Another dismal economic report under “Middle class” Joe Biden.
April’s inflation report is out and … it sucks. Core inflation (CPI less food and energy) remains elevated at 5.5% YoY, much higher than The Fed’s target rate of 2%. Even worse, US REAL average weekly wage growth is negative again at -1.1% YoY, negative growth for the 25th straight month.
Turns out that core inflation is higher than overall inflation. 4.9% YoY compared to core of 5.5% YoY.
Despite the hot core inflation report, Fed Funds Futures are pointing to declining rates over time.
While the US middle class is getting screwed, The Biden family are raking in millions …. from China.
The Federal government in Washington DC is broken beyond repair. Politicians get elected by promising free or cheap things, so they keep delivering the bacon. Or pork to political donors. The top 1% get massive payoffs (like green energy subsidies or bank bailouts), the bottom 99% get out of control entitlements like Social Security, Medicare and Medicaid. And other unsustainable entitlements. In fact, student loans are now an entitlement since some voters will vote for the corrupt politician (no, Joe Biden isn’t the only corrupt politician in Washington DC) who will forgive their student loans.
In fact, we now have $187 TRILLION in UNFUNDED liabilities that were promised to the 99%. The 1% will always get their political contributions paid. Biden and Schumer have promised their donor class trillions in spending, so that are threatening to let the US debt default to protect the 1%.
And unfunded entitlements are expected to soar, particularly Medicare.
Mandatory spending is expected to soar while discretionary spending is almost flat in terms of growth.
Meanwile, the US credit default swap remains elevated as the US Treasury short curve (2Y-3M) is near the most inverted in history.
And this headline, “Biden Not Ready Yet to Invoke 14th Amendment to Avoid US Default”. That means Biden would adopt extraordinary powers to prevent a debt default. Hence, the idiocy like the trillion dollar coin.
Nobel Laureate and Statist useful idiot Paul Krugman wants to keep spending trillions. As a result, he argues “Don’t worry about the declining US dollar hegemony … as long as the US doesn’t default.” Translation: Krugman agrees with Dementia Joe that Republicans should just pass Biden’s budget with no strings attached. C’mon Krugman. The growth of BRICs (Brazil, Russia, India, South Africa and growing) is partly due to 1) perceived weakness of Senile Grandpa Joe and 2) the fiscal spending and debt growth in Washington DC. Of course it matters, but Krugman wants to keep spending on green lunacy and entitlements until we break the back of the country. Sounds like Krugman is on board with Cloward-Piven.
They can’t cut promised entitlements. Look at France where Macron raised the retirement age by 2 years and there are endless riots. So debt default is the only option, though painful.
Will Congress and future administrations stop prominsing endless spending that benefits the 1%? Not likely. Our political system is hopelessly broken.
I am sure that China’s Communist Party has sent Dementia Joe a message “We own you! You better not default on what you owe us!!” Or default so we can own you financially.
Three of the four horsemen of the financial apocalypse. Yellen is the fourth horseman, but is too short to appear in the picture.
US average hourly earnings year-over-year (YoY) rose in April to 4.4%. Too bad core inflation at the last reading also rose to 5.6% YoY.
Yes, Biden and his talking heads will talk about the 253k jobs added, but will ignore (of course) the huge downward revision of March’s jobs added. 236k revised downwards to a mere 165k.
And on the good jobs report, the 10-year Treasury yield jumped by 10.9 basis points.
And the US Treasury 2Y-3M curve has dropped off the end of the earth.
Biden loves to brag about the greatest economy in history! Sure Joe. Life during Biden.
Challenger jobs cuts in April were 176% year-over-year. Non farm productivity in Q1 fell -2.7% QoQ. And unit labor costs in Q1 almost doubled to 6.3% QoQ, almost doubled from the Q4 2022 figure of 3.2%.
At least The Fed is going to pause it manic rate hikes. Then begin dropping them again.
Official estimates from the Congressional Budget Office (CBO) show that, since January 2021, legislation signed by President Biden has set in motion a record $3.37 trillion in new spending. And for all that spending, we get a pathetic 1.1% QoQ growth rate?
Inflation continues to be 4% QoQ despite M2 Money growth collapsing.
Gross private domestic investment crashed by -12.5% QoQ.
This is Biden’s idea of a strong economy? His lame campaign slogan is “Let’s finish the job!” Please don’t Joe!
The US economy is barely chooglin along at a dismal 0.53% YoY (but 0.4% MoM in March). As the Covid “sugar rush” that caused a surge in Industrial Production in April 2021 of 16.56% has led to a “sugar crash” as M2 Money growth crashed and The Fed hiked rates to combat inflation. Known as a “sugar crash.”
Also in today’s economic news is more Sugar Crash news. Advance retail sales dropped -1% in March. That is -155% lower than a year ago when it was +1.8%.
Here is the breakdown.
The Federal Reserve put a spell on us when Bernanke/Yellen kept rates too low for too long (TLFTL) and The Fed is now playing catch up. It is now creating havoc.
And on the Philly Fed’s Christopher “Fats” Waller saying that he favored more monetary policy tightening to reduce persistently high inflation, although he said he was prepared to adjust his stance if needed if credit tightens more than expected, we see that US Treasury 2-year yield jumping 13.5 basis points to 4.103%.
Two of the biggest items for consumer are housing and food. Shelter inflation (CPI) is still growing at 8.2% YoY and food is still growing at 8.5% YoY.
Federal Reserve officials appear on track to extend their run of interest-rate hikes when they meet next month, shrugging off their advisers’ warning of recession with a bet that they need to do a little more to curb inflation.
Minutes of last month’s policy meeting showed officials dialed back expectations of how high they’ll need to lift rates after a series of bank collapses roiled markets last month. Still, officials raised their benchmark lending rate a quarter point to a range of 4.75% to 5%, as they sought to balance the risk of a credit crunch with incoming data showing price pressures remained too high.
They did so even after hearing from Fed staff advisers that they were forecasting a “mild recession” later this year.
Officials agreed “some additional policy firming may be appropriate,” according to minutes of the Federal Open Market Committee gathering, a posture several Fed speakers have reiterated in recent days.
Policymakers “commented that recent developments in the banking sector were likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring and inflation,” the minutes said, though they agreed the extent of the effects was uncertain. “Against this background, participants continued to be highly attentive to inflation risks.”
Inflation started with Biden’s misguided war on US energy, then Biden/Congress helped inflation with an epic spending splurge. The Federal Reserve counterattacked with Fed rate hikes.
Over the past year, The Fed Funds Effective rate has risen and US bank credit has crashed to 2.73% year-over-year.
Do I detect a trend?
Since 2005, the crash in US bank credit is looking like 2008/2009 all over again.
Whether Biden is Cap’n Crunch or Jerome Powell or Janet Yellen, they are all crunching the US economy.
Confounded Interest - Anthony B. Sanders 
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