Consumers continue to add to their record level of debt as higher prices squeeze wallets.
Americans added another $40.1 billion to the debt load in June, according to the latest data from the Federal Reserve. That represents a 10.5% year-on-year increase.
Despite back-to-back contractions in GDP, President Joe Biden, Fed Chair Jerome Powell, Treasury Secretary Janet Yellen and all of their supporters in the corporate media insist the US economy isn’t in a recession. But the only data they ever point to in order to back up their assertion is the “strong” labor market.
The problem with this spin is the labor market is a lagging indicator and it’s starting to show cracks.
Personal income from all sources adjusted for inflation — real income — fell for the second straight month in June and was down 1% on the year. But American consumers continue to spend. How can this be?
They’re running up debt at a dizzying pace.
This undercuts the narrative claiming the American consumer is “healthy.”
Yesterday, an Israeli law went into effect banning the use of cash in business transactions over 6,000 NIS ($1,700). Private cash transactions can’t exceed 15,000 NIS ($4,360). This is yet another escalation in the “war on cash.”
The Federal Reserve delivered another 75 basis point interest rate hike at its July FOMC meeting. This pushes the federal funds rate over the 2% threshold to between 2.25% and 2.5%.
The mainstream media emphasized the size of the hike. One headline called it “a second super-sized hike,” with many other mainstream pundits noting that it matched a June hike was the biggest since 1994. But it wasn’t as big as the full 1% hike everybody thought was on the table after we got June’s flaming hot Consumer Price Index (CPI) data.
Here’s the question: has the Fed reached the end of its rope? Will this be the last hike in this cycle?
Inflation and rapidly spiking prices aren’t just a problem in the US. It’s gotten so bad in Europe that that perpetually dovish European Central Bank (ECB) has been forced to go hawkish.
But not really. Just hawkish for the ECB.
Last week the ECB raised interest rates for the first time since 2011. The bank surprised markets, raising all of its policy rates by 50 basis points. That pushes its deposit rate all the way to — zero.
You don’t have to worry about that recession anymore. The White House fixed it.
And by “fixed it” I mean it just changed the commonly held definition of a recession.
On July 1, a Virginia law extending and expanding a sales tax exemption on the sale of gold and silver bullion and coins went into effect. Ending the sales tax will relieve some of the tax burdens on investors, and take a step toward treating precious metal bullions as money instead of a commodity.
Putin is causing inflation. Greedy corporations are causing inflation. COVID-19 caused inflation. We hear all kinds of reasons for the recent spike in prices. And now we have a new one. It’s the millennials’ fault.
This is all wrong and it illustrates the problem with redefining inflation to be something it isn’t.
Retail sales rose 1% in June after a 0.1% decline in May. Mainstream media breathlessly reported that the jump in retail spending “eases” recession fears.
Does it though?