One reason that US home prices remain high (and unaffordable for many) is The Federal Reserve (aka, The Green Slime). Former Fed Chair (and Biden’s Treasury Secretary is no Luciana Paluzzi, the Italian beauty from the James Bond film Thunderball. Yellen is just a far-left economic hack.
Look at the Case-Shiller national home price index compared with The Fed funds target rate.
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 3.8% annual return for November, up from a 3.6% annual gain in the previous month. The 10-City Composite saw an annual increase of 4.9%, recording the same annual increase in the previous month. The 20-City Composite posted a year-over-year increase of 4.3%, up from a 4.2% increase in the previous month. New York again reported the highest annual gain among the 20 cities with a 7.3% increase in November, followed by Chicago and Washington with annual increases of 6.2% and 5.9%, respectively. Tampa posted the lowest return, falling 0.4%.
The pre-seasonally adjusted U.S. National, 20-City, and 10-City Composite Indices’ upward trends continued to reverse in November, with a -0.1% drop for the national index, while the 20-City Composite saw a -0.1% decline and the 10-City Composite was unchanged.
While the Fed Funds target rate gyrates, The Fed’s balance sheet remains high.
As The Pretenders sang, “My City Was Gone.” That song was about Akron, Ohio. But it applies to the US Mortgage Market under Biden/Harris. The question is whether Trump’s deregulation plans can return to its former glory.
Mortgage applications increased 0.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 17, 2025.
The Market Composite Index, a measure of mortgage loan application volume, increased 0.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3 percent compared with the previous week. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 7 percent compared with the previous week and was 2 percent higher than the same week one year ago.
The Refinance Index decreased 3 percent from the previous week and was 42 percent higher than the same week one year ago.
The Pretenders’ lead singer Chrissie Hynde likely would have made a better Federal Reserve Chair and Treasury Secretary than Janet Yellen.
This is the worst start to a fiscal year EVER: – Spending is up 10.9% – Receipts are down 2.2% – FYTD deficit up 39.4% at $711 billion They’re handing Trump a ticking time bomb!
Speaking of Biden handing a ticking time bomb (according to Zero Hedge), after rising for 5 straight months, analysts expected headline consumer prices to continue accelerating in December (+0.4% MoM exp) and it did exactly that – the highest MoM print since March, leading the YoY CPI to rise 2.9% (the highest since July)…
Source: Bloomberg
CPI details:
Food
The index for food increased 0.3% in December, after rising 0.4% in November. The food at home index also rose 0.3% over the month. Four of the six major grocery store food group indexes increased in December. The index for cereals and bakery products rose 1.2% over the month, after falling 1.1% in November. The meats, poultry, fish, and eggs index increased 0.6 percent in December, as the eggs index rose 3.2 percent. The index for other food at home rose 0.3 percent over the month and the index for dairy and related products increased 0.2 percent.
Energy
The energy index increased 2.6% in December, after rising 0.2% in November. The gasoline index increased 4.4% over the month. (Before seasonal adjustment, gasoline prices decreased 1.1 percent in December.) The natural gas index rose 2.4 percent over the month and the index for electricity rose 0.3 percent in December. The energy index decreased 0.5 percent over the past 12 months. The gasoline index fell 3.4% over this 12-month span and the fuel oil index fell 13.1 percent over that period. In contrast, the index for electricity increased 2.8 percent over the last 12 months and the index for natural gas rose 4.9 percent.
All items less food and energy
The index for all items less food and energy rose 0.2 percent in December, after rising 0.3 percent in each of the 4 preceding months.
The shelter index increased 0.3 percent in December, as it did in November.
The index for owners’ equivalent rent also rose 0.3 percent over the month, as did the index for rent.
The lodging away from home index fell 1.0 percent in December, after rising 3.2 percent in November.
The medical care index increased 0.1 percent over the month, after rising 0.3 percent in October and November.
The index for physicians’ services increased 0.1 percent in December and the index for hospital services rose 0.2 percent over the month.
The airline fares index rose 3.9 percent in December, after rising 0.4 percent in the previous month.
The index for used cars and trucks rose 1.2 percent over the month and the index for new vehicles increased 0.5 percent.
Other indexes that increased in December include motor vehicle insurance, recreation, apparel, and education.
In contrast, the index for personal care fell 0.2 percent in December after rising 0.4 percent in November. The indexes for communication and alcoholic beverages also declined over the month. The household furnishings and operations index was unchanged in December
The resurgence of energy costs drove the hot headline CPI along with Core Services…
Source: Bloomberg
Core CPI (ex Food and Energy) dipped to +0.2% MoM (below the 0.3% exp) and the YoY pace of inflation slowed to 3.24% YoY. Core CPI rose EVERY month under Biden…
Source: Bloomberg
Core Goods price inflation slowed MoM (but deflation is gone on a YoY basis)…
Source: Bloomberg
The Fed’s favorite indicator of the CPI bunch – SuperCore or Services CPI ex-Shelter – rose 0.28% MoM (slowing the pace of annual inflation to +4.17%)…
Source: Bloomberg
Transportation Services were not MoM…
Source: Bloomberg
Overall, it’s energy costs that are re-emerging as a drive of inflation… thanks Joe!
Source: Bloomberg
…and Energy prices aren’t going down anytime soon in the CPI world… thanks Joe!
Source: Bloomberg
While Producer Prices under Biden rose at triple the rate they did under Trump, Consumer Prices soared 21.25% under Biden (+4.9% p.a.) vs 8%, 1.94% p.a. under Trump…
Source: Bloomberg
Finally, equity traders were braced for a volatile day ahead of the print, with options implying moves of 1.1% in either direction for the S&P 500, the most for a CPI day since March 2023.
Mortgage applications decreased 3.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 3, 2025. This week’s results include an adjustment for the New Year’s holiday.
The Market Composite Index, a measure of mortgage loan application volume, decreased 3.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 47 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 7 percent from one week earlier. The unadjusted Purchase Index increased 43 percent compared with the previous week and was 15 percent lower than the same week one year ago.
Purchase application activity is up about 2% from the lows in late October 2023 and is now 15% below the lowest levels during the housing bust.
The Refinance Index increased 2 percent from the previous week and was 6 percent lower than the same week one year ago.
Mortgage applications decreased 21.9 percent from two weeks earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 27, 2024. The results include an adjustment to account for the Christmas holiday.
The Market Composite Index, a measure of mortgage loan application volume, decreased 21.9 percent on a seasonally adjusted basis from two weeks earlier. On an unadjusted basis, the Index decreased 55 percent compared with two weeks ago. The seasonally adjusted Purchase Index decreased 13 percent compared with two weeks ago. The unadjusted Purchase Index decreased 48 percent compared with two weeks ago and was 17 percent lower than the same week one year ago.
The holiday adjusted Refinance Index decreased 36 percent from two weeks ago and was 10 percent higher than the same week one year ago. The unadjusted Refinance Index decreased 62 percent from two weeks ago and was 6 percent lower than the same week one year ago.
The fact that economic conditions are getting worse is certainly not good news, but it is better to know in advance what is coming. After four years under Joe Biden, the U.S. economy is a giant mess. We have been witnessing a slow-motion collapse right in front of our eyes, and those at the bottom levels of the economic food chain have been experiencing more pain than anyone else. Of course this is one of the biggest reasons why Donald Trump won the election.
Example? Sticky inflation remains far higher under Biden/Harris than it did when Trump was President. Prices remain elevated as you will notice when Christmas shopping!
#1 When the economy is in good shape, holiday spending increases each year. In 2024, only 16 percent of Americans say that they are going to spend more than last year and 35 percent of Americans say that they are going to spend less…
Americans this holiday season say they are seeing a ghost of Christmas past: inflation.
The CNBC All-America Economic Survey finds inflation is still haunting the buying public, leading to what’s shaping up to be just an average season for retailers. Just 16% of respondents say they will spend more, down two points compared to last year. Forty-eight percent said that they’ll lay out the same amount for holiday gifts, up five points. At the same time, 35% say they’ll spend less, down two points as well.
#2 The number of job openings in the U.S. is now the lowest it has been since January 2021, but unlike January 2021 we don’t have a pandemic to blame our poor performance on…
US job openings tumbled last month to their lowest level since January 2021, a sign that the labor market is losing some momentum. Still, posted vacancies remain well above pre-pandemic levels.
The Labor Department reported Tuesday that the number of job openings dropped to 7.4 million in September from 7.9 million in August.
Economists had expected the level of openings to be virtually unchanged. Job openings fell in particular at healthcare companies and at government agencies at the federal, state and local levels.
#3 The manufacturing numbers that we are getting are extremely dismal. For example, the Philadelphia Federal Reserve Manufacturing Index just experienced an extremely sharp decline…
The Philadelphia Federal Reserve Manufacturing Index, a critical gauge of the general business conditions in Philadelphia, has reported a significant drop. The actual figure stands at -16.4, a sharp decline that suggests worsening conditions for manufacturers in the region.
This figure starkly contrasts with the forecasted number of 2.9, highlighting a more severe downturn than initially predicted. Analysts had anticipated a positive shift, indicating improving conditions, but the actual data presents a different, more concerning situation.
Moreover, when compared to the previous index value of -5.5, the current reading of -16.4 further emphasizes the severity of the decline. This continuous drop indicates a concerning trend for manufacturers within the Philadelphia Federal Reserve district.
#4 Thanks to rapidly rising mortgage rates, the average U.S. homebuyer just lost $33,250 in purchasing power in just six weeks…
Mortgage rates hit 7% on October 28, the highest level since the start of summer and up nearly one percentage point from the 18-month low they dropped to in mid-September.
A homebuyer on a $3,000 monthly budget can afford a $442,500 home with a 7% mortgage rate, the daily average 30-year fixed rate on October 28. That buyer has lost $33,250 in purchasing power over the last six weeks; they could have purchased a $475,750 home with the 6.11% average rate on September 17. That was the lowest level since February 2023.
#5 Our cost of living crisis is officially out of control. According to Bank of America, almost a third of all households “spend more than 95% of their disposable income on necessities such as housing costs, groceries and utility bills”…
Many Americans are still in a tough spot: Nearly 30% of all US households this year said they spend more than 95% of their disposable income on necessities such as housing costs, groceries and utility bills, according to a Bank of America Institute report, up from 2019 levels.
#6 A recent Lending Tree survey discovered that nearly a quarter of all households couldn’t pay their entire power bill at some point within the past year…
LendingTree’s findings about electricity bill costs comes as it reported 23.4% of Americans experienced an inability to cover their entire energy bill or portions of it in the last year, based on Census Bureau Household Pulse Survey data.
#7 The same Lending Tree survey found that about a third of all households had to reduce spending “on necessary things” within the past year in order to pay utility costs…
Needing to cover utility bills prompted 34.3% of Americans to curb their spending on necessary things – or eliminate some altogether – in at least one instance in the prior year, LendingTree said.
#8 As I discussed last week, demand is at record levels at food banks all over the nation…
Why is demand at food banks all over the country higher than it has ever been before? The media keeps insisting that economic conditions are just fine, but it has become quite obvious to everyone that this is not true. In particular, the rising cost of living has been absolutely crushing households from coast to coast. In the old days, most of the people that would show up at food banks were unemployed. But now food banks are serving large numbers of people that actually do have jobs but that don’t make enough to pay for all of the basics. The ranks of the “working poor” are growing very rapidly, and this is creating an unprecedented crisis all over America.
#9 During normal times, troubled retailers would at least wait until after the holiday season to throw in the towel. But we haven’t even reached Christmas and Party City has already announced that it will be closing all stores…
Party City is closing down all of its stores, ending nearly 40 years in business, CNN has learned.
CEO Barry Litwin told corporate employees Friday in a meeting viewed by CNN that Party City is “winding down” operations immediately and that today will be their last day of employment. Staff were told they will not receive severance pay, and they were told their benefits would end as the company goes out of business.
Big Lots is beginning ‘going out of business’ sales at all its stores across the US, as it prepares to close its remaining locations.
The discount retail chain filed for Chapter 11 bankruptcy in September, and has already shut hundreds of stores nationwide.
In a press release Thursday, the company said it would begin the sales at its 963 remaining locations, after a sale to a private equity firm fell through.
#11 As of the end of November, more than 7,000 store closings had been announced in the United States. That is a 69 percent increase from last year…
According to a report from CoreSight Research, U.S. retailers had announced more than 7,100 store closures through the end of November 2024, which represents a 69% increase compared to the same time in 2023. These closures are spread across numerous different sectors of retail from auto parts to restaurants to pharmacies, leaving many consumers wondering which companies will survive. This brings us to GameStop, the beloved retail gaming store, which has not only been closing hundreds of retail store locations since 2020, but also appears to be on track to close hundreds more of its locations in the very near future.
Look at all of these beautiful Christmas decorations at the Crocker Galleria mall in San Francisco. It’s 4:47 PM and everybody should be shopping and buying Christmas presents for their family, but nobody is in this mall.
There are only three stores left that are open here. The escalators hum on inside this beautiful but empty decorated mall.
Outside on Market Street the fentanyl addicts lay folded over while a street performer sings Last Christmas to an empty Street.
Of course the lack of shoppers at that particular mall is just the tip of the iceberg.
California’s biggest downtown areas are crumbling under the weight of homelessness and drug addiction, causing a vital part of its economy to dry out.
Cities like Los Angeles and San Francisco have made countless headlines since the pandemic about their drug-infested streets where businesses are quickly pulling out due to high crime rates and low consumer passage.
The number of drug addicts in America is at the highest level ever.
The number of homeless people in America is at the highest level ever.
They are victims of our slow-motion economic collapse, and the holidays will not be very happy for them.
So if you still have food on the table and a warm home to sleep in, you should consider yourself to be incredibly blessed.
Sadly, more Americans are being forced out into the streets with each passing day as the slow-motion collapse of our economy accelerates.
Housing Starts: Privately-owned housing starts in November were at a seasonally adjusted annual rate of 1,289,000. This is 1.8 percent below the revised October estimate of 1,312,000 and is 14.6 percent below the November 2023 rate of 1,510,000. Single-family housing starts in November were at a rate of 1,011,000; this is 6.4 percent above the revised October figure of 950,000. The November rate for units in buildings with five units or more was 264,000.
And down -10.2% year-over-year.
Building Permits: Privately-owned housing units authorized by building permits in November were at a seasonally adjusted annual rate of 1,505,000. This is 6.1 percent above the revised October rate of 1,419,000, but is 0.2 percent below the November 2023 rate of 1,508,000. Single-family authorizations in November were at a rate of 972,000; this is 0.1 percent above the revised October figure of 971,000. Authorizations of units in buildings with five units or more were at a rate of 481,000 in November.
As we watch Biden and Democrats attempt to demolish the country as Biden leaves office. Let’s see how many criminals Biden will pardon on the way out … like the Jan 6th “select” committee of Adam Schiff, Adam Kinzinger, Liz Cheney, Bennie Thompson, etc.
Joe Biden is leaving the Presidency with an attrocious record. While saying he is leaving Trump with the strongest economy in modern times, the is actually leaving Trump and Republicans with a hollow shell for an economy. It is the final punch in the jaw from an angry, failed President.
The following chart shows that in October and November, the US deficit exploded to a staggering $624.2 billion, and even though this included several calendar adjustments – which explains the freak September surplus which as we said was due to calendar effects – the November deficit of $367 billion was $14 billion more than consensus estimates of $353 billion. Worse, combining October and November we find that not only was the combined number of $624 billion some 64% higher than the corresponding period one year ago, but it was also the highest deficit on record for the first two-months of the year (and that includes the spending insanity during the covid crisis).
Putting the deficit in context, the budget deficit in October and November – the first two months of fiscal 2025 – are now officially the worst start a year for the US Treasury on record.
No wonder even Statist Janet Yellen (Treasury Secretary who failed utterly at her job) apologized that her abysmal performance. “I am concerned about fiscal sustainability and I am sorry that we haven’t made more progress,” she said adding that “I believe that the deficit needs to be brought down especially now that we’re in an environment of higher interest rates.” Meanwhile Biden keeps handing out $$$ to Ukraine, Africa, Syria, illegal immigrants and anything else that asks … unless it it American citizens. Man, does Biden HATE America!
Here is Yellen’s record on debt. A total of $15.2 TRILLION under her leadership.
Under Biden/Yellen (don’t forget Senate fools like Schumer and McConnell!), debt interest has surpassed Social Security and Medicare as the second largest government agency expense.
Biden is a classic progressive Democrat, spending other people’s money like a wild man (sort of like California Governor “Greasy Gavin” Newsom’s father. Or grandfather. And let’s not forget the $222 TRILLION in UNFUNDED liabilities such as Social Security and Medicare.
“See Joe, I can destroy California’s economy just like you destroyed the US economy!”
The delinquency rate for commercial mortgage-backed securities (CMBS) tied to office properties reached 10.4 percent in November 2024, approaching the 10.7 percent peak reached during the 2008 financial crisis. The ascent is the fastest two-year increase on record, with rates climbing 8.8 percentage points since late 2022, significantly outrunning the 6.3-point rise seen during the financial crisis nearly 15 years ago.
The office real estate sector has been grappling with a severe downturn for several years now, but are accelerating recently as they are driven by persistently high vacancy rates and declining rents. Property values, particularly for older office buildings, have plummeted, with many losing 50 to 70 percent of their market value and in some cases becoming effectively worthless. Those conditions have left real estate portfolio managers and building owners unable to borrow, refinance or sell properties, contributing to rising delinquencies and foreclosures. (Mortgages become effectively delinquent when payments are missed beyond a standard 30-day grace period.)
On the CMBS front, there have been no upgrades in 2023 and 2024.
Efforts to convert office buildings into residential spaces are increasing but remain limited by structural and economic constraints. Many office towers are unsuitable for conversion due to their large floor plates or prohibitively high retrofitting costs which often exceed the cost of demolition and rebuilding. In 2024, 73 office-to-residential conversions were completed, with an additional 30 underway. Despite plans to increase the pace in 2025, the cumulative impact remains minimal, addressing just 7.9 percent of the 902 million square feet of vacant office space nationwide.
After last month’s catastrophic JOLTS report, which was a disaster across the board, and which was meant to give the Fed a green light to cut rates more after Biden won the election (which he didn’t, but the Fed still had to cut even if Trump is now in control), some speculated that Biden’s Department of Labor will do everything in its power to sabotage further rate cuts by the Fed, most notably the upcoming December decision in two weeks time, by pushing out much stronger than expected economic data. That’s precisely what happened moments ago when the DOL reported that in October, the number of job openings in the US soared by a whopping 372K, the biggest monthly increase since August 2023, to 7.744 million from 7.372 million.
The JOLTS print smashed the median estimate of 7.519 million by 225K…
… with just 4 analysts (out of 28) predicting a higher job openings number.
According to the DOL, the job openings rate, at 4.6 percent, changed little over the month. The number of job openings increased in professional and business services (+209,000), accommodation and food services (+162,000), and information (+87,000) but decreased in federal government (-26,000).
Amusingly, after we mocked two months ago the stunning surge in construction job openings just as a record chasm had opened between the manipulated number of construction jobs and openings…
… which meant the biggest monthly surge in construction job openings on record at a time when the housing market has effectively frozen thanks to sky high interest rates, a simply glorious paradox of manipulated bullshit data…
… the BLS realized that it had to make an adjustment after getting called out, and Construction Job openings dropped by another 9K to 249K and back to post-covid lows. Oh, and yes, the number of “construction jobs” is about to fall off a cliff just as soon as Orange Man Bad enters the White House.
Setting the glaring data manipulation aside, in the context of the broader jobs report, in October the number of job openings was 770K more than the number of unemployed workers, an increase from the previous month and not too far from inverting once again, similar to what happened during the covid crash.
But while the job openings surge was a surprising reversal of the deteriorating trend observed for much of 2024, where even the DOL was stumped was the number of hires, which tumbled from 5.582 million to 5.313 million, a new post-covid low.
Commenting on the plunge, SouthBay Research notes that “hiring was weak in October and the last time hiring was this low was June and NFP slowed to 118K. But remember that this data aligns with the October Payroll data – not November’s. Both October NFP and the latest October JOLTS Hiring data cover the same period (through mid-October).” Furthermore, there were an additional 4 weeks since this JOLTS survey and hurricane recovery (aka hiring) rebounded. In addition, as the Job Openings indicate, employer intent to hire was already underway when this survey was completed.
Meanwhile, the drop in hiring was offset by a surprise spike in the number of Quits, which rose by 228K from 3.098MM to 3.326MM, the biggest increase since May 2023, with quits increasing in accommodation and food services (+90,000).
Finally, no matter what the “data” shows, let’s not forget that it is all just estimated, and it is safe to say that the real number of job openings remains still far lower since half of it – or some 70% to be specific – is guesswork. As the BLS itself admits, while the response rate to most of its various labor (and other) surveys has collapsed in recent years, nothing is as bad as the JOLTS report where the actual response rate remains near a record low 33%
In other words, more than two thirds, or 67% of the final number of job openings, is made up!
Looking ahead to Friday’s November Nonfarm Payrolls, the report will be driven by hurricane recovery, with the JOLTS data pointing to a lot of weakness in exactly the areas October Payrolls slipped. As for organic hiring, there have been no anecdotal signs of hiring pullback heading into November. On the contrary: businesses seem to be inclined to ramp up a bit, now that Trump is president and promises a dramatic easing of regulations.
Confounded Interest - Anthony B. Sanders 
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