The government CPI data for August came in slightly under expectations. Nevertheless, a 0.3% month-on-month increase in prices is significant. And a dig into the numbers reveals something wonky. The way the government calculates housing costs drastically understates rising prices and skews overall CPI to the downside.
The Federal Reserve insists inflation is “transitory” and the economy is making “progress.” Yet, it continues with the extraordinary monetary policy it launched at the onset of the COVID-19 pandemic. Meanwhile, we’re seeing all kinds of data hinting that the economy may not be as great as advertised. Despite this, and even as prices continue to spiral higher, the Fed’s only monetary policy is talk. Peter breaks it all down on his podcast and drills down to the key question: what happens if the markets call the Fed’s bluff?
We’ve been talking about the inflation threat for months. But the markets have been acting as if the real threat is the Federal Reserve trying to fight inflation by tightening monetary policy. With every bit of inflation news, gold has sold off. But after last week’s hotter than expected CPI data, it looks like investors may be starting to see the light and realizing that the central bank can’t fight inflation. Peter Schiff talked about this apparent pivot in a recent podcast.
Millions of Americans remain out of work. The US economy continues to languish, burdened by government lockdowns and other pandemic-related factors. Retail sales have dropped precipitously over the last several months, underscoring the economic malaise. So, how is it that the housing market is booming?
There was a tremendous amount of volatility in the stock market this week with the NASDAQ entering correction territory and then rebounding. Is this just a blip on the radar? Or is the biggest bubble ever running out of steam? In this episode of the Friday Gold Wrap podcast, host Mike Maharrey talks about it. He also digs into what’s going on in the housing market and what it’s telling us about the broader economy.
Last month we reported that mortgage delinquencies soared at a record pace in April. Well, things have gotten even worse since.
The overall delinquency rate for mortgages on one-to-four-unit residential properties spiked by nearly 4% in Q2, reaching 8.22% by June 30, according to the Mortgage Bankers Association’s National Delinquency Survey. The jump in the delinquency rate was the biggest quarterly rise in the history of the survey.
Last week we reported on a looming wave of evictions on the horizon as the economic consequences of the coronavirus-induced government economic shutdowns begin to rear their ugly heads. Now for more gloomy news, there are also signs of trouble in the mortgage markets.
Mortgage delinquencies soared at a record pace in April. And that was toward the beginning of the pandemic’s economic impact.
Here is a summary of some of the significant economic data/news that came out last week.
Third-quarter 2019 new orders for durable goods remain on track for a second annual decline. August 2019 Real New Orders for Durable Goods showed a monthly gain of 0.2% [1.0% ex-Commercial Aircraft], but an annual decline of 4.9% [down by 2.1% (-2.1%) ex-Commercial Aircraft].
Pending home sales hit the lowest level in nearly five years in November, a sign that the US housing market will continue to get uglier in the near future.
Not too long ago, we reported that the air was starting to come out of housing bubble 2.0. As just one example, home sales in California hit the lowest level in a decade. And it’s not just California.
Now we’re seeing more signs of trouble. Pending home sales tanked in November, according to data released by the National Association of Realtors last week. The Pending Home Sales Index plunged 7.7% compared to November 2017, the biggest year-over-year percentage drop since June 2014.
Last week, we reported that it looks like the air is coming out of housing bubble 2.0. Now it appears the auto bubble may have also popped.
Yesterday, GM announced plant closures and layoffs due to sluggish sales. The big automaker said it plans to shutter five North American factories and slash around 14,000 jobs.