Confounded Interest – Anthony B. Sanders
Financial Markets And Real Estate
US pending homes sales in April tanked -11.5% YoY and down -3.9% MoM which was greater than expected.
Not really surprising when you see that REAL home prices are growing at an 11.55% YoY clip while REAL hourly earnings are declining at a -2.8% YoY pace.
Do you feel like I do with Bidenflation crushing my check book and The Fed crushing my hopes for an affordable home.
Today’s US Real GDP was worse than economists expected.
US Real GDP Annualized QoQ printed at -1.5%. And GDP prices QoQ printed at 8.1%, also higher than expected.
At least Personal Consumption printed higher than expected at 3.1%.
Import prices (goods) led the way at 20.9%. Part of Biden’s brilliant strategy of reducing domestic oil production and import expensive energy from overseas?
Consumers are spending more, but the personal savings rate is down to the lowest level since 2013 at 6.2% as consumers try to cope with inflation.
Seriously, with soaring energy prices and soaring EVERYTHING prices (except for real wage growth), it is difficult to see how the US will avoid a recession.
Yes, everything is seemingly rising in price, yet REAL average hourly earnings growth keeps falling. Rising price + declining real earnings growth = eventual recession.
So, let’s get ready to stumble … into recession.
April’s inflation numbers are out and, at first glance, inflation seems to be cooling from 8.5% YoY in March to 8.3% YoY.
But the headline inflation numbers do not accurately reflect the pain and suffering of American households. Food is up 9.4% YoY and gasoline is up 43.6% YoY.
The strange way the BLS measure “shelter” shows that housing only grew at 5.1% YoY. That’s odd since home price growth is almost 20% YoY and rent growth is near 20%.
Runaway home prices and rents are especially painful given that inflation is destroying the purchasing power of the dollar for consumers. Real average weekly earnings YoY are at -3.4% YoY.
Hence, the purchasing power of the US Dollar keeps eroding.
Good luck out there with inflation still roaring, and food/housing/energy prices soaring.
Here is a photo of American children trying to create energy from flying a kite made from progressively devalued US currency.
Trevor Noah was correct. EVERYTHING is more expensive under Biden. And REAL average hourly earnings YoY keeps declining.
REAL average hourly earnings YoY fell further to -3%.
Meanwhile, fertilizer prices, a key ingredient to food costs, is up 262% under Biden.
Today’s jobs report was better than expected, at 428k jobs added (versus 380k expected). Its just too bad Bidenflation is clubbing American workers to economic death.
US labor force participation actually declined in April and struggles to get back to levels pre-Covid and Trump.
Here is the jobs market data for April 2022.
Leisure and hospitality sector still has a way to go after the ill-advised government shutdowns surrounding Covid.
Oddly, there are two job openings for every unemployed person.
Here is the new version of American Gothic.
Here’s some simple Medusa math for you: negative growth + payroll gains = negative productivity. Negative productivity + high labor costs = very high unit labor costs. That’s not a pretty picture for the economy or for companies, and the Q1 figures were even worse than expected — productivity fell by 7.5%, pushing unit labor costs up by 11.6%. Nasty.
In fact, labor productivity fell to the lowest level since 1947 and President Harry Truman.
Of course, Biden’s green energy policies have led to crushing inflation.
So, after Fed Chair Powell (aka, Jay The Revelator) said yesterday that “No Signs US Economy ‘Vulnerable’ To Recession”, we saw the S&P 500 index dive 1.5% and the 10-year Treasury yield break through the 3% barrier.
Biden’s policies are a Medusa-touch on the economy.
The new logo for the Biden Administration.
President Biden (or whoever is pulling his strings) is inflicting a “Medusa Touch” on the US. That is, everything his administration touches turns to stone.
Yesterday, I walked through the rise in energy and food prices under Biden, and it is horrific. The only “disinformation” was generated by the Biden Administration itself claiming that soaring inflation is due to Russia’s invasion of Ukraine. I demonstrated that inflation began with Biden’s anti-fossil fuel executive orders and the Russia invasion only made things worse.
Let’s look at average hourly earnings. Thanks to “progressive” energy policies from Biden, REAL average hourly earnings growth has crashed and burned.
But here is the chart that the Biden Administration touts showing average hourly earnings growth at 5.6% YoY (although I doubt if Jen Psaki would leave out the massive distortion caused by The Federal Reserve’s “Let’s go crazy!” monetary policy.
Another Medusa Touch moment is the reverse repo market. When I wrote about reverse repos before, several people wrote me saying “You don’t understand. This is a temporary problem and will vanish shortly.” However, The Fed’s reverse repo facility has now climbed to an all-time high.
Then we have the disruptive effects of The Federal Reserve deciding for us that mortgage rates are too low and should be higher.
Now look at lithium prices, a key element for electric car batteries. Making the switch from Internal combustion engines to electric motors far more costly.
The list goes on and on.
Suffice it to say, everything the Biden Administration touches turns to stone.
But I wager that the Biden Administration wishes that Hunter Biden’s laptop would turn to stone.
Only an elitist DC bureaucrat like Joe Biden would laugh at inflation that is ruining the lives of millions of Americans.
It’s official! The Biden economy stinks!
US real GDP growth for Q1 slipped into negative territory (-1.4% QoQ) while GDP price growth rose to 8%. So, negative real GDP growth is negative coupled with horrid inflation.
Personal consumption expenditures were below expectations at 2.7%.
Now that the Biden Administration has created an old Soviet Union-style Ministry of Disinformation (called the “Disinformation Governance Board”), I hope that I don’t get censored for reporting that the Biden economy officially stinks.
Good luck to The Federal Reserve in withdrawing the monetary stimulus.
M2 Money stock YoY skyrocketed during the Covid mini-recession, peaking at 21% during February of 2021. The Dallas Fed manufacturing outlook grew to 38.1 in March 2021.
However, as M2 Money growth has slowed 11%, the Dallas Fed manufacturing outlook has plunged to near zero.
So, with the economy faltering (and REAL wage growth in negative territory), will The Fed reinstate its “Low Rider” interest rate policies?
The US Treasury 10Y yield is down -12.5 basis points (never a good sign as investors buy Treasuries in a flight to safety).
Crude oil is down below $100 again and is down -5.61% today on … problems everywhere. ALL metals are down.
Cryptos are getting clobbered today as well.
Between Biden’s “Going green!” policies and The Fed’s allegedly trying to fight inflation, markets are getting trashed.
The Covid epidemic was bad enough with the government shutdowns and deaths. But was even worse is that all the Fed monetary stimulus and Federal government stimulus “relief” led to a reversal of fortune. In that, the share of net worth held by the top 1% grew and the gap between the 1% and bottom 50% hit an all-time high.
Now that the 1% have fed at the Federal trough, The Fed is anticipated to raise rates by 100 basis points at the next two meetings.
Remember, REAL average hourly earnings are getting crushed under Biden and his pro-1% policies.
This is a nightmare for the American middle-class and lower-wage households.
Confounded Interest - Anthony B. Sanders 
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