'Tis Only My Opinion!

December 2022 - Volume 42, Number 12

The economy is faltering ...

You can look at almost any economic metric and find that recent months have been deteriorating. To name just a few --  Retail Sales, Interest Rates, GDP, Housing Prices, Auto Sales, Used Car Prices & Delinquencies, Freight Rates - both domestic freight and overseas container rates, Unemployment, Bankruptcies, etc.

That is even if you look at the real numbers before the government massages the data. It hardly matters which series you take a look at.

 If, however, you look at the same data from Shadow Government Statistics, the economy is not just faltering but could be headed towards a depression in 2023 and beyond.

With the FED on a mission to reduce inflation to a 2% annual rate, the major sectors in the economy are not only faltering but headed towards major angst for investors.

Of course, when inflation stays at a 2% rate for a decade, what really happens is that you have just depreciated the dollar and your net worth by 17.8%.

But -- no problem -- you are now in a higher tax bracket.

Higher interest rates are destroying the cash-poor. And Powell promises more hikes going forward.

Housing is headed toward a major downturn while home costs are doubling. However, we are beginning to see home prices in many markets starting to show significant downward pressure as asking prices are cut.

Increased auto loan rates are finding used car prices falling and loan delinquencies rising.

The lower and middle class are turning to credit cards to meet their current living expenses. Credit-card debt will have increased about $110 billion during the 2022 which is an annual record.

The lower and middle class are seeing rising credit-card rates at a time when credit-card debt is trending upward. Interest rates on credit cards averaged 16.3% in December 2021 have risen to 19% today.

Many pundits are hoping for year-end retail sales to fuel a Christmas stock market rally.

However, with the situation in Europe and the Ukraine, problems with supply-chains, and a increasing lay-offs being announced, it is no wonder that the economy is facing major headwinds.

Meanwhile, the Biden administration continues to increase the federal debt and it will shortly pass $32 trillion and with the economy coming under pressure, one must wonder when the "Minsky Moment" will arrive.

As we enter December 2022, a good outlook would be for only a "faltering economy" ... a more realistic is for a major recession that might trigger that "Minsky Moment."

Remember to:

Keep It Safe, Simple and Stay Focused!

But then 'Tis Only My Opinion!

Fred Richards
December 1, 2022


Corruptisima republica plurimae leges. [The more corrupt a republic, the more laws.] -- Tacitus, Annals III 27

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