You cannot ignore economic reality.

[brutus2]

Considering they have a considerable influence on today's economy and have the best data available and lots of resources and people it leaves one with
only 2 choices. The Fed speaks with fork tongue or they are simply incompetent. I believe it is a combination.

Lets examine their forecast and the actual data of the last full year available. 2022

Here are the median forecast from the FOMC members on 12/17/2021, just weeks away from 2022

Category Forecast Actual Result

GDP 4% .9% Massive miss
Unemployment 3.5% 3.5% Spot on but this rate has changed little since their conference
PCE ( inflation per their calc) 2.6% 5.0% Big miss
PCE core 2.7% 4.4% Big miss
Fed Funds Rate .9% 4.5% Massive miss

[brutus2]

The sugar rush is finally over, one would suspect.

An increase in the deficit is almost entirely used up in that year. (spent)
Most would not argue that at least 80% of it is used within a month or two of outlay.
One needs only to look at its components to rationalize that.
The secret is that it is only the increase that is important, as even if it is trillions of dollars, if it does not change, it will have little impact on GDP.


So for the first 10 months that has been reported in the fiscal year the deficit has increased 870 billion. ( very strange since none of it is attributable to Ukraine per the Treasury. )

In a 27 trillion economy that is 3.22% multiplied by 12/10 or 3.87%.

If we assume only 80% of it is used in that period we have 3.15%

The GDP annualized for that 10 month period would be lower than that, say in the low 2% area.


So the obvious conclusion is that without the huge fiscal stimulus ( for no apparent reason) in 2022/2023 we would be in a recession.

That is why many very smart people called a significant recession far to early.

However, the sugar high is over. August and Sept of 2022 accounted for 220 + 430 billion in deficit spending. It is doubtful that will be surpassed, although August
might be as high as 300 billion.

Add to that the continual gravitational effect of higher rates for longer and the student loan thing ending this month and the poor retail guidance being given, the trade balance - which was a bonus recently, going away, and the San Francisco Fed stating that all the massive stimulus cheques just finished being spent ( credit cards now are driving household debt increases)and the large refinancing needs of commercial real estate very soon, I think we are getting very close to what will have been obvious when it happens.
Even more important is that many that were sure of a recession in 2023, have given that story up and many that a recession is coming at all. That is always key.

[brutus2]

7:30 a.m.
BMO to close retail auto finance business as bad debt mounts
BMO Financial Group plans to close its retail auto finance business in order to reroute resources, as borrowers dig deep to stay on top of recent interest rate hikes.

The decision will also trigger an unspecified number of layoffs in Canada and the U.S., the Bank of Montreal said.

It comes after the company’s bad debt provisions more than tripled to $492 million in the quarter ended July 31 compared to a year earlier. In its retail line, the bank’s provisions for credit losses rose 800 per cent to $81 million last quarter from $9 million the year before.

Those dents on the income statement hint at the financial strain facing consumers, who have struggled to cope with a spike in interest rates over the past year and a half.

The higher borrowing costs have begun to slow some lending demand and deal making amid heavy competition among Canadian banks on mortgage rates and wider concerns about a general economic slowdown.

The Bank of Montreal’s indirect retail auto loans segment works with car dealerships to arrange financing for car buyers, who in turn make monthly payments to the lender — the bank. BMO’s commercial banking business, which backs auto dealers through inventory financing, is unrelated to the upcoming shutdown.

[ynot2k]

quote not working, brutus2 wrote in part:

"BMO to close retail auto finance business as bad debt mounts...

...Those dents on the income statement hint at the financial strain facing consumers, who have struggled to cope with a spike in interest rates over the past year and a half...

...The Bank of Montreal’s indirect retail auto loans segment works with car dealerships to arrange financing for car buyers, who in turn make monthly payments to the lender — the bank..."

Looks like every day people are struggling to maintain the same lifestyle due to the real cost of living rises.

Will the central bank of canada do anything to lessen the pain (for BMO of course, not the everyday people)?

[brutus2]

This one is for you Ynot2k
Greg Mannarino commenting on Janet Yellen stating no signs that the US economy is in a downturn

https://www.youtube.com/watch?v=x0jAEc7hVUA

[ynot2k]

This one is for you Ynot2k
Greg Mannarino commenting on Janet Yellen stating no signs that the US economy is in a downturn

https://www.youtube.com/watch?v=x0jAEc7hVUA

Thanks, I liked it a lot.


"No sign that the US economy is in a downturn" ha ha. And I bet a lot of people did the yellen face.