It’s Hard! US Manufacturing PMI Collapsed In June

It’s hard. What is? US hard economic data!

With ‘hard’ data collapsing in the last month, ‘soft’ survey data from ISM and S&P Global this morning was ‘mixed’ as usual:

S&P Global US Manufacturing PMI rose from 51.3 in May to 51.6 for the final June print (down very modestly from the 51.7 flash print).
ISM US Manufacturing PMI dropped from 48.7 to 48.5 in June (well below the 49.1 expected)

Source: Bloomberg

Need more confusion…

S&P Global noted that higher supplier charges were signaled in June. Alongside rising labor costs, this resulted in a further marked increase in input prices. But, ISM saw Prices Paid plunge from 57.0 to 52.1, well below the 55.8 expected…

Source: Bloomberg

New orders rebounded in June but employment dropped back into contraction. On the bright side, Orders/Inventories (typically a leading indicator), ticked up in June…

Source: Bloomberg

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said:

“The S&P Global PMI survey shows US manufacturers struggling to achieve strong production growth in June, hamstrung by weak demand from domestic and export markets alike. Although the PMI has now been in positive territory in five of the first six months of 2024, up from just one positive month in 2023, growth momentum remains frustratingly weak.

“Factories have been hit over the past two years by demand switching post-pandemic from goods to services, while at the same time household and business spending power has been diminished by higher prices and concerns over higher-for-longer interest rates. These headwinds persisted into June, accompanied by heightened uncertainty about the economic outlook as the presidential election draws closer.“

Finally, despite the uptick, Williamson admits the truth under the surface of the survey:

“Business confidence has consequently fallen to the lowest for 19 months, suggesting the manufacturing sector is bracing itself for further tough times in the coming months.”

However, we are sure business owners everywhere were reassured by the commander-in-chief’s commanding performance in the debate last week. /sarc

Getting Out Of Dodge! May’s Active Housing Inventory Explodes +27.5% YoY (Denver UP 75.2% YoY)

Gimme two steps to sell my house. Are people getting out of dodge?? Calfornia Gpvernor “Greasy Gavin” Newsom sold his Sacramento home and moved to Marin County for better schools. Sacrramento active housing inventory is up 65.6% YoY.

Active housing inventory in May is up 27.5% YoY nationally, with Denver leading at 75.2% YoY. I highlight Columbus Ohio at +32.9% since that is where I live.

While the government may be able to fake BLS and CPI data to gloss over the fact that 5.5% rates have already likely driven the nation into a deep recession, independent data on the housing market is showing a decades-long shortage in inventory starting to rebound.

A new report from Construction Coverage has revealed where the largest increases in real estate inventory in the U.S. are taking place.

The report notes that the current housing shortage—which is now estimated to be between four million and seven million homes—can trace its beginnings to long before the COVID-19 pandemic. In the 10 years following the Great Recession, the United States constructed fewer new homes than in any other decade since the 1960s.

They write that the lack of housing affects certain areas more severely than others. Researchers ranked locations based on the percentage change in the average monthly housing inventory—the total number of active listings plus pending sales at the end of the month—between Q1 2023 and Q1 2024.

Data from a national level showed that U.S. housing inventory decreased from more than two million in 2012 to a low of approximately 630,000 at the start of 2022.

Over the same period, months’ supply—a measure of how long it would take existing inventory to sell if no new homes came on the market—plummeted from a national high of 7.5 months to a historic low of 1.1 months, the report adds.

It also noted that inventory has rebounded slightly since early 2022: throughout the first quarter of 2024, the national inventory hovered around 970,000 homes for sale, marking a 4.0% year-over-year increase.

Despite this uptick, existing inventory would sustain the current sales pace for just 2.9 months—a marginal increase from the 2.8 months’ supply recorded last year.

The report broke down trends by cities and states, finding that as of the first quarter of 2024, states with the lowest levels of supply are concentrated in and around the Midwest (such as Kansas with 1.5 months of supply) and the Northeast (including Rhode Island with 1.8 months of supply).

However, Washington also stands out for having some of the lowest levels of available housing nationally, with just 1.9 months of supply.

In contrast, several states in the South, led by Florida (5.2 months of supply), along with Hawaii (5.2 months) and Montana (5.1 months), present notably more favorable conditions for buyers.

Among the nation’s largest cities, Denver, El Paso, and Dallas recorded the largest year-over-year increases in housing inventory. At the opposite end of the spectrum, Las Vegas, Raleigh, and Chicago recorded the biggest declines.

The data is hardly a 2008-style collapse, but that doesn’t mean it isn’t noteworthy.

While the ‘turning of the tide’ still remains muted, the housing market is so large it rarely corrects swiftly. It’s important to notice, however, that rising inventory ticking higher – combined with mortgage rates now over 7% – could easily be telegraphing a correction in prices heading into 2025.

Wasting Away Again In Bidenville! US New Home Sales Crashed In May (Near 7% Mortgage Rates Aren’t Helping)

It seems everything Biden touches turns to stone. This used to be called “The Medusa Touch” but I changing that to “The Biden Touch.” And that includes housing. Or we can simply sing along with the late Jimmy Buffet and “Wasting aways again in Bidenville.”

And near 7% mortgage rates aren’t helping (as The Fed continues its fight against Bidenflation).

US new home sales were expected to dip 0.2% MoM in May… but they didn’t..

New home sales crashed 11.3% MoM (after April’s 4.7% drop was revised up to a 2.0% MoM rise). That is the biggest MoM drop since Sept 2022…

Source: Bloomberg

This is the biggest YoY drop since Feb 2023, taking the SAAR down to the same level as it was in 2016…

Source: Bloomberg

Median new home price fell 0.9% YoY to $417,400 – lowest since April 2023 – (with the average selling price at $520,000) with a big downward revision for April from $433k to $417k!…

Source: Bloomberg

For the first time since June 2021, median existing home prices are above median new home prices…

Source: Bloomberg

As BofA warned yesterday:

“The US housing market is stuck, and we are not convinced it will become unstuck anytime soon. After a surge in housing activity during the pandemic, it has since retreated and stabilized. We view the forces that have reduced affordability, created a lock-in effect for homeowners, and limited housing activity will remain in place through our forecast horizon “

At the same time, the supply of available homes increased to 481,000, still the highest since 2008.

Source: Bloomberg

New home sales are catching down to the reality of mortgage rates continuing to hold above 7%…

Source: Bloomberg

It seems homebuilders finally gave up filling that gap in anticipation of an imminent Fed rate-cut to save the world.

Will Biden double down on his failed policies tonight in the CNN Presidential debate? Perhaps Joe can sing “Double Shot of Bidenomics.”

Dallas After Midnight! “Poor National Leadership” As Stagflation ‘Erodes Business Confidence’

Dallas after midnight! Especially with a broken Congress and President.

Philly Fed Services jumped into expansion (to two year highs?), Chicago Fed National Activity Index surged, Case-Shiller home prices hit a new record high but appreciation slowed, Conference Board Expectations hovers near decade lows, Richmond Fed Manufacturing tumbled, Dallas Fed Services improved but remains in contraction…

But, below the hood of the last one we see some more interesting dynamics evolving as revenues and employment decline while prices re-accelerate…

Source: Bloomberg

This is the 25th straight month of contraction (sub-zero) for the Dallas Fed Services index and judging by the respondents’ comments, there is a clear place to point the finger of blame:

Poor national leadership and lack of confidence have eroded the business environment.

The Federal Reserve’s recent announcement of no rate cuts in the near future is concerning regarding the immediate and lag effect it could have on the local economy. We have received direct feedback from many of our clients in various industries, and they are increasingly concerned. They are freezing hires and spending, with many reducing spending. The primary reason is the economic stagnation locally and nationally affecting their businesses.
People are adjusting to new economic realities. Few are expecting salary increases and are instead making lifestyle adjustments to deal with higher living costs. Reality is also setting in for the apartment owners we serve. They understand rents aren’t going up and interest rates aren’t coming down. As rate caps expire and loans mature, lenders are having to adapt as well. Ultimately, a lot of private equity (much in the form of individual retirement savings put into syndications) is getting wiped out.
We need a rate cut before we will see any revenue improvement from home sales.
As elections draw near, the political environment worsens, creating more uncertainty in our business.
We feel inflation and fear of more inflation plus the rise in cost of living are holding consumers back. Hopefully we will adapt to the new realities soon.

Customers are concerned about the election, so they are holding off on large purchases.

The lack of building activity is shutting down the appliance industry.
Affordability has become an ever-increasing problem for new car dealers. The price increases of new cars combined with higher interest rates have put new cars out of reach for more and more people.
[Car] inventories continue to swell, and interest rates remain high. Our grosses are off, and margins continue to decline. Profits are down 20 percent from the prior year.
The economy is slowing. The consumer is more cautious and more reluctant to purchase at higher prices and payments.

And finally, this seemed to sum up just how business-owners feel in general about the current occupant of The White House:

“Our outlook depends heavily on the presidential election.

Where The Jobs Aren’t! California Shows No Net Job Growth During 2023

Where the jobs aren’t! Calfironia under Gavin Newsom and their Marxist elected officials.

Based on the most recent release of the early benchmarks, payroll jobs declined by 32,000 from September 2023 through December 2023. On the contrary, the preliminary monthly reports showed a solid increase in job growth (+117,000 jobs) at the time. With the fourth quarter revision, calendar year 2023 saw essentially no net job growth (+9,000 jobs overall). Data since January 2024 has not yet been rebenched. As such, the figure includes the Early Benchmark Revision for these recent months growing at the same rate as the official CES estimates.

Given Calfornia’s burdersome taxes and regulations, not to mention $20 per hour for fast food workers, it is not surrprising that job growth in California has been minimal.

Surprise! US Economic Surprise Index Slumps To -28.10 (Lowest Since 2022)

Well, perhaps bot a genuine surprise. We are aware that the US economy has been slowing as the massive fiscal and monetary stimulus from Covid is wearing out.

The economics surprise index slumped to -28.10, the lowest since 2022.

I feel like the US economy is experiening a Ragnarok change. With the giants (World Economic Forum/UN. etc) winning.

US Existing Home Sales Declined -2.8% YoY In May As Leading Economic Index Falls -2.0% Over Past 6 Months

I am no forune teller, but this doesn’t look to good for old Joe (Biden).

Existing home sales fell -2.8% YoY in May.

US existing home sales fell for the third straight month in May (-0.7% MoM vs -1.0% exp). This left home sales down 2.8% YoY (YoY sales have not increased since July 2021)…

Source: Bloomberg

The total home sales SAAR is push back towards COVID lockdown lows once again at 4.1mm, but prices accelerated to a new record high…

Source: Bloomberg

“Home prices reaching new highs are creating a wider divide between those owning properties and those who wish to be first-time buyers,” NAR Chief Economist Lawrence Yun said in a statement.

“Eventually, more inventory will help boost home sales and tame home price gains in the upcoming months.”

And given that mortgage rates remain stubbornly above 7%, existing home sales show no signs of improving anytime soon…

Source: Bloomberg

The supply of homes on the market increased 18.5% from the same month last year to 1.28 million, but it’s still well below the level seen before the pandemic when mortgage rates were much lower.

Source: Bloomberg

About 67% of the homes sold were on the market for less than a month in May, roughly flat from the prior month, while 30% sold above the list price. Properties remained on the market for 24 days on average in May, compared with 26 days in April, NAR’s report said.

The Conference Board Leading Economic Index® (LEI) for the U.S. decreased by 0.5 percent in May 2024 to 101.2 (2016=100), following a 0.6 percent decline in April. Over the six-month period between November 2023 and May 2024, the LEI fell by 2.0 percent—a smaller decrease than its 3.4 percent contraction over the previous six months.

Biden Shrugged: US Housing Starts Fall To COVID Lockdown Lows (Multifamily Starts Down -51.7% YoY In May)

It begs the question: where are the 10+ million illegal immigrants living who have poured over the border under Binden/Mayorkas? Especially when 5+ units housing starts dropped -51.7% since last year (YoY) in May. And the trend under Biden looks terrible!

Despite ugly consumer confidence and soaring mortgage rates, analysts expected a small rebound in housing starts and building permits in May (after April’s disappointing misses). They were wrong… again… as both Starts and Permits plunged MoM (-5.5% MoM and -3.8% MoM respectively)…

Source: Bloomberg

That was the third monthly drop in permits (more forward looking) in a row. Worse still, April Housing Starts were revised lower (from +5.7% to +4.1%), making this miss even worse.

This dragged the SAARs for starts and permits to their lowest since the trough of COVID…

Source: Bloomberg

With Multifamily starts falling back near COVID lockdown lows…

Single-Family 982K SAAR, down 4.8% from 1,031K and the first sub-million print since October 2023
Multi-Family 278K, down 13.7% from 322K and the lowest since March’s 245K (which was the lowest print since covid crash)

Source: Bloomberg

And multi-family permits cratering to their lowest since Oct 2018…

Single-Family permits 949K SAAR, down 2.9% from 977K
Multi-Family permits 382K SAAR, down 6.1% from 407K

And with rate-cut expectations holding near their lows, there is no sign of recovery in home-building yet…

Source: Bloomberg

It seems reality is starting to set in for homebuilders…

Source: Bloomberg

As housing starts plummet, jobs seem to keep growing to record highs…

Source: Bloomberg

Will any rate-cut actually move the dial here?

Biden’s Amerika! Top 1% Now Have Higher Share Of Household Wealth Than Entire Middle Class (Struggling Households At 46%)

Now you know why Joe Biden has fund raisers in Hollywood and New York where the elites (the top 1%) live. Biden is the President of The Elites, not the middle class.

How bad it is? The top 1% now have more household wealth than the entire middle class. Note that the recent surge occurred under Trump, but Biden is doing nothing about it.

Further evidence? 46% of households are struggling.

In terms of housing prices, home prices are growing FASTER than average hourly earnings. Again!

Politicians. You can’t trust ANY of them with our money. Or a cookout.

Here is New Yprk Senator Chuck Schumer posing as a middle class American cooking gray hamburgers at super low heat with cheese on top of raw meat. What a fraud!

Going Down! Consumer Sentiment Slumps To 7 Month Low In 5-Sigma Miss (As PPI Final Demand Sinks And Fed Loses MORE Money)

We’re going down!

Moments ago the University of Michigan released the latest “report card” on Bidenomics, and to nobody’s surprise – except perhaps a certain senile teleprompter reading, diaper-wearing puppet in the White House – it was another disaster.

One month after the May Consumer Sentiment printed at a record 7-sigma miss to expectations, consumer sentiment once again “unexpectedly” slumped, this time from an upward revised 68.8 to 67.6, the lowest print since last November, and the biggest 3-month drop in sentiment (-13.8 points) going back to the covid lockdowns.

… which was not only a 5-sigma miss to the median estimate (an improvement from last month’s 7-sigma)…

… but also the biggest miss of 2024.

The collapse in sentiment was broad based, and hammered both current conditions – which plunged from 69.6 to 62.5, the lowest since 2022 and badly missing estimates of 72.2 – and also expectations, which dropped from 68.8 to 67.6 (and also far below the 72.0 estimate).

The decline in sentiment coincides with signs that the labor market, which has driven consumer spending over the last year, is also falling apart. The unemployment rate rose to 4% last month, the highest in more than two years, while jobless claims unexpectedly soared following a firing frenzy out of California.

“While lower-income families have, as a group, seen notable wage gains in a strong labor market, their budgets remain tight amid continued high prices even as inflation has slowed,” Joanne Hsu, director of the survey, said in a statement.

But wait there’s more, because if that was the “stag” part of the report, the UMich report also confirmed that the “flation” isn’t far behind, as the inflation outlook continued its recent deterioration, to wit: 1 Year inflation expectations remained unchanged at 3.3%, beating estimates of a drop back 3.2%, while 5-10 Year inflation expectations rose from 3.0% to 3.1%, the highest since November.

If that wasn’t enough, the slide in sentiment suggests restrained consumer demand in coming months. The university’s measure of buying conditions for durable goods decreased to the lowest level since December 2022, a glowing testament to just how tapped out the US consumer truly is.

In short: the verdict for Bidenomics is in, and it’s a complete disaster, as for Powell’s recent laughable comment that he can’t see the “stag” nor the “flation”… well, Fed chair, they just bit you on the ass.

On top of a poor consumer sentiment report, the PPI Final Demand index was down … again.