Biden’s Economy Under A Bad Sign! 38% Of US Companies Anticipate That They Will Conduct Layoffs In 2024 (Office Vacancy Rate Hits 20%!)

The US economy is under a bad sign. And if it wasn’t for The Fed’s money printing, we would have no economy at all!

We experienced a tremendous amount of economic turbulence in 2023, but at least the employment market was relatively stable.

Unfortunately, that period of relative stability appears to be ending.

The pace of layoffs really seemed to pick up steam at the end of 2023, and the outlook for the coming year is not promising at all. In fact, a survey that was just conducted by Resume Builder discovered that a whopping 38 percent of U.S. companies anticipate that they will conduct layoffs in 2024…

38% of companies say they are likely to have layoffs in 2024
52% are likely to implement a hiring freeze in 2024
Half say anticipation of a recession is a reason for potential layoffs
4 in 10 say layoffs are due to replacing workers with artificial intelligence (AI)
3 in 10 companies reducing or eliminating holiday bonuses this year

If you currently have a job that you highly value, try to hold on to it as tightly as you can.

Because the employment market is starting to shift in a major way.

In recent weeks, so many large U.S. companies have been announcing layoffs…

Nike has announced a $2 billion cutback over the next three years, with an uncertain number of job cuts included. Toy giant Hasbro will cut nearly 20% of its workforce in 2024, according to reports from the Wall Street Journal. Music service Spotify announced a third round of layoffs. A recent email from CEO Daniel Ek says the company plans to cut its workforce by nearly 20%. Roku is going to be limiting new hires, and laying off about 10% of its workforce, while Amazon layoffs are effecting its new gaming division (all 180 jobs there are being eliminated). Citi CEO Jane Fraser announced layoffs in September, and sources have told CNBC that the bank could let go of at least 10% of its workforce, across several business lines. Flexport Logistics plans to cut up to 30% of its employees, and financial services company Charles Schwab is cutting back by 5-6% of its workforce, according to reports from Business Insider.

Unfortunately, this is just the tip of the iceberg.

Many more layoffs are on the way.

Meanwhile, retailers continue to close stores at an astounding pace…

With the continued rise of online shopping, along with record inflation, it’s no wonder that retailers are suffering steep financial losses. Unfortunately, this means that companies all across the U.S. are downsizing brick-and-mortar storefronts to make ends meet. In 2023, we’ve seen closures from big-name retailers and local shops alike—and the shutdowns don’t appear to be easing up anytime soon.

More than 3,000 retail locations were shut down in 2023, but that is nothing compared to what is coming…

According to UBS equity analyst Michael Lasser, the U.S. remains over-retailed. Lasser estimated that the U.S. will shed almost 50,000 retail stores by 2028. He cites rising operating costs and a higher proportion of e-commerce sales, causing retailers to look closely at store locations and performance.

Can you imagine what our communities will look like if that projection is even close to accurate?

As economic conditions deteriorate, people are going to get more desperate and the conditions in our streets will become even more chaotic.

You may not have heard about this yet, but earlier this week a giant mob of more than 100 young people savagely looted a bakery in Compton, California…

A mob of over 100 looters purposefully crashed a Kia into a small bakery in Compton, Calif., before they flooded in and ransacked the store during a night of rampage on the streets earlier this week.

The thieves had gathered in the area for an illegal street takeover around 3 a.m. Tuesday before making the mile-long trek to Ruben’s Bakery & Mexican Food.

When they got to the locked store, a white Kia backed into the front doors, clearing an entryway for the crowd of pillagers to get to their loot.

And so it goes. Lawlessness is bad for retail businesses. Not to mention the morale of US citizens.

And then we have the office market. The office space vacancy rate in the US has reached its highest level since 1979. In the fourth quarter of 2023 19.6% of office space in major US cities was not leased according to data collected by Moody’s Analytics.

The increase in remote work since the COVID-19 pandemic has caused a large decline in demand for office space, despite increasing attempts to get Americans back in the office. What’s more, on the demand side the stock of office space in the US is the result of earlier booms in commercial real estate construction. The last boom took place between 2012 and 2017, when demand for commercial real estate loans strengthened. On the supply side, lending standards loosened between 2012 and 2015. This era coincides with a strong rise in the commercial real estate price index, which may have motivated banks to expand lending. Loan standards tightened during the pandemic, then loosened again when the economy rebounded, but have tightened since 2021.

Since the Great Recession, commercial real estate prices have more than doubled in nominal terms, but have moved sideways since 2021. This suggests that prices have reached a plateau. However, in recent years inflation has obscured the movement of commercial real estate prices in real terms, which shows a peak in 2021, but since then there has been a decline, almost to the level during the COVID-19 pandemic. In other words, commercial real estate prices are already failing to keep up with inflation. Is this an indication that the commercial real estate bubble is already deflating? With nominal commercial real estate prices remaining elevated, most of the nominal price correction is likely still to come. Since small banks are heavily exposed to commercial real estate, the enduring problems at small banks and the fragility of commercial real estate could provide a dangerous mix that could explode during a recession. For more details, we refer to The commercial real estate-small bank nexus.

I noticed that The Administration has handed propaganda duties off to John Kirby and relegated KJP to relief pitching away from Peter Doocey!

Hey, at least KJP can speak. Unlike Hillary Clinton, the worst public speaker in the world.

Sloppy Joe! Seven Charts Showing The Serious Problems With Bidenomics (Rising Interest Costs, 15% Lower Purchasing Power, Surging Shipping Costs, Etc)

Joe Biden can be called “Sloppy Joe” because of the economic havoc he has sprung on an unsuspecting middle class. The following seven charts are what keeps me up at night (unlike what keeps multimillionaire Michelle Obama up at nights).

First, US interest payment on Federal debt is rising faster than our bloated military budget. Thanks mostly to The Fed raising rates to fight inflation under Biden.

Second, contrainer shipping rates are soaring thanks to Iran’s interference in the Middle East and Biden’s failed diplomacy with Iran.

Third, food prices are over 20% more expensive under Biden while gasoline prices are over 28% more expensive under Biden. Housing is also more expensive under “Sloppy Joe” as in 33.5% more expensive.

Fourth, Bidenomics is about adding more non-productive government jobs.

Fifth, Department of Homeland Insecurity Secretary Alejandro “Cuba Pete” Mayorkas just admitted that 85% of illegal border crossers are released into the general public. I was stunned by this revelation. I just assumed that Mayorkas waived EVERYONE through. Frankly, I think Mayorkas meant he stopped 85 migrants out of the millions who has crossed the border under Sloppy Joe.

Sixth, Grayscale Bitcoin Trust $GBTC traded close to half a billion on Monday. Which shows the lack of confidence in Biden’s handling of the economy.

Seventh, purchasing power of the US Dollar is down 15% under Sloppy Joe.

While some may view Biden’s policies are planned destruction of the US economy, it could simply be that Biden (who is one of the stupidest people in Washington DC) simply is grossly incompetent and … sloppy.

Bidenomics In The Underworld! Inflation Causing Consumer Credit Debt To Soar After Second Biggest Surge In Credit Card Debt On Record As Food And Gasoline Prices Soar > 20% Under Biden (Credit Card Rates At 22.75%)

Bidenomics has taken the US economy to the underworld. Where households have to run up credit cards to ridiculous levels to cope with inflation under Bidenomics. Under Bidenomics, food prices are up 20.4%, home prices are up 33.5% and regular gasoline prices are up 28.2%. Whip out those credit cards!!!!!

According to the latest monthly consumer credit report from the Fed, in November, consumer credit exploded higher by $24.75BN, blowing away expectations of a “modest” $9BN increase after the surprisingly subdued $5.8BN (upward revised from $.5.1BN) in October and the $4.3BN average of the past 6 months. This was the biggest monthly increase since last November, and was the first $20BN+ print since Jan 2023.

When looking into the details we find something remarkable: while non-revolving credit rose a modest $4.6BN…

… in keeping with the subdued increase in recent months as rates on auto loans make them prohibitive for most consumers while student loans are actually shrinking for the 2nd quarter in a row…

… what was the big shock in today’s data was the blowout surge in revolving credit, which in November exploded by a whopping $19.133BN, a record surge from the $2.9BN in October, and the second biggest monthly increase in credit card debt on record!

This, despite the average interest rate on credit card accounts in Q4 flat at a record high 22.75% for the second quarter in a row.

What is especially surprising about this conirmation that the bulk of holiday spending was on credit is that it takes place after several months of relative return to normaly, when consumers appeared increasingly reluctant to max out their credit cards due to record high rates, and at a time when the personal savings rate in the US has collapsed back near multi-decade lows in recent months.

Well, it now appears that Americans have once again done what they do so well: follow in the footsteps of their government and throw all caution to the wind, charging everything they can (and whatever they can’t put on installment plans which also hit a record late last year) including groceries, on their credit card, and praying for the best… or not even bothering to worry about what comes next.

In addition to massive debt to cope with Bidenomics, we now have Soylent Green.

The Thrill Is Gone? Large Bank Loan Volumes Continue To Shrink Despite Deposit Growth (M2 Money Growth NEGATIVE For All Last Year!)

Yes, BB King was right … about banking. “The Thrill Is Gone” from bank lending,

I observed yesterday that bank credit growth has been negative for the past year. The entire year!

On the bank deposit front, after losing more than a trillion dollars in deposits in 2023 – and seeing usage of The Fed’s emergency funding facility soar to a record high yesterday – total bank deposits rose by $24.2BN in the week-ending 12/27/23 (on a seasonally-adjusted basis) – that is the 4th straight week of deposit inflows…

Source: Bloomberg

On a non-seasonally-adjusted basis, deposits rose almost in line, up $20.3BN (the fifth week of inflows in a row)…

Source: Bloomberg

Interestingly the sizable deposit inflows are occurring alongside sizable money-market fund inflows…

Source: Bloomberg

…now we know where all that reverse repo liquidation cash is going…

Source: Bloomberg

Excluding foreign bank flows, the picture is even rosier with domestic bank deposit inflows of $33.8BN (SA) and $38.7BN (NSA) – the 5th week in a row of NSA inflows…

Source: Bloomberg

While it may surprise some, on an NSA basis, domestic bank deposits are now back above pre-SVB levels…

Source: Bloomberg

Large banks saw $24BN inflows last week and Small Banks $9.4BN (on an SA basis) and for the 5th week in a row both large and small banks saw NSA inflows (+$30BN and +$8.7BN respectively)…

Source: Bloomberg

On the other side of the ledger, loan volumes continued to shrink (despite the deposit growth). Large bank loan volumes fell $8.2BN (the 4th week of falling loan volumes in a row)…

Source: Bloomberg

Which leave us continuing to highlight the fact that there is potential trouble brewing still as the key warning sign continues to flash red (Small Banks’ reserve constraint – blue line), supported above the critical level by The Fed’s emergency funds (for now)…

Source: Bloomberg

As the red line shows, without The Fed’s help, the crisis is back (and large bank cash needs a home – green line – like picking up a small bank from the FDIC).

All of which keep us wondering, are we setting up for another banking crisis in March as:

1) BTFP runs out…

It was only a 12 month temporary program, and it is going to be hard for The Fed to keep it alive.
The BTFP-Fed Arb continues to offer ‘free-money’ (and usage of the BTFP has risen by $32BN since the arb existed), but the spread has narrowed a smidge from a peak near 60bps to 50bps today…

Source: Bloomberg

Which will make it hard for The Fed to defend leaving the facility open after March when its “temporary” nature is supposed to expire.

“In justifying the generous terms of the original program, the Fed cited the ‘unusual and exigent’ market conditions facing the banking industry following last spring’s deposit runs,” Wrightson ICAP economist Lou Crandall wrote in a note to clients.

“It would be difficult to defend a renewal in today’s more normal environment.”

2) RRP drains to zero…

…at which point reserves get yanked which means huge deposits flight.

Source: Bloomberg

Is this the real reason why The Fed ‘pivoted’? It knows what’s coming??

Perhaps we should look at The Fed’s little beige book.

The problem is that The Fed doesn’t know what 7 plus 7 equals. Other than asset bubbles.

Running On Empty? The Free Money Has Run Out (M2 Money Growth Has Been Negative For The Past Year!)

Jackson Browne said it best. The US economy is “running on empty.”

M2 Money growth is negative. And M2 Money growth has been negative for the last year.

The third and largest round of fiscal stimulus was in March of 2021. That’s when Biden’s popularity peaked at 55.1 percent.

Base image from 588 Biden Approval Ratings.

Why Biden’s Approval Rating Is Miserable

Income is rising and so are wages. Even real income is up. But real wages are another matter.

Personal income data from the BEA, hourly wages from the BLS, real hourly earnings and chart by Mish.

Personal Income vs Hourly Wages Notes

DPI means Disposable Personal Income. Disposable means after taxes.
Real DPI means inflation adjusted using the Personal Consumption Expenditures (PCE) deflator. Real DPI is a BEA calculation.
Average hourly earning are for production and nonsupervisory workers.
Real wages are deflated by the Consumer Price Index (CPI) not the PCE.
The BLS does not report a real hourly wage. I used the CPI-W index for production and nonsupervisory workers, produced by the BLS, as the deflator.

Personal Income Definition

The BEA defines personal income as “Income that people get from wages and salaries, Social Security and other government benefits, dividends and interest, business ownership, and other sources.”

Rental income is a part of other sources.

Three Rounds of Fiscal Stimulus

Round 1, March 2020: $1,200 per income tax filer, $500 per child(CARES Act) – Trump
Round 2, December 2020: $600 per income tax filer, $600 per child (Consolidated Appropriations Act, 2021) – Trump
Round 3, March 2021: $1,400 per income tax filer, $1,400 per child (American Rescue Plan Act) – Biden

The three rounds of free money fiscal stimulus (literally a helicopter drop), plus eviction moratoriums put an unprecedented amount of money in people’s hands. In addition, unemployment insurance paid people more to not work than they received working.

The third round of stimulus under Biden was totally unwarranted. However, it is also worth noting that Trump wanted a much bigger second stimulus package than the Republican Congress gave him. Trump is no fiscal hero.

For more discussion, please see Why Biden’s Approval Rating Is Miserable in One Economic Chart

The three stimulus packages, on top of supply chain disruptions, energy disruptions due to the war in Ukraine, and Bidenomics in general, set in motion the biggest wave of inflation in over 30 years.

Biden went from an approval rating of 17.2 percent to a disapproval rating of 17.2 percent.

Peak Free Money

In addition to declining real wages, perhaps Biden’s big problem is the free money has run out.

Biden’s popularity peaked in March of 2021 along with stimulus. Was that a honeymoon impact or peak free money?

[ZH: While not a perfect indicator, the lagged US credit impulse perhaps provides a proxy for US fiscal excess and when overlaid with Biden’s approval rating, it is clear that 2022’s re-acceleration did nothing for people’s faith in him… and it’s only got worse…]

I suspect a bit of each coupled with hope of more free money, especially student loan forgiveness.

Sending free money to Israel and Ukraine does not help perceptions of how Biden is doing. And neither does the border or ridiculous energy regulations that cost people money.

Biden keeps telling people what a great job he has done.

I don’t believe it and most don’t either. And that shows up in the polls no matter what reason you assign.

Can Biden scrounge up some more stimulus? Because the private sector is not doing well under “Open Borders Biden.”

Bidenomics Housing Market: Average US Household Can Afford Only Cheapest 16% Of Listed Homes (WORST Housing Affordability In History!)

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Alarm! US Pending Home Sales Index Sink To New Record Low In November, Down -5% YoY

Alarm! With rampant inflation, The Federal Reserve has raised rates to tame inflation. And with the rate increases, US pending home sales have fallen -5% since last year.

With new home sales plummeting (playing catch-down to reality) and existing home sales bouncing very modestly off record lows (SAAR), pending home sales were expected to rise modestly MoM in November (+0.9%). However, Pending Home Sales missed expectations, unchanged in November (from an upwardly revised October decline of -1.2% MoM).

That left Pending Home Sales Index still down over 5% YoY…

Source: Bloomberg

That leaves the Pending Home Sales Index at a new record low…

Source: Bloomberg

The index of contract signings for existing homes declined in the South, the biggest US housing market, to the lowest level on record.

Pending sales climbed in the other three regions.

The trend in pending home sales appears to tracking mortgage rates (with about a one-month lag), suggesting things may be about to pick up more solidly in the next few months…

Source: Bloomberg

“Although declining mortgage rates did not induce more homebuyers to submit formal contracts in November, it has sparked a surge in interest, as evidenced by a higher number of lockbox openings,” Lawrence Yun, NAR’s chief economist, said in a statement.

“With mortgage rates falling further in December – leading to savings of around $300 per month from the recent cyclical peak in rates – home sales will improve in 2024,” Yun said.

Optimism – from a realtor – whoever would have thought!?

Biden Demands Media To Start Reporting Good Economic News (15.1 Million Jobs Added In 10 Months After Covid Economic Shutdown Ended Under Trump, 15.5 Million Jobs Added Under Biden In 34 Months After $6.25 TRILLION In Additional Public Debt)

C’mon Joe. The media has always reported bad news. Warm and fuzzy doesn’t anger people, but bad news does! And under Bidenomics, there has been a lot of bad news.

President Biden railed against corporate media before he and several family members headed by helicopter to Camp David, the presidential retreat in the mountains of western Maryland.

Before boarding the presidential helicopter, Biden was asked by one reporter: “What’s your outlook on the economy next year?”

The president responded: “All good,” adding, “Take a look. Start reporting it the right way.”

Sounds like Biden watched the Travola/Jackson flick “Basic” where the infamous line was uttered “Tell the story right.”

OK Joey, let’s tell the story right. After the horrendous economic shutdowns of local economics and schools in 2020, 15.1 million jobs were added after the shutdowns ended in just 10 months. Wow, that was simple! But under Biden’s Reign of Economic Error, only 15.5 million jobs were added over the next 34 months.

But Biden’s record on jobs comes at the expense of an additional $6.25 TRILLION IN PUBLIC DEBT.

With $34 trillion and rapdily growing debt and budget deficits, it is hard to find good news about Bidenomics.

The Fed Killed Inflation? US Home Prices Surged For 9th Straight Month In October (+4.8% YoY), Led By Miami And Detroit(?)

So much for “The Fed killed inflation” narrative. Inflation is still alive and well in housing prices. Particularly in cities like Miami and Detroit? Maybe the Lions winning their division for the first time in 30 years helped!

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 4.8% annual change in October, up from a 4% change in the previous month. The 10-City Composite showed an increase of 5.7%, up from a 4.8% increase in the previous month. The 20-City Composite posted a year-over-year increase of 4.9%, up from a 3.9% increase in the previous month. Detroit reported the highest year-over-year gain among the 20 cities with an 8.1% increase in October, followed again by San Diego with a 7.2% increase. Portland fell 0.6% and remained the only city reporting lower prices in October versus a year ago.

The Case-Shiller National Home Price index was up 4.8% in October as The Federal Reserve keeps its monstrous foot on the balance sheet pedal.

Home prices in America’s 20 largest cities rose for the 9th straight month in October (the latest data released by S&P Global Case-Shiller today), up 0.64% MoM (slightly better than the +0.60% MoM expected).

That pushed the YoY rise in prices up 4.87% – the fastest pace since Dec ’22…

Source: Bloomberg

…but as the chart shows the MoM gains are slowing rapidly.

“U.S. home prices accelerated at their fastest annual rate of the year in October”, says Brian D. Luke, Head of Commodities, Real & Digital assets at S&P DJI.

“We are experiencing broad based home price appreciation across the country, with steady gains seen in nineteen of twenty cities.”

Miami and Detroit saw the biggest MoM gains while the West Coast dominated the MoM price declines with San Francisco, Portland, and Seattle worst.

But, judging by the resumption of the rise of mortgage rates since the Case-Shiller data was created, we would expect prices to also resume their decline…

Source: Bloomberg

So prices are up, mortgage rates are actually falling again now (lagged)… so The Fed is re-blowing the same bubble?

Well, at least Detroit is near the top! Playing in Rocket Mortgage stadium.

The US Misery Index, Christmas Edition! Americans Experienced 20% Higher Food Prices, 19% Higher Rents And 61% Higher Gasoline Prices Under Bidenomics, Yet Misery Index Is Almost Back To “Normal”

Have a holly, jolly Christmas! Despite it being far more expensive under Bidenomics.

The ‘Misery Index’ is near its lowest level since pre-COVID, but Misery Index masks the true horrors of Bidennomics: 20% higher food prices, 19% higher rents and 61% higher gasoline prices under Bidenomics.

Americans should be in a better financial position heading into the holidays, according to a famous formula developed in the 1960s under President Lyndon Johnson.

The sum of U.S. unemployment and inflation – known as the “misery index” – fell to 6.8% in November from 7.5% the previous month. That’s the lowest since the summer and fast approaching pre-Covid levels.

The misery index is calculated by adding up the current unemployment rate (3.7%) and the inflation rate (3.1%). The formula provides a simple way to gauge whether the well-being of Americans is improving or not.

Misery peaked in April 2020 when the index spiked to 15%, the highest since 1982. Conditions have improved since the early onset of Covid, but it hasn’t been smooth sailing.

After falling back to 7.7% in January 2021, the index re-accelerated over the next two years as inflation surged. The misery index was 12.5% in June 2022—the same month that annual inflation hit 9.1%.

The unemployment component of the index has been faring well since Covid emergency measures were lifted back in 2021. The unemployment rate has remained below 4% for nearly two years—even as the economy begins to slow.

But economists warn that the misery index doesn’t offer a complete picture of how the average American is doing.

You can tell just by asking them how they feel about the economy and personal finances.

How do Americans really feel?

Economist Greg Ip, who heads economic commentary at The Wall Street Journal, compared the misery index to the University of Michigan’s consumer sentiment index—one of the most closely-watched consumer surveys.

“Based on historic correlations, sentiment has been more depressed this year than you would expect given the level of economic misery,” Ip wrote, arguing that consumers are more pessimistic than the misery index would suggest.

A deeper dive into the sentiment data reveals that Americans are still frustrated about inflation and the impact of high interest rates on their finances. And while the consumer sentiment index rose in December—breaking a four-month skid—some economists attributed it to a temporary holiday boost ahead of Christmas.

“Consumer spirits are perking up for the holiday season which is a sign Christmas is still coming this year,” said Christopher Rupkey, chief economist at FWDBONDS, a New York-based financial research company.

A separate sentiment survey from LSEG/Ipsos paints an even less enthusiastic picture of the average consumer.

The December primary consumer sentiment index—which measures Americans’ attitudes toward jobs, investments, the economy, and personal finances—declined from November and was only up slightly compared to 12 months earlier.

According to the survey, attitudes toward the current situation, investments, and jobs “showed significant declines this month.”

The impact of cumulative inflation

As Creditnews Research reported in a recent study, Americans aren’t celebrating the slowdown in inflation because they’re still reeling from the cumulative price increases of the past three years.

While inflation has fallen to 3.1%, consumer prices have increased by a cumulative 19% since the start of 2020. Food prices are up a whopping 25% over that period.

Americans spent the better part of two years—April 2021 to January 2023—seeing inflation grow faster than their paychecks. That trend reversed in February of this year.

But even with stronger purchasing power this year, the vast majority of Americans (92%) said they reduced their spending in the six months through September, according to a Morning Consult survey for CNBC.

A majority of respondents across all wage brackets said current economic conditions negatively impacted their finances.

So, while the Misery Index indicates that the inflation RATE has slowed, it masks the fact that Americans are far worse off under Bidenomics.