The Thrill Is Gone? US Industrial Production Plunges In October As Auto-Maker Strikes Hit (But Also Federal Stimulypto Has Worn Out)

Confounded Interest ^ | 11/17/2023 | Anthony B. Sanders

[Kaiser8408a]

The thrill has gone from all the BIG spending bills from Biden.

After its surprising bounce last month (on a seasonally-adjusted basis, because it crashed NSA), US Industrial Production was expected to decline 0.3% MoM in October. It was worse – down 0.6% MoM from a downwardly revised September print (from +0.3% to +0.1%). October’s decline is the worst since Dec 2022 and the YoY drop of 0.8% is the worst since the COVID lockdowns. AND Federal stimulypto is wearing off (M2 Money growth surge peaked in February 2021, but has slowed into negative growth starting in August 2022.

Notably, once again, the non-seasonally-adjusted industrial production tumbled more than then seasonally-adjusted data…

Source: Bloomberg

On the manufacturing specific sector, consensus was for a 0.4% drop MoM but it was considerably worse, dropping 0.7% MoM (and September’s print was revised down from +0.4% to +0.2% MoM). That is the biggest MoM drop since March and biggest YoY drop since the COVID lockdowns.

That is also the 8th straight month of YoY declines for Manufacturing production.

Source: Bloomberg

Output was weighed down by a 10% plunge in motor-vehicle production as the annualized rate of car assemblies dropped to 9.22 million units, the least since February 2022. Excluding parts production, autos and trucks production fell 16.5% MoM – the biggest drop since the COVID lockdowns…

Source: Bloomberg

Starting in September, the United Auto Workers union authorized targeted strikes against the Big Three Detroit automakers, disrupting production at the companies and at their suppliers. The UAW reached tentative agreements with management in late October, laying the groundwork for a rebound in factory output in November.

So theorteically, we should see bounce back next month. Unless demand – as WMT hinted at – has fallen off a cliff.

[pepsionice]

Just an obvious question...if the union gets a 10-percent rise in wages, and the $45,000 car goes up to $50,000....can the general consumer afford the car?

I used to think car loans would max out to 48 months, and noted that the trend then went to 60 months, and in the last year...noted the next trend as being 72 months, and a few even willing to budget for 84 months (7 years).

This past summer, I noted the repossession rate nearing 20-percent. So my logical question is...what will a bank do with 3-year old car that they repossess...which marginally holds 50-percent of the original value? If you were asking for a dozen problems to relate to 1929, and the 1930s...isn’t this an example of how bank failures will start to occur?

[Phoenix8]

Although honestly im wondering why the economy hasn’t crashed already.

People were talking about bubbles, depression etc 2 years ago. Matter of fact videos like this were the rage a year ago:

“Why the economy is headed for a new depression”
https://www.youtube.com/watch?v=Hj-QVlzjrTc

Or this one only from this summer:
‘THIS Will Push the US Economy into a Major Recession By September 2023”
https://www.youtube.com/watch?v=HZ_jXASh-mg

[Sirius Lee]

So my logical question is...what will a bank do with 3-year old car that they repossess...which marginally holds 50-percent of the original value?

Well, unlike all those EVs in the dealer lots, there's still a chance that someone will purchase the used ICE at a slightly marked up prices. The market will discover the price eventually, but yes, some of these dealers are going down, customers defaulting, and both will be taking some banks with them.

[griswold3]

We still have $2T in the pipeline from Biden’s IRA and CHIPS act 2022.

[fatboy]

“...So my logical question is...what will a bank do with 3-year old car that they repossess...which marginally holds 50-percent of the original value? If you were asking for a dozen problems to relate to 1929, and the 1930s...isn’t this an example of how bank failures will start to occur?”

_____________________________

The bank will auction off the car repo and the borrower is liable for the difference between the auction price and the car note balance. Of course, some of that debt will be non-collectable however the bank can place liens on property and/or assets for in many cases up to 10 years. In the end those who pay off their obligations will subsidize those who do not pay off their obligations.

The 1929-1933 bank failures had more to do with depositors removing their money from their bank in a panic than bad loans, not to minimize the impact of bad loans. Today the FDIC insures deposits however it is insurance, and the bank pays a premium for this insurance.

The big question is just how solvent is the FDIC in the case of mass bank runs? How much money is on deposit in commercial banks? We in the USA are not the big savers we once were, we can’t take out deposits that don’t exist. If I were faced with a car repo or mortgage foreclosure and had money in a savings account, I would use that money to hold off the foreclosure not to hid under the mattress or continuing to fund a lifestyle I cannot afford but not all would do that. I view the increase in car repos as proof that many don’t have much in the way of savings not an impending run on the banks. Of course it isn’t as simple as that and this is just my opinion.

So as for me I say get out of debt now or at least put in place a plan to pay off your debt and work towards that goal, pay off your mortgage and put some monies in the bunker. If the economy melts down those with little to no debt and a savings cushion will do far better than those with thousands in credit card, personal, car and mortgage debt. If the economy doesn’t melt down you would have taken the necessary steps to get your financial house in order. I say “you” in the general sense not trying to imply that your specific finances are in disarray.

[Varsity Flight]

Ho thrill with Lucifer ends .. Can’t run to daddy fig leaf. So let’s get defiant, and drum up a war. How about a war. The War.

[Bernard]

That's part of the reason Kevin McCarthy cooked up his deal with Chuck Shumer and Joe Biden to increase the national debt by 4 Trillion in 19 months. And much of that spending did not get reported as federal deficit because the deal makers called it all special spending. Part of the reason why nobody in DC, including the new Speaker of The House, has made any serious noise about an annual budget; just Continuing Resolutions.

Someday there may be adult supervision in DC. Right now it still seems to be absent.

[SaveFerris]

(Although honestly I’m wondering why the economy hasn’t crashed already.)

Same here

[SaveFerris]

(and drum up a war. How about a war)

I predicted, in 2016, that the Democrats would do it.

Seems to be in the horizon. Now on a couple of fronts.

[SaveFerris]

BidenDepression 2023 / Spring, 2024

[unread]

if the union gets a 10-percent rise in wages, and the $45,000 car goes up to $50,000....can the general consumer afford the car?

Inter the motor scooter, stage right..

inexpensive to buy, cheap to keep, and no parking fees.. Many nations are covered with them, wall to wall.. I've owned several, and I like'um.. :)

[Brian Griffin]

“what will a bank do with 3-year old car that they repossess”

Car dealers often have finance systems independent of banks I believe.

I’ve thought of investing money in them, but I don’t trust car dealer loan underwriting given the “nobody walks” commercials.

[Gen.Blather]

The economy is huge. Imagine not just one ocean liner, but a dozen. Each starts a turn, and it takes mile after mile to change direction. The fact that America has control over the amount of money in circulation, interest rates and a host of other levers means they can diddle and fiddle to prop up this or that metric. Of course, every intervention causes more distortion, making the ultimate correction deeper and longer than it would be if they’d just let the market float. But no administration wants the crash to occur during their stewardship. What’s worse is the socialist nature of the government means they do things for political rather than economic reasons. Thus, we get subsidies for things like electric cars when physics says electric cars can’t work past a certain percentage. You get policies for idiot things like Net Zero, which anyone in science or industry worth their salt will tell you can’t be done. The more something is impossible the more government pushes us to do it. In WWI it was lions led by donkeys. Now it’s the people led by idiots, whose symbol is the donkey.

[Brian Griffin]

“The big question is just how solvent is the FDIC in the case of mass bank runs?”

The FDIC will be made solvent.

I suspect FDIC premiums are unrealistically low given the high risks banks face.

The Irish government had big problems from bank failures as I recollect.

[Brian Griffin]

“Although honestly im wondering why the economy hasn’t crashed already.”

Many people own stock in Amazon, Apple and Microsoft and those companies made many millionaires.

In 1982, the US stock market was worth about $600 billion. In 2023, the US stock market is worth about $30 billion.

[Brian Griffin]

In 1982, the US stock market was worth about $600 billion. In 2023, the US stock market is worth about $30 trillion.

[Brian Griffin]

We have millions of Biden era invaders who will be given drivers licenses and will need to buy vehicles.

[unclebankster]

In 1982, the US stock market was worth about $600 billion. In 2023, the US stock market is worth about $30 billion.

**************************

Your 2nd number, the valuation for 2023 seems low.

[unclebankster]

Your 2nd number, the valuation for 2023 seems low.

********

Oops.

I missed the correction in post #17.