Posted on 05/25/2021 4:57:19 PM PDT by SeekAndFind
For the past several months we have warned about the pernicious effects soaring prices are having on both corporations ("Buckle Up! Inflation Is Here!") and consumers (""This Is Not Transitory": Hyperinflation Fears Are Soaring Across America"), prompting even otherwise boring sellside research to get (hyper) exciting, with Bank of America predicting that "Transitory Hyperinflation Lies Ahead."
But none of this has spooked the Fed into conceding - or believing - that inflation is anything more than transitory. And maybe just this once, the Fed has a point because all else equal, by which we mean lack of rising wages, the best cure to higher prices is, well... higher prices.
Presenting Exhibit A: understanding that Biden's stimmy bonanza is about to end and that soon they will have to live again within their means, Americans' buying intentions (6 months from today) as measured by the Conference Board, have cratered across the 3 major spending categories: homes, automobiles and major household appliances.
The drop was so massive, it amounted to the biggest one-month drop in intentions to purchase appliances...
... and homes...
This confirms what we noted earlier, namely a record divergence between crashing homebuyer confidence (due to record home prices) and soaring homebuilder confidence (also due to record home prices). Guess which one will matter in the end.
This, for better or worse, screams stagflation: as Lynn Franco, senior director of economic indicators at the Conference Board, said while consumers’ assessment of present-day conditions improved, "consumers’ short-term optimism retreated, prompted by expectations of decelerating growth and softening labor market conditions in the months ahead.”
While it's clear why stagflation will be "worse", we say better because if nothing else these data confirm that US consumers are now tapped out, if not today, then certainly 6 months from today when Biden's trillions in stimmies will have been long spent, and the spending spree will be over.
Oh, and for those saying wage hikes may be permanent we have some bad news: employers know very well that the extended unemployment benefits bonanza ends in September at which point millions of currently unemployed workers will flood back into the labor force sending wages sharply lower, and is why instead of raising base pay, most potential employers offer one-time bonuses, which - as the name implies - are one-time. As for higher wage pressures, well... just wait until October when everything reverses, Uncle Sam is no longer a better paying competitor to the US private sector, and wages slump.
What does that mean for the economy? Well, all those producers and retailers who got used to bumper demand and pushed their prices sharply and not so sharply higher, will face a stark choice: either drag prices right back down, or sell far fewer goods and services. That, or just await the next bailout.
One thing is certain: six months from today, the US economy will be far, far uglier.
But, of course, they didn't.
After watching house prices by me skyrocket the last year, I’m now seeing big price cuts to homes that have been on the market here in Hellinois for more than 7-10 days. Its not uncommon to see $20k price cuts after a week.
A house I looked at last year sold for $320k. The person who bought it is trying to sell it for $365k now. It sold in 3 days last year. Its been on the market a week now and already cut the price by $10k. Anyone who looks at the sale history isn’t gonna pay anywhere near $365k for it. Not after selling for $320k 12 months ago.
....”Time to just sit tight and save money”....
Te plans for new stove and frig were put on hold when Biden was seated for me....and I restocked pantry plus.
Learn to garden.
It is going to get interesting.
That hasn’t happened yet here on the Gulf Coast of Florida. Prices are still rising by the week. They will collapse. Just a matter of time. The weekly price increases are unsustainable. As the article states, with stagnant wages, the prices of homes, vehicles, and major appliances will result in much lower sales. Those prices will need to come down or the sales will suffer big time. And, as most people understand it’s far better to sell a lot of product at a lesser profit than sell very little at a lot of profit. This rule of economics is inviolable.
“washing machine that has a consistent problem with fine metal flakes.”
Maybe you can vacuum them out of the wash tub.
“Then 80,000,000 or more folks voted for the most popular Presidential ticket in the history of the country,”
Nope. The democrats committed fraud. Biden got at most 54 million votes. Trump got 102 million or 74 million, depending on the source.
What you are saying is the USA knows the election was stolen.
Trust Factor is 0.
Wife and I bought a bed set; cancelled after 90 days and they couldn’t even give us an idea of when it might arrive.
The door hinge on my refrigerator broke, wrecking the door. I tried to by a new refrigerator for six months. A friend was remodeling a house and gave me his clients used one.
I just bought a
“Vacation Home”
in Prescott.
Ain’t much on the
Market and what
Comes up seems pricey.
It’s my Bug Out from
SoCal.
I’m gonna pull this
Move off “or Bust!”
I would think you have some time. The Fed and banks are going to do everything possible to keep propping up CornPop, just like they did Soetero. So, hopefully you’ll be able to take advantage of it.
They may not have liked working with President Trump but at least he held their feet to the fire.
I know CodeToad. It was sarcastic.
Like that meme floating around.......Biden ran twice before. Never came close. Campaigned from his basement and got more votes than anyone in history. I think not.
And if it weren’t for the DNC and some big money folks propping him up this time, he and Harris would have been that first 2 out. She was and wS only brought back to life because he needed a caretaker.
But I do agree with your estimate on how many votes President Trump got. I think it was at least 90 million, if not more.
And I don’t think CornPop got more than 50 million.
Zactly!!!
bump for later
Bkmk
Crash for Clunkers
Hi. Im in No Cal and getting ready to leave. Looking at Southern Utah or Northern Arizona. If you dont mind me asking, how much did you pay for your home? Thanks for your time, Daniel
I hope you are correct. Inflation brought about by propping corn pop up will surely be a bane on our country before we know it, it’s unavoidable at this point.
Hopefully people will see the light and realize it’s not all unicorns and marshmallows with xiden. I laughed at the insinuation that people can’t keep up with him, he’s just so fit and active. Have they not seen the feeble old man walking, talking etc.
I'm in that boat also, the problem is the value of the dollar has been declining with all the free money that's been printed. The proof of that statement is in the accelerating inflation we're experiencing.
At some point -- likely within the next six months -- prices have to fall because people will out of necessity, have to cut back spending to afford the basics such as food, gas which have also seen big time inflation.
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