expenses. This is especially true for younger generations.
A 2023 study conducted by Deloitte found that more than half of Millennials and Gen Zers were living paycheck to paycheck. Perhaps shockingly, 37% of Millennials and 46% of Gen Z reported taking another part-time or full-time job just to afford their bills.
Working longer hours and barely scraping by is one of the main reasons why younger adults feel they’re worse off financially than their parents were at their age.
An August 2023 study conducted by The Harris Poll found that 74% of Millennials and 65% of Gen Zers believe they are starting further behind financially than previous generations.
“They’re telling us they can’t buy into that American dream the way that their parents and grandparents thought about it—because it’s not attainable,” said The Harris Poll CEO John Gerzema.
Remember, Clueless Joe Biden is in charge!(or Obama, take your pick).
Like the spaghetti western “The Good, The Bad And The Ugly,” Bidenomics has had similar effects on financing. Some good, some bad and a lot of uglies.
The good! For investors like pension funds the own US Treasuries, inflation has led The Federal Reserve to raise interest rates. This is good for investors holding short-term debt. The Bianco Fixed Income Total Return Index is soaring!!
The Bad: Well, the flip-side of the same coin is that debt refinancing costs have soared.
The Ugly. There are many contenders for losers under Bidenomics and current Fed (garbled) policies. But I choose … mortgage demand collapse with rising home prices and rising mortgage rates. Mortgage rates are up 165% under Biden.
And mortgage demand (applications) have been crushed.
Also on the ugly side, global aggregate corporate yields have collapsed.
So, there have been winners with Bidenomics (the top 1%), and lots of losers.
We are on a Highway To Hell! Massive Federal Budget deficits and staggering payments to Treasury from The Fed (losses on balance sheet) and $212 TRILLION in unfunded promises to the non-elites.
Under Modern Monetary Theory (or print money without consequences), we are seeing trillion dollars budget deficits with no end in sight. Nothing has been the same since the financial crisis of 2008 with The Fed’s massive intervention.
Then we have The Fed paying an ever growing amount to US Treasury for losses on their huge balance sheet.
According to Trepp, the volume of CMBS delinquency increased 49.4% during 10 months through October.
Looking for more? This piece has been taken from Trepp and Commercial Real Estate Direct’s Q3 2023 Quarterly Data Review. Access the magazine here.
The volume of CMBS loans that are classified as delinquent increased by 49.4% during the 10 months through October to $27.91 billion. That volume amounts to 5.07% of the $601.98 billion universe tracked by Trepp. In contrast, delinquencies at the end of last year amounted to 3.03% of the $616.15 billion universe then extant.
Office Sector Drives Increase in Delinquency Volumes
The driver of the increase was the office sector, which had a 261% increase in delinquency volumes over the 10-month period through October. A total of 199 loans with a balance of $9.59 billion, or 5.91% of all CMBS office loans were at least 30 days late with their payments, as of the end of October. At the end of last year, 115 loans with a balance of $2.65 billion, or 1.63% of office loans, were delinquent.
The sector’s prospects are unlikely to improve as office occupancy rates have declined in most of the country’s major markets. That’s been driven by a substantial pullback in demand from office-using tenants.
Hit especially hard have been loans with floating coupons that are maturing and need interest-rate cap agreements in place before they qualify for term extensions. Those rate caps have skyrocketed in price in lockstep with interest rates.
On the residential side, The Fed is helping drive mortgage payments through the roof!
Biden’s terrible economic policies and horrid fiscal managment has put stress on The Federal Reserve. The Federal Reserve paid an estimated $76 billion to the Treasury in 2022 while banks’ willingness to lend has plummeted.
One of the key ways central banks absorb liquidity back out of the market is through reverse repo. These are short-term transactions where the Fed sells securities to banks and agrees to buy back at a higher price the next day.
This means banks are being paid to park cash with the Fed instead of injecting it into the economy through loans and fanning the fires of inflation.
That alone is costing the Fed $200M every single day.
In addition, the Fed is spending another $500M in daily interest payments on its reserve policy, i.e. balances that banks are holding in their reserve accounts at the Fed.
Banks’ willingness to lend has plummeted making credit availability increasingly tighter. Current levels have typically ended in recessions.This time is NOT different.
And on the energy side of the market, Biden Invokes ‘Wartime Powers’ to Attack Gas-Powered Furnaces. Of all the stupid things Biden has done, invoking wartime powers to make households use inefficent electric heat pumps instead of gas furnaces in stupid of two levels. First, invoking wartime powers for things unrelated to national defense is reckless and capricious. Second, electric heat pumps in the colder areas of the country is stupid as well. Electric heat pumps are inefficient, unless the goal of Biden and his Idiocracy is to “cull the herd” or kill off people during winter months (I had an electric heat pump in a condo I owned and it was terrible in winter months).
Yes, the Biden Administration and The Fed are economic mutilators!
Confounded Interest - Anthony B. Sanders 
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