Biden’s Fiscal Inferno! Biggest Peactime, Non-crisis Budget Deficit In US History! (December Deficit Equals $129.4 Billion, UP 50% From December 2022)

Yes, it’s Biden’s fiscal inferno! And getting worse as the Presidential election approaches!

Remember when I showed that the “stealth” secret sauce behind Bidenomics was nothing more than a massive, multi-trillion debt-fueled spending spree, which led to the biggest peactime, non-crisis budget deficit in US history, with the total deficit for fiscal 2023 ending just over $2 trillion, or double the prior year, something which BofA’s Michael Hartnett called the “era of fiscal excess”?

Well, we have news for you: if 2023 was bad, 2024 – an election year of course – is shaping up to be far worse.

Moments ago the US Treasury reported the budget deficit picture for December and it will come as no surprise to anyone that the US has continued to spend like a drunken sailor, or rather, even more. As shown in the chart below, in the month of December, the US collected $429 billion through various taxes, while total outlays hit $559 billion…

… resulting in a December deficit of $129.4 billion.This may not sound like a lot, but December is actually one of those months when the US deficit is relatively tame, or used to be.

As shown in the next chart, traditionally the December deficit was barely in the $10-20BN range… until 2020 when it exploded to an all time high of $140BN. And while it dropped sharply in 2021, it rebounded dramatically in 2022, and rose to just shy of the December crisis high last month!

Here is some more context: tax receipts of $429.3BN in December were down 5.6% from the $454.9BN in December 2022 and down a whopping 11.8% from December 2021. On an LTM basis, US total tax receipts were $4.521TN, or down 7.2% YoY. This is now the 9th consecutive YoY decline in LTM tax receipts, something that historically has only taken place when the US was in a recession. As an aside, the “smart economists” were certain that the collapse in tax receipts would reverse after November when the postponed California taxes would be collected. Well, November has come and gone and the big picture is just as ugly.

Looking at outlays, unlike tax receipts, there is danger of a decline… ever; and indeed in December the US spent a total of $559 billion, up 3.5% from the $540BN spent a year ago, and up even more from the $508BN in 2021. On a 6 month moving average basis, we are rapidly approaching the exponential phase even when accounting for the spending burst in 2020 and 2021.

Putting it all together, we get the scariest chart of all: the YTD budget deficit three months into fiscal 2024 is already $509 billion, which would be the biggest deficit in US history after one quarter with the exception of the covid outlier year of 2021 when the US injected multiple trillions in stimmies.

As for the final, and most shocking, data point, the December budget deficit of $129.4 billion was more than $40BN higher than the $87.5BN median estimate, and was more than 50% higher compared to the $85BN December deficit in fiscal 2022.

Needless to say, this is completely unsustainable and assures fiscal collapse for the US, not if, but when. Then again, we already knew this thanks to the CBO which was kind enough to chart the endgame:

What is funniest about all this is that the US is on an accelerating path to ruin less than one year after the imposter in the White House published this laughable propaganda.

We can’t wait to see what really happens to the budget deficit over the next 10 years. Spoiler alert: there won’t be a happy ending.

And here is The Federal Reserve Board coming to the rescue of Biden!

Inflation Feelin’ Hot, Hot, Hot! CPI Rises To 3.4% YoY, Core Inflation Declines To 4% YoY (Is The Fed Tightening Too Much Since The Target Rate Is 150 Basis Points HIGHER Than Core Inflation Rate??)

Inflation is feelin’ hot, hot, hot!

Although core inflation declined in December (CPI all items less food and energy), it is still hot, hot, hot at 4% Year-over-year (YoY). This raises the following question: Is The Fed tightening too much? Aka, yet another Fed policy error?? Since The Fed target rate is 5.50% and core inflation is now 4%?

Headline Consumer Price Inflation printed hotter than expected in December, +0.3% MoM vs +0.2% exp and +0.1% prior, pushing the YoY headline CPI up to +3.4% (from +3.1% prior and hotter than the +3.2% exp)…

Source: Bloomberg

Services (Shelter mostly) costs re-accelerated and energy deflation stalled in December…

On the brighter side, core CPI according to the BLS rose 0.3% MoM as expected, dropping the YoY change below 4.00% for the first time since May 2021…

Source: Bloomberg

Goods deflation has stalled as the used cars and trucks index rose 0.5 percent over the month, after rising 1.6 percent in November.

More problematically for The Fed (and the rate-cut ‘hypers’), is the fact that Core CPI Services Ex-Shelter (SuperCore) rose 0.4% MoM, upticking the YoY rise to +4.09%…

Source: Bloomberg

This is a category that Fed Chair Jerome Powell and other policymakers have highlighted as a focus.

All the subsectors of SuperCore rose MoM with the shelter index increased 6.2 percent over the last year, accounting for over two thirds of the total increase in the all items less food and energy index.

But shelter inflation is slowing (slowly):

Shelter inflation was up 6.15% YoY in Dec, down from 6.51% in Nov and the lowest since July 2022
Rent inflation was up 6.47% YoY in Dec, down from 6.87% in Nov and the lowest since July 2022

And the next time someone from the Biden administration says ‘inflation is down’ in an attempt to gaslight the public into believing ‘prices are down’ – show them this chart…

Headline costs at record highs
Core costs are record highs
Food costs at record highs
Fuel costs on the rise again

Source: Bloomberg

Four of the six major grocery store food group indexes increased over the month.

The index for meats, poultry, fish, and eggs rose 0.5 percent in December, led by an 8.9-percent increase in the index for eggs.

The index for food away from home rose 5.2 percent over the last year.

The index for limited service meals rose 5.9 percent over the last 12 months, and the index for full service meals rose 4.5 percent over the same period.

The White House was quick to note that real hourly earnings was positive in December (+0.8% YoY) but that number is the aggregate of ALL American workers.

If we drill down to the ‘average joe’ – production and non-supervisory jobs – their wages are up 17% since Biden was elected… The only problem is, the cost of food since then has surged almost 21%…

Is this a pause before the re-plunge? M2 thinks so…

So what happens next?

Not so much Goldilocks perfection.

Powell is in a real pickle now – does the Fed begin shrinking QT in March (which it has to if it is terminating BTFP and Reverse Repo is drained) without starting rate cuts.

Biden’s Economy Under A Bad Sign! 38% Of US Companies Anticipate That They Will Conduct Layoffs In 2024 (Office Vacancy Rate Hits 20%!)

The US economy is under a bad sign. And if it wasn’t for The Fed’s money printing, we would have no economy at all!

We experienced a tremendous amount of economic turbulence in 2023, but at least the employment market was relatively stable.

Unfortunately, that period of relative stability appears to be ending.

The pace of layoffs really seemed to pick up steam at the end of 2023, and the outlook for the coming year is not promising at all. In fact, a survey that was just conducted by Resume Builder discovered that a whopping 38 percent of U.S. companies anticipate that they will conduct layoffs in 2024…

38% of companies say they are likely to have layoffs in 2024
52% are likely to implement a hiring freeze in 2024
Half say anticipation of a recession is a reason for potential layoffs
4 in 10 say layoffs are due to replacing workers with artificial intelligence (AI)
3 in 10 companies reducing or eliminating holiday bonuses this year

If you currently have a job that you highly value, try to hold on to it as tightly as you can.

Because the employment market is starting to shift in a major way.

In recent weeks, so many large U.S. companies have been announcing layoffs…

Nike has announced a $2 billion cutback over the next three years, with an uncertain number of job cuts included. Toy giant Hasbro will cut nearly 20% of its workforce in 2024, according to reports from the Wall Street Journal. Music service Spotify announced a third round of layoffs. A recent email from CEO Daniel Ek says the company plans to cut its workforce by nearly 20%. Roku is going to be limiting new hires, and laying off about 10% of its workforce, while Amazon layoffs are effecting its new gaming division (all 180 jobs there are being eliminated). Citi CEO Jane Fraser announced layoffs in September, and sources have told CNBC that the bank could let go of at least 10% of its workforce, across several business lines. Flexport Logistics plans to cut up to 30% of its employees, and financial services company Charles Schwab is cutting back by 5-6% of its workforce, according to reports from Business Insider.

Unfortunately, this is just the tip of the iceberg.

Many more layoffs are on the way.

Meanwhile, retailers continue to close stores at an astounding pace…

With the continued rise of online shopping, along with record inflation, it’s no wonder that retailers are suffering steep financial losses. Unfortunately, this means that companies all across the U.S. are downsizing brick-and-mortar storefronts to make ends meet. In 2023, we’ve seen closures from big-name retailers and local shops alike—and the shutdowns don’t appear to be easing up anytime soon.

More than 3,000 retail locations were shut down in 2023, but that is nothing compared to what is coming…

According to UBS equity analyst Michael Lasser, the U.S. remains over-retailed. Lasser estimated that the U.S. will shed almost 50,000 retail stores by 2028. He cites rising operating costs and a higher proportion of e-commerce sales, causing retailers to look closely at store locations and performance.

Can you imagine what our communities will look like if that projection is even close to accurate?

As economic conditions deteriorate, people are going to get more desperate and the conditions in our streets will become even more chaotic.

You may not have heard about this yet, but earlier this week a giant mob of more than 100 young people savagely looted a bakery in Compton, California…

A mob of over 100 looters purposefully crashed a Kia into a small bakery in Compton, Calif., before they flooded in and ransacked the store during a night of rampage on the streets earlier this week.

The thieves had gathered in the area for an illegal street takeover around 3 a.m. Tuesday before making the mile-long trek to Ruben’s Bakery & Mexican Food.

When they got to the locked store, a white Kia backed into the front doors, clearing an entryway for the crowd of pillagers to get to their loot.

And so it goes. Lawlessness is bad for retail businesses. Not to mention the morale of US citizens.

And then we have the office market. The office space vacancy rate in the US has reached its highest level since 1979. In the fourth quarter of 2023 19.6% of office space in major US cities was not leased according to data collected by Moody’s Analytics.

The increase in remote work since the COVID-19 pandemic has caused a large decline in demand for office space, despite increasing attempts to get Americans back in the office. What’s more, on the demand side the stock of office space in the US is the result of earlier booms in commercial real estate construction. The last boom took place between 2012 and 2017, when demand for commercial real estate loans strengthened. On the supply side, lending standards loosened between 2012 and 2015. This era coincides with a strong rise in the commercial real estate price index, which may have motivated banks to expand lending. Loan standards tightened during the pandemic, then loosened again when the economy rebounded, but have tightened since 2021.

Since the Great Recession, commercial real estate prices have more than doubled in nominal terms, but have moved sideways since 2021. This suggests that prices have reached a plateau. However, in recent years inflation has obscured the movement of commercial real estate prices in real terms, which shows a peak in 2021, but since then there has been a decline, almost to the level during the COVID-19 pandemic. In other words, commercial real estate prices are already failing to keep up with inflation. Is this an indication that the commercial real estate bubble is already deflating? With nominal commercial real estate prices remaining elevated, most of the nominal price correction is likely still to come. Since small banks are heavily exposed to commercial real estate, the enduring problems at small banks and the fragility of commercial real estate could provide a dangerous mix that could explode during a recession. For more details, we refer to The commercial real estate-small bank nexus.

I noticed that The Administration has handed propaganda duties off to John Kirby and relegated KJP to relief pitching away from Peter Doocey!

Hey, at least KJP can speak. Unlike Hillary Clinton, the worst public speaker in the world.

Bidenomics In The Underworld! Inflation Causing Consumer Credit Debt To Soar After Second Biggest Surge In Credit Card Debt On Record As Food And Gasoline Prices Soar > 20% Under Biden (Credit Card Rates At 22.75%)

Bidenomics has taken the US economy to the underworld. Where households have to run up credit cards to ridiculous levels to cope with inflation under Bidenomics. Under Bidenomics, food prices are up 20.4%, home prices are up 33.5% and regular gasoline prices are up 28.2%. Whip out those credit cards!!!!!

According to the latest monthly consumer credit report from the Fed, in November, consumer credit exploded higher by $24.75BN, blowing away expectations of a “modest” $9BN increase after the surprisingly subdued $5.8BN (upward revised from $.5.1BN) in October and the $4.3BN average of the past 6 months. This was the biggest monthly increase since last November, and was the first $20BN+ print since Jan 2023.

When looking into the details we find something remarkable: while non-revolving credit rose a modest $4.6BN…

… in keeping with the subdued increase in recent months as rates on auto loans make them prohibitive for most consumers while student loans are actually shrinking for the 2nd quarter in a row…

… what was the big shock in today’s data was the blowout surge in revolving credit, which in November exploded by a whopping $19.133BN, a record surge from the $2.9BN in October, and the second biggest monthly increase in credit card debt on record!

This, despite the average interest rate on credit card accounts in Q4 flat at a record high 22.75% for the second quarter in a row.

What is especially surprising about this conirmation that the bulk of holiday spending was on credit is that it takes place after several months of relative return to normaly, when consumers appeared increasingly reluctant to max out their credit cards due to record high rates, and at a time when the personal savings rate in the US has collapsed back near multi-decade lows in recent months.

Well, it now appears that Americans have once again done what they do so well: follow in the footsteps of their government and throw all caution to the wind, charging everything they can (and whatever they can’t put on installment plans which also hit a record late last year) including groceries, on their credit card, and praying for the best… or not even bothering to worry about what comes next.

In addition to massive debt to cope with Bidenomics, we now have Soylent Green.

Running On Empty? The Free Money Has Run Out (M2 Money Growth Has Been Negative For The Past Year!)

Jackson Browne said it best. The US economy is “running on empty.”

M2 Money growth is negative. And M2 Money growth has been negative for the last year.

The third and largest round of fiscal stimulus was in March of 2021. That’s when Biden’s popularity peaked at 55.1 percent.

Base image from 588 Biden Approval Ratings.

Why Biden’s Approval Rating Is Miserable

Income is rising and so are wages. Even real income is up. But real wages are another matter.

Personal income data from the BEA, hourly wages from the BLS, real hourly earnings and chart by Mish.

Personal Income vs Hourly Wages Notes

DPI means Disposable Personal Income. Disposable means after taxes.
Real DPI means inflation adjusted using the Personal Consumption Expenditures (PCE) deflator. Real DPI is a BEA calculation.
Average hourly earning are for production and nonsupervisory workers.
Real wages are deflated by the Consumer Price Index (CPI) not the PCE.
The BLS does not report a real hourly wage. I used the CPI-W index for production and nonsupervisory workers, produced by the BLS, as the deflator.

Personal Income Definition

The BEA defines personal income as “Income that people get from wages and salaries, Social Security and other government benefits, dividends and interest, business ownership, and other sources.”

Rental income is a part of other sources.

Three Rounds of Fiscal Stimulus

Round 1, March 2020: $1,200 per income tax filer, $500 per child(CARES Act) – Trump
Round 2, December 2020: $600 per income tax filer, $600 per child (Consolidated Appropriations Act, 2021) – Trump
Round 3, March 2021: $1,400 per income tax filer, $1,400 per child (American Rescue Plan Act) – Biden

The three rounds of free money fiscal stimulus (literally a helicopter drop), plus eviction moratoriums put an unprecedented amount of money in people’s hands. In addition, unemployment insurance paid people more to not work than they received working.

The third round of stimulus under Biden was totally unwarranted. However, it is also worth noting that Trump wanted a much bigger second stimulus package than the Republican Congress gave him. Trump is no fiscal hero.

For more discussion, please see Why Biden’s Approval Rating Is Miserable in One Economic Chart

The three stimulus packages, on top of supply chain disruptions, energy disruptions due to the war in Ukraine, and Bidenomics in general, set in motion the biggest wave of inflation in over 30 years.

Biden went from an approval rating of 17.2 percent to a disapproval rating of 17.2 percent.

Peak Free Money

In addition to declining real wages, perhaps Biden’s big problem is the free money has run out.

Biden’s popularity peaked in March of 2021 along with stimulus. Was that a honeymoon impact or peak free money?

[ZH: While not a perfect indicator, the lagged US credit impulse perhaps provides a proxy for US fiscal excess and when overlaid with Biden’s approval rating, it is clear that 2022’s re-acceleration did nothing for people’s faith in him… and it’s only got worse…]

I suspect a bit of each coupled with hope of more free money, especially student loan forgiveness.

Sending free money to Israel and Ukraine does not help perceptions of how Biden is doing. And neither does the border or ridiculous energy regulations that cost people money.

Biden keeps telling people what a great job he has done.

I don’t believe it and most don’t either. And that shows up in the polls no matter what reason you assign.

Can Biden scrounge up some more stimulus? Because the private sector is not doing well under “Open Borders Biden.”

How Do You Spell Contraction? M-O-N-E-Y (Velocity Of Bank Credit Crashes As Manufacturing PMI Sinks To Contraction)

How do you spell contraction? M-O-N-E-Y!

Take a look at this chart of real GDP YoY / Bank Credit YoY on the left axis and M2 Money growth on the right axis. I call this the velocity of bank credit. And it is sucking wind! Crashing to -13 in Q3.

Then we have US manufacturing PMI saw only two months in 2023 that were not in contraction and ended on a decidedly poor note with the final December print dropping to 47.9 (from 48.2 flash and 49.4 prior).

Source: Bloomberg

Across the board it was ugly with:

Renewed contraction in output as orders fall at sharper pace
Rates of inflation pick up
Joint-fastest drop in employment since June 2020

How bad is Biden’s fiscal policy? US interest payments on our bloated Federal debt is now higher than defense spending. Biden isn’t tuff enough to moderate spending or the border invasion.

US Fiscal Inferno! US Government Debt Now Bigger Than US Economy, But Unfunded Liabilities (Promises) Are $632k Per Citizen (As California’s Governor Newsom Gives Away Free Healthcare To Illegal Immigrants)

Yes, the US is engulfed in a fiscal inferno!

US government debt is now bigger than the US economy. This was unseen until 2012 when debt surpassed GDP for the first time.

In addition to almost $34 trillion in debt from our crazy spending, out-of-control government, we are on the hook for almost $213 TRILLION in unfunded liabilites (promises made to Americans that will likely not be honored).

The sad thing about the US Debt Clock summary is the $632,195 share per citizen of unfunded liabilties. That raises two questions. First, how can California’s Ken doll Governor Gavin “Greasy” Newsom give away free healthcare to ALL illegal immigrants? Second, since the invasion of illegal immigrants began under Biden/Mayorkas, will they be on the hook for the unfunded liabilities which they disordinately consume? Not likely. Maybe we should charge each illegal immigrant $632k admission fee.

California’s Ken doll Governor and fiscal imbecile Gavin Newsom.

Biden Demands Media To Start Reporting Good Economic News (15.1 Million Jobs Added In 10 Months After Covid Economic Shutdown Ended Under Trump, 15.5 Million Jobs Added Under Biden In 34 Months After $6.25 TRILLION In Additional Public Debt)

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 US Misery Index, Christmas Edition! Americans Experienced 20% Higher Food Prices, 19% Higher Rents And 61% Higher Gasoline Prices Under Bidenomics, Yet Misery Index Is Almost Back To “Normal”

Have a holly, jolly Christmas! Despite it being far more expensive under 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.

Americans should be in a better financial position heading into the holidays, according to a famous formula developed in the 1960s under President Lyndon Johnson.

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.

Housing Market Index Remains Depressed Under Bidenomics As Federal Debt SOARS (Its A Long Way To The Bottom!)

As AC/DC sang; “Its a long way to the ~~top~~ bottom.” But Bidenomics is sending us there!

Today, the NAHB/Wells Fargo Housing Market Index rose slightly on falling mortgages. But the housing market index remains depressed since Biden seized the reigns of power in 2021.

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.