Today's economy
Robust or at a stand still?
Our government continues to say how strong it is. The President continues to tout how well the stock market is doing as an indicator of how well the economy is doing. This is not a good indicator of the economy’s health.
The reality is the economy is barely moving along. Housing is un affordable. Fuel prices are too high, even though it has been dropping a few cents. Interest rates are far too high. Credit card debt is at an all time high.
The bubble is about to burst. We are on borrowed time economically and using borrowed money. The government continues to print money out of thin air and consumers are using credit cards to pay for food and other essential items. This is quickly placing them further and further in debt. I see this as a real indicator as to how the market is doing.
Interst rates are far too high. The President say he would lower rates on “day one”, yet the FED has only lowered rates a fraction of a point. Real rates must be lower by a point or two. The housing market is slow with houses staying on listing for a longer time. Besides they are priced out of the reach of first time home buyers. Housing starts are down. Until we see rates drop, and the prices of homes come down there will be a bubble and no homes will sell.
The last jobs report stated we created no jobs and with the government shut down, more people are filing for unemployment. Therefore we are now in negative numbers. This is the fault not only on Trump but also on Biden who started these terrible policies we are now living with.
As I see it, bankruptcies will go up. More people will be homeless, and credit debt will need to be written off bank balance sheets. This is not a good sign for the economy.
Loans will start to get tight again. Car prices now average $50,000. Thats not a good sign for either the consumer or the auto industry. Dealers are sitting on cars for months only paying interest on that unsold inventory. What happens when they default on loans?
As I see it we need to make changes and do it fast. We are on a deep slope and we need to reverse course. We need to do this quickly.
What do you think? Do you see the economy strong or weak? I would like to hear from you.
Thanks Doug for your note. I agree with what you wrote except higher interest rates. I believe lower rates will spark the economy creating jobs causing more taxes to be collected. With any hope, cars and houses will come to reality and prices will drop. We need to go back on the gold standard. Like the Japanese, we need to stop printing money to curb inflation. Time will tell.
In order for the U.S. to have a strong economy it needs a strong currency - that gains value from interest on Bond Markets... it's all great until no one want's your Bonds and the Fed is the only buyer of last resort of U.S. debt.. Lowering interest/lending rates actually robs everyone of their savings/wealth; floods the markets/economy with more easy money (worthless paper) - more hyperinflation - more govmt malfaesance. Hyperinflation is the hidden tax that makes you believe homes are an 'investment'. Inflated home prices (bubbles) fool everyone without considering nominal values of money over a 30-year Home Loan...the home didn't gain any real value - we just lost the purchasing power of our currency. As for the economy- it's one big Ponzi that will unravel very painfully - consolidation of wealth for the oligarchs as always... boom bust business cycles we've had over the last 50-years are nothing like what is headed our way. Hedge yourself with PMs.