C’mon Joe. The media has always reported bad news. Warm and fuzzy doesn’t anger people, but bad news does! And under Bidenomics, there has been a lot of bad news.
President Biden railed against corporate media before he and several family members headed by helicopter to Camp David, the presidential retreat in the mountains of western Maryland.
Before boarding the presidential helicopter, Biden was asked by one reporter: “What’s your outlook on the economy next year?”
The president responded: “All good,” adding, “Take a look. Start reporting it the right way.”
Sounds like Biden watched the Travola/Jackson flick “Basic” where the infamous line was uttered “Tell the story right.”
OK Joey, let’s tell the story right. After the horrendous economic shutdowns of local economics and schools in 2020, 15.1 million jobs were added after the shutdowns ended in just 10 months. Wow, that was simple! But under Biden’s Reign of Economic Error, only 15.5 million jobs were added over the next 34 months.
But Biden’s record on jobs comes at the expense of an additional $6.25 TRILLION IN PUBLIC DEBT.
With $34 trillion and rapdily growing debt and budget deficits, it is hard to find good news about Bidenomics.
The ‘Misery Index’ is near its lowest level since pre-COVID, but Misery Index masks the true horrors of Bidennomics: 20% higher food prices, 19% higher rents and 61% higher gasoline prices under Bidenomics.
The sum of U.S. unemployment and inflation – known as the “misery index” – fell to 6.8% in November from 7.5% the previous month. That’s the lowest since the summer and fast approaching pre-Covid levels.
The misery index is calculated by adding up the current unemployment rate (3.7%) and the inflation rate (3.1%). The formula provides a simple way to gauge whether the well-being of Americans is improving or not.
Misery peaked in April 2020 when the index spiked to 15%, the highest since 1982. Conditions have improved since the early onset of Covid, but it hasn’t been smooth sailing.
After falling back to 7.7% in January 2021, the index re-accelerated over the next two years as inflation surged. The misery index was 12.5% in June 2022—the same month that annual inflation hit 9.1%.
The unemployment component of the index has been faring well since Covid emergency measures were lifted back in 2021. The unemployment rate has remained below 4% for nearly two years—even as the economy begins to slow.
But economists warn that the misery index doesn’t offer a complete picture of how the average American is doing.
You can tell just by asking them how they feel about the economy and personal finances.
How do Americans really feel?
Economist Greg Ip, who heads economic commentary at The Wall Street Journal, compared the misery index to the University of Michigan’s consumer sentiment index—one of the most closely-watched consumer surveys.
“Based on historic correlations, sentiment has been more depressed this year than you would expect given the level of economic misery,” Ip wrote, arguing that consumers are more pessimistic than the misery index would suggest.
A deeper dive into the sentiment data reveals that Americans are still frustrated about inflation and the impact of high interest rates on their finances. And while the consumer sentiment index rose in December—breaking a four-month skid—some economists attributed it to a temporary holiday boost ahead of Christmas.
“Consumer spirits are perking up for the holiday season which is a sign Christmas is still coming this year,” said Christopher Rupkey, chief economist at FWDBONDS, a New York-based financial research company.
A separate sentiment survey from LSEG/Ipsos paints an even less enthusiastic picture of the average consumer.
The December primary consumer sentiment index—which measures Americans’ attitudes toward jobs, investments, the economy, and personal finances—declined from November and was only up slightly compared to 12 months earlier.
According to the survey, attitudes toward the current situation, investments, and jobs “showed significant declines this month.”
The impact of cumulative inflation
As Creditnews Research reported in a recent study, Americans aren’t celebrating the slowdown in inflation because they’re still reeling from the cumulative price increases of the past three years.
While inflation has fallen to 3.1%, consumer prices have increased by a cumulative 19% since the start of 2020. Food prices are up a whopping 25% over that period.
Americans spent the better part of two years—April 2021 to January 2023—seeing inflation grow faster than their paychecks. That trend reversed in February of this year.
But even with stronger purchasing power this year, the vast majority of Americans (92%) said they reduced their spending in the six months through September, according to a Morning Consult survey for CNBC.
A majority of respondents across all wage brackets said current economic conditions negatively impacted their finances.
So, while the Misery Index indicates that the inflation RATE has slowed, it masks the fact that Americans are far worse off under Bidenomics.
For November, US existing home sales are down -7.28% since last year. At least that is an improvement over -14.6% YoY in October.
Despite homebuilder sentiment ticking up (along with their stock prices) and housing starts soaring – buoyed by a 100bps decline from multi-decade highs in mortgage rates – analysts expected a small 0.4% MoM decline in existing home sales in November (after October’s big drop).
“The latest weakness in existing home sales still reflects the buyer bidding process in most of October when mortgage rates were at a two-decade high before the actual closings in November,” said NAR Chief Economist Lawrence Yun. “A marked turn can be expected as mortgage rates have plunged in recent weeks.”
The total existing home sale SAAR bounced very marginally off record lows…
Source: Bloomberg
Regional sales were mixed:
Existing-home sales in the Northeast slipped 2.1% from October to an annual rate of 470,000 in November, down 13.0% from November 2022. The median price in the Northeast was $428,600, up 4.8% from the prior year.
In the Midwest, existing-home sales rose 1.1% from the previous month to an annual rate of 940,000 in November, down 8.7% from one year ago. The median price in the Midwest was $280,800, up 4.9% from November 2022.
Existing-home sales in the South improved 4.7% from October to an annual rate of 1.77 million in November, a decline of 4.3% from the prior year. The median price in the South was $351,500, up 3.4% from last year.
In the West, existing-home sales slumped 7.2% from a month ago to an annual rate of 640,000 in November, down 8.6% from one year before. The median price in the West was $603,200, up 5.3% from November 2022.
Mortgage rates are down, but leave a long way for home sale to drop still…
Source: Bloomberg
But, the gap between current rates and effective rates for Americans is still immense…
Source: Bloomberg
The median existing-home price for all housing types in November was $387,600, an increase of 4.0% from November 2022 ($372,700), but down MoM…
All four U.S. regions posted price increases.
“Home prices keep marching higher,” Yun added.
“Only a dramatic rise in supply will dampen price appreciation.”
Well, with housing starts accelerating in the latest data and Powell’s massive pivot, has The Fed re-ignited its 3rd housing bubble?
And the buying condition for housing sinks to all-time low.
Housing Starts: Privately‐owned housing starts in November were at a seasonally adjusted annual rate of 1,560,000. This is 14.8 percent above the revised October estimate of 1,359,000 and is 9.3 percent above the November 2022 rate of 1,427,000. Single‐family housing starts in November were at a rate of 1,143,000; this is 18.0 percent above the revised October figure of 969,000. The November rate for units in buildings with five units or more was 404,000.
Building Permits: Privately‐owned housing units authorized by building permits in November were at a seasonally adjusted annual rate of 1,460,000. This is 2.5 percent below the revised October rate of 1,498,000, but is 4.1 percent above the November 2022 rate of 1,402,000. Single‐family authorizations in November were at a rate of 976,000; this is 0.7 percent above the revised October figure of 969,000. Authorizations of units in buildings with five units or more were at a rate of 435,000 in November.
Median NEW home prices dropped -20% YoY.
1-unit housing starts exploded, but permits declined.
The Federal government added $7 trillion in debt since 2020 while it took 215 years to get to $7 trillion before Covid and Bidenomics.
In what can simply be called fiscal insanity, The Federal government is borrowing like there is no tomorrow (given that Biden is 81 years old, this isn’t far off) displacing businesses and households. Heaven help us if the Federal government has to borrow more money to fight a real war like World War II.
So, the massive Federal debt gorging isn’t helping the housing market.
Both the US Federal government and California’s government are facing a fiscal inferno. Thanks to a softening economy and inane fiscal policies.
At the macro level, we see that The Federal government has gone wild spending money and borrowing it. Much more than businesses and households. Biden’s wild spending reduces the degrees of freedom that Treasury has if the US slips into another recession or depression.
First, let’s begin with banks to illustrate the worsening condition of the economy. Emergency loans from The Fed’s Bank Term Funding Program (BTFP) is on the rise, signaling perceived trouble in the economy.
Small banks are suffering more than big banks.
Consumer sentiment is below 70 (100 baseline) under Biden and Bidenomics.
And then we have Gavin “Gruesome” Newsom and California. California is now facing a $68 billion deficit. It has also defaulted on a $20 billion loan from the federal government. The situation is so dire the state is telling agencies not to replace broken printers or re-stock office supplies. Workers are being stripped of benefits and could face furloughs. This is all happening as the state has spent billions funding High-Speed Rail and expanding Medi-Cal to all undocumented immigrants, while losing billions in tax revenue from people leaving the state.
$68 billion is over twice this forecast deficit of $24 billion.
But never fear. “Billions Biden” will make sure California is okay, ar least until the 2024 Presidential election.
Like the spaghetti western “The Good, The Bad And The Ugly,” Bidenomics has had similar effects on financing. Some good, some bad and a lot of uglies.
The good! For investors like pension funds the own US Treasuries, inflation has led The Federal Reserve to raise interest rates. This is good for investors holding short-term debt. The Bianco Fixed Income Total Return Index is soaring!!
The Bad: Well, the flip-side of the same coin is that debt refinancing costs have soared.
The Ugly. There are many contenders for losers under Bidenomics and current Fed (garbled) policies. But I choose … mortgage demand collapse with rising home prices and rising mortgage rates. Mortgage rates are up 165% under Biden.
And mortgage demand (applications) have been crushed.
Also on the ugly side, global aggregate corporate yields have collapsed.
So, there have been winners with Bidenomics (the top 1%), and lots of losers.
The drop takes the measure from ‘expansion’ at 7-month-highs to ‘contraction’ at 4-month-lows…
Source: Bloomberg
The new orders fell six points to -11.3, pointing to a decline in orders for a third consecutive month, and the shipments index fell sixteen points to -6.4, indicating that shipments fell.
The unfilled orders index held steady at -24.0, a sign that unfilled orders continued to fall significantly.
After rising into positive territory last month, the inventories index retreated fourteen points to -5.2, suggesting that inventories moved lower.
The delivery times index dropped ten points to -15.6, its lowest reading in several years, a sign that delivery times shortened.
The index for number of employees fell four points to -8.4, its lowest level in several months, pointing to a modest decline in employment levels.
On the bright side, the prices paid index moved down six points to 16.7, suggesting an ongoing moderation in input price increases, while the prices received index held steady at 11.5, a sign that selling price increases remained modest.
Is this the start of ‘soft’ data’s reversion to ‘hard’ reality?
The Fed – with its six rate-cuts – better hope so.
… it was the dot plot, where the median 2024 dot plot now forecasts 3 rate cuts up from 2, that shocked traders: in a very rare admission by the Fed, the central bank confirmed that the pre-meeting market pricing of multiple cuts in 2024 were correct in interpreting the Fed’s intentions. It also confirmed – yet again – that the market was right and every single FOMC member was wrong. In retrospect, none of this should have been a shock.
Commenting on the dot plot, TS Lombard’s Steven Blitz said that “for a group that prizes the pricing of its policy intentions in the forward markets as being more important to shifting market conditions than the spot rate, they h d to know that moving the median forecast for Fed funds at the end of 2024 back to June levels would be a bullish signal.“
Or maybe concerns about the market’s reaction were of secondary importance to a Fed which had gotten the tap on the shoulder by the Biden admin and its Democratic cronies on the Hill, terrified about their re-election chances now that the snake of Identity Politics is finally eating its poisonous tail. Indeed, almost as if having seen the collapse in the recent approval polls, Biden’s handlers made some very persuasive phone calls to the Fed. After all, only something as ridiculous – and serious – as steady political pressure can explain the unprecedented U-Turn by the Fed chair, one which even shocked Powell’s own mouthpiece, Nikileaks, who commented on the “Powell pivot” saying “what a difference two weeks can make.”
But markets are behaving as if The Fed will begin cutting rates. Look at the US 2-year Treasury yield on Wednesday AFTER the Fed minutes were released.
Bear in mind that mortgage rates are up 149% under Biden. And mortgage payments up 88%. Yikes!
Mortgage applications increased 7.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 8, 2023.
The Market Composite Index, a measure of mortgage loan application volume, increased 7.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 6 percent compared with the previous week. The seasonally adjusted Purchase Index increased 4 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 18 percent lower than the same week one year ago.
The Refinance Index increased 19 percent from the previous week and was 27 percent higher than the same week one year ago.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 7.07 percent from 7.17 percent, with points decreasing to 0.59 from 0.60 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
And Freddie Mac’s 30-year mortgage rate is UP 165% under Biden.
Like WEF’s Klaus Schwab, Biden doesn’t want you to have a low rate mortgage for Christmas!
Confounded Interest - Anthony B. Sanders 
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