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.

[brutus2]

Happy days in retailing. Interesting where all the closures are. Target lost 1.5 billion in past 2 years to ' inventory shrinkage' I believe they have lots of company.

-----------------------------------------------------------------------

Target is pulling up stakes in Harlem because of rampant theft and violence — one of nine stores the discount chain plans to shutter in crime-riddled cities nationwide, the company said Tuesday.

The big-box retailer — which opened the East Harlem location to great fanfare in 2010 as a revitalization of the neighborhood — announced it will close all nine stores on Oct. 21.

“We cannot continue operating these stores because theft and organized retail crime are threatening the safety of our team and guests, and contributing to unsustainable business performance,” the Minneapolis-based chain said in a statement.

The other locations to be shuttered are in San Francisco, Seattle, and Portland, Ore. — all cities with progressive prosecutors who refuse to go after shoplifters despite boom in organized retail theft since the pandemic.


Target is closing its East Harlem on Oct. 21 after opening to great fanfare in 2010.
Target said it invested “heavily” in strategies to stop the the shoplifting in its stores, adding more security guards and “theft deterrent tools” but to no avail.







“Despite our efforts, unfortunately, we continue to face fundamental challenges to operating these stores safely and successfully,” the company said.

Target’s efforts to fight crime included training its employees and security teams on how to “protect themselves and de-escalate potential safety issues” as well as partnering with the U.S. Department of Homeland Security and advocating for the Combating Organized Retail Crime Act in Congress.

The chain has also hosted “store walks” with members of Congress and other legislators and law enforcement to educate them on how it has been fighting crime.

When Target opened the E. Harlem store at 517 E. 117th St. in the summer of 2010 — greeting shoppers with a massive “Hello Harlem” sign — it represented the culmination of a decade of lobbying city officials and wooing residents to allow a big-box store to gain a foothold amid the neighborhood’s mom-and-pop businesses.


Target will close nine stores in four major cities by Oct. 21, the company said on Tuesday.
Target was eager to avoid the backlash that its chief rival, Walmart, experienced when it sought to open a store in New York City and was stopped by union reps and elected officials.

Targets efforts to win over Harlemites included charitable donations, including renovating a public library and carrying merchandise designed by local artists, according to reports at the time.

When it opened, the store carried a “generous selection” of Spanish language and Ebony greeting cards, Gospel and Latin music and Spanish language books and movies, religious candles and multicultural dolls, the company said in a press release.

Target was among the first major retailers to publicly blame crime for a deterioration in its financial results, with its chief executive, Brian Cornell, sounding the alarm in May when he said the company would be closely monitoring the “safety” of its employees as it weighs its options.

In August, Cornell said during an earnings call that “violence and threats of violence” surged 120% during the first five months of the year.


The company said it’s concerned about the “safety” of its employees as retail theft becomes more aggressive.

“Our team continues to face an unacceptable amount of retail theft and organized retail crime,” Cornell said at the time. “Unfortunately, safety incidents associated with theft are moving in the wrong direction.”

Target’s move to close the nine stores comes on the heels of another massive round of store closures including Rite Aid, which filed for bankruptcy protection and is likely shuttering up to 500 stores in the coming months, according to reports.

[brutus2]

PCE showed a .1% gain today in real terms vs I believe .7% in July.

I can only imagine that should shave a hefty chunk off the ridiculous Atlanta Fed GDP forecast for the 3rd quarter.
Last I seen it was at 4.9% when average of all other forecasting was .5% or so. Remember it was 5.9% in late August.

Next update is Monday. I am sure no one cares about it as its formula is so backward looking it is almost useless.
As can be seen by all the other forecasters, they pay scant attention to it, for good reason.

[ynot2k]

Wow, it is indeed happy days once again for the common man, or in this case almost everyone except the club and their familiars.

Personal Disposable Income (real) is down once again. Down .2%. the same as last month and the month before was 0.

PDI is income from all sources, not just wages.

Interesting to note that in the past 2 years personal disposable income/ per person is down 1% .

You would think with all those high rent payments and interest coupons and big raises for those lucky enough to have COLA and of course those millions and millions of new jobs,
that would increase this figure over past 2 years, not decrease it. The government and the Fed are always such an enigma, are they not?

Personal disposable income is down 1% in last two years... yet living cost are up a lot

"The typical American household spent $709 more in July than they did two years ago to buy the same goods and services, according to Moody’s Analytics."

https://edition.cnn.com/2023/08/11/e...ing/index.html

Maybe if one finds a food product that doesn't rise in price - like Ryanferr's ham - then all is well but for most every day people it is not well at all.

[vertical1]

So it becomes, How to age gracefully as prisoners in our own homes