World

Good News Is Bad News in Biden’s Economy


Bostic’s Patience

A lot of economic data was released to the world Thursday, and most of it supports our analysis of the Beige Book from yesterday’s Breitbart Business Digest.

Jobless claims were flat at 212,000, which was also right around what prognosticators predicted. This number is quite low, especially for people looking for excuses for the Fed to cut interest rates. As we noted earlier this week, there is zero evidence a cut is coming any time soon, and the hot labor market is the biggest indicator of that (behind rising inflation).

Atlanta Fed President Raphael Bostic echoed this sentiment in his remarks at an event in Florida today. So long as the labor market stays this strong, no cuts are coming. If you’re a Biden fan or the establishment media, you might interpret this sentiment from Bostic as a willingness to cut if the jobs market slows; but, again, there is no evidence that this is happening.

Federal Reserve Bank of Atlanta President Raphael Bostic speaks during a Bloomberg Television interview in Atlanta, Georgia, on Nov. 3, 2023. (Elijah Nouvelage/Bloomberg via Getty Images)

I’m comfortable being patient,” Bostic said. “I’m of the view that things are going to be slow enough this year that we won’t be in a position to reduce our rates towards… the end of the year.”

Precisely.

No Cool Off in Sight

Next up, the index of leading economic indicators fell 0.3 percent in March, the Conference Board said Thursday. The leading index determines whether the economy should be expected to improve or worsen using 10 indicators. The 0.3 percent decline was worse than the 0.1 percent predicted by a poll of economists conducted by the Wall Street Journal, but more importantly, it marked a reversal from February, which showed the index rising for the first time in two years.

Given that the labor market has not cooled off and the economy is expanding at a relatively quick rate, there is no sign that inflation is subsiding (we know from recent data it’s currently increasing), and, thus, rates are unlikely to come down any time soon.

Factory Employment Weakens

The Philadelphia Fed factory gauge jumped to its highest level in two years in April, with indexes rising 15.5 percent, far exceeding the 2.5 percent forecast. This data indicates that the manufacturing sector in the mid-Atlantic region expanded the most in two years on the back of strong new orders and shipments of finished goods. However, as is so often the case with Bidenomics, even this good news is bad news because of the upward inflationary pressure.

So, consider this yet another indicator that a pivot toward lower interest rates is not in the cards.

Interestingly, factory employment continued to drop and is now at its lowest level since May 2020. “Manufacturing job growth has been next to non-existent over the past year, with the Labor Department’s measure of new factory jobs averaging just 2,000 a month in that span, among the weakest-performing industries in the private sector,” Reuters reported.

If this trend holds, it is all but guaranteed to be a Trump campaign talking point. If you’re just tuning in, Biden’s lifelong claim that he is the best politician for working and middle-class workers is entirely fraudulent.

Home Buyers Feel the Squeeze

The average rate of the ever-popular 30-year fixed mortgage rose to 7.5 percent, which is the highest level since November of last year. Even with rates this high, mortgage applications rose five percent last week, indicating that some home buyers have given up hope that rates are about to come down. Still, demand is considerably lower than it was this time last year.

Inventory rose as well, but is at a very low historical level, increasing competition and squeezing out many perspective buyers.



Source link

LEAVE A RESPONSE

Your email address will not be published. Required fields are marked *