Economic News
Trending Economic News...
October 4, 2024
In a total shocker with the election one month away, the monthly job numbers turn out to be a blowout. Way better than expected. Who would have thought?
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This from the very same agency that overstated the twelve month run rate by over 30% or 818,800 jobs just a few weeks back.
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I spend my day running our businesses and working with companies in the Great Lakes. It is noticeably slower on the ground. I could care less what people in cubicles in Washington D.C. say, the economy is weakening.
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A summary at https://www.reuters.com/markets/us/us-job-growth-surges-september-unemployment-rate-falls-41-2024-10-04/
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September 19, 2024
The Federal Reserve reduced interest rates by 50 basis points (.50% to most Americans). The prime rate is now 8.00% down from 8.50% prior.
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Lower rates tend to stimulate borrowing and increase economic activity.
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We are six weeks from an election. The Federal Reserve has a policy of remaining above politics. The problem is that cutting rates favors the incumbent. As a lifetime watcher of the Federal Reserve, I am profoundly disappointed.
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The timing is really suspect. The country continues to hurtle toward a hyper-partisan vortex we may never recover from.
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Really nicely done piece here.
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https://www.jpmorgan.com/insights/outlook/economic-outlook/fed-meeting-september-2024
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August 21, 2024
The US Bureau of Labor Statistics dramatically overstated the number of job created in the twelve months running April 2023 through March 2024. Total job creation was in fact 818,000 less than reported.
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Economic growth is likely weaker than these very same people are telling us.
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Nice summary here at https://nypost.com/2024/08/21/business/us-economy-created-818000-fewer-jobs-than-initially-reported/
August 15, 2024
​Debt, debt, and more debt. Inflation runs faster than personal income so people begin to borrow to make up the difference.
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A ticking time bomb.
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July 29, 2024
While we slept last night, the national debt broke $35 trillion. Yes, you read that right. $35,000,000,000,000 in debt.
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We will crack up. Write it down. Not sure of the date, but you cannot borrow $2 trillion per year and pay $1 trillion in annual interest and not go belly up.
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Our economy is built on deficit spending. Look back at the default in Greece. Look at the default of many nations in Central and South America.
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Plenty of pain dead ahead.
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https://www.foxbusiness.com/politics/us-national-debt-hits-new-record-35-trillion
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July 25, 2024
Second quarter GDP (Gross Domestic Product) came in nicely above expectations. I am a bit skeptical but two specific factors helped the number. First, people are using savings to consume (buy things) which is a game that eventually runs itself out. Second, inventories were a significant portion of growth. Those inventories will be sold in future quarter potentially hurting future growth.
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Nice piece by CNBC on the data here....
https://www.cnbc.com/2024/07/25/us-gdp-q2-2024.html
July 22, 2024
The Crowdstrike outage was a fiasco for the world. A single software update failed and sent the airlines, banks, and health care system into a tailspin.
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The country needs to look at the high concentration in areas like software, hardware, banking, and health care.
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When a failure hits one of these large players, the whole system is rocked. There will be consequences to the global economy.
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Here is a link to a great piece on the meltdown...
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https://abcnews.go.com/US/american-airlines-issues-global-ground-stop-flights/story?id=112092372
July 21, 2024
Last Saturday, President Trump was nearly assassinated in Pennsylvania. Had he in fact taken a fatal shot, I believe we would be in chaos this very day.
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Earlier today, President Biden dropped out of the 2024 race less than 30 days before he was to accept the nomination of his party.
Uncertainty is not good for the economy. It gives everyone the "yips" as the say in golf. Uptight. Cautious. Frightened. Concerned.
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Expect the second and third quarter gross domestic product (GDP) to be softer than original forecasts.
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June 18, 2024
The Congressional Budget Office (CBO) updated projections for the budget deficit for 2024.
Houston, we have a problem....
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The projection, which was presented with only about 100 days to go in the current fiscal year, shows the deficit running $400 billion higher than the last projection in February. Let that sink in. The deficit for the year will be $400 billion higher than initially expected.
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So the deficit will not be $400 billion, the increase in the size of the deficit will be $400 billion higher. The deficit will exceed $1.9 trillion for 12 months. We are taking in more money actually, but spending like drunken sailors. (No offense to drunken sailors).
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We are on a path of destruction. In a growing economy we are running a huge deficit. What is going to happen when the downturn takes hold and the economy goes into recession (it may already be there...)? Will we borrow $3 trillion or $3.5 trillion or more?
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Pretty good piece from The Hill. Take a look here.
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June 5, 2024
ATT is reporting a large outage.
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We will see more cyberattacks and more hacking. I personally know of a company in Wisconsin that paid ransom via Bitcoin to regain control of their IT systems.
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Attacks on our companies can cost little and do tremendous damage.
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Let's hope our country is up to the challenge.
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May 30, 2024
The slowdown in growth has arrived. Arrived rather suddenly in fact.
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The 2024 first quarter gross domestic product fell to a rate of 1.3%, down from 3.4% in the fourth quarter of 2023. Remember that is not 2.1%, it is a slowdown in the rate by almost 62%. In short, the economy is growing at a rate far slower than in late 2024.
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Higher interest rates are biting as well as the end of much of the stimulus funding (all borrowed) from the government. Inflation is still a problem and many people are tapped out. It is clearly showing across many sectors.
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It will be interesting to see the effect on the presidential race.
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April 28, 2024
I was at Home Depot last week purchasing some framing lumber. As a buyer it was quite refreshing. OSB (Oriented Strand Board) in 1/2" was under $20 per sheet. 2"x4" common in the 8' length were $2.45.
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Lumber has collapsed back to the range five years ago. Remember the lumber pricing panic in 2021 and 2022? Funny thing happens to framing lumber when mortgage rates are artificially reduced to under 3%.
Whenever I see prices of any commodity skyrocket and the media tell us "this time it is different because..." I break into a smile.
All commodities behave in a cyclical manner. Prices stay flat. Prices rise sky high. Prices collapse. Prices revert to a tight range.
Take a look at softwood lumber prices in this graph. Funny thing happened on way to $2,000. We went to $500.
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https://www.statista.com/statistics/1239728/monthly-lumber-price-usa/
The peak of business mistakes happen at panic highs and panic lows.
Keep that thought in your heads when you are feeling stressed about something in your specific business or market.
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April 27, 2024
Another one bites the dust!!!
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Last night bank regulators seized Republic First Bancorp, based in Philadelphia. It has been in trouble for some time now. Time ran out last night. 32 branches with $6 billion in assets.
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Higher interest rates and the unfolding commercial real estate meltdown are pressuring banks nationwide. See the "Bank Failures"section of this site to better understand how banks unravel.
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This piece at the New York Post lays it out.
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By the way, this is happening in an economy said to be healthy and expanding. I work with small and medium-sized businesses all day. We own a manufacturing business ourselves.
The economy is unquestionably slowing.
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April 25, 2024
The first quarter Gross Domestic Product came in well below expectations. The economy grew at 1.6% rather than the expected 2.4%. Remember the math here. That is not 0.8% lower than expected. It is 33.3% lower. Inflation in the quarter also ran hotter than expected at 3.5%.
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We are in a fix. We have a slowing economy and high inflation. We are also running a $1.7 trillion annual deficit in allegedly good economic times.
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America needs a whole bunch of adults in the room and they are nowhere to be found.
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Read this piece. I may not agree with all of his politics, but Jamie Dimon at JP Morgan Chase is not stupid.
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April 24, 2024
Interesting moment earlier today. A lender I have known for years called me on a commercial property renewal. Despite a nearly 40% equity position and more than adequate debt coverage, the existing lender passed on the renewal.
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The owners were shocked and are now looking for a new lender.
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We are WAY overbuilt in many urban markets. Office buildings, medical offices, retail space, and even warehousing is way overbuilt. The bank was worried about the FUTURE lease rates and occupancy, not what is happening today.
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The commercial real estate market meltdown ain't even in the first inning. Remember that.
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April 19, 2024
Congress appears poised to pass aid for Israel and Ukraine.
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Regardless of where you stand on this, we have a problem. Every penny of that aid will be borrowed and the bills handed to future generations.
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April 18, 2024
Mortgage rates rose to 7.26% for the 30-year fixed rate. Housing sales are beginning to decline and inventories are building. Mortgage rates are literally double what they were just a few years ago. This trend will likely continue.
Here is a nice article on March new home sales.
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https://www.cnbc.com/2024/04/18/march-homes-sales-dropped-despite-a-surge-in-supply-heres-why.html​
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April 15, 2024
Treasury yields continue to climb higher. The ten-year treasury, that is a benchmark for mortgages, has climbed to 4.64% today. It fell as low as 3.86% at year-end on hopes of rate cuts.
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The people talking about six rate cuts this year while inflation continues to run near 4% are dreaming.
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April 14, 2024
The meltdown in the commercial real estate market is upon us. An office tower in downtown St. Louis sold for $3.5 million, down from a sale of $210 million in 2016. Yes, your math is correct. The value fell by 98% in eight years.
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Here is a link. The article is almost disturbing. Some of our great cities are well on their way to becoming wastelands.
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https://therealdeal.com/national/2024/04/13/downtown-st-louis-hits-commercial-rock-bottom/
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As the collapse in office tower prices accelerates, banks will find themselves in tough straits as well.
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