Slowing! Jobs Friday Shows Decline In Jobs Added, Real Avg Hourly Earnings Growth Now -3.25% YoY (NOT The Strongest Economy In History!)

There is no doubt that the US economy is slowing, thanks in part to The Federal Reserve’s sudden crusade to slow inflation (caused by … The Federal Reserve and Federal spending).

My favorite chart is US Average Hourly Earnings YoY. It peaked in March at 5.6% and has been slowing to 5.1% in June. BUT historically high inflation has caused REAL US Average Hourly Earnings YoY to decline to -3.25%.

The good news? 372k jobs were added in June. The bad news? It was lower than jobs added in May (390k) showing a slowing trend.

Unemployment remained at 3.6%. Labor force participation fell to 62.2%.

The US labor force participation remains below the pre-Covid levels despite staggering Fed monetary stimulus. But what happens when The Fed’s “Snake Juice” is withdrawn??

Here is a nice summary table.

US 30 year mortgage rates resumed their vertical climb as The Fed continues to tighten their loose monetary policy.

But the jobs report was good enough to lead to the US Treasury 10Y yield to jump 10.3 basis points today.

Alarm! Challenger Job Cuts Rise 58.8% YoY As Real Wage Growth Is Negative At -3.34% YoY (10Y-2Y Yield Curve SCREAMS Recession)

Alarm!

As most economists are aware, unemployment rates are not a leading indicator of a recession. But job cuts ARE a leading indicator.

Challenger US job cuts rose 58.8% YoY in June. Combine that with negative REAL wage growth (-3.34% YoY) and we have a problem.

Unemployment rate (U-3) is a poor leading indicator of recession since unemployment rates are the lowest before a recession.

Further signaling problems for the might US economy is the US Treasury yield curve (10Y-2Y). It is inverting.

In this slowing economy, there will be fewer people singing “Take This Job And Shove It!”.

Sloth-Slow? Fed Expected To Raise Target Rate 75 Basis Points As Recession Fears Grow (Trying To Force A Recession??)

Generally speaking, The Federal Reserve cuts rates as a recession approaches. But not this time!

The Federal Reserve is expected to raise their target rate by 75 basis points at the next FOMC meeting.

We are already seeing Fed rate hikes being priced into the mortgage markets, as Bankrate’s 30-year mortgage rate fell to 5.57% after rising above 6% in June. The reason? Recession fears have caused Treasury yields to fall.

The Fed is hiking their target rate, but has been sloth-slow in unwinding their balance sheet.

Yes, The Fed has been sloth-slow in removing the Covid-related stimulus. But is The Fed trying to pull a “Volcker” by raising rate to choke off inflation EVEN IF THE ECONOMY ENTERS RECESSION? Fed Funds Futures data is pointing to a reversal of Fed rate hikes by Feb 2023.

Here is Fed Chair Jerome Powell showing the amount of Covid-related stimulus removed recently.

Bidenflation Strikes! Dow Down 2% As Recession Fears Grow (Check Out M1 Money Growth!)

Lightning strikes!

Inflation has been a disaster for millions of Americans. As inflation grows (highest in 40 years), fears of recession are jolting markets.

The Dow today is down 2%.

Then again, Europe is down even more.

My favorite chart for explaining the surge in inflation is M1 Money Stock around the Covid outbreak in early 2020. Which has NOT been removed.

The US Treasury 10Y-2Y yield curve just inverted.

No, this is not a real ECB currency, but it might as well be.

Heartaches On Heartaches! US Court Ruling May Take 70,000 Truckers Off Road, Spur Jams (Diesel Prices UP 118% Under Biden, Things Just Keep Getting Worse)

Hey, I thought Mayor Pete Buttigieg, the US Transportation Secretary, was supposed to unclog the supply-chain crisis! Instead, we get heartaches on heartaches as diesel prices rise 118% under Biden AND now the bottle-necks may get a lot worse.

A US Supreme Court decision that could force California’s 70,000 truck owner-operators to stop driving is set to create another choke point in already-stressed West Coast logistics networks, a truckers’ organization said.

“Gasoline has been poured on the fire that is our ongoing supply-chain crisis,” the California Trucking Association said in a statement following the Supreme Court’s decision to deny a judicial review of a decision of a lower court, a process known as certiorari.

“In addition to the direct impact on California’s 70,000 owner-operators who have seven days to cease long-standing independent businesses, the impact of taking tens of thousands of truck drivers off the road will have devastating repercussions on an already fragile supply chain, increasing costs and worsening runaway inflation,” the CTA said.

The association asked the Supreme Court for a review of a case challenging California’s Assembly Bill 5, a law that sets out three tests to determine whether a worker is an employee entitled to job benefits or an independent contractor who isn’t. The trucking industry relies on contractors, and has fought to be exempt from state regulations for years because of federal law.

With few exceptions, the relationship between independent truckers and their carriers, brokers and shippers will be governed by the tests.

As if US consumers aren’t getting crushed by rising prices already. In response to the Covid outbreak, The Fed slammed its foot on the money accelerator along with Federal government stimulus. Throw in Biden’s anti-drilling executive orders, and we have a nightmare.

Consumer confidence is already crumbling under inflation and rising energy prices.

Let’s get ready to stumble.

Slip, Slidin’ Away! US Q2 Real GDP Descends To -2.1% (Late In The Evening For The Midterm Elections!)

Slip slidin’ away
Slip slidin’ away
You know the nearer the midterm elections
The more you’re slip slidin’ away

As Bill Clinton once said about elections, “It’s the economy, stupid.”

Which is bad news for Biden and Democrats after Q1’s bad GDP report of -1.6% “growth”, we now see the Atlanta Fed’s real-time GDP report for Q2 at -2.1%.

Today’s miserable construction spending report helped tank Q2’s real GDP forecast.

Its getting late in the evening since the midterms are only a couple of months away and Biden’s approval rating is miserable.

Sing it, Joe!

Reversal Of Fortune! Fed Funds Futures Point To Feb ’23 Reversal Of Fed Rate Hikes (Recession Alert!) As Crippling Inflation Soars

No, not the Claus von Bülow kind of reversal of fortune where has was accused of killing his wife. But this murder is coming from The Federal Reserve hiking interest rates even when they know that doing so could lead to a recession. And Biden’s anti-fossil fuel energy policies.

“Fed Chair Powell Admits That Fighting Inflation Could Lead To Recession.”

And investors in the Fed Funds Futures market see The Fed changing its rate-hiking ways in February 2023.

Inflation is what is killing the US economy and millions of households. Financially speaking.

And Biden’s approval ratings are sinking faster than The Titanic. In other words, he’s just killing us.

And then we have turbulence in the housing market as Fed intentions are driving up mortgage rate which helped listings with price reductions at 98.2% YoY.

Biden’s energy policies plus The Fed’s war on inflation will result in an economic reversal of fortune.

S&P 500 Posts Worst First Half Rout Since 1970 As 10Y Treasury Yield Tanks 14 Basis Points (Biden Approval Drops To 38.3% On Rising Inflation, Gasoline Prices)

Run runaway! For safety to Treasuries.

A “recession shock” begins for markets following the worst first-half for the S&P 500 in more than 50 years.

And investors are running to Treasuries for safety as US Treasury 10-year yields tank 14 basis points.

Biden’s approval rating has collapse with inflation and rising gasoline prices. Note that Biden’s approval rating dropped below 50 in mid-August 2021, long before the Russian invasion of Ukraine in late February 2022. Gasoline prices had risen 49% since Biden’s inauguration as President, but before the Russian invasion of Ukraine.

Winter is coming!

Fed Is ‘Just at the Beginning’ of Raising US Rates, Mester Says, MBA Mortgage Purchase Applications Drop -21% WoW As Rates Rise (Mester Channels The Carpenters)

Cleveland Fed’s Mester is channeling The Carpenter’s song “We’ve only just begun … to raise rates.”

Financial markets are anticipating what Mester is saying: rapidly rising interest rates. But as you can see from the following chart, gasoline prices (orange line) are driving rising US prices. So it is doubtful that monetary tightening will slow price increases. But Mester and company can only control monetary stimulus.

Mortgage rates have soared as The Fed attempts to crush inflation. And mortgage purchase applications fell -21% WoW in the most recent Mortgage Bankers Association survey.

The Refinance Index increased 2 percent from the previous week and was 80 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 0.1 percent from one week earlier. The unadjusted Purchase Index decreased 21 percent compared with the previous week and was 24 percent lower than the same week one year ago.

It almost seems like Mester is following the Taylor Rule (not really). But using CPI YoY, the Taylor Rule is saying that The Fed Funds Target Rate should be … 22.10%. It is only 1.75% after years of excessive stimulus following the banking crisis of 2008/2009. And Yellen who seemingly never met a rate hike that she liked.

If we use core PCE as our measure of inflation, the Taylor Rule is still high at 13.25%, a whopping 11.50 spread over the current target rate.

Will The Fed drive up rates and risk a recession ala Paul Volcker? Are we sitting on top of the world or about to get fried?

Bear in mind that gasoline prices are up 104% under the Biden Administration and mortgage rates are up 105%.

The Thrill Is Gone! Richmond Fed Index Plummets To Covid-era Levels (Conference Board’s Consumer Confidence Falls Below 100) As Fed Withdraws Stimulus

It took a while and trillions in fiscal and monetary stimulus to recover from Covid-era economic lockdowns, but now that the monetary stimulus is being withdrawn, the economy is stalling.

If you look at the chart below, you can see that “The Thrill Is Gone” from monetary and fiscal stimulus.

And The Conference Board’s Consumer Confidence Index fell below 100 as M2 Money Stock YoY returns to pre-Covid levels.

You are gonna have to face it, we’re addicted to gov (stimulus).