I remember giving a speech to Federal regulators in Washington DC and discussing the rise of housing rentership in the US. I said the US is veering towards a renter nation.
Today’s housing starts report revealed the biggest MoM jump in multi-family starts since 2016, and the highest SAAR for ‘renter nation’ since Dec 2023.
On a year-over-year basis, 5+ unit (multifamily) starts are are up while 1-unit housing starts are negative.
Unfortunately, the percentage change on a year-over-year basis were negative. -2.6% for 1-unit starts and -27% for 5+ unit (multifamily) starts.
Under Biden, home prices rose a whopping 38.3% while population (if you believe the US Census Bureau) rose 3.3%.
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.
The latest jobs report was like the Cornell Hurd song, “It’s just the whiskey talking.” Except that this time it’s just the Biden Administration talking … and their jobs reports have been corrected/revised repeatedly.
The latest jobs report saw Nonfarm Payrolls rise by 256k and mortgage rates (conforming) rose above 7%. But what happens when the recent jobs report is revised downwards?
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.
Was Freddie King correct? Is the US economy going down??
The US Treasury yield curve (10Y-2Y) has inverted to the positive side after a prolonged NEGATIVE inversion (from July 6, 2022 to Sept 5, 2024) marking the longest period of negative inversion since August 18, 1978 – May 1, 1980. Each negative inversion was followed by a recession.
The UST 10Y-3M yield curve tells a similar tale. The 10Y-3M curve inverts prior to recessions but goes positive just prior to recessions.
Yes, if the yield curve is a good predictor of recession, the US economy is going down.
Freddie King is playing a Gibson ES-355TDC guitar.
Existing-home sales have finally started to improve on a seasonally adjusted basis after a three-year decline.
Cause? Raging home prices combined with higher than normal mortgage rates. Home prices are up 35.4% under Biden while conforming 30Y mortgage rates are up 148%.
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.
US home prices in the 20 largest cities rose 0.32% MoM in October (the latest data from S&P CoreLogic Case-Shiller), considerably hotter than the 0.22% rise expected. However, despite the MoM beat, the pace of annual acceleration has declined to its slowest since Sept 2023. At 3.62% YoY.
The Biden/Harris economic “miracle” was simply massive Federal spending (and borrowing) combined with hiring Federal workers. This can be seen in the following chart of Chicago Fed manufacturing index compared with Federal spending. Great times in the first months of 2021, but as Federal spending slowed, so did the manufacturing index. Last seen at -10.71 in December 2024.
Joe Biden, sold his soul for family wealth at the crossroads in Delaware.
Confounded Interest - Anthony B. Sanders 
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