Bidenomics, aka the Federal government takeover of the US economy with Soviet-style economic central planning, is highly dependent on loose Federal Reserve monetary policy (Janet Yellen and Powell’s wild overreaction to the massively inappropriate Covid shutdowns),
So, how is Bidenomics working out? On the bank lending front, commercial and industrial (C&I) lending growth is crashing along with bank credit growth YoY.
The US Treasury 10Y-2Y yield curve remains deeply inverted at -91.031 basis points and M2 Money growth has crashed. The 30 year mortgage rate is hovering around 7.27%.
The Republicans’ little red book is showing people escaping big crime and tax states like New York and California for lower tax, lower crime states like Florida and Texas. But to Democrats who are really bad at math, 7+7 = 0?
California and New York have sustained population declines during Covid and after, that have long-term implications for local economies. The exodus means workers with six-figure salaries in technology, finance, real estate, and entertainment are going elsewhere, which will reduce tax revenue for the state.
MyEListing.com, an online real estate portal, used IRS migration data to reveal California and New York lost $343 million and $299 million in 2021, respectively, due to the surge in migration outflows.
The beneficiaries of the outflow are Florida and Texas, which took in $12.4 billion and $10.7 billion, respectively.
“Despite its numerous attractions, from the booming tech industry and world-class universities to beautiful landscapes and cultural richness, California’s high personal income tax rates seem discouraging for many high-wealth individuals. This, coupled with the state’s high cost of living, will likely fuel a wealth migration out of California,” MyEListing wrote in the report.
The exodus from California is so severe that state demographers forecasted the total population will be the same today as in 2060.
If left unchecked, the largest outflows of residents from specific metro areas could experience a fiscal crisis. Such a development would be tragic for Democrat-controlled cities already plunging into crisis as progressive politicians fail to enforce law and order.
Joe Biden said that Republicans will impeach him in the House of Representatives since inflation is coming down. Huh? No Joe, it is because your are the most corrupt President in history, a compulsive liar and your economic policies are pure World Economic Forum mandates (open borders, Central Bank Digital currency, green energy, etc). Biden started off his Presidency by declaring war on fossil fuels that helped drive prices through the roof. And the middle class are paying the price.
But as inflation cools (blue line) thanks in part to Biden draining the Strategic Petroleum Reserve (orange line), Biden can gloat. But remember, gasoline prices remain 56% higher under Biden’s Reign of Error. Even worse, gasoline FUTURES are up 91.5% under Biden. Yikes!
But look at how gasoline prices and gasoline futures have risen in July (pink circle). The last inflation report showed that inflation has declined to 3% (still higher than The Fed’s 2% target), gasoline prices are up almost 5% since July 19, 2023.
Gasoline, meanwhile, started the year at less than $2.50 per gallon. This week, gasoline topped $2.90 per gallon and may yet reach $3.
WTI Crude Oil futures have broken through the $80 barrier … again. Heating oil futures are up 1.43% today with WTI Crude futures up 0.61%.
So as energy prices keep rising (and Biden’s EPA keeps issuing green energy edicts and fails to recognize that our power grid can’t support all the electric cars and trucks envisioned by the Obama/Biden green dreamers). As such, energy prices will keep rising and with it … inflation.
Commercial real estate (CRE), particularly office space, reminds me of the Arthur Brown tune “Fire!” except that Jerome Powell of The Federal Reserve is the God of Hellfire! While fighting inflation caused by … The Federal Reserve and insane Federal spending (aka, Bidenomics). Call this the Over, Under, Sideways Down economy. The top 1% are doing quite well, while the lower 50% of net worth households are struggling.
The Q1 2023 NCREIF Office property (value) index shows declining office value since Q2 2022 as The Fed began raising its target rate to combat inflation.
From Trepp, we have this shocking table showing the decline the average total value loss over the span of around a decade. The oldest buildings experienced the largest reduction in value of 60%, and the newest experienced the least (but quite substantial) reduction of 52%. Although the newest buildings performed the best relatively, their 52% value reduction is easily the most concerning, and displays truly how much distress is present in the office sector. This group has the highest percentage of Class A buildings, but its reduction value over the past decade is still approximately on par with buildings constructed over half a century prior. With north of $150 billion in securitized maturities beyond 2023, these trends set a gloomy tone for their future and the performance of office properties as a whole.
Then we have this alarming headline from Trepp: “Commercial Mortgage Sector Faces Another Wall of Maturities as $2.75 Trillion Rolls by 2027.” An estimated $528.7 billion of commercial mortgages mature this year, according to Trepp data, which projects that next year, maturities will increase to $532.8 billion. The projections are based on data for the first quarter compiled using the Federal Reserve’s flow of funds and made various assumptions regarding loan terms for each of the major lender categories. The data would indicate that the market is facing a wall, if not a mountain of maturities that would make the 2015-2017 wall of maturities look almost inconsequential. During that period, roughly $1.1 trillion of loans were scheduled to come due. But attention was focused on the CMBS market, as more than $335 billion of loans were set to mature during the period.
Well, REAL gross domestic income fell -0.8% YoY in Q1 2023 as M2 Money growth crashes. Not a good sign for the US economy or commercial real estate.
Of course, office properties are suffering from almost out-of-control crime in major American cities and the desire of workers to work from home rather than commute to work in cubicles.
But never fear! We have massively corrupt and compulsive liar Joe Biden as President!! He is the President of The 1%! Not the other 99%.
Bidenomics, massive spending on green energy mandates while curbing fossil fuel consumption, has been a true wonder for the top 1% of net worth (let’s call them The Elites). And Bidenomics, like Obamanomics, relied on super generous Federal Reserve money printing.
The result? Total Net Worth held by the top 1% has grown rapidly since the Covid outbreak and Fed monetary expansion (plus Congress going wild spending). The bottom 50%? They improved in terms of net worth
So, The Elites (top 1%) want The Fed to keep on printing money, since their net worth soars.
Meanwhile, US bank credit is crashing as The Fed slows M2 Money growth.
Not only is credit growth grinding to a halt, but unrealized losses on bank investment securities continues to worsen.
If you didn’t see this, then check out House testimony of extraterrestrial visitations to Earth. This has been happening since the 1950s (allegedly), so why NOW is there sudden interest in aliens? Deflection away from the horrible scandal of Biden taking money from foreign actors? Likely answer? Biden and Mayorkas will send Treasury Secretary Janet Yellen to negotiate with alien invaders giving them anmesty, free school, free food, free healthcare and directions on how to register to vote. And giving aliens preferential trade status. All for “10% for The Big Guy!”
The Biden Administration is gushing about Q2’s Real GDP report of 2.4% QoQ. Wow, after trillions of dollars of stimulus spending and The Fed going wild with monetary stimulus, all we got was 2.4% growth??
Both The Federal government and Federal Reserve went wild with stimulus surrounding the Covid economic shutdown in 2020. The excessive reaction function is still working its way through the economy and we finally got Q2 Real GDP QoQ of 2.4%! But seriously, is that all we got from an increase in public debt of 39% since January 2020, and M2 Money increased 36%. And, of course, The Federal Reserve double their balance sheet from 2020 to today … and are slow walking its removal. So, with Biden’s insane green spending and Powell’s monetary stimulytpo, all we got was 2.1% Real GDP growth YoY??
And US public debt to GDP is now over 120%, thanks in part to Federal spending and Fed monetary stimulus related to the Covid economic shutdowns.
Today, The Fed raised their target rate to 5.50%, up 525 basis points from 0.25% on 3/15/2022. That is one big rise in rates over a short period of time.
Will they stop with one rate hike? If The Fed Funds Futures data is correct … no more rate ratese this year and maybe declining rates next year.
The US Treasury 10Y-2Y yield curve remains deeply inverted at -102.08 basis points.
New home sales in June fell -2.5% from May to June to 697k units sold. But on a year-over-year (YoY) basis, new home sales are up 23.8%. Thanks largely to The Federal Reserve slow walking the shrinking of their massive balance sheet.
Too much monetary stimulus and The Fed’s failure to remove the Covid stimulus is now hitting new home sales.
Confounded Interest - Anthony B. Sanders 
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