The Market Composite Index, a measure of mortgage loan application volume, decreased 5.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 6.3 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 10 percent lower than the same week one year ago. And -40% under Biden.
The Refinance Index decreased 14 percent from the previous week and was 12 percent higher than the same week one year ago.
It is still an unfavorable time to buy a home!
From the film “Ronin” that sums up actor Robert DeNiro in one sentence.
Spence (Sean Bean): “You know, you think too hard.” Sam (Robert DeNiro): “Nobody ever told me that before.”
How would DeNiro consider the 40% drop in mortgage purchase demand under Biden?
.. and a huge miss to estimates of 240K… in fact, as shown below, this was the biggest miss since Dec 2021
The weakness was pervasive, and while payrolls were a huge miss, the unemployment rate also rose more than expected, from 3.8% to 3.9%, vs estimates of an unchanged print.
Wages also eased back with average hourly earnings rising 0.2% MoM, below the expected 0.3% increase and down from last month’s 0.3% print. On an annual basis, earnings rose 3.9%, down from 4.1% last month and below the 4.0% estimate.
On the flip-side of that – and echoing the market-worrying ECI data earlier this week – Unit Labor Costs soared 4.7% in Q1 (well above the 4.0% expected and the 0.4% rise in Q4)…
Source: Bloomberg
So wage inflation is confirmed – rising at the fastest pace in a year – as all the gains we have been told to expect from AI just aren’t there in the data.
While quarterly productivity figures are quite volatile, a sustained slowdown represents another hurdle for the Federal Reserve’s inflation fight. With interest rates expected to stay at a two-decade high for awhile longer, business investment in equipment will likely continue to be a weak factor in overall economic growth.
Today’s data corroborates other data that showed gross domestic product cooled in the first quarter while employment costs rose by the most in a year. As a result, inflation is proving stubborn, supporting the Fed’s pivot to a more hawkish stance that will keep interest rates higher for longer than anticipated.
Of course, Fed Chair Powell told us yesterday that he “doesn’t see the stag or the flation” in US data…
Perhaps Cazadores tequila should be the official drink of the Biden Administration. It has the “stag” on the label and it is produced in Mexico … who Biden can’t (or won’t) stand up to.
New Orders also remain negative (but did improve) and prices continue to rise (though at a slower pace). Labor market measures suggested flat employment and slightly shorter workweeks (hours worked index remained negative for a seventh month in a row) this month.
However, wit that said, wage pressure picked up dramatically this week to a seven-month high…
Source: Bloomberg
However, as always, we glean the most informative perspective from the respondents completed surveys where the pessimism shines through…
The business and political environment is terrible.
Business has not been this slow since COVID, and I’m worried.
Consumer confidence for consumer goods has noticeably worsened.
Customer orders have dropped. The indication is the economy is hurting spending in our area specifically. Customer uncertainty is worsening.
I keep thinking we’ll hit bottom and either level out or turn up, but we keep pushing those hopes out a month, and another month, and another.
There has been a decrease in new orders for three weeks now. Currently, we think this will come around, but we get more concerned as time goes on.
Industrial manufacturing is showing signs of positivity due to the possibility of an interest rate decrease. Please do it. Manufacturing is really hurting.
High prices remain problem for many businesses:
Inflationary pressures on raw materials and construction costs are driving up the cost of public projects. This is causing states to delay or scramble for funding for projects that have long lead times.
Business is generally good, but we’re starting to see more customer resistance to prices. Our costs have increased dramatically over the last two years, and we have customers asking to hold prices to last year’s level, which we just can’t do. We continue to make capital investments to improve productivity and reduce unit labor cost.
And finally, many are fearful of another four years of Bidenomics:
Political instability and politicization have hampered growth.We are entering stagflation.
Fewer governmental regulations would lower our cost of doing business. An example is the 332 report, which we must fill out for the U.S. government; it has no value for us, just expense.
Business is extremely slow, and we see no signs of improvement.We think it will stay slow until after the presidential election, after which, we will either have four more years of slow business or an improving economy.
Joe Biden could barely eat his dinner at the White House Correspondents’ Dinner. And we think he is calling the shots in The White House?? Oh well. Perhaps it is Treasury Secretary Janet Yellen or Klaus Schwab of the World Economic Forum.
In any case, Treasury bond issuance in 2024 is expected to hit $1.9 TRILLION. Surpassing levels seen even during the 2008 financial crisis.
And with inflation, the US personal saving rate is near the lowest level since Obama (2010).
And with the core inflation rate still higher than anytime since 2010, households are paying more for … everything depleting their savings.
With Biden and Congress spending like drunken sailors on shore leave, and no end in sight, this will eventually explode. Ukraine, foreign aid, no border security, virtually no money for Maui fire, E. Palestine Ohio is still a wreck, etc. They always have money for someone else. And if Trump is elected in November, watch CNN and MSNBC and Biden/Congress blame Trump.
Commodities are a way to protect yourself against the government and their insane spending and debt.
My point? Gold keeps rising!
The leading foreign holder of US debt is Japan, which is following the insane path as the US and resembles a banana republic.
Former Fed chair under Obama and current Treasury Secretary Janet Yellen under Biden is Doctor Wonderful. NOT!!
I don’t know what Biden thinks is so funny. Maybe it is because House “Majority” Leader Mike Johnson (RINO-LA) gave Biden and Schumer everything they wanted (Ukraine, Israel funding but nada for security our borders). Life is good when you are stupid and mean-spiritied like Joe Biden!
Biden is so vain: capped teeth, hair plugs, constant tan, face lifts, etc.
Today’s economic news highlights “Government Power.” Unproductive government jobs saw wages rise 8.5% YoY while productive private sector jobs saw wages rise by only 5.5% YoY. This is Bidenomics!!!
…the doves’ last chance for sooner than later rate-cuts is today’s Core PCE Deflator – often described as The Fed’s favorite inflation signal. Last month saw an uptick in the headline deflator and following yesterday’s core PCE rise for Q1, all eyes are on the March data released this morning.
However, both the headline and core PCE Deflator data printed hotter than expected (+2.7% vs +2.6% exp vs +2.5% prior and +2.8% vs +2.7% exp vs +2.8% prior respectively)…
Source: Bloomberg
The silver lining is that this hot PCE print is ‘dovish’ relative to the GDP-based data we saw yesterday, with whisper numbers of +0.4 to +0.5% MoM (vs the +0.3% print).
But still – it’s not good for the doves.
As WSJ Fed Whisperer Nick Timiraos notes, the 3-Month annualized core PCE jumped to 4.4%…
The Service sector led the MoM and YoY acceleration in headline PCE…
Source: Bloomberg
And for Core PCE, it was Services prices too that drove the acceleration…
Source: Bloomberg
The so-called SuperCore – Services inflation ex-Shelter – rose once again, and was revised higher…
Source: Bloomberg
Stripping it back even further, Transportation Services and ‘Other Services’ were the biggest gainers in SuperCore…
Source: Bloomberg
Income and Spending both rose again on a MoM basis with spending outpacing income (again). The 0.8% MoM rise in spending was the highest since Jan 2023…
Source: Bloomberg
Spending is accelerating fast relative to incomes (on a YoY basis) – and remember this is all nominal…
Source: Bloomberg
On the income side, government and private wage growth accelerated:
Govt wages rose to 8.5% YoY, from 8.3%, the highest Dec 22
Private wages rose to 5.5% YoY, from 5.4%, highest since Dec 22 as well
Source: Bloomberg
Which meant the personal savings rate plunged to 3.2% from 3.6% – its lowest since Nov 2022…
And the soaring credit card balance explains how people are getting by…
Source: Bloomberg
And all this amid the fourth straight month of government handouts…
Source: Bloomberg
Finally, while the markets are exuberant at the survey-based disinflation, we do note that it’s not all sunshine and unicorns. The vast majority of the reduction in inflation has been ‘cyclical’…
Source: Bloomberg
Acyclical Core PCE inflation remains extremely high, although it has fallen from its highs.
Is The (apolitical) Fed going to be able to cut at all this year like Joe Biden said they would?
The Federal Reserve is playing the song “Don’t rock the boat” ahead of the Presidential election. Despite the horrible economic news.
1) 4 months of hotter inflation (like today’s stagflationary GDP report)
2) Nearly 1.5 million full-time jobs decline with 1.9 part-time jobs created over a year
3) $2 trillion annual deficits
Leading traders to price in 1 rate cut in December 2024. AFTER THE PRESIDENTIAL ELECTION!
Under Biden, home prices are up 32.5% and conforming 30Y mortgage rates are UP 160%.
One of my colleagues at George Mason University in finance (an economics PhD) constantly quoted Lenin’s famous “You have to break a few eggs to make an omelet.” But why is it always OUR eggs that have to be cracked, never the wealthy elite.
COVID was a gift to Biden. The furious Federal spending of Q2 2020 through Q1 2021 helped keep GDP growth above recession levels.
Ignore Biden’s demented rants/lies about cutting the debt in half. Biden has claimed he cut the $34+ trillion national debt by $7 billion, $1.4 trillion, $1.7 billion, $1.7 trillion, and “in half,” depending on the day he rants. He did no such thing. He is confused and is talking about the BUDGET DEFICIT (don’t look to Snopes to fact check “Trucker Joe”, they really only fact check Trump).
Not surprisingly, the Federal deficit spiked with the Covid lockdowns. But when the economy reopened, the budget deficit shrunk because … the economy was open and Federal tax receipts soared. But we are back to rising deficits again.
Today, Q1 GDP numbers were released and it looks great. Real GDP year-over-year was 2.97% while Federal government expenditures YoY were 4.21%. But the US is still processing the tidal wave of COVID-related spending out of Washington DC (red line). The YoY growth in Federal spending was 86.4% in Q2 2020, 48.9% in Q3 2020, 22.4% in Q4 2020, and 67.8% in Q1 2021. Like The Titanic trying to avoid the iceberg, it takes a while for massive Federal spending to work itself through the economic system.
On a QoQ basis, US GDP increased by only 1.60%. Here are the contributions to GDP.
GDP QoQ was up 1.6% while Core PCE Price Index rose 3.7%. Yikes!
Are we entering Stagflation with the worst GDP print in 2 years as prices soar. As COVID stimulus seems to be wearing out.
Manufacturer’s Durable Goods New Orders growth peaked in April 2021, thanks in part to M2 Money Growth peaking in February 2021. And its been all downhill since then.
This is the 8th downward revision of durable goods orders in the last year…
Source: Bloomberg
Under the hood, defense and non-defense capital goods orders rose with non-defense aircraft orders surging over 30% MoM…
Source: Bloomberg
But… it looks like the AI bubble just burst as Computer & related Products orders plunged 3.9% MoM – the biggest drop since COVID lockdowns…
Source: Bloomberg
Finally, and more problematically, core capital goods shipments – a figure that is used to help calculate equipment investment in the government’s gross domestic product report – saw only a small 0.2% MoM rise, which left core shipments down 1.2% YoY – the biggest YoY drop since the COVID lockdowns…
Source: Bloomberg
Now that Biden is considering a NATIONAL CLIMATE EMERGENCY granting him 130 War-like powers, I shudder to think for much green spending he will initiate.
Biden: “How many times does Trump have to prove we can’t be trusted?”
Confounded Interest - Anthony B. Sanders 
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