The latest data on wages and inflation, combined with last quarter’s contraction indicates flat growth paired with high inflation.
Friday brought a dose of bad news for Federal Reserve chair Jerome Powell:
- Wages and salaries rose at a record pace last quarter: 5.3% from a year earlier, according to the Employment Cost Index. Private-sector wages jumped ahead at an even faster 5.7% pace.
- Though many still aren’t seeing pay keep up with inflation. It’s a problem for the Fed. Brisk pay hikes may make it difficult to slow inflation if businesses keep jacking up prices to offset rising labor costs.
The Fed’s preferred gauge of inflation, which strips out food and fuel costs, reaccelerated — even more than economists expected.
- Core PCE rose 0.6% last month after holding at 0.3% since February, effectively shooting down any hopes this measure could be leveling off.
Core PCE rose 1.3% last quarter, or a 5.2% annualized pace.
- Final domestic private-sector sales — a good measure of underlying economic growth — came in at 0% in the April-June quarter.
“The rest of the economy might be slowing down, but wages are speeding up,” Indeed economist Nick Bunker says.
- “Competition for workers remains fierce as employers have to keep bidding up wages for new hires,” he added. “These red-hot wage growth statistics may fade in the near term, but there’s a long way for them to drop.”
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Reuters
“U.S. manufacturing slows modestly; excess inventories a major concern”
By Lucia Mutikani
August 1, 2022
Businesses, however, are sitting on excess inventories after ordering too many goods because of worries about shortages, depressing new orders.
“The post-pandemic inventory restocking cycle is winding down amid softening consumer goods demand,” said Pooja Sriram, an economist at Barclays in New York.
“This intensifies risks of a harder landing in the manufacturing sector later this year.”
The ISM’s index of national factory activity dipped to 52.8 last month, the lowest reading since June 2020, when the sector was pulling out of a pandemic-induced slump.
High inflation remained a complaint among businesses even though overall price increases for inputs have started slowing considerably.
Makers of chemical products said inflation is “slowing down business,” and also noted an “overstock of raw materials due to prior supply chain issues and slowing orders.”
Manufacturers of food products reported that “many customers appear to be pulling back on orders in an effort to reduce inventories.”
Textile mill operators said “continuing delivery and staffing issues have eaten away the bottom line.”
The ISM survey’s forward-looking new orders sub-index dropped to 48.0 from a reading of 49.2 in June.
It was the second straight monthly contraction.
Combined with a steady reduction in order backlogs, that suggests a further slowdown in manufacturing in the months ahead.
Many retailers, including Walmart, have reported carrying excess inventory as soaring inflation forces consumers to spend more on low-margin food products instead of apparel and other general merchandise.
The ISM’s measure of factory inventories increased to a 38-year high in July.
According to the ISM’s Fiore, companies were showing the most concern about their inventory levels since the start of the COVID-19 pandemic two years ago when a slowdown in manufacturing activity was anticipated.
But the road to low inflation will be long.
While the survey’s measure of factory employment rose to 49.9, it remained in contraction territory for a third straight month, with manufacturers continuing to express difficulty finding workers.
High turnover related to quits and retirements was also frustrating efforts to adequately staff factories.
There were 11.3 million unfilled jobs across the economy at the end of May, with nearly two job openings for every unemployed worker.
Remarks by President Biden On Economic Growth, Jobs, and Deficit Reduction
MAY 04, 2022
11:01 A.M. EDT
THE PRESIDENT: Well, good afternoon.
And — all kidding aside, I — this week, my administration released new information that contains that we’re on track to cut the federal deficit by another — another $1.5 trillion by the end of this fiscal year — the biggest decline in a single year ever in American history.
And the biggest decline on top of us having a $350 billion drop in the deficit last year, my first year as President.
We also learned that for the first time since 2016, the Treasury Department is planning to pay down the national debt issued to the public this quarter.
And for all the talk that Republicans make about deficits, it didn’t happen a single quarter under my predecessor.
Not once.
The bottom line is the deficit went up every year under my predecessor, before the pandemic and during the pandemic.
And it’s gone down both years since I’ve been here — period.
That’s — they’re the facts.
And why is it important?
Because bringing down the deficit is one way to ease inflationary pressures in an economy where a consequence of a war and gas prices and oil and food and — it all — it’s just a different world right this moment because of Ukraine and Russia.
We reduce federal borrowing and we help combat inflation.
********************************
Reuters
“U.S. Treasury raises Q3 borrowing estimate”
By Reuters Staff
August 1, 2022
NEW YORK, Aug 1 (Reuters) – The U.S. Treasury said on Monday it expects to borrow $444 billion in the third quarter, more than the May estimate of a $182 billion, due to changes in projections of fiscal activity and the estimated impact of redemptions in the Federal Reserve System Open Market Account.
CNBC
“Fed’s Daly says ‘our work is far from done’ on inflation; Evans sees ‘reasonable’ chance for smaller hike”
Jeff Cox
August 2, 2022
The Federal Reserve still has a lot of work to do before it gets inflation under control, and that means higher interest rates, San Francisco Fed President Mary Daly said Tuesday.
“People are still struggling with the higher prices they’re paying and the rising prices,” Daly said during a live LinkedIn interview with CNBC’s Jon Fortt.
“The number of people who can’t afford this week what they paid for with ease six months ago just means our work is far from done.”
Reuters
“U.S. services sector surprises with momentum; supply, price pressures easing”
By Lucia Mutikani
August 3, 2022
Services activity is being supported by a shift in spending from goods.
But signs of weakness are mounting.
Accommodation and food services businesses reported that “restaurant sales have softened the past few weeks.”
Businesses in the management of companies and support services sector said they “can feel the economy weakening,” and that “clients are making appropriate moves in anticipation of a recession.”
Retailers said they were “in inventory reduction mode, attempting to match inventory levels to current lower sales trends.”
******************
CNBC
“Walmart lays off corporate employees after slashing forecast”
Melissa Repko
August 3, 2022
Walmart confirmed on Wednesday that it has begun to lay off corporate employees about a week after the company slashed its profit outlook and warned consumers had pulled back on discretionary spending due to inflation.
The company, seen as a bellwether for the nation’s economy, spooked investors last week when it cut its outlook for quarterly and full-year profit guidance.
That warning had a chilling effect on the retail sector, dragging down the stocks of companies including Macy’s and Amazon and sending up a flare about the health of the American consumer.
Walmart said at the time that as shoppers spent more on necessities like groceries and fuel, they were skipping over high-margin merchandise like apparel.
It said it would have to cut prices to sell more of those items, especially as a glut of inventory piled up in its stores and at those of competitors like Target and Bed Bath and Beyond.
Later that same week, Best Buy cut its profit and sales forecast, saying it was seeing softening demand for consumer electronics — big-ticket, discretionary purchases that some shoppers can postpone.
CNBC
“Fed Governor Bowman sees ‘similarly sized’ rate hikes ahead after three-quarter point moves”
By Jeff Cox
August 6, 2022
Federal Reserve Governor Michelle Bowman said Saturday she supports the central bank’s recent big interest rate increases and thinks they are likely to continue until inflation is subdued.
“My view is that similarly sized increases should be on the table until we see inflation declining in a consistent, meaningful, and lasting way,” she added in prepared remarks in Colorado for the Kansas Bankers Association.
Bowman said she will be watching upcoming inflation data closely to gauge precisely how much she thinks rates should be increased.
However, she said the recent data is casting doubt on hopes that inflation has peaked.
“I have seen few, if any, concrete indications that support this expectation, and I will need to see unambiguous evidence of this decline before I incorporate an easing of inflation pressures into my outlook,” she said.
Moreover, Bowman said she sees “a significant risk of high inflation into next year for necessities including food, housing, fuel, and vehicles.”
Her comments come following other data showing that U.S. economic growth as measured by GDP contracted for two straight quarters, meeting a common definition of recession.
While she said she expects a pickup in second-half growth and “moderate growth in 2023,” inflation remains the biggest threat.
“The larger threat to the strong labor market is excessive inflation, which if allowed to continue could lead to a further economic softening, risking a prolonged period of economic weakness coupled with high inflation, like we experienced in the 1970s.”
CNBC
“Consumer prices rose 8.5% in July, less than expected as inflation pressures ease a bit”
By Jeff Cox
August 10, 2022
On a monthly basis, prices were flat as energy prices broadly declined 4.6% and gasoline fell 7.7%.
That offset a 1.1% monthly gain in food prices and a 0.5% increase in shelter costs.
Even with the lower-than-expected numbers, inflation pressures remained strong.
The jump in the food index put the 12-month increase to 10.9%, the fastest pace since May 1979.
Butter is up 26.4% over the past year, eggs have surged 38% and coffee is up more than 20%.
Despite the monthly drop in the energy index, electricity prices rose 1.6% and were up 15.2% from a year ago.
The energy index rose 32.9% from a year ago.
Inflation-adjusted average hourly earnings were still down 3% from a year ago.
Shelter costs, which make up about one-third of the CPI weighting, continued to rise and are up 5.7% over the past 12 months.
The numbers indicate that inflation pressures are easing somewhat but still remain near their highest levels since the early 1980s.
The July drop in gas prices has provided some hope after prices at the pump rose past $5 a gallon.
But gasoline was still up 44% from a year ago and fuel oil increased 75.6% on an annual basis, despite an 11% decline in July.
While inflation has been accelerating, gross domestic product declined for the first two quarters of 2022.
The combination of slow growth and rising prices is associated with stagflation, while the two straight quarters of negative GDP meets a widely held definition of recession.
And talk about the BIDEN MIRACLE ECONOMY based on BIDEN-O-NOMICS, a monetary theory and economic theory and social engineering theory all rolled up into one tight little package in one of Joe’s frontal lobes, coupled with the singing of HALLALUHAH and saying of AMEN many times over while kneeling down and knocking our heads on the floor each time we say AMEN, Joe Biden has wrought a TRUE ECONOMIC MIRACLE by delivering to we, the American people, ZERO PERCENT INFLATION!
Oh how great that makes me feel, and all warm and squishy inside, to boot, and how do I know that is true?
Because I got it right directly from Joe Biden’s chosen mouthpiece, the very witty and highly entertaining Karine Jean-Pierre who said thusly on her TWITTER account, which means it has to be true or TWITTER wouldn’t have let her TWEET about it, because that would be against some policy of theirs they use against Trump, to wit:
Karine Jean-Pierre
@PressSec
United States government official
We just received news that our economy had 0% inflation in July.
While the price of some things went up, the price of others, like gas, clothing, and more, dropped.
10:34 AM · Aug 10, 2022 · Twitter for iPhone
HAPPY DAYS ARE HERE AGAIN, PEOPLE!
ISN’T JOE BIDEN JUST REALLY TRULY AWESOME, DOING WHAT ALL THE WHIZ KIDS ON THE FED HAVE BEEN UNABLE TO DO, WHICH IS TO DELIVER US REAL, NOT IMAGINARY, ZERO INFLATION!
Reuters
“U.S. home builder sentiment, New York state factory activity drop”
Reuters
August 15, 2022
Meanwhile, a separate survey by the New York Fed showed the “Empire State” index on current business conditions plummeted 42.4 points to a reading of -31.3 this month.
A reading below zero signals a contraction in the New York manufacturing sector.
Manufacturers reported a sharp decline in orders and shipments.
The survey’s new orders index tumbled 36 points to a reading of -29.6 while the shipments index plummeted 49.4 points to -24.1.
Reuters
“Target profit crumbles as inflation-weary consumers shun discretionary spending”
By Uday Sampath Kumar
August 17, 2022
Aug 17 (Reuters) – Target Corp reported a bigger-than-expected 90% fall in quarterly earnings on Wednesday and missed estimates for comparable sales as it struggled to lure inflation-hit shoppers with steep discounts on apparel, electronics and home goods.
A host of U.S. retailers have issued profit warnings in recent weeks as consumers squeezed by higher prices for everything from toothpaste to gas curtailed spending on non-essential items.
CNBC
“Home sales fell nearly 6% in July as housing market slides into a recession”
Diana Olick
August 18, 2022
Sales of previously owned homes fell nearly 6% in July compared with June, according to a monthly report from the National Association of Realtors.
It is the slowest sales pace since November 2015, with the exception of a brief plunge at the beginning of the Covid pandemic.
Sales dropped about 20% from the same month a year ago.
“In terms of economic impact we are surely in a housing recession because builders are not building,” said Lawrence Yun, chief economist for the Realtors.
Mortgage rates spiked higher in June, with the average rate on the 30-year fixed loan crossing 6%, according to Mortgage News Daily.
It then settled back into the high 5% range.
That rate started this year around 3%, so the hit to affordability in June was hard, especially coupled with soaring inflation.
First-time buyers represented just 29% of buyers in July.
Historically they usually make up about 40% of sales, but they are clearly struggling the most with affordability.
High rents are also making it harder for them to save for a down payment.
The last sentence in this following article is a necessary element of STAGFLATION:
Reuters
“Fed’s George says pace, endpoint of rate hikes still matter of debate”
Reuters
August 18, 2022
Aug 18 (Reuters) – The recent easing of U.S. financial conditions, including a surge in stock prices, may have been based on an overly optimistic sense that inflation was peaking and the pace of interest rate increases was likely to slow, Kansas City Federal Reserve President Esther George said on Thursday.
Much of the decline was related to energy costs, she noted, while prices for a broad set of other services and goods continued to increase.
“That is hardly comforting,” she said.
And recent “abysmal” productivity numbers, which imply that workers are producing less for each dollar they are paid, could make controlling inflation that much harder, she added.
Here is another necessary element of STAGFLATION:
Reuters
“Revisions confirm steep decline in U.S. productivity in second quarter”
Reuters
September 1, 2022
WASHINGTON, Sept 1 (Reuters) – U.S. worker productivity plunged in the second quarter, leading to the largest year-on-year decline on record, the government confirmed on Thursday, keeping upward pressure on labor costs.
Nonfarm productivity, which measures hourly output per worker, contracted at a 4.1% annualized rate last quarter, the Labor Department said.
Productivity tumbled at a 7.4% rate in the first quarter.
Productivity fell at 2.4% rate from a year ago, instead of the 2.5% pace estimated last month.
It was still the biggest year-on-year decline since the government started tracking the series in the first quarter of 1948.
Unit labor costs – the price of labor per single unit of output – shot up at a 10.2% rate, rather than 10.8% as previously estimated.
And with respect to a looming recession, this Reuters article tells an interesting story:
“Stocks slide, dollar soars as September starts stormy”
By Marc Jones and Koh Gui Qing
September 1, 2022
Gold fell 0.9% to $1,695.0219 an ounce, but industrial metals all took a heavy pounding with tin down 8%, zinc down 5.3% and copper down 1.75%.
Oil and the price of gas has been going down, nor because of anything the Biden regime has done, other than trigger recession fears as the hapless fed tries to fight the Biden regime’s runaway inflation, which recession fears and a lack of liquidity due to excessive volatility have brought down the price of a barrel of oil, and consequently, a gallon of gasoline, which drop in price has caught the attention of OPEC, which just cut the amount of oil it is going to pump to drive the price of a barrel of oil back up, which will take gasoline with it as we head into the November mid-terms:
AFP
“Eurozone stocks, euro tumble as Russia fuels energy crisis”
AFP
5 September 2022
Eurozone stocks tumbled Monday and the euro hit a new 20-year dollar low on energy crisis fears, after Russia said it would not restart gas flows to Germany and effectively most of the continent.
Natural gas prices spiked almost a third, while oil added to strong gains as OPEC and its Russia-led allies decided at a meeting Monday to lower crude output in a bid to lift prices.
More like Joe and Karmela funking us, as I see it.
Reuters
“U.S. firms see tentative progress on inflation and labor supply, Fed says”
September 7, 2022
“The outlook for future economic growth remained generally weak, with contacts noting expectations for further softening of demand over the next six to twelve months,” the Fed’s report said.
In the Fed’s Chicago district, those jitters were apparent, with “many” contacts expressing concerns about the potential for a recession, while one staffing firm in the Philadelphia Fed’s district reported a slowdown in orders “approaching levels consistent with prior recessions.”
Wayne, please don’t allow others to use my name. This was not submitted by me, and I’d appreciate it if you’d remove it.
Note: Copy.
The last time around, that being 1929, the Great Depressions started here in the US and as European countries were trying to recover from WWI, they depended on American financing, so that in 1929, when the American economy started its crash, it brought Europe down with it, and it was Europe’s connections that quickly made this a global economic crisis.
This time around, that process is starting in Europe, thanks to Joe Biden and all his stupid sanctions which are not bothering Putin, but are crippling the economies of all Joe’s so-called allies in Europe:
Reuters
“Russia says United States is behind Europe’s gas supply crisis”
September 6, 2022
VLADIVOSTOK, Russia, Sept 6 (Reuters) – Russia’s foreign ministry said on Tuesday that the United States had fomented Europe’s gas supply crisis by pushing European leaders towards the “suicidal” step of cutting economic and energy cooperation with Moscow.
Europe is facing its worst gas supply crisis ever, with energy prices soaring and German importers even discussing possible rationing in the European Union’s biggest economy after Russia reduced gas flows westwards.
When asked what needed to happen for Nord Stream 1 to begin pumping again, Foreign Ministry spokeswoman Maria Zakharova told Reuters: “Listen, you are asking me questions that even children know the answer to: those who started this need to finish this.”
She said the United States had long sought to break the energy ties between Russia and major European powers such as Germany, even though Moscow had been a reliable energy supplier since Soviet times.
“The dominance of Washington prevailed,” Zakharova told Reuters on the sidelines of Eastern Economic Forum in Vladivostok.
“Political forces were brought to power in the European Union who are playing the role of ‘sheep-provocateurs’.”
“It is absolute suicide but it seems they will have to go through this,” she said.
And why have oil and gas prices been declining?
Is it because of anything Joe Biden has done?
Or is it because of the economic chaos Joe Biden has unleashed on the world with his massive sanctions against Russia which haven’t hurt the Russians, but are destroying the economies of all Joe’s hapless allies, those nations stupid enough to get into bed with Joe Biden in his war of choice against Putin that Joe is not winning, the same way he and Hussein did not win their war against Basher Assad in Syria?
Let’s take a look and see what we might see:
Rigzone
“Oil Plunges to Six Month Low Amid Demand Concerns”
by Bloomberg | Julia Fanzeres and Alex Longley
Wednesday, September 07, 2022
Oil benchmarks tumbled to their lowest in more than six months as demand concerns emanating from China prompted a wave of selling that turned into a frenzy as prices breached technical warning levels.
West Texas Intermediate extended losses to settle below $82 a barrel while Brent closed at $88, their lowest since January.
A dollar gauge reached an all-time high on Wednesday, offering a macro headwind to commodities at a time when the oil market is grappling with potential slowing demand in China.
Traders lamented the market picture was darkening as oil formed what’s referred to as a “death cross” – a bearish technical signal where WTI’s 50-day moving average falls below its 200-day MA- for the first time since 2020.
“Elevated volatility is the story here,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Management.
“There is no way to have conviction and want to place bets when the market trades in huge ranges with limited liquidity.”
“The risk reward is just not there.”
Crude has made a soft start to September, extending a run of three monthly losses that’s the longest streak in more than two years.
With central banks jacking up rates to quell inflation, investors are concerned economies may tip into recession and slow crude demand.
In China, one of the world’s largest oil consumers, virus curbs are damping demand, with centers from Chengdu to Shenzhen extending lockdowns or adopting movement controls.
As oil sheds all of the gains accrued since the invasion of Ukraine and heads back to levels seen at the start of the year, traders are evaluating if prices could fall much further.
Despite the uncertainty in Chinese demand, another main oil buyer, the US, remains strong.
“WTI crude should hold $80 given how strong the US economy remains and now that most of the demand shock from China’s deteriorating COVID situation has been priced in,” said Ed Moya, senior market analyst at Oanda.
And at the same time goofy old Joe Biden is out there slapping himself on the back vociferously while cheering how great he is, and how his policies are creating millions upon millions of new high-paying jobs, a thousand million of them, according to Biden Chief Propagandist Karine Jean-Pierre, we have this reality to consider:
Reuters
“Fed’s Powell hopeful inflation can be tamed without pain of Volcker era”
By Howard Schneider and Ann Saphir
September 8, 2022
WASHINGTON, Sept 8 (Reuters) – The Federal Reserve is “strongly committed” to fighting inflation, but there remains hope it can be done without the “very high social costs” involved in prior campaigns to control surging prices, Fed Chair Jerome Powell said on Thursday.
The issue confronting the Fed now is just how high and how fast it will need to push borrowing costs to control the worst outbreak of inflation since the 1980s, and whether the monetary tightening can be done without triggering a recession and steep rise in unemployment – a so-called “soft landing.”
New research suggests, however, that the hopeful scenario is out of reach, with a jobless rate that may have to double from the current 3.7% to dependably lower inflation.
Jean Pierre, Created 10,000 Million Jobs
https://www.youtube.com/watch?v=GqtX8L3PdXU
Reuters
“TREASURIES-Two-year yields highest since 2007 as Fed officials talk up rate hikes”
By Karen Brettell
SEPTEMBER 9, 2022
A Fed report showed on Friday that U.S. household wealth fell by a record $6.1 trillion in the second quarter to its lowest in a year as a bear market in stocks far outweighed further gains in real estate values.
It’s looking like it’s inflation to me, anyway:
CNBC
“Inflation rose 0.1% in August even with sharp drop in gas prices”
By Jeff Cox
Sept. 13, 2022
Inflation rose more than expected in August as rising shelter and food costs offset a drop in gas prices, the Bureau of Labor Statistics reported Tuesday.
The consumer price index, which tracks a broad swath of goods and services, increased 0.1% for the month and 8.3% over the past year.
Energy prices fell 5% for the month, led by a 10.6% slide in the gasoline index.
However, those declines were offset by increases elsewhere.
The food index increased 0.8% in August and shelter costs, which make up about one-third of the weighting in the CPI, jumped 0.7% and are up 6.2% from a year ago.
Medical care services also showed a big gain, rising 0.8% on the month and up 5.6% from August 2021.
New vehicle prices also climbed, increasing 0.8% though used vehicles fell 0.1%.
“They’re watching for where inflation is coming from,” said Quincy Krosby, chief equity strategist at LPL Financial.
“It’s very clear to them that it’s food, it’s transportation and it’s rent.”
“Rent keeps marching higher.”
“That is the most stubborn of everything the Fed is fighting at this point.”
The report presented conflicting sides of the inflation picture.
After peaking above $5 a gallon this summer, gasoline prices have pulled back sharply.
However, the cost of living in other key areas such as food and shelter continues to push higher, raising concerns that inflation that had been concentrated is now beginning to spread.
Within the jump in food costs, bread prices rose 2.2% on the month and are up 16.2% from a year ago.
Eggs surged another 2.9% and are up 39.8% for the 12-month period, and canned fruits increased 3.4% and 16.6%, respectively.
The Federal Reserve is hoping to slow a labor market that has posted solid job gains through the year.
Specifically, policymakers are concerned about a huge gap between job openings and available workers as labor force participation is stuck below its pre-pandemic levels.
That has resulted in rising wages that have in turn put pressure on prices.
Why the price of gas and oil has been declining, and no, it was not because of Joe Biden doing anything positive:
Rigzone
“Oil Posts Third Weekly Loss as Recession Fears Rise”
by Bloomberg | Ilena Peng and Julia Fanzeres
Friday, September 16, 2022
Oil settled at its third weekly loss as mounting evidence of an economic slowdown overshadows supply-risk concerns.
Hotter-than-expected inflation figures fanned expectations that more interest-rate hikes will crimp growth, while a warning from FedEx Corp. Friday was seen as proof that the US economy has started slowing.
“This was the week that energy traders started to believe that the US economy is headed for a rough patch,” said Ed Moya, senior market analyst at Oanda.
“Global recession fears are becoming the consensus view and that is troubling for the short-term crude demand outlook.”
Global oil consumption is being threatened by a darkening economic outlook.
A hawkish US Federal Reserve, the risk of a recession in Europe due to a severe energy crisis, and China’s continued Covid-19 lockdowns are all adding pressure to the commodity.
Diesel prices — often correlated to the global growth outlook — have slumped this week and several banks have cautioned on the outlook.
Reuters
“FedEx warning drives worst decline in stock, deepens slowdown fears”
By Medha Singh and Bansari Mayur Kamdar
September 16, 2022
Sept 16 (Reuters) – FedEx Corp’s shares had their worst day ever and closed at the lowest price since early pandemic months, after the delivery heavyweight pulled its forecast, feeding into fears of a global demand slowdown while piling more pressure on its new chief executive for a quick turnaround.
FedEx’s gloomy outlook for fiscal 2023 comes amid investor anxiety that the U.S. Federal Reserve’s rapid pace of interest rate hikes to tame soaring inflation threatens to tip the economy into a recession.
“We suspect that headwinds from an inflation-fatigued U.S. economy, a resource-constrained European economy, and second-order effects from lockdowns in China proved too much to overcome,” Cowen analyst Helane Becker said.
The U.S. firm joins global logistics peers such as Hong Kong’s Cathay Pacific Airways and France-based transporter CMA CGM in signaling that consumers are saving for essentials such as gas and food ahead of the holiday season as surging prices discourage casual shopping.
Subramaniam warned on CNBC on Thursday that he believes a global downturn was impending.
In response to a question of whether the economy is “going into a worldwide recession,” Subramaniam said “I think so.”
“But you know, these numbers, they don’t portend very well.”
Reuters
“U.S. December deficit quadruples as outlays grow, debt ceiling nears”
By David Lawder
January 12, 2023
WASHINGTON, Jan 12 (Reuters) – The U.S. government’s December budget deficit quadrupled from a year earlier to $85 billion as receipts shrank slightly and outlays grew to a new December record, the Treasury Department said on Thursday as it neared the $31.4 trillion federal debt limit.
Underlying costs for healthcare, Social Security and interest on a growing pool of public debt are rising, the Treasury data showed.
The $85 billion December deficit compared to a $21 billion deficit a year earlier, a strong performance driven by then-record revenues and steep drops in unemployment aid as the economy recovered from the COVID-19 pandemic.
The Treasury said unadjusted receipts for December shrank by 7% from December 2021 to $455 billion as individual withheld receipts fell $14 billion due to lower 2022 year-end bonus payments and Federal Reserve earnings fell to zero from $12 billion a year earlier as it paid higher interest on bank reserves.
December’s unadjusted outlays grew 6% to $540 billion as Treasury-paid interest on the public debt grew by $9 billion from a year earlier and Social Security outlays also rose $9 billion because of cost-of-living adjustments, a Treasury official said.
For the first three months of fiscal 2023, which began in October, the government reported a deficit of $421 billion, a 12% increase over the same period of fiscal 2022, with receipts down 3% to $1.026 trillion, and outlays up 1% to $1.447 trillion, also a record for the period.
Interest on the public debt for the year-to-date period totaled $210 billion, up 37% or $57 billion compared to a year earlier.
The Treasury official said the increase was due to higher interest rates paid on conventional debt that had expanded by $1.8 trillion from a year earlier.
Reuters
“Fed says surging interest costs cut what it handed back to Treasury in 2022”
Story by Michael S. Derby
13 Janaury 2023
NEW YORK (Reuters) – The Federal Reserve said Friday that it handed back substantially less money to the Treasury last year than it did the year before, amid rising interest expenses tied to its work to lower inflation.
The Fed said in a statement that in 2022 it handed back a preliminary $58.4 billion, compared to 2021’s $107.9 billion.
The Fed noted in September of last year net income turned negative and by September the central bank began recording what’s called a deferred asset that tallies up the loss, which stood at $18.8 billion at the end of the year.
The turn to technical losses for the Fed is driven by the central bank’s aggressive rate rise campaign last year, which saw it raise its rate target from near zero levels to between 4.25% to 4.5% by year’s end.
That sharply increased the amount of interest expenses faced by the central bank last year.
In 2022, the Fed says that interest expenses surged to $102.4 billion last year, from 2021’s $5.7 billion.