Week Ending May 31, 2024
The May ISM Manufacturing Index came in at 48.7%…Down from 49.2% in April.
What does it mean – This report and previous manufacturing reports pull into question the reality of a soft landing. The latest ISM report coming in at 48.7% shows a faster pace of contraction in manufacturing activity which is at odds with the message from DC and the media.
Per the latest from the Bureau of Labor Statistics (BLS), the job market seems solid…Initial jobless claims continue to signal a tight labor market.
What does it mean – If correct and survives next month’s revision, the national job market continues to be an anomaly(continue reading). According to the Challenger layoff announcements, this latest report points to higher unemployment claims ahead. Below is the graph from the Challenger report.
Nearly 50% of states are experiencing deteriorating labor market conditions…Almost 50% of states in the U.S.A. are flashing a warning. Will it become a self-fulfilled prophecy?
What does it mean – As we have been pointing out for some time, parents and grandparents who live in CA, NY, NJ, PA, WI, MI, IL and others are watching their children and grandchildren take flight to states that are well run, follow the rule of law, and will better survive an economic downturn. Unfortunately for many, this mass migration from states like CA, NY, NJ creates excess demand and rising costs for rent, housing, services etc., creating more inflation in local markets. It is a major issue in states like FL, TX, AZ, the Carolina’s, TN and others, putting a massive burden on the local population and compounding the housing problems at the local level. See the chart below.
Home sales registered their biggest decline since early 2021 on a seasonally adjusted basis…Down nearly 8%. Pending home sales fall to lowest levels since the escape of COVID from the Wuhan lab.
What does it mean – Prior to 2021, the previous drop that was this low was in 2010, per the graph below.
Cost of government employees continues to rise faster than the private sector…Private sector compensation was up 4.1% over last 12 months ending in March 2024. vs. Compensation costs for state and local government workers up 4.8% for the same 12-month period ending in March 2024.
What does it mean – Cost of government employees continues to go up faster than the private sector. In one year, government compensation was up 17% more than the compensation in the private sector. One must ask, are our elected officials acting as good stewards for the taxpayer and our country?
The Fed is breaking records and all the rules…The Fed’s balance sheet is up 733% from August of 2008 until the end of May 2024.
What does it mean – The Feds Transparency or lack of is the elephant in the room. In 2008 the Fed changed how it looks at financing our economy. Yes, you heard it. The Fed broke the bank and now the bank can’t afford to call the loan. We are financing it at levels unseen before. And this change requires the Fed to change how it manages its balance sheet. In 2008 we fell for “too big to fail” that resulted in QE or quantitative easing. The Federal Reserve switched from a scarce reserve model to an abundant reserve model. We can go into detail another day, but the results deserve your attention.
According to First Trust and the Federal Reserve’s own numbers, the Federal Reserve has expanded from $870 billion in August 2008 to $7.2 trillion today, a staggering 733% increase, and has averaged 33% of GDP over the past four years, bigger than at any time in history.
Brian Westbury and Bob Stein at First Trust pose a few very important questions that our Congress, President, and Federal Reserve members should have thought of before they unilaterally decided to save their collective butts and allowed an unelected agency to do what it wants.
- How is the Fed paying for its operating budget?
- Where is it getting the money to pay for wages and salaries?
- Does the Fed print new money to pay for its budget?
- Does the Fed borrow from the Treasury without authorization from Congress? Or does the Fed borrow from banks, using the repo market to pay its salaries?
Can someone in Congress or the Senate, or a good Constitutional Attorney get the Fed to respond to First Trust or please re-submit a FOIA for the above questions? Investors, business owners, entrepreneurs, and most importantly citizens deserve these answers. This wild financing and the unholy alliance between big banks and big government has led to massive deficits and is facilitated by Fed bankers who benefit from their own decisions and a congress that lacks the credibility and gumption to do their job.
There is not one political party that can claim that they are less responsible for increasing the debt than the other party or letting the Fed get away with economic treason. Here is what the majority of both the House and Senate did. Along with the last few Omnibus bills to “save our economy”, both voted for the last $1.7 trillion, 4,000-page Pelosi-Schumer Omnibus Appropriations bill passed on Dec. 23, 2022, included $858 billion for defense, $787 billion for non-defense domestic programs and more than 7,200 earmarks costing over $15 billion. And have allowed the Federal Reserve to experiment with your future. Yes, literally experiment. Keep reading.
Unlike a credit card with a spending limit, our government has no limit to what it will spend or what it will spend your money on. For example, in the above bill, the government spent over half a million dollars to study(experiment) how cocaine affects the sexual behavior of Japanese quail. Dr. Fauci’s National Institute of Allergies and Infectious Diseases was awarded $478,188 to inject hormones into male monkeys to transition them into female monkeys. First, why? Second, what is wrong with these people? And who is the congressman/woman that wanted that? These are the same folks we elected to be stewards over your money and took an oath to defend the constitution.
Author Steve Hale in his book Awakening Now or Never writes, “If we were to pay one dollar every second of every hour of every day of every month to pay down our national debt, it would take almost 32,000 years just to pay off $1 trillion. Paying off $34 trillion would take 1,115,000 years. It would take more than 10,000 18 wheelers to transport 1 trillion $1 dollar bills.”
No matter if you are retired, working, starting a business, a student, child, parent, friend or foe, together, we need to hold these elected and unelected bureaucrats accountable. To do this, we all need to be well-informed citizens. Let them here you on voting day. Vote every one of them out of office that voted for this ongoing stream of omnibus bills and BS pork that has led to massive bureaucracy, overwhelming entitlement programs, cultural chaos, and massive inflation. Here is the great news, it is public knowledge and easy to see who voted for this chaos and I am happy to share it with you. Just ask and I will get you the list. Make them answer for their actions. Your business, your job, your children’s future and yours depend on it.
Let’s roll America!!!
Doug De Groote, CFP®, MBA, CTC
Managing Director
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