So here is a follow-up question from yesterday’s article…

• I read your article yesterday and it made sense to me. I have a ton of questions but one in particular. Why do so many experts say the economy is doing well, when you say it isn’t?

 

Ouch! A little personal there, eh?

OK, you are actually right…SPOT ON! Actually, the vast majority of economic/banking/market experts are all saying the economy is doing well. And even more interesting…the vast majority of average people define today’s economy as ‘poor’ or worse. So why the difference?

To me it is simple…viewpoints.

‘Experts’ look at lots and lots of economic metrics…in other words, statistics. They look at a long list of statistics such as unemployment, GDP, inflation, debt-to-GDP, etc. Even stuff like ‘the composition of the debt between currency, reserves, bills, notes and bonds’…if you can even begin to wrap your head around that one. There are literally hundreds of these economic metrics that experts review, compare, extrapolate, and mix with tea leaves and chicken bones. That gives them their opinions/views/forecasts.

Then there is the American public, the average Joe, you and me. What we mostly look at is what we pay for stuff. Things like food prices, car prices, mortgage rates, utility costs, rent, credit card interest, fuel, etc.

So it is the theoretical vs the realistic viewpoint conflict. And age old problem to be sure.

So yes, my opinion/viewpoint of what is happening economically in the US is very different from the vast majority of experts…and I am grateful that it is…I am not drinking the Kool-Aid.

What?

First point: almost every key economic metric is controlled by whom? Yup, produced by the US federal government. And do the people causing almost all the economic problems want to produce figures showing how poorly their economy is doing?

Next point: Virtually every economic expert has a side gig, or their primary job, giving advice to investors. If the general perception is that the economy is doing well…then investments do well. Self-serving to say the least.

There are some interesting folks out there making some really good observations.

“America is broke right now,” the personal-finance guru, Robert Kiyosaki (Rich Dad, Poor Dad), said in a recent Fox Business interview. “America is in serious trouble financially because of the debt load.” He went on to predict this…1) he warned America’s debt pile will fuel inflation and crush the US dollar, 2) The government will print greenbacks to cover its soaring debt costs, eroding their value, 3) raised the prospect of a severe recession and a market crash.

But it gets way more interesting…

The CEO of Walmart just said, “customers are behaving so strangely” in that they are still spending money but are far more picky about what they are buying, are moving away from popular name brands, and “customers generally speaking are really sensitive right now.”

And when asked about the Walmart statement, Amazon’s CEO said this about their customers, “they’re being careful about what they spend on, and they’re looking for bargains and deals wherever they can. Wherever they can trade down price they’re trying to do so.”

What does that mean to you?

Hold on…let’s not leave the federal government out of this! At the Senate Banking Committee on Wednesday, they were talking about the upcoming changes for home lenders. Current mortgage rates are double to triple what they were before Biden took office…now approaching 8%. At the committee hearing banking experts warned that the new government mandate rule changes will raise mortgage rates at least 30%, just from those rule changes alone.

So what do you think happens to the housing market when mortgage rates are 10 – 15%???

Yeah boy, my view of the current economic condition and where it is head is WAY different than the vast majority of the so-called experts. I just wished I made their kind of salaries!!

So, good catch…good call…spot on !

Now, here are 3 metrics that all came out yesterday that might give you a little pause…

1 – Reuters reports that the total US household wealth fell by 1% in the 3rd quarter (ending October 31) of 2023. They said that the only reason it didn’t fall more substantially…increase in house prices.

2 – NYT reports that as of the end of the 3rd quarter of 2023 (ending October 31) the average US home price has been falling since since the beginning of 2023….average price now $431,000.

3 – The Fed reported that credit card debt increased $3billion in the 3rd quarter (ending October 31) to another record high of $1.3trillion. The reasons; 1) inflation, 2) high interest rates, 3) household expense rising faster than income. Part of that article, “When your expenses are growing faster than your paycheck, credit cards are not an indulgence, they’re a lifeline.” Along with that is this from Morgan Stanley, “customers are running higher balances and have weaker credit.”

My thoughts on this:

• (ref #2) Reading the full housing report shows house prices falling except in key areas of the country and the price of high-end homes are increasing in price at a very high pace, faster than the mid and lower income homes. Example: In our area our place would sell for about $300,000 or so. That is $131,000 less than the national average. How many homes would have to sell well above $431,000 to bring ours up to that average price?
• (ref #1) In regards to American wealth…Do you live in a high-end $700,000 priced home? Do you live in one of the hot home price areas? Take away those high-end homes and the hot priced areas…what does that tell you about the real fall of American household wealth if you look at the real situation of house prices?
• (ref #3) If the American economy (Biden Economics) and Americans in general are doing so well financially…then why are credit card balances going up and balances hitting new record highs? Why are the ‘experts’ talking about how good the economy is when the Fed is talking about the damning effects of inflation and high interest rates?
• (ref #3) Take a serious moment and really consider these two quotes:
  • “When your [Americans] expenses are growing faster than your paycheck, credit cards are not an indulgence, they’re a lifeline.”
  • “Customers are running higher balances and have weaker credit.”

So what do these metrics tell you?

No, wait…what does your gut tell you? Your commonsense tells you what?

Better yet…what are doing about it?

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• Gas Prices: Can you explain that?
• “Inflation is Falling!” Ah, what?
• GDP 4.9% : Economic Celebration ! !
• Economy Manipulated ? ?

 

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