De Groote Financial Group March 31, 2022 No Comments

Week Ending March 25th, 2022

“A picture is worth a thousand words.” In this case, two pictures are worth three times as much due to inflation.

Consumer price index up 7.9%… If we added back energy and food we would need more toes and fingers to count the real rate of inflations.

What does it mean – The energy index was up 25.6% year-over-year and gasoline alone was up 38.0% year-over-year and used cars where up over 41% for the year.

Jerome Powell vows to get inflation back to 2%… And it may take three years according to his speech.

What does it mean – Expect inflation to continue for the foreseeable future. As long as the Fed and Treasury keep the printing presses on. This is the 1970’s all over.

Existing home sales down… Sales across the nation are down anywhere from 4.7% in the west to 11.5% in the North East.

What does it mean – Higher mortgage rates and rising prices continue to weigh on sales.

Retail sales… Big dip to giant spike. Shutdown to stimulus checks for all and more government handouts for good measure.

What does it mean – Our President, leadership in Congress and in the Senate are convinced the way to their job security is a free handout and cheap money. Check out reality in the chart below. Expect retail sales to continue to fall as the government runs out of your money. Normal retail growth is roughly 5% a year.

Durable goods… You may be asking yourself, “Is this the same chart above?”

What does it mean – No, it is not the same chart above. Durable good orders are a bit more volatile than retail yet, the pattern is the same. Stimulus checks lead to stimiboats, stimicars, stimitrailers and so on. Peloton thought they where geniuses along with the boat makers, pool table manufacturers and expensive off road toys. What they are now realizing is that the stimulus checks padded their earnings for most of 2020 and all of 2021. Now reality is setting in. Expect a return to a more normal cycle and possible a fall off as most will have to digest what they just bought.

I had a conference call with “The Four Horseman of Economic and Foreign Policy Chaos” Johnson, Ford, Nixon and Carter called and asked for their failed economic policies and disastrous foreign policy back. During that call the 1980’s left a voice mail and said, “don’t you wish you had our foreign policy?”

What does it mean – Our economy grows faster when government shrinks. Since the turn of the century and particularly since 1930 government has continued to grow. In 1930 non-defense spending represented 2.5% of GDP today it represents almost 27%. More folks are now in the wagon than pulling it. Can you guess at what point in history since the Great depression government shrank as a percentage of non-defense pending vs. GDP and the US GDP growth rate went up? Email me your answer.

Very truly yours,

Doug De Groote, CFP®, MBA, CTC Managing Director

De Groote Financial Group, LLC is a federally registered investment adviser that maintains a principal office in the State of California. The information contained in this message is confidential, protected from disclosure, and may be legally privileged. If the reader of this message is not the intended recipient or an employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any disclosure, distribution, copying, or any action taken or action omitted in reliance on it, is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by replying to this message and destroy the material in its entirety, whether in electronic or hard copy format.
Disclaimer: This article is solely for informational and educational purposes only and contains information that is not appropriate for everyone. Nothing herein should be construed as the provision of personalized investment advice. This article does not provide legal, tax, or accounting advice. Before making decisions with legal, tax or accounting ramifications, please consult the appropriate professionals for advice that is specific to your situation. Your experience may vary according to your individual circumstances and there is no guarantee that the views and opinions expressed herein will come to pass. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. This article should not be regarded as a complete analysis of the subjects discussed.

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