What Happened Last Week and What It Means to You: August 12nd, 2022
Week Ending August 12nd, 2022
White House claims inflation is ZERO Percent…
Annual rate at 8.5% it is nowhere near zero.
What does it mean – Energy surged 7.5% in June and was down 4.6% in July offsetting food prices, rent, and nearly everything you consume to come in at 0% or flat for July. It still means the inflation rate is at 8.5% annualized. Don’t let DC math confuse you.
New York Fed’s Empire State Manufacturing plunges 42.4 points…
NY Fed’s survey index of general business condition plunged 42.4 points to negative 31.3.
What does it mean – This is the second worst reading since the NY Fed has been keeping records. The index for new orders dropped 35.8 points to negative 29.6, the lowest reading for this gauge outside of the lockdown period of March through May 2020. The index for shipments fell 49.4 points to negative 24.1. This indicates a sharp decline in both orders and shipments.
Q2 GDP decreases…
Report indicated that real GDP decreased at an annual rate of 0.9%.
What does it mean – This report will stir the debate as to whether the U.S. economy is in recession. Regardless, it also makes it clear that the economic environment has undoubtedly weakened.
Consumer debt increased by $22.3 billion in May…
As inflation hits consumers, consumers hit their credit cards.
What does it mean – Consumer credit has slowed a bit in the first half of the year but is slowly on the rise again.
CPI unchanged in July…
While many will go out on a limb to say inflation is flattening or slowing, etc.
What does it mean – Don’t fool yourself. Inflation is not transitory, and the Fed only has limited if any control over inflation, but they are now forced to exert their will on the American consumer. The Fed is nowhere near being done with raising rates.
Do not be fooled by the Orwellian ruse…
Inflation Reduction Act (IRA), a degraded version of the failed $4 trillion Build Back Better Act.
What does it mean – IRA is more government, more regulation and will soon become better known as the Build Back Beijing Act. The media has already stopped calling it the Inflation Reduction Act and now refer to it as what it really is – a “$430 billion climate, health care and tax bill”. Most of the spending for this Green New Deal will go to Chinese companies producing equipment made with coal so that we can purchase things we don’t need to save the environment we are allowing China to pollute. All of this is at the expense of the you, the American Taxpayer. You just can’t make this stuff up.
Go East young man…
We may want to change the once famous saying attributed to Horace Greeley, New York Daily Tribune, July 13, 1865. “Washington [D.C.] is not a place to live in. The rents are high, the food is bad, the dust is disgusting, and the morals are deplorable. Go West, young man, go West and grow up with the country.”
What does it mean – New Housing sales in the West were down a whopping 36.7% month-over-month. As higher mortgage rates and higher prices create affordability pressures for prospective buyers, the exodus from the West continues. More businesses and taxpayers are taking their jobs, employees, and money with them. Will CA ever get a clue?
Nope. That is the answer to the question above.
What does it mean – Prop 30, if passed in November, will add 1.75% in taxes on people earning income of over $2 million and will direct 45% of the revenue to “green” initiatives made in China with (not clean-burning) coal, 35% to charging stations made in China from coal and from natural gas drilled here in America, as well as 20% to wildfire prevention. Lightning strikes are now controllable according to elected officials in Sacramento. With only 560,000 electric vehicles on the roads in CA, this will not benefit or help the 96.1% of drivers and only the wealthy will benefit from the incentives or charging stations.
CA and this administration in DC are well on its way to living up to the awesome example of the Russian auto industry. When was the last time you saw a Lada (Russian made car) on the road. Never. There aren’t a Lada them.
Let’s roll America!!
Doug De Groote, CFP®, MBA, CTC