patrick.net

Misc says

Ye[, purchasing PMI just came out today. It was barely positive coming in at 51.

Looks like heading into another recession :-/

When does a recession start ? around 45 ?
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As of 8/23/23, it is no longer forecasted to be "Inflation beyond the Stars". The yield on the 10 year bond is 4.21% and inflation over the next 10 years according to the bond gurus is gonna be 2.37%. Over the last few years, not only was inflation gonna be super low, but government bond holders were willing to accept a negative real rate of return on their treasury holdings. Now they want a real rate of return of 1.84% annually over those ten years.

Mortgage rates are about 7.5% for 30 year conforming loans. We could have these "HIGH" rates for decades.

This means a permanent decrease in living standards for younger Americans. House prices do not have to fall because interest rates go up. Neither do higher education costs. Recent college grads could have a $100k education loan at 2% now that exact same program is at 5.5%. The yearly interest differential is easy to figure out. Loans for new vehicles (only the highest paid segment of society can afford the payments and maintain the other niceties of living in a 1st world country).

Disillusionment is already rampant among the young. Looks like they will be stamped as being 2nd rate citizens through no fault of their own.

Misc says

This means a permanent decrease in living standards for younger Americans.

Can still build affordable housing such as 1200 square foot townhomes or rowhouses with 3 bedroom and 2 bath. Just need the local governments to approve and the developers to build. Housing is the biggest factor right now as far as standard of living, followed by health care insurance and access.

Mortgage rates are driven largely by inflation. So if inflation goes down then won't mortgage rates eventually catch up with inflation (which means following CPI and PCE).

I understand the 30 year mortgage rate also tracks the 10 year Treasury: https://www.mortgagenewsdaily.com/mortgage-rates/30yr-treasuries

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Inflation is forecast to be about 3/8 of a percent above the 2% target the Fed has set. So pretty close to what the Fed wants. Sure if the Fed drops inflation by that much then mortgage rates should decline that much...all else being equal. That still leaves about a 7% mortgage rate and who knows bond holders may want more than the 1.84% real rate of return on their investment. We just came out of a really weird time where Central banks forced bond holders to accept negative rates of return (after inflation for the US), but even a nominal loss for the Eurozone & Japan bonds. Mortgage rates track inflation, but the real rate of return the bondholders want on the 10 year has gone from about negative 2 percent to about a positive 2 percent, and given the low rates the Central Banks crammed down, the current mortgages just seem high.

In the US we have 30 year fixed rate mortgages because our forefathers didn't trust bankers. Here in the US as the rates rise there is generally less debt issued as it becomes more expensive. In the Eurozone with their variable rate mortgages, rate increases immediately suck cashflow from the family budget (with a certain lag).

Misc says

Inflation is forecast to be about 3/8 of a percent above the 2% target the Fed has set. So pretty close to what the Fed wants.

Why do you believe anything they say at this point? They've been lying about inflation for 20 years. They lie about literally everything. You must be aware of this.

They lowball a number, it's bullshit, they backwards revise it at the ministry of truth.

Start saving their predictions, literally, and the date, and then a few years later, see how far they were actually off by looking of the number being reported by Google or them or whatever, later.

Until just recently inflation had been below the Fed's target rate since the Great Recession. They were struggling to get inflation up. The problem was they were concentrating on the CPI and ignoring the rampant inflation in real estate and stocks.

Who coulda known that giving away free trillions of dollars could cause the CPI to go nuts??

Misc says

Who coulda known that giving away free trillions of dollars could cause the CPI to go nuts??

Yeah, Wolfman at Wolf Street website was warning about asset inflation and how that would lead to inflation as people feel more rich with their inflated stock gains, and willing to spend more on the latest AirBnB vacation rental, Mac Book, etc.

But everything has to eventually to settle and return to the mean. Historical rules and metrics ultimately are what significantly matter.

Housing has gone up 4% a year since the late 1940's according to Robert Shiller.

The stock market in general goes up about 5% to 7% above inflation each year over the long run.

Housing costs should not be more than 37% of household income.

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ad says

Housing costs should not be more than 37% of household income.

Yes, but that should be calculated with a 20 year mortgage. All the 30 year mortgage did is cause and keep going house inflation.

Ammo prices are down 20-40% on ammoseek.com. 22 LR can be found for 4 cents/round, while 6 months ago it was difficult to find anything below 9 cents. Time to stock up!

Bd6r says

Ammo prices are down 20-40% on ammoseek.com. 22 LR can be found for 4 cents/round, while 6 months ago it was difficult to find anything below 9 cents. Time to stock up!

I remember about 18 months ago when the cheapest cost was around $1 for 9 mm.

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Misc says

"House prices do not have to fall because interest rates go up. Neither do higher education costs."

So... what happened to Supply And Demand?

Did the Globalists abolish Supply And Demand? Or is it because Supply and Demand does not apply to monopolies?

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15% increase in food prices due to Biden economics

https://nypost.com/2023/08/24/bidens-food-stamp-expansion-linked-to-15-jump-in-grocery-prices/

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And now Dollar Tree is reporting problems with store theft.

https://www.cnn.com/2023/08/24/business/dollar-tree-theft-earnings/index.html

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ad says

And now Dollar Tree is reporting problems with store theft.

https://www.cnn.com/2023/08/24/business/dollar-tree-theft-earnings/index.html

That's goddamned sad. I shop at dollar tree every now and then, and the people there you can see aren't doing well. Imagine being so desperate you're stealing a $4 pizza or $1 plate or drinking glass?

Their dish-soap sucks by the way. It's all water. I just use it to clean off the worst of a plate before I dump it into a dishwasher with a soap wand. I guess it works well enough, but I wouldn't buy it again.

richwicks says

Their dish-soap sucks by the way.

Their cough drops don't work either.

Booger says

Their cough drops don't work either.

I don't trust any Dollar store medicines now either.

richwicks says

Imagine being so desperate you're stealing a $4 pizza or $1 plate or drinking glass?

Do not fall for the lefty line that thieves steal to feed their families. That would be believable if foodstuffs were taken. I suspect that Dollar Store thefts are done by the case or truckload by insiders or pros. After all, who would do a grab bag of stuff they could only fence for a few bucks? I also suspect that "seepage" may be used as an excuse by managers of poor performing stores.

HeadSet says

After all, who would do a grab bag of stuff they could only fence for a few bucks?

There is enough desperate people like the homeless who would do this. Also people take a few items because they know they can easily get away with the theft.

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richwicks says

That's goddamned sad. I shop at dollar tree every now and then, and the people there you can see aren't doing well. Imagine being so desperate you're stealing a $4 pizza or $1 plate or drinking glass?

It also might be that much of a societal norms or culture change for thefts like this to be common. People's character is that they are more likely to not hesitate to steal. Some or all of this may be driven by socieoeconomics.

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In France, their inflation rate is higher than here in the States. In true Socialist tradition, instead of letting prices decline, they have instead decided to destroy over production.

Yes, great financial minds of the Eurocrat bureaucrats at work.

https://www.msn.com/en-us/money/companies/france-to-spend-over-215m-to-destroy-surplus-wine-as-demand-continues-to-plummet/ar-AA1fMu1D?ocid=msedgdhp&pc=U531&cvid=c8b61181810a44139cf75df2ba1eadda&ei=18

https://rudy.substack.com/p/one-in-twenty

AmericanKulak says

But Republicans place the blame for soaring prices on 'Democrats' reckless spending and failed policies'

Oil companies are not adding new rigs since they claim they do not want to expand given Biden's energy policies. They claim it would be too risky to explore and add more rigs in an environment that is anti-oil and gas.

Florida Power and Light continues to increase electric rates while natural gas remains at a constant price; one major reason is that they keep building more solar power sites. FPL has adopted the Democrats position on renewable energy.

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T-mobile to lay off 5000 from corporate and support offices, but not frontline or retail employees, total employee reduction represents 7% of workforce.

I wonder if we'll start to see more layoffs and an increase in unemployment toward the end of this year, and if CPI and PCE will drop accordingly.

https://www.usatoday.com/story/money/2023/08/25/t-mobile-layoffs-cut-workers-jobs-nationwide/70680602007/

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Oh sure, they'll lower the price of their cell phone plans.

ad says

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T-mobile to lay off 5000 from corporate and support offices, but not frontline or retail employees, total employee reduction represents 7% of workforce.

I wonder if we'll start to see more layoffs and an increase in unemployment toward the end of this year, and if CPI and PCE will drop accordingly.

https://www.usatoday.com/story/money/2023/08/25/t-mobile-layoffs-cut-workers-jobs-nationwide/70680602007/

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In April 2020, T-Mobile and Sprint Corporation, merged to create a new T-Mobile, with the goal of giving customers access to faster speeds and better service at lower prices.

Just a year prior, then CEO John Legere touted that the merger would create more new, high quality, high paying jobs from day one.

"That’s not just a promise. That’s not just a commitment. It’s a fact," Legere wrote on T-Mobile's website.

Clearly that was a lie. Anyone thinking that a merger wouldn't result in layoffs is a moron.

Booger says

Clearly that was a lie. Anyone thinking that a merger wouldn't result in layoffs is a moron.

I'm reading more people are tapping into their 401K's. I know of one way to do this, which is called SEPP.

And this news about 401K's somewhat relates to the T-Mobile layoffs of white collar jobs.

https://www.cnn.com/2023/08/08/economy/401k-hardship-withdrawals/index.html

Maybe we'll see a drop in restaurant prices, vacation rental prices, etc. and consequently a drop in PCE and CPI, especially for services as white collar people will be more prudent consumers.

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ad says

Maybe we'll see a drop in restaurant prices, vacation rental prices,

I am sitting on the beach at the Jersey shore right now. I booked well in advance and got a great rate. I usually have to wait until September to get rates this cheap. Of course if I wait until last week or something it would have cost $80/night more.

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Car prices down due to lower demand (because of car loan interest rates rising) and also increased supply of newer automobiles.


https://finance.yahoo.com/news/car-market-just-flipped-10-130024504.html

The average price for a new vehicle in July was $44,700, a massive flip of $3,243 compared to the price in January, as reported by Kelley Blue Book. Prices have fallen by 1.7% since the start of the year, marking the first significant decline in car prices since supply shortages began affecting the industry in 2021.

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1) Weaker than expected jobs growth for August 2023 report: https://www.usnews.com/news/economy/articles/2023-08-30/adp-employers-add-fewer-jobs-than-expected-as-hospitality-sector-slows

2) Federal Reserve Bank of Philadelphia data seems to show recession has started: https://mishtalk.com/economics/philadelphia-fed-gdpplus-measure-sure-looks-like-recession-started-in-2022-q4/

See the above 2 links. More layoffs such as 7% of T mobile's white collar workforce means less middle to upper class who can go on vacation, buy a new car, etc.

It does not help that the Fed Funds rate is at 22 year high. But this tells me inflation should continue to trend downward.

I predict an unemployment rate of at least 5% by spring 2024, but there may be a lot of manipulation and lying such as reporting an economic recovery by late summer 2024.

Its all about the Dems keeping the White House, and they can't cheat enough to win an election during a recession.

So expect a lot of continued lies about the economy such as inflation and economic growth at least through early November 2024..

The problem is the Dems control everything from the federal bureaucracy that calculate the economic statistics to the mainstream media outlets that report what is spoon fed to them by the Birdbrain Biden admin.

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PCE rose by 0.2% from June 2023 to July 2023. I am focusing on monthly changes due to the "baseline effect" of comparing inflation to 12 months ago.

As long as annual inflation continues to remain below 4% for the next 6 months, and monthly increases are no more than 0.35% then I think inflation will continue to trend downward.

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https://www.usatoday.com/story/money/2023/08/31/july-pce-inflation-report-today/70723559007/

"An inflation measure that’s watched closely by the Federal Reserve edged higher in July, possibility raising the chances that the Federal Reserve will raise interest rates again this year.

Consumer prices increased 3.3% from a year earlier, above the 3% pace in June but below the 40-year high of 7% in June 2022, the Commerce Department said Thursday.

Much of the July rise was due to the fact that inflation already had started to slow somewhat by July 2022 and so the gap in prices between that month and July 2023 was larger.

On a monthly basis, prices rose 0.2%, in line with June’s increase, according to the personal consumption expenditures (PCE) price index."

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Saudi Arabia to extend production cuts. Go to Ycharts and look at world rig county and oil rig count; they are still way below early 2020 levels.

https://www.bloomberg.com/news/articles/2023-08-30/saudi-arabia-expected-to-prolong-oil-cut-again-survey-shows

Wonder what Birdbrain Biden is going to do if this extends into 2024. Or maybe he'll make a deal with them so that oil prices rise again after the November 2024 election.

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In this rare instance, the Saudis may actually help America by impeding Pedo Peter.

The second revision is noticeably less than the original estimate for each month. They need a recession at least 9 months before the November 2024 election.

That gives the Democrats enough time to claim an economic recovery when campaigning in August through October.

They need 3 months of constant news broadcasting about how the economy has improved, just like Clinton's first campaign was all about "its the economy stupid".
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AI like ChapGPT expected to replace coders, paralegals, teachers, and graphic artists among the jobs most affected.

https://www.businessinsider.com/chatgpt-jobs-at-risk-replacement-artificial-intelligence-ai-labor-trends-2023-02

Is AI going to do to coders like word processing did to clerk typists and it replacing the typist pool at work ?

Or think about how telephone operators had been affected by technology, or even how the US Postal Service has seen a drop in mail due to email, electronic payments, etc.

This means that labor costs will drop some for companies that use AI more, which should mean less inflation.

Look at how a lot of customer service agents are AI and it takes several minutes to work with them to finally chat with a customer service agent who is a real person.

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Roku to lay off 10% of its workforce as reported by CNBC today. It already laid off about 12% since last November.

Let's track credit card debt delinquencies and the unemployment rate for the next 6 months.