A Gallup news survey [DATA HERE] indicates that eight out of ten Americans expect higher prices and continued rising inflation, as the working class can see the through the smoke and mirrors of the Biden economy.
Overall, there are multiple datapoints that show the economic quagmire that is taking place right now. Gasoline continues to rise in price, as oil costs continue to skyrocket as an outcome of Biden energy policy. Food store prices have only just begun to show the higher prices that are built into the replenishment process.
Newly arriving goods overall are at a much higher price that previous inventory. The 30, 60 and 90-day terms of purchase order fulfillment are now reflecting the cumulative cost increases at every stage in the supply chain. Inbound prices to retail are still climbing. This is an economic quagmire created by inflation that cannot be avoided.
Fuel, food, home energy and home prices overall are rising. As a result, durable good spending has contracted. CTH has pointed out this dynamic for almost five months; however, the actual data is difficult to extract, because the scale of government spending in 2021 has clouded all of the economic indicators.
The official government inflation statistics at 7 to 9% do not accurately reflect the real inflation being felt by consumers, which is in the 25 to 40 percent range for highly consumable products. If you look around your local community, it is not difficult to see that working class Americans have modified all of their spending priorities to deal with the food, energy and housing inflation that cannot be avoided.
Inventories are climbing. [Article] The pundits claim inventories are building as supply chain issues are resolving. However, that’s not the real story. Inventories are climbing, productivity is dropping, and the Purchasing Manufacturers Index (PMI) is showing deceleration in manufacturing outputs.
An interesting backward looking graphic from Zero Hedge identified something CTH readers may remember discussing last year. We observed a significant skew inside the machinery of the economy that was created by the massive covid spending bill in early 2021.
The scale of appreciation in the value of homes in the real estate sector seemed to peak in the last two weeks of May and first two weeks of June 2021. From that point appreciation continued, but the rate of appreciation was dropping. Something shifted.
This declining rate of appreciation coincided with the shift in massive investor driven purchases in real estate.
The big hedge funds and financial portfolios started buying homes, and this dynamic created an artificial appreciation rate outside the Main Street worker home-buying dynamic.
Home value increases were not driven by working class families buying homes or moving up. Instead -on a macro level- home values effective mid-2021 were driven by institutional investors shifting to holding real estate assets instead of tenuously more risky paper.
The bottom line is this. Despite the indicators, which have been made useless by massive amounts of money pumped into the economy, we have been in a contracting economic position since mid-2021.
This is a very important aspect to accept when you are thinking about your current financial position, and/or what you may need to do going forward.
If you recognize the absence of real economic activity surfaced mid-2021; and if you accept that absence was hidden by economic activity generated by the spending of government funds injected into the economy; then you can better predict the depth of the hole that was covered up by government intervention.
Accepting that reality then the irreconcilable data starts to make things make sense:
♦ November 2021 retail employment hiring was down. Why? This should have been the pre-holiday hiring spree. However, retailers saw something in their brick and mortar sales that stopped them from hiring.
♦ The third quarter U.S. productivity (June, July, August) was down 5%. Why? If everyone was spending their COVID stimulus, why wasn’t manufacturing making more stuff? The reality was that wholesalers were clearing out product inventories as they knew inbound replacements would cost more…. so, they replaced less.
♦ Inflation wasn’t “transitory”? Why? Because the inflation was driven by the perfect storm of energy policy, monetary policy and government spending.
♦ December 2021, retail sales were lower than December 2020. Why? Because people bought less stuff, because people had less disposable income, because food, fuel, energy, home heating and home living costs were chewing up our paychecks and savings.
♦ The U.S. savings rate started rapidly declining. Why? Inflation.
♦ In the third and fourth quarter 2021, U.S. workers started quitting more (JOLT’s report). Why? A combination of vaccine mandate (minor cause) and people jumping jobs to get higher wages because inflation was crushing them (major cause).
The people predicting more inflation all the way through 2022 are correct. We have only just recently seen the first wave of 2022 product inflation hitting the supermarket in the past two weeks. There will be more waves as the prices embedded inside the cumulative supply chain have yet to surface.
However, stop and think about this overall economic situation, a real quagmire, as identified by the simple datapoints above. The professional political class and financial pundits will never admit the Main Street economy started contracting in the middle of 2021. From their perspective, the money pumped into the system was real. It wasn’t. It was all artificial economic stimulus.
Now, into this very specific -and never before experienced- economic quagmire, where we are supposed to pretend not to know things, the Federal Reserve is about to raise interest rates.
WASHINGTON (AP) — The Federal Reserve said Wednesday that it will “soon” be time to start raising interest rates, a key step in reversing pandemic-era policies that have fueled hiring and growth but also high inflation.
The Fed is expected to lift its benchmark short-term rate from zero as soon as March, when it also plans to phase out monthly bond purchases that have been intended to anchor longer-term rates.
Chair Jerome Powell said at a news conference that these actions will help prevent high inflation from becoming entrenched and that the central bank can manage the process in a way that prolongs economic growth and keeps unemployment low. (more)
As I have just outlined above, the “economic growth” they cite is not real. The ‘economic growth‘ was created by government spending.
The government spending has stopped. The cover over the hole is being removed, and the Fed is raising interest rates.
What do you think is about to happen?
FUBAR.
When I am wrong, stop listening to me. In the interim, prepare your family accordingly.
Add to this article by Sundance that it was announced today that the US balance of trade crossed the NEGATIVE $1 TRILLION mark for the first time in history.
I read an article two months ago about the Boston region at risk for LNG shortage because MA failed (refused) to allow the gas lines to run down from Canada. Maybe this nearing NE snow storm is raising concern.
This may not belong here, but get a carton of whole milk yogurt with live culture. Once you have that you can keep making your own yogurt into infinity if you have whole milk. Soft cheese is easy. Just whole milk and white vinegar. Search recipes.
Hope it helps someone save money
Lemon juices serves instead of vinegar. The cheese is akin to the Indian paneer. It squeaks when but 🙂 Tell Leftards that it is nano insects screaming…
If you press it overnight, and rub the ensuring block with salt, in three months in an airy cellar you get hard yellow cheese.
What’s coming? Another $2T+ stimulus plan. The uniparty will happily oblige.
There never should have been 2 weeks to slow the spread, nor trillions injected by the PDJT admin – it’s a slimy, disgusting, slippery slope. Give the uniparty an inch…
Today I noticed a half-gallon of ice cream looks like a pint.
There are NO half-gallons, less ice cream with a bigger price. Also, the watering down of canned goods and frozen entrees is noticeable. Everything tastes the same…dishwater. I’ve started making my own bread and bagels….tired of paying $5 for it. As Dylan said, “The times they are a’changin.”
Ah Publix still has real half gallons!
“ The government spending has stopped. The cover over the hole is being removed, and the Fed is raising interest rates.
What do you think is about to happen?”
Given that FED Chairman Powell has indicated they will continue to buy Mortgage Backed Securities and Treasury debt, I think Powell is trying to keep the housing bubble inflated, even as interest rates rise.
The stock market’s recent 1,700 point drop took $7,300 out of the average IRA account. Evidently, it is less risky politically to damage retirement savings than it is to allow for a housing correction.
When subprime went “tits up” in 2008, the economic backlash nearly took down the globalist financial system. They cannot afford a repeat occurrence.
It is still going to be a 5 year inflation cycle. We are finishing year 1. 4 years from now your paycheck will have shrunk by 35%.
And the real estate market, does anyone here have a good feel for the direction it’s headed? And when?
Only the central planners know for sure. Go with your gut. Only you know your personal circumstances.
As I posted above, I expect congress will continue to fund the gov, AND keep passing massive stimulus bills. If that happens, inflation continues upward and the bubble just keeps getting bigger until … you know.
The only thing that would stop it is EVERYONE calling their senators to demand no more spending. Start cutting instead.
The responsible approach is politically impossible at this point – raising interest rates big, moving from quantitative easing to tightening. That would crash the stock market while inflation is still high. But delaying the inevitable just makes the consequences more extreme.
Depending how long this continues, the USD may falter as the world reserve currency – then we’re really sunk. Maybe that’s integral to the WEF plan.
As for me I’m going to use less ,spend less,stay home more, avoid using the credit card etc.
So I would think others will do the same. Even tho that will hurt businesses and jobs.
We’re going into survival mode.
That’s why I’ve spent the past two years doing home improvements and stocking the pantry. Prices will never come back down
Once they go up.
None of this will improve with these people in charge.
To ban monoclonal treatment is a huge indication of the political mindset. They will not be looking out for our best interest.
We do need to look out for each other and look up. The stage is being set for our Redeemer to return.
Wouldn’t want to be them
Last I saw earlier a barrel of crude was rapidly approaching $90.
Meanwhile non working class residents of America are receiving large increase in their SNAP benefits and other government assistance to keep them happy democrats.
On a similar note relative to the spending, observationally I believe the stock markets are artificially inflated for the same reason.
I had read an article (maybe Zerohedge) wherein some analyst was saying if the NASDAQ gets below 14,000 all bets are off so I looked up the 5 year graph (link below) on NASDAQ performance to try to understand if there was something visual to confirm his speculation. I did not see anything there at all. But I did find a curious occurrence relative to the latest unprecedented climb to its peak of 15,973 on 11/16/21.
Note the depth of the pandemic drop was at 7,360 on 4/1/20. The country was shut down at the time but the ascent began in spite of the shutdown. Why? What was happening? I can’t tell you everything that was happening but I do know of one substantial thing that was happening. The very first STIMULUS checks were about to be deposited in just 12 more days. Since that time the NASDAQ added more than 50% gains on top of its PREPANDEMIC all time high.
What else has happened since then? Simple. TRILLIONS more government spending bills have flooded the market. Leaving one to question whether the market gains are based purely on the trillions of government spending or new in-demand NASDAQ company products, services and performance.
Off the top of my head, without exhaustive research to the contrary, I’m going with what I’ve said all along. Market growth is artificial and the vast majority of it is stimulus/government spending based. Not exactly a sustainable path forward.
https://www.nasdaq.com/market-activity/index/comp
Dow just posted 4Q financials and compared to year prior increased profit on 4% less volume. Reported prices were 39% higher than 1 yr ago. Here is the proof that can not be hidden that SD talked about months ago regarding the inflation continuing to rise based on the cost increase of precursors used to produce our products and packaging. And Dow is expecting next quarter to be just as “strong” (meaning more price increases?).
https://apple.news/AePGtZQDvRZ6HRVM7urNDxA
When a sports team loses as often as the current administration has, the coach gets fired. Brandon is a full on loser.
You’re working from a faulty assumption. Biden isn’t in charge of anything, his dementia precludes it. It’s the people behind the scenes who are controlling him.
In an election year?
Wow, things must really be bad.
If inventories are up, I wonder how much of that is work-in-progress, rather than finished goods?
I believe a couple thousand years ago a man named John was given a vision of where we’re at.
A day’s wages for a loaf of bread,
“(5) And when he had opened the third seal, I heard the third beast say, Come and see. And I beheld, and lo a black horse; and he that sat on him had a pair of balances in his hand. (6) And I heard a voice in the midst of the four beasts say, A measure of wheat for a penny, and three measures of barley for a penny; and see thou hurt not the oil and the wine.” (Revelation 6:5-6)