Bidenomics At Work! Interest On Federal Debt Higher Than Bloated Defense Spending, Biden Ignores Supreme Court And Forgives $1.2 Billion In Student Loan Debt (Cabbage Rolls And Coffee For Us, Wagyu Beef And Champagne For The 1%)

I remember the joke made by Jay Leno about Obama. Go to a McDonalds and order whatever you want and give the bill to the person behind you. Unfortunately, that is the Democrat playbook under Obama/Biden (hereafter termed “O’Biden”). For example, Biden is bragging about forgiving student loan debt relief in the amount of $1.2 Billion in student debt for roughly 153,000 borrowers. And bragging that he is ignoring the US Supreme Court like a banana republic dictator. Like the Jay Leno “joke,” SOMEONE has to pay for this election year vote pandering. But that is the beauty/tragedy of BIG government. It is so big and the numbers so monstrous that many kind of shrug and go “eh.” But someone pays and its the middle class in the form of taxes and inflation.

Who is going to pay for the 10 million illegal immigrants that have crossed the southern border under Biden? While Paul Krugman points to a higher GDP from immigration (illegals still buy goods and services), but mostly are a deadweight drag on social services such as welfare, Medicare, schools, healthcare system, etc.). And of course migrant crime is going off the charts. Who pays for Biden’s border fiasco? The middle class and low wage workers, of course. Elites benefit from uncontrolled immigration, generally live in compounds with private security that the rest of us can’t afford. Remember President Carter and the Cuban Mariel boat lift where Fidel Castro emptied his prisons and sent them to Florida creating absolute mayhem and a huge spike in crime? Biden and Cuba Pete Mayorkas turning up the heat on immigration and its accompanied crime wave.

O’Biden loves to spend other people’s money. Aka, OUR money. Case in point. According to the CBO, net interest on the exploding Federal debt under O’Biden now exceeds our defense spending and that gap is expected to explode. To be sure, the US is funding billions in the middle east, handing over billions to Zelensky and Ukrainian oligarchs, and we have China. What a mess!

So, when will “Billions Biden” stop spending other people’s money? Well, only a barely-held Republican House can stop Biden. Meanwhile I will focus on soaring food prices and eat cheap cabbage rolls and drink coffee. Until Biden kills off those pleasures.

But don’t worry! We might get Gavin Newsom, the ultimate used car salesman, to replace Biden against Trump. But Biden’s ego is so massive (why I have no idea) that he won’t go down without a fight. And what about Cacklin’ Kamala?

Newsom’s Fiscal Inferno! California’s Budget Crisis Worse Than Newsom Projected (State Watchdog Warns Deficit Could Reach Record $73B!)

Newsom’s Fiscal Inferno!

When Arnold Schwarzenegger was Governor California, his budget chief, a former high school pal of mine, called me to look at California’s budget. He sent me his spreadsheets with forecasts and asked me what I thought. Even back then, I called back and said “California is on an unsustainable fiscal path and seems to be committing suicide.” He agreed, but noted that Schwarzenegger would not like that conclusion. I told him to blame me for the report, as an unpaid consultant to The Golden State. But even back then, I could foresee the absolute mess that the California State legislature would make, particularly if they elected a Democrat governor.

Fast forward to today. Another “glamorous” governor (Newsom does have a great smile and great hair), but even a far worse fiscal path. California’s budget deficit could reach a record $73 billion!

California’s budget deficits look a lot like Biden’s (call him Newsom’s elderly intellectual grandpa) budget deficits where Biden and Congress went on a spending spree from “the honey pot” (US Treasury) and borrowed funds.

California’s budget crisis is projected to expand more than previously thought and could hit a record deficit of $73 billion, according to a new report from the state’s nonpartisan Legislative Analyst’s Office (LAO).Her

The LAO laid out the grim forecast in a Tuesday report that cautions that a $24 billion “erosion in revenues” corresponds to a $15 billion increase in the state’s budget problem. Due to this, the budget deficit, which last month was estimated to hit $58 billion, could now go as high as $73 billion.

“The actual increase in the state’s budget problem will depend on a number of factors, including formula-driven spending changes, most notably Proposition 98 spending requirements for schools and community colleges,” the report said.

H.D. Palmer, the deputy director of the California Department of Finance and Newom’s spokesperson on budget matters, responded to the new LAO report by telling Fox News Digital that their budget shortfall differs from the $38 million they estimate.

“From now through April, more than $51 billion in income and corporate tax receipts are forecast to come in,” Palmer said. “No one can say today with certainty how those numbers may change the budget estimate of a $38 billion shortfall.”

“A responsible step would be for the Legislature to act now on the early action budget measures needed for $8 billion in solutions to help close this gap,” he added.

The projected bad news comes as Newsom has worked to increase his profile nationwide. It also occurred as California experienced a mass exodus.

California saw its first-ever population decline in 2020 when the state imposed rigid lockdowns during the COVID-19 pandemic. From January 2020 to July 2022, the state lost well over half a million people, with the number of residents leaving surpassing those moving in by almost 700,000.

Census data has shown that Texas is the most popular destination for residents fleeing the state, followed by Arizona, Florida, and Washington. (Of course, Arizona where I used to live has flipped from a Red state to a Blue state with immigration and Democrats are working hard to flip Texas to a Blue state. Washington, has already flipped Blue. Florida remains a Red state under Ron DeSantis).

Here is Biden’s budget deficit chart under the hilariously termed “Bidenomics.” Ah, so maybe Governor Newsom is a perfect fit for the wild spenders in Washington DC.

Lest we forget, Biden/Congress can borrow endless funds and stick the bill to Gen Zers and the unborn.

And remember, US politicians have promised $213 TRILLION in unfunded payments that will require cuts (LOL!) or a massive increase in Federal debt.

Biden and Newsom could sing “Fiscal inferno” together! “Here is my demented, doddering grandfather!”

That’s Bidenomics! US Leading Indicators Decline For 22nd Straight Month, Back To March 2006 Levels

That’s Bidenomics for you!

The Conference Board’s Leading Economic Indicators (LEI) continued its decline in January, dropping 0.4% MoM (notably worse than the -0.1% MoM expectations), and December’s 0.1% declin e was revised down to a 0.2% decline.

The biggest positive contributor to the leading index was stock prices (again) at +0.10
The biggest negative contributor was average workweek at -0.18

This is the 22nd straight MoM decline in the LEI (and 23rd month of 25) – equaling the longest streak of declines since ‘Lehman’ (22 straight months of declines from June 2007 to April 2008)

“The U.S. LEI fell further in January, as weekly hours worked in manufacturing continued to decline and the yield spread remained negative,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board.

“While the declining LEI continues to signal headwinds to economic activity, for the first time in the past two years, six out of its ten components were positive contributors over the past six-month period (ending in January 2024).

As a result, the leading index currently does not signal recession ahead.

While no longer forecasting a recession in 2024, we do expect real GDP growth to slow to near zero percent over Q2 and Q3.”

While the Conference Board seems optimistic, we are struggling to see any signs of hope! tumbling back below the peak in March 2006…

And on a year-over-year basis, the LEI is down 7.0% (down YoY for 19 straight months) – still close to its biggest YoY drop since 2008 (Lehman) outside of the COVID lockdown-enforced collapse (but starting to inflect)…

The annual growth rate of the LEI remains deeply negative and decoupled from Real GDP…..

Finally, the massive easing of financial conditions in the last few months suggests a turn in LEI is imminent…

And hence the ‘soft landing’ mission is accomplished… so no need for rate-cuts? (Except for the banking crisis that looms in March).

Here is the roadmap for Bidenomics.

Back In The Saddle Again! Why The Fed Will RAISE Rates (Home Price Growth Reaccelerating, SuperCore Inflation Is Rising, Mass Immigration)

The Federal Reserve (aka, The Keep) is back in the saddle again. The Fed has been unable to control inflation since Federal government spending was so fast and furious after Covid that little thought was given to the long-term ramifications of insane spending. Not to mention The Fed’s overreaction to Covid.

Example?

Home price growth is rising again. Home prices in traditional “bubble cities” out west were cooling, but are reaccelerating. Even Detroit and Cleveland are seeing rapid home price acceleration.

Yes, housing inflation is sticky.

In retrospect, this wholesale dovish euphoria may have been rather short sighted, because after several strong economist reports hit the tape (with the Nov 2024 election growing closer by the day, that should hardly have been a surprise), March rate cut odds collapsed from over 100% in late December, to just 12% currently…

… as first the January CPI printed red blazing hot – with core coming in at 3.9% far higher than the 3.7% expected, with the 3-month annualized rate jumping to 4% from 3.3% and the 6-month annualized rate spiking to 3.7% vs 3.2%, but the biggest highlight was SuperCore CPI (i.e., core CPI services ex-Shelter) which soared 0.7% MoM, the biggest jump since Sept 2022…

… and then the January PPI print come in even hotter, with a core component surging in January by 0.5%, smashing expectations and beating estimates by the most since Jan 2021.

The result: not only has the market rapidly priced out what if formerly saw as many as 6 rate cuts in 2024, but growing speculation that a rate cut may not come at all unless the Fed tightens some more first (and with the S&P500 now over 5000, it is pretty clear that the market has already priced in virtually all rate cuts and has cornered the Fed).

Of course, the mass migration across the Mexican border (who knows? could be up to 11 million under Biden’s Reign of Error). While Paul Krugman, the resident lunatic economist for the New York Times, extols the virtues of mass immigration for driving up GDP, fails to recognize that mass migration is helping drive up prices. This is inflation that The Fed can’t control. And Biden/Mayorkas want even MORE mass immigration.

Maybe Fed Chair Powell should watch the film “The Keep” for lessons on how to control inflation. in the face of government sanctioned mass ILLEGAL immigration from Latin America, China, Africa and The Middle East.

White House Plans Downshift In Electric Vehicle Transition As Demand Slides (A Tesla 4-module Battery Pack Costs $20,000 To $28,000 BEFORE Labor!)

Burn on, Bidenomics!

The Biden administration is reportedly considering easing tailpipe emissions regulations, a move that was designed to force Americans from gas and diesel-powered vehicles to electric vehicles, according to The New York Times, citing three people familiar with the plan. This potential policy adjustment is in response to concerns from major automakers and labor unions and comes amid sliding EV demand, recently prompting companies such as Ford Motor Company to reduce EV production and lay off workers.

“Instead of essentially requiring automakers to rapidly ramp up sales of electric vehicles over the next few years, the administration would give car manufacturers more time, with a sharp increase in sales not required until after 2030,” the people said.

This policy change comes after 3,900 auto dealers penned a letter to President Biden at the end of 2023, warning the president to reconsider the pace of EV mandates, citing a severe decline in demand for these vehicles.

“Currently, there are many excellent battery electric vehicles available for consumers to purchase. These vehicles are ideal for many people, and we believe their appeal will grow over time. The reality, however, is that electric vehicle demand today is not keeping up with the large influx of BEVs arriving at our dealerships prompted by the current regulations. BEVs are stacking up on our lots,” the dealers said.

They warned: “Already, electric vehicles are stacking up on our lots which is our best indicator of customer demand in the marketplace.”

Last month, Ford Motor’s electric vehicle sales ran out of juice as the automaker was forced to slash production of its all-electric F-150 Lightning to April “to achieve the optimal balance of production, sales growth and profitability.”

A recent note by RBC analyst Tom Narayan said the EV slowdown is far from over:

“Key takeaways thus far from earnings season are that the EV slowdown is not showing any evidence of an inflection, Level 4 autonomy headwinds continue to persist, and fears over supplier inventory overbuild are likely overblown.”

Analyst Adam Jonas at Morgan Stanley suggested consolidation is coming to the industry:

The EV bubble is no match for elevated interest rates, and no fiscally conservative American is trying to survive the era of failed Bidenomics with a +$1,000 EV car payment.

Plus, Toyota’s chairman and former CEO, Akio Toyoda, will likely be proven right: EV cars will never dominate the global market, adding hybrids are the future.

If the alleged climate crisis is as urgent as portrayed by radicals in the White House and woke corporate media, then why does the Biden administration feel the need to move the transition goalposts if banning gas cars saves the planet?

Biden would likely sound more sincere if he dumped his gasoline-powered Corvette for a lousy electric car. On a personal note, I own at Volvo XC-60 hybrid and HATE the damn thing!!!

Thunderstruck! Housing Starts Collapse In January As Producer Prices Soar (Back In Red?)

Its as if the US economy is thunderstruck! US housing starts collapsed in January as Producer Prices soared. NOT a good sign for the US economy.

After single-family home starts plunged in December, analysts did not expect much of a bounce back in January as rates remain high and some regions were affected by weather.

Analysts were way off. Housing Starts puked 14.8% MoM in January (vs unchanged exp), but December’s 4.3% MoM decline was revised up to a 3.3% MoM rise. Building Permits also tumbled, down 1.5% MoM (vs +1.3% exp) and well down from the +1.8% MoM in December…

Source: Bloomberg

This pushed the Housing Starts SAAR back near post-COVID lows…

Source: Bloomberg

DO NOT BLAME THE WEATHER! It’s January – we know there are weather issues and that should be more than ‘priced-in’ on a seasonal adjustment basis.

Multi-family permits cratered to their lowest since Oct 2020. Permits for one-family homes edged higher after rising consistently throughout 2023

And multi-family starts were even worse, plunging from 489k SAAR to 314k SAAR – the lowest since May 2020 (when the economy was closed)…

The government’s report showed housing starts fell in all four of the nation’s regions, led by the Midwest and Northeast. The number of single-family homes completed plunged to the lowest level since May 2020.

They built it, but no one came… the inventory of new houses for sale remains elevated and suggests builders may be cautious about beginning new projects.

Don’t expect Permits to be reaccelerating anytime soon as mortgage rates have started to rise once again…

Source: Bloomberg

Which is not good news for CPI either as it suggests there is little rent relief coming soon.

And finally, there is a record gap between what the government tells us about construction employment and actual construction activity…

Makes you wonder, eh? Did builders all suddenly get massively less productive? Or is the BLS just making shit up as usual?

And then we have producer price spiking in January.

After the hotter-than-expected CPI (which has been shrugged off entirely by the stock market), Producer Prices were expected to rebound very modestly MoM but continue to slow on a YoY basis in January. Instead, like CPI, it re-accelerated with headline rising 0.3% MoM (+0.1% MoM exp), which left PPI up 0.9% YoY (down from December but hotter than the +0.6% exp)…

Source: Bloomberg

The picture was even worse under the hood with PPI ex food and energy up 0.5% MoM (vs +0.2% prior and +0.1% exp) and ex-food, energy, and trade up 0.6% MoM (vs +0.1% exp).

This was the biggest ‘beat’ for Core PPI since Jan 2021…

In fact, core PPI reached a new record high (reminder, disinflation does not mean lower prices), now up 17.4% since Biden was elected…

Services PPI soared MoM, and energy continues to be a driver of deflation (but is losing its power)…

Source: Bloomberg

And on a YoY basis, Services PPI is also re-accelerating (+1.47% from +1.14%). Energy continues to be the deflationary driver…

Source: Bloomuberg

This is not good news for the disinflationistas. And it will stop President Biden’s narrative that ‘prices are coming down’…

Looks like the US economy is back in red.

Biden’s Mortgage Market! Mortgage Demand Down 2.3% From Last Week, Purchase Demand Down -12% From Last Year (Mortgage Rate UP 151% Under Bidenomics)

Wake Joe up before the economy go goes … down any further.

Mortgage applications decreased 2.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 9, 2024.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 2 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index increased 4 percent compared with the previous week and was 12 percent lower than the same week one year ago.

The Refinance Index decreased 2 percent from the previous week and was 12 percent higher than the same week one year ago.

Mortgage rates (30Y fixed) are up 151% under Bidenomics.

Gimmie (Cheap) Shelter! Shelter Index CPI Increased 0.6 Percent In January (Largest Factor In Monthly Increase In Index) As Inflation Comes In Hotter Than Expected

Gimme (cheap) shelter!

As soon as Joe Biden started bragging on his low-energy campaign trail about inflation declining I knew it would go up. And it is increasing again.

Shelter cost (aka, housing) is still growing.

Expectations were for a big drop in the YoY consumer price index (from +3.4% to +2.9%) but instead it surprised to the upside (just as we warned) with a +3.1% YoY print for headline CPI (spoiling the sub-3% partiers). Consumer prices rose 0.3% MoM (more than the 0.2% exp) but the headline did decline from +3.4% to +3.1% YoY…

Source: Bloomberg

Core CPI fell below 4.00% YoY for the first time since May 2021, but the +3.86% YoY print was hitter than the 3.7% exp (with prices rising 0.4% MoM – the biggest jump since April 2023)…

Source: Bloomberg

CPI Core: The index for all items less food and energy rose 0.4 percent in January.

The shelter index increased 0.6 percent in January, and was the largest factor in the monthly increase in the index for all items less food and energy.
- The index for owners’ equivalent rent rose 0.6 percent over the month, while the index for rent increased 0.4 percent.
The lodging away from home index increased 1.8 percent in January. The motor vehicle insurance index increased 1.4 percent in January, and the recreation index rose 0.5 percent in January.
Among other indexes that rose in January were communication, personal care, airline fares, and education.
The medical care index rose 0.5 percent in January.
The index for hospital services increased 1.6 percent over the month and the index for physicians’ services increased 0.6 percent.
- The prescription drugs index fell 0.8 percent in January.
The index for used cars and trucks fell 3.4 percent in January.
The index for new vehicles was unchanged in January.
The apparel index also decreased, falling 0.7 percent over the month.

Core Service inflation picked up MoM…

..and accelerated YoY

Source: Bloomberg

Under the hood, food and Energy services costs jumped MoM along with transportation services…

Here’s the biggest component upside surprises…

And one step deeper – the so-called SuperCore: Core CPI Services Ex-Shelter index – soared 0.7% MoM (the biggest jump since Sept 2022…

… driving the YoY change up to +4.4% – the hottest since May 2023….

Source: Bloomberg

Finally, as a reminder, lower inflation does not mean lower prices.

Source: Bloomberg

The actual index of consumer prices hit a new record high this month – and is up over 18% since President Biden’s term began (it was up 8% over President Trump’s full four year term).

And it gets worse…

Source: Bloomberg

And on the higher than expected inflation report, we are still seeing bets on Fed Funds rate falling from 5.50% to 4.233% over the coming year.

The re-accleration of inflation means wage growth is back in the red relative to prices.

Daddy (Ukraine) Warbucks Biden’s Hideous Debt Mess! (Biden Has Added $6.5 Trillion In Debt With Only $1.95 Trillion In Real GDP Growth As Jobs Report Reveals Weakness In Economy)

I watched Tucker Carlson’s interview with Russian President Vladimir Putin. Putin is an amazing contrast to our 81-year old President with dementia who can barely speak while Putin was articulate. Not at all what Hillary Clinton was raving about (she is still furious about losing to Trump after losing to Obama). One thing that caught my attention was Putin talking about The Fed’s endless printing of money. Well, THAT is how the US grows GDP these days. Borrow and spend with the private sector as an after thought.

Let’s revisit the HORRIBLE jobs report from December. Not only were all job gains in the past year entirely thanks to part-time workers, but native-born workers plunged by a another whopping 560 thousand, bringing the two-month total drop to just under 2 million. This meant that not only has all job creation in the past 4 years been exclusively for foreign-born workers, but there has been zero job-creation for native-born American workers since July 2018 (don’t believe us? go ahead and check the data directly from the Fed).

So, the Federal government is borrowing trillions of dollars so that 1) part-time jobs are created and 2) foreign born workers have jobs, but not native born Americans?? (Blogger Paul Krugman thinks that immigration will add $7 trillion in real GDP over the next 10 years and this will save Social Security and Medicare. Huh? I admit, millions of immigrants will spend money, but many will be on the Federal and State doles, so its tax dollars going to immigrants to spend.) This seems like Obama/Biden are using Cloward-Piven tactics to overwhelm Social Security, Medicare and other social services, NOT grow the economy as Krugman projects.

Typically, economists look at measures like M2 Money Velocity (Real GDP/M2). M2 Money Velocity is rising … but still remains below where it was pre-Covid under Donald Trump.

But a more relevant velocity is the velocity of DEBT. As in GDP/Debt. Under Biden, the US has added almost $6.5 TRILLION in debt while real GDP has risen by only $1.949 trillion. That amounts to a DEBT velocity of 0.30. Meaning that the US gets an anemic $30 in real GDP for every $100 in additional Federal debt.

Yes, the US economy is broken and requires endless money printing and debt financing to pay for endless wars and now millions of illegal immigrants getting on “the dole.” Then we have Biden’s forgiving student loan debt (inappropriately) and now Big Tech wants $7 trillion to develop AI (in a normal economy, tech companies would develop AI themselves, but under Obama/Biden, we are not in a normal economy).

Here is Daddy (Ukraine) Warbucks Biden with his biting dog and daughter Ashey.

The Truth About Biden’s Awful Jobs Report And Rising Credit Card Delinquencies (Weakest Jobs Report For January On Record, 90+ Day Delinquency Rate Rises To Almost 10%)

I think the Biden Presidency is nicely summed-up by Biden confusing France’s President Macron with former French President Mitterand. Particularly since Mitterand died in 1996. Is Biden seeing dead people??

Anyway, the Biden economy and his Bidenomic strategy is based on massive debt expansion, both public and private debt. Household Debt reached $17.5 Trillion in Fourth Quarter; Delinquency Rates Rise 

Credit card delinquecies (90+ days) rose to almost 10% in Q4 2023.

Credit card delinquencies surged more than 50% in 2023 as total consumer debt swelled to $17.5 trillion, the New York Federal Reserve reported Tuesday.

Debt that has transitioned into “serious delinquency,” or 90 days or more past due, increased across multiple categories during the year, but none more so than credit cards.