White House Warns Latest Jobs Data Will Be Ugly Due to Omicron (As Atlanta Fed GDPNow Forecast Falls To 0.1%)

Biden spokesperson Jen Paski and the White House always have an excuse for bad news. Perhaps they watched John Belushi in “The Blues Brothers” for help with “It wasn’t my fault!” excuses.

(Bloomberg) — The White House is lowering expectations for this week’s U.S. jobs report, saying that brief absences of workers due to omicron could overstate the number of unemployed people for last month.

Several White House officials have teed up Friday’s report with warnings, saying that the week when surveys were taken for the January payroll numbers was the height of illness absences in the aftermath of the holidays.

Brian Deese, the director of President Joe Biden’s National Economic Council, said the numbers could be “confusing” as Covid illnesses are recorded as job losses.

“We expect that that will have an impact on the numbers,” Deese told MSNBC on Tuesday. “We never put too much weight on any individual month; this will particularly be true in this month, because of the likely effect of the short-term absences from omicron.”

Biden has repeatedly touted employment data as an indicator of a robust economic rebound, and highlighted the tumbling jobless rate to blunt criticisms about overheated inflation. Friday’s report may still show historically low unemployment, which is based on a separate survey from the one for payrolls and counts temporary, unpaid sick leave differently.

Labor Secretary Marty Walsh and White House Press Secretary Jen Psaki have also delivered warnings that the official January jobs gain may be poor.

If a worker was out “and did not receive paid leave, they are counted as having lost their job,” Psaki said Monday. Nearly 9 million people missed work due to illness in January, when the data were being collected, she said.

“So we just wanted to kind of prepare, you know, people to understand how the data is taken,” she said. “As a result, the month’s jobs report may show job losses in large part because workers were out sick from omicron.”

Yes, a record number of Americans quit their jobs in 2021. But how many were Omicron-related dropouts versus frustrated Americans is unknown. You can guess which side Biden/Psaki will take.

Economists expect nonfarm payrolls to rise by 150,000 for January — the weakest reading since the end of 2020. The U.S. unemployment rate is seen remaining unchanged, at 3.9%, according to the median estimate of forecasts compiled by Bloomberg.

So, are Dreese and Psaki saying that US GDP will roar back … from 0.1% … if Omicron fades away? And that all the fiscal and monetary stimulypto are going to cease creating problems??

Despite the fear of Omicron in the upcoming jobs report, there are still 5 rate hikes on the horizon to combat inflation … created by the Biden Administration and Federal Reserve as they combated COVID with massive fiscal and monetary stimulus.

But don’t worry, the Biden Administration ordered rapid test kits from China … and they have arrived!

The Grapes Of Wrath! Misery Index (Inflation + Unemployment) Remains Elevated Post COVID, Renter Misery Index Skyrockets (REAL Wage Growth Remains NEGATIVE)

The misery index is traditionally inflation rate plus U-3 unemployment rate. The RENTER misery index is the Zillow Rent Index YoY + U-3 unemployment rate to demonstrate the hardship of renters because of soaring home prices.

Notice that because of rising home prices, the Renter misery index has overwhelmed the improvement in unemployment.

As I typically do, I will now include The Fed’s balance sheet (as a proxy for Fed stimulus and supporting Federal government expenditures). Yes, you can see that The Fed and Federal government are responsible for our modern day “Grapes of Wrath.”

If we look at the TRADITIONAL misery index, we see that misery remains above 10 (it was below 6 prior to the COVID outbreak in early 2020).

Remember that the REAL average hourly earning growth of Americans is NEGATIVE. Gains in wage growth more than offset by inflation.

I won’t even mention how inflation is crushing retirees since Social Security and pension plans rarely adequately compensate retirees for inflation.

Now for the really bad news. 81-year old senior, House Speaker Nancy Pelosi, has announced that she is running for Congress yet again from leftist-stronghold San Francisco. Although she has an expensive home in Georgetown and a beautiful vineyard in Napa Valley. Pelosi’s vineyard only sells grapes to other wine makers. Not bad for a career civil servant!

I really wanted Pelosi to produce a wine called “The Grapes of Wrath” in honor of her insider trading and massive wasteful spending of taxpayer money that has helped generate inflation, rampant government debt growth and hurting retirees and hourly workers.

US Home Price Growth “Slows” To 18.81% YoY With Phoenix AZ At 32.2% (Simply Unaffordable!)

Happenings two months ago. The Case-Shiller home price index is out for … November 2021.

The Case-Shiller National home price index “slowed” to 18.81% YoY in November as The Fed continues its monetary stimulypto. Notice that The Fed is easing even when there is limited inventory available. Result? Hideous home price inflation.

Which metro area is growing the fastest, making housing even more unaffordable for renters? Phoenix AZ is growing at a 32.2% YoY clip while Washington DC is the slowest growing metro area at 11.1% YoY. The second faster growing metro area in Tampa FLA.

Phoenix AZ is growing at the fastest rate in the nation as The Fed still has its monetary stimulus at FULL SPEED AHEAD.

Let’s see if Fed Chair Powell decides to raise rates and let the Fed’s balance sheet run-off.

Bad 7 Days For Cryptos And NASDAQ As Fed Quantitative Tightening Looms (Is Jerry Gergich Running The US Economy?)

It has been a tough 7 days for Bitcoin, Ethereum and the NASDAQ composite index as The Fed is anticipated to raise their target rate AND engage in quantitative tightening.

While the NASDAQ composite index has been deflating over past 7 days, Bitcoin and Ethereum plunged in recent days. What is going on??

The Russell 2000 value (white) and growth (green) indices are both deflating.

With regards to anticipated Fed rate increases, Fed Funds Futures are signaling almost 4 rate hikes in 2022 and 4 by the February 2023 meeting.

Then we have the massive increase in The Fed’s balance sheet after COVID struck in early 2020. Now, with the S&P 500 skyrocketing (until 7 days ago), why is The Fed buying sooooo much Agency MBS??

With the supply chain broken thanks to Congress/Biden/The Fed pouring trillions into an economic system that was working … we now have an economic system that is broken. Clogged ports, meat-packing labor shortages, etc. It’s as if Park’s and Recreation’s Jerry Gergich is running the economy as opposed to Ron Swanson.

US Multifamily Housing Starts Jump 13.7% In December, 1-unit Starts Fall -2.25% As All Eyes On Fed

Now we have people like JPMC’s Jaime Dimon speculating about 7 rates increases in 2022 and other bankers speculating about a faster than expected withdrawal of the The Fed’s monetary stimulus in the form of asset purchases, we have to anticipate what the result will be in markets.

Like what will happen to housing starts if and when the stimulus is removed.

Today, we saw 1-unit housing starts fall 2.25% from November to December, but multifamily (5+ unit) starts rise 13.7%.

Of course, home price growth of near 20% YoY combined with declining REAL hourly earnings points to more multifamily housing and less single-family detached housing.

Here is the rest of the story, as Paul Harvey used to say. 5+ unit permits are up 19.9% in December while 1-unit permits are up 1.99%.

The Empire Strikes Out! Empire Manufacturing Index Slumps To Negative Territory As Inflation Roars (WTI Crude Futures UP 79% Since Jan 1st)

Well, Omicron is hitting hard. Not the virus itself, but governments’ reaction to the virus. The NY Empire Manufacturing Index has tanked into negative territory.

New orders are down 5%.

On the energy front, West Texas Intermediate Crude Oil futures are up 79% since January 1, 2021 while regular gasoline prices are up “only” 50% over the same period.

How about inflation and the Treasury yield curve? Inflation has soared to 40-year highs under Biden as energy prices (WTI Crude Futures) have soared 79%.

Container ships are still backed-up at LA and Long Beach ports. I thought Mayor Pete was supposed to fix the port congestion problem!

Maybe they should play the Darth Vader theme when Biden goes to the podium to stammer.

Simply Unaffordable! Fannie Mae Multifamily Financing Grew 23% … While Home Prices Grew 19.1% And Real Hourly Earnings Fell -2.36% (Rising Mortgage Rates Make The Affordability Problem WORSE)

Mortgage Orb has the tantalizing headline: “Fannie Mae’s Financing for Multifamily Affordable Housing Grew Over 23%.” At first, this sounds amazing … until you realize how simply unaffordable housing is much of urban/suburban America.

If you look at the following chart, you can see multifamily (5+ unit) starts remain elevated (pink box) which is not surprising given that home prices at growing at 19.1% YoY nationally (orange circle) and REAL hourly earnings have declined (yellow triangle) thanks to reemergence of inflation after 40 years.

Then we have the humming dragon, rising mortgage rates, that will reduce housing affordability even further.

Home ownership has become simply unaffordable much like steaks. Doctor, doctor (Yellen), we got a bad case of unaffordable home ownership.

UMich Housing Sentiment “Rises” To 83 As Inflation Hurting Retail Sales (Industrial Production Declines -0.3%)

That Bidenflation is really hurting Americans.

Start with the UMich Buying Conditions for Houses. It “rose” to 83. Unfortunately, 100 is the baseline and any number below 100 is bad. The reason? The massive increase in US home prices since 2020.

But retail sales are hurting thanks to higher prices. Retail sales less food services and auto are DOWN 3.1% MoM.

Meanwhile, US industrial production fell to -0.3%.

Mortgage Rates in the U.S. Soar to the Highest Since March 2020 (3.45% Nominal Rate, -3.59% REAL Rate)

Mortgage rates in the U.S. rose for a third straight week, reaching the highest point in almost two years.

The average for a 30-year loan was 3.45%, up from 3.22% last week and the highest since March 2020, Freddie Mac said in a statement Thursday.

Rates tracked a jump in yields for 10-year Treasuries, which climbed to levels not seen since early 2020, before the pandemic roiled financial markets. Signs point to borrowing costs rising further as the job market improves and the Federal Reserve steps up its efforts to tame inflation.

That would increase the burden on homebuyers who are already stretching to afford a purchase. Rates for 30-year mortgages tumbled to a record low of 2.65% a little more than a year ago.

Cheap loans have helped fuel a housing rally that’s still running hot even as home prices soar out of reach for many Americans.

But wait! The REAL 30-year mortgage rate (nominal 30-year rate – CPI YoY) is -3.59%.

Lael Brainard, Biden’s nominee to be Vice Chairman of The Federal Reserve, has been one of the “inflation is transitory” crowd. US Senator Toomey is questioning Brainard in today’s hearing. From Toomey’s opening statement:

Last year, Governor Brainard repeatedly insisted that inflation was transitory. We have now had nine consecutive months where inflation has been more than two times the Fed’s 2% target. That makes it pretty clear that inflation is not transitory. Yesterday’s CPI release of 7.0%—the highest in 40 years—confirms that.

Inflation is a tax that is eroding Americans’ paychecks every day. Even though wages are growing, inflation is growing faster and causing workers to fall further and further behind.

At least the REAL mortgage rate is negative!

I hope Senator Toomey shows Brainard this chart of “transitory” negative wage growth.

Negative wage growth and negative REAL mortgage rates. What a total mess!

Inflation Nation! US PPI Final Demand Soaring At 9.7% YoY As CPI Soared 7.0% YoY (Energy Prices Lessened In Q4 But Are Surging Again In 2022)

Yesterday’s inflation report was the worst in 40 years. But at least today’s Producer Price Index Final Demand is down slightly from November. But PPI Final Demand YoY is still roaring at 9.7%.

The producer price index for final demand increased 0.2% from the prior month and 9.7% from a year earlier, Labor Department data showed Thursday. The annual advance was the largest in figures back to 2010.

Excluding the volatile food and energy components, the PPI climbed 0.5% in December and was up 8.3% from a year earlier.

Too much Federal government spending, too much Fed monetary stimulus, Omicron helping created labor shortages, etc. But the real killer has been ENERGY prices. Note that natural gas, gasoline and WTI crude oil were falling in November/December helping to slow PPI growth by a smidge. BUT energy prices are skyrocketing in January. So … look for higher PPI in January.

Here is the painting by Thomas Hart Benton that drove “Brokeback Biden” to try to destroy fossil fuel production. Or at least this is Washington DC’s idea of what Oklahoma and Texas are like.