Small business optimism index, record budget surplus, commodities

Posted on by
Not good:
This is the automatic fiscal stabilizers doing their thing to slow things down during a recovery, and they keep increasing the pressure until growth goes negative. Additionally, with some $30 trillion of public debt, an 8% increase in prices means the value of the public debt- the net money supply in the economy- has contracted by about $2.4 trillion. This is a direct ‘removal of savings’ and functions the same as a tax on savings, thereby slowing the economy. It is reflected in the debt/GDP ratio which is falling rapidly.
This is how a typical post war slump develops- high wartime deficit spending followed by a reduction in deficit spending.

The US posted a budget surplus of USD 308 billion in April of 2022, the highest on record, switching from a USD 226 billion gap in the same period last year and above market expectations of a USD 226 billion surplus. April has traditionally been a budget surplus month due to the traditional April 15 tax filing deadline, except in 2009, 2010 and 2011 after a financial crisis, and in 2020 and 2021 due to the Covid-19 pandemic. Receipts jumped 97 percent to an all-time high of USD 864 billion, underpinned by tax receipts on the back of a strong economic recovery. At the same time, outlays slumped 16 percent to USD 555 billion, reflecting lower spending for COVID-19 relief. For the first seven months of the 2022 fiscal year, the US federal deficit was at USD 360 billion, a 81 percent decline from the same period of fiscal 2021. source: Financial Management Service, US Treasury Monthly Treasury Statement

State and local governments are also getting flooded with tax payments:
Here’s the culprit:
Hopefully they level off, but if energy takes another run up the inflation numbers won’t turn down:
Share

CPI

Posted on by

My take is we’ve had a one time upward adjustment in prices due to increased costs from Covid-related supply issues, along with supply side disruptions from the Trump/Biden tariffs.

Prices seem to have begun to level off and go sideways, which would mean CPI increases returning to the lower, pre-Covid monthly increases:

However, if energy costs don’t level off and instead rise dramatically, CPI will be dragged upward as well:

Share

GDP, jobless claims

Posted on by

Typical post war recession type of outcome, as previously discussed:

 

One reason for the low unemployment in the US is that for a lot of people you need a job to get health insurance:
https://tradingeconomics.com/united-states/jobless-claims

 

Reported inflation will fall rapidly unless energy prices increase from current levels,
which is likely given current Saudi OSP’s and EU responses to the war:

Share

New manufacturers orders, vehicle sales, unemployment claims, rents, oil prices

Posted on by

This component is going nowhere:

Still trying to catch up from the oil capex collapse of 2016 and covid collapse:

Not good:

This is an all time low as people scramble to get extra jobs to deal with higher prices,
like paying rent, for example:

Oil prices taking a breather with the announcements of releases from strategic petroleum reserves.

Price direction, however, is instead set by Saudi OSP premiums to benchmarks which were just raised for the 3rd month and this time to record highs.

This puts a relentless upward bias to prices until Saudi pricing changes, and will propel what’s call inflation as well. And the higher prices can also trigger a sharp recession:

The Commodities Feed: Saudi OSP raised to record highs

Share

Retail sales, Consumer sentiment, NY manufacturing survey

Posted on by

Gone flat post covid, adjusted for inflation:

The post covid slump continues, and now there are war disruptions:

US Consumer Sentiment Lowest since 2011
The University of Michigan consumer sentiment for the US fell to 59.7 in March of 2022 from 62.8 in February, below market forecasts of 61.4, preliminary estimates showed. It is the lowest reading since November of 2011, as inflation expectations rose sharply due to a surge in fuel prices exacerbated by the Russian invasion of Ukraine. The current economic conditions index fell to 67.8 from 68.2 while the expectations gauge sank to 54.4 from 59.4. The year-ahead expected inflation rate (5.4%) rose to its highest level since 1981, and expected gas prices posted their largest monthly upward surge in decades. Personal finances were expected to worsen in the year ahead by the largest proportion since the surveys started in the mid-1940 pointing out that the high inflation rate is impacting incomes.

Share