The Biden Recession Has Arrived

[Geee]

Issues & Insights

No doubt about it, the economic news in recent weeks has been relentlessly negative. Indicator after indicator shows activity plunging sharply in key parts of the economy. Now, a widely followed indicator signals economic growth is likely to be zero in the current quarter, after the first quarter’s “unexpected” 1.4% decline.

Buckle up, looks like we’re entering a recession, folks.

Let’s review just some of the economic carnage of recent days:

 

• The Fed raised interest rates by 3/4 of a percentage point on Wednesday, the largest hike since 1994, as the central bank desperately tries to rein in our near-9% inflation rate.
• Mortgage rates surged above 6%, the highest since 2008, a level that is likely to tank home sales and hit consumers’ pocketbooks hard as adjustable-rate mortgages move upward along with interest rates.
• Producer prices soared at a 10.8% rate in May, an ominous sign of higher inflation for consumers down the road. That followed last week’s 8.6% yearly CPI number, the highest since 1981.
• Retail sales fell 0.3% in May, but jumped 8.1% from a year earlier. A good sign? Hardly. Adjusted for CPI inflation, growth was minus 0.5%.
• Small business optimism is its lowest ever, the National Federation of Independent Business said. This is key because small businesses are the No. 1 employer in America, usually first to hire in good times and first to fire in a slump.
• “Meanwhile,” AP reports, “the national average price at the pump reached $5.01 per gallon on Tuesday, up from $4.45 a month ago, and surging more than 60% in one year.”
• And before Wednesday, when the stock market rallied in relief that the Fed finally recognized the seriousness of the inflation problem, all of the post-Trump stock market gains had been erased.
• The Atlanta Fed’s GDPNow indicator, a kind of running tab of GDP data, fell to zero on Wednesday. A rule of thumb says two or more quarters of zero or negative growth equals a recession. By that standard, the Biden recession is here.

[Valin]

Went to my neighborhood Little Store yesterday (Coffee, Bread, Milk, Eggs 2packs of smokes) $39.44. 

[Valin]

@Geee