Right there with you. They've gone past blank check spending into some astral plane where money is just a nuisance not to be concerned about.
Gross Federal Debt as Percent of Gross Domestic Product This is what really keeps me up at night...from virtually every perspective. A societal threat coming full speed down the tracks with no adults in the room with the political stones and leadership skills to address the problem. To put things in perspective, if not at present, we are soon to spend more paying the interest on our national debt than we are for our national defense. If not in 2024, then certainly in 2025 and then the differential will mushroom. At the end of the Great Depression, interest totaled only 0.5% of national defense spending. At the end of WWII after the massive financing costs of the war and after the bulk of de-mobilization - 1947 - that number stood at 33%. At the end of Vietnam 30%. Most recent estimate for Fiscal 2029 is 120%. That is unsustainable, a clear and present risk to our society and the system is broken. Demonizing the opposition and pi$$ing on each other across the aisle that is the currency in trade of this clown show of a Congress will not solve the problem Lest we desire to cast political stones at our political opponents, the failure is long standing and bi-partisan. The Clinton administration was the last President to leave office after having successfully reduced the level of debt to GDP. The last Republican..... Gerald Ford. Before that.....couldn't tell ya
Well what's needed is a massive reduction in the size of Govt. Problem is: that'll be a major hit to employment - one that neither side will want to be stuck with.
Man, I just don't see any way the Fed is going to be able to start lowering rates in June. All of the indicators show that things aren't bad (except inflation accelerating) so moving rates down will be like pouring gas on the inflation fire. Those fellas are in a tight corner.
Agree with all of that. The Iranian mullahs and their collaborator/sponsor in Moscow are making matters worse as well. They both need their a$$es kicked. That said, our guy in the Oval Office ain't helping any either by forgiving $billions$ of student debt. Tough job being a central banker, you got to swallow everybody's crap then try and somehow make a gourmet meal out of it
Markets don't like inflation nor do markets like growth below expectations. What markets REALLY dislike is the combination of both - stagflation. Most recent data released today suggests that may be something to worry about...the worst of both worlds "Stocks fell sharply Thursday after the latest U.S. economic data showed a sharp slowdown in growth and pointed to persistent inflation." https://www.cnbc.com/2024/04/25/dow...flation-and-growth-concerns-live-updates.html
Sometimes we pessimists are right. If Joe wanted to prop things up a bit, he'd be opening all the oil leases up so we could take control of the price... but no, he's too hell bent on being green to do something beneficial to his own country.
More data today suggest there is more lingering inflation to be concerned about than stagnation. Growth in consumption and spending, tho slowing, remains stronger than expected at this point in the business cycle after significant Fed tightening, thus wringing the last mile out of the inflation "stickiness" is the larger problem for now, at least from the Fed perspective. Labor markets continue to be healthy and consumers continue to spend money. Some pundits now doubt we'll see any rate cuts at all in 2024 with with a few suggesting possible rate hikes! "Inflation showed little signs of letting up in March, with a key barometer the Federal Reserve watches closely showing that price pressures remain elevated. The personal consumption expenditures price index excluding food and energy increased 2.8% from a year ago in March, the same as in February, the Commerce Department reported Friday. That was above the 2.7% estimate from the Dow Jones consensus." https://www.cnbc.com/2024/04/26/pce...ed-inflation-measure-rose-2point8percent.html
I'm no pundit, but I've been pretty sure we'll see no rate drops unless the economy completely falls on it's face. Sure hope for no hikes... that isn't good for anyone. You can remove energy from the price index, but you can't remove it's effect on moving and selling goods. Drop the price of diesel down to $2.50 and watch what happens. Oops, that's not in the playbook...
Federal Reserve issues FOMC statement Fed Meeting Day...to the surprise of on one, Fed keeps rates unchanged "Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated. In recent months, there has been a lack of further progress toward the Committee's 2 percent inflation objective." On a related front, tho not a reduction in the policy rate, the Fed annlounced that it will begin to slow the pace of it's balance sheet reduction - "the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion." in essence announcing the beginning of the easing of financial conditions with a very modest first step. Initial market reaction was a solid pop in equities and declines in market interest rates probably as a sigh of relief that there was no hint of a change in stance away from easing, tho still chewing on Chair Powell's post-meeting comments. Final verdict TBD, stay tuned
Labor is gonna determine if this thing nose-dives. If companies start cutting payrolls, it'll get dicey fast.
It's pretty clear that the Fed isn't going to be able to get to the last mile in their battle to achieve their inflation goals with unemployment hovering near all-time lows and current levels of consumer demand. There is going to have to be some softness in the labor markets to get to 2%. The big question is will the landing be "soft" or are we going to have to endure some level of pain. With so much federal money continuing to splash around in the economy by way of infrastructure, chips and IRA(?) acts along with his incessant debt forgiveness regime and the massive private investment we're seeing to continue the build out of the AI infrastructure, it's hard for me to see it going south fast anytime soon. I'm still in the "soft landing" camp. I expect growth to slow, modest rise in unemployment with perhaps a small, short contraction in output. That said, a harder landing is certainly within the range of plausible outcomes
I said labor, but energy could also torpedo any good times on the horizon. If the middle east erupts into full blown war oil prices could go berserk, and reek havoc on the economy as well. (since we choose not to produce our own) I really don't know what to expect, but I am a pessimist by nature these days. Guess the older I get the more I want the kids off my lawn!
https://www.cnbc.com/2024/05/03/jobs-report-april-2024-us-job-growth-totaled-175000-in-april.html "The U.S. economy added fewer jobs than expected in April while the unemployment rate rose, reversing a trend of robust job growth that had kept the Federal Reserve cautious as it looks for signals on when it can start cutting interest rates. Nonfarm payrolls increased by 175,000 on the month, below the 240,000 estimate from the Dow Jones consensus. The unemployment rate ticked higher to 3.9% against expectations it would hold steady at 3.8%." Could be just the kind of number that the Fed was looking for....market sees "Goldilocks" and celebrates as stocks surge and market interest rates tumble
Inasmuch as 70% of our GDP is driven by personal consumption, the health watch of the economy typically has all eyes on the consumer. Bank of America, with it's 69 million customer households, is in a unique position to gauge the spending behaviors and financial health of the consumer. They regularly publish a good summary assessment of their data in their "Consumer Checkpoint". It is closely watched by serious observers of the economy and represents one the best gauges of consumer health almost in real time. My take, "soft landing" scenario remains among most likely outcomes Among key takeaways: "• Lower-income spending growth remains above that of higher-income households in Bank of America data. And it appears lower income households' after-tax wages and salary growth has risen, while savings buffers remain. But the apparent cooling in the labor market warrants close watching from here." "...spending momentum appears to continue to be relatively soft but stable." https://institute.bankofamerica.com...mic-insights/consumer-checkpoint-may-2024.pdf
ECONOMY CPI report shows inflation easing in April, with consumer prices still rising 3.4% from a year ago "Inflation eased slightly in April, providing at least a bit of relief for consumers while still holding above levels that would suggest a cut in interest rates is imminent." Latest inflation data has markets clearly happy with the news as open market rates declined and both S&P 500 and Nasdaq hit all-time highs at the open. Goldilocks still in play, we'll see.... https://www.cnbc.com/2024/05/15/cpi...umer-prices-rose-0point3percent-in-april.html