Confounded Interest – Anthony B. Sanders
Financial Markets And Real Estate
According to the Atlanta Fed’s GDP Now REAL time model, Q3 Real GDP is 5%.
The subcomponents of GDP growth are as follows:
So much for the doom and gloom of Trump’s tariff “war” or Trump’s Iran “war.” 5% Real GDP growth is outstanding!
And The Fed keeps on printing money (M2)! Keep on printin’!
Large bank mortgage originations have crashed and burned since 2022. The Fed has raised rates following the Covid outbreak and have not cut rates in a significant manner.
Another problem facing the US economy is that housing prices have over doubled since 2015.
My reaction to the Fauci testimony in Congress.
I am surprised that no one in Congress asked Dr, Fauci about how Covid crisis impacted the housing market.
US home prices are clearly unaffordable for younger households, given the dearth of true starter homes. As of Q1 2026, REAL US residential property prices fell -2.1% YoY.
China’s real residential property prices are declining even faster than the US.
The US Federal Reserve is printing money M2 at a 5.6% YoY pace. Slower than during the Covid outbreak, and slower than the decade prior to Covid.
China is printing money at a gutwrenching pace (10.5% YoY as of August 2019). Note that China has historically printed money faster than The Federal Reserve.
Global Central Banks are the Neegans of the global economy.
Welcome to the whacky world of employment in the AI era!
US jobs rose by 172K in May. Local government rose by 55K while finance/insurance jobs fell by -20.2K in May.
The inflation numbers are out for April. Consumer prices rose 3.8% annually, higher than The Fed’s target rate of 2%.
To be fair, The Federal Reserve pumped up the money supply (M2) by 4.6% in March.
According to the BLS, gasoline prices rose 28.4% annually in April while shelter rose 3.3% annually.
MBA Mortgage Purchase Index down -3.7% over the past week after climbing +1.2% in prior week…30y mortgage rate rose to +6.45% up from +6.37% and highest in a month.
With the Federal government playing an outsized role in the housing and mortgage markets, the Federal goverment is like an enormous Mantis Shrimp.
High home prices show signs of cooling, mortgage rates remain fairly constant, while new home sales increase by 47k in March. Despite rising mortgage rates.
The bigger picture? New home sales remain relatively depressed after the Covid outbreak in 2020.
Median price for new single family homes fell to $387,400 in April, dropping 6.2% y/y to its lowest level since July 2021.
Worst March for existing home sales since 2009.
Rents? Lowest since pre-pandemic.
Is Rosa DeLauro actually Moe Howard with purple hair??
It used to be that a debt-to-GDP (Gross Domestic Product) ratio above 1.0 would be disastrous. Yet, the US Debt-to-GDP ratio rises during and after most recessions. Why? The old Keynesian model called for increased government spending and debt to pull the country out of a recession. But the Keynesian model called for debt to be repaind after the recession ended. But after most recessions, the Federal government keeps spending and borrowing. Following the Covid outbreak of 2020, the US debt-to-GDP ratio exceeded 1.0 and has remained fairly constant since.
As of today, the US Federal debt load is $39.204 trillion while GDP is $32.090 trillion resulting in a debt-to-GDP ratio of 1.22.
The leader in the debt-to-GDP race is … Sudan! Followed by Japan and Singapore.
As lowest debt-to-GDP ratio nations are energy-rich Brunei (2.3%) and Kuwait (3%).
The Fed Dots Plot points to rising rates.
The Dots Plot is corroborated by 3-month SOFR options (pink line).
As Federal government debt hits $39+ trillion. And $357,070 per taxpayer.
Confounded Interest - Anthony B. Sanders 
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