U.S. foreclosure filings totaled 95,712 in the first quarter of 2023. That’s 6% higher than in the previous quarter and 22% higher than a year ago. . . .
alone saw 36,617 U.S. properties in foreclosure, a 20% increase compared to February and 10% higher than a year ago.
It was the 23rd consecutive month with a year-over-year increase in foreclosure activity.
a companion article, alsom by NBC reminded readers
High inflation and slow growth is sometimes described as “stagflation,” which characterized the late 1970s and early ’80s U.S. economy.
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. I don’t know how bad things are going to get. I do know that when hared times come people are better off if they saw them coming and prepared, worse off if they believe some crappy rose-colored scenario and kept spending frivously right up until the last minute.
Energy prices dropped in March
(so did used cars and truck for some reason)
That “hid” (or masked) high inflation in other areas
Basically inflation ate our lunch otherwise.
But as to your question, “Is 5% inflation bad?”
Think forward,
Would you support small a flat 3-5% consumption tax that taxes all spending (including spending from food stamps and other programs) but gives the rich a deduction for all the money they save?
“grind to a halt”
“slashes its growth forecast”
“slow to near zero”
“sounded the alarm”
“Our worst fears around the Fed have been confirmed”
“are now playing a dangerous game”
That’s pretty gloomy.
So far, increases in tution, medical costs and wages have not “caught up with” inflation. Each has , so far, increased less than overall inflation. I can only speculate what that means about the future.
The full impact of tighter Fed policy is also delayed by about 16 months, Hyman said, citing research from the economist John Keynes. That means it could take another year for the full consequences of the Fed’s moves to bubble to the surface, though the economy is already starting to flash warnings that a downturn is imminent.
Traditionally the NBER declared a redession any time and every time there were two consecutive quarters of negative GDP growth. I see that as highly probable in the foreseeable future.
More recently it added a component, and to be declared a recession those two quarters must ALSO be accompanied some sort of poorly-defined upswing in unemployment. Right now the (un)employment picture is strong, but with two footnotes.
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. Unemployment footnote 1:
Right now labor-force participation rate is low.
In 2000, 67% of working aged adults worked, today 62% do (minus 5%)
Unemployment footnote 2:
Right now a larger percentage of the labor force is part0time or temporary (gig workers seasonal workers etc.
In 2000 workers worked an average 1,844 hours/year. today that number is 1,765 (minus 4%)
By those two measures alone our starting point is already 9% lower.
9% is a pretty significant number.
If it were 9% unemployment, or 9% inflation or even 9% out of the military budget or 9% out of the education budget etc. we’d be tearing our hair out over it. It is still 9% out of the economy, just spread around on ways that don’t set off any alarms.
Stan Druckenmiller is kind of a guru.
When he makes a statement like this everyone (myself included) should dial-down the certainty knob a notch or two.
There are many things that forecast a recession.
Some of those thing are good positive things (at the time), nonetheless they indicate a recession (large or small) is coming.
One of those is unemployment
The chart below shows the US unemployment rate since 1948
Gray areas are recessions. Unemployment bottoms just before a recession.
Without exception unemployment bottom = recession coming
and
recession coming = unemployment bottom
a 100% correlation is tough to find in economics but tis appears to be one.
A second indicator
is Retail Money Market funds (cash on the sidelines that people are afraid to invest or spend or even put in regular bank accounts)
It can peak at the beginning of a recession or in the middle of a recession or at the end of a recession but it always means “badness is coming” and never means “goodness is coming.”
Chart below shows Retail Money Market funds as % of GDP
The textbook response is “Yes of course. Rising bankruptcies are bad, and, more importantly, they are a sign that things are getting worse.”
Both parts of that statement are true, so, there I have said that. Obligation filled.
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That said, in my somewhat learned opinion, the rising # of bankruptcies is an inevitable result of decades of bad Fed policy (artificially holding interest rates way below free market rates.)
That inevitably produces
lots of crap companies and/or
too many good companies to survive once the Fed has to stop artificially creating artificial buyers with artificial money.
The barn is full of manure. To some degree rising bankruptcies is just manure being removed from the barn.
