Tag: economy

BIDEN IS BANKROLLING ISRAEL’S WAR AMID GROWING FINANCIAL HARDSHIP AT HOME

IN LATE OCTOBER, President Joe Biden issued two supplemental funding requests. The first, primarily to support Israel’s war on Gaza and Ukraine’s war against Russia, became the $95 billion National Security Act, which the Senate passed in February. This week, Biden urged House leadership to pass the bill as soon as possible.

Never has the president appeared more committed to advancing one of his priorities. Biden delivered a rare Oval Office address specifically to market the plan — something he hasn’t done for any other proposal — and designated the funding as “emergency requirements.” In the weeks and months that followed, he ensured that it remained at the top of Congress’s agenda, even if that meant delays to other legislative business. His hard work paid off: The current bill gives Biden pretty much exactly what he asked for.

The second proposal is half the size of the first and funds domestic programs such as grants to child care providers and disaster relief. This request wasn’t designated as emergency spending.

While Biden personally and repeatedly urged Congress to approve his foreign policy plan, there is not a single instance of him even mentioning his domestic proposal in a statement since offering it on October 25. It hasn’t made an appearance on his personal or presidential X accounts either. Indeed, the way the proposal is written suggests that Biden never intended it to be taken seriously. The foreign policy request is a 69-page, fully drafted legislative proposal that’s formally addressed to the House speaker; the domestic request is a two-page summary table.

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Income Needed To Afford A Home In The US Has Soared By 80% Since 2020

The Biden administration and its fawning PR industry, also known as the mainstream media, have over the past year been desperate to explain to ordinary deplorables Americans why the US economy is ackchyually doing “so much better” than most peasants give the 81-year-old’s handlers credit for (see “The Economy Is Great. Why Do Americans Blame Biden“, “Voters Are More Upbeat on Economy, but Biden Gets Little Benefit, WSJ Poll Shows“, “Is Biden Going Down With the Ship Called Bidenomics?”, “Why Biden Touts Jobs When Americans Care About Prices“, and so on).

And yet, for all the seasonal adjustments, data rigging, propaganda and angry outbursts by the senile president,  there may be a very simple reason why Biden will lose the Nov 2024 election not just on the catastrophic debacles that are immigration and foreign policy (Afghanistan, Ukraine, Israel), but also on the economy, and that has to do with the snuffing of what was once the American dream – namely, owning a house.

According to Zillow, the income needed to comfortably afford a home in the US has leapt 80% since 2020, far exceeding what the BLS reports has been a 23% increase in median household income over the same period.

The real estate website found home buyers today need to make more than $106,000 a year, up $47,000 from 2020, a change driven largely by higher prices and borrowing costs.

“Housing costs have soared over the past four years as drastic hikes in home prices, mortgage rates and rent growth far outpaced wage gains,” said Orphe Divounguy, a senior economist at Zillow.

Some math: in 2020, a household earning $59,000 a year could comfortably afford the monthly mortgage on a typical US home, assuming the rule of thumb that a buyer can spend up to 30% of their income on housing and make a 10% down payment. That was less than the US median income of about $66,000 at the time, meaning more than half of American households had the financial means to afford homeownership.

Fast forward just four years to today, when it takes roughly $106,500 in income to afford a typical home, and median earnings are about $81,000, putting a home purchase out of reach for most families.

In 14 large housing markets, led by a handful of cities in California, Zillow estimated that household income must be $150,000 or more to comfortably afford a typical home. Among the 50 largest metropolitan areas studied, only Pittsburgh still had an income threshold for affordability below the $59,000 national average from 2020.

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The U.S. national debt is rising by $1 trillion about every 100 days

The debt load of the U.S. is growing at a quicker clip in recent months, increasing about $1 trillion nearly every 100 days.

The nation’s debt permanently crossed over to $34 trillion on Jan. 4, after briefly crossing the mark on Dec. 29, according to data from the U.S. Department of the Treasury. It reached $33 trillion on Sept. 15, 2023, and $32 trillion on June 15, 2023, hitting this accelerated pace. Before that, the $1 trillion move higher from $31 trillion took about eight months.

U.S. debt, which is the amount of money the federal government borrows to cover operating expenses, now stands at nearly $34.4 billion, as of Wednesday. Bank of America investment strategist Michael Hartnett believes the 100-day pattern will remain intact with the move from $34 trillion to $35 trillion.

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The Average U.S. Household Is Spending $1,019 More A Month Just To Buy The Same Goods And Services It Did 3 Years Ago

It seems odd to talk about 2021 as “the good old days”, but the truth is that the cost of living was far lower just three short years ago.  Earlier today, I did an interview with Sam Rohrer of Stand In The Gap Today in which we discussed how food prices have gotten wildly out of control.  One example that I brought up was the fact that a Big Mac “value meal” can cost up to 18 dollars in some parts of the country.  There is no way that I would shell out 18 bucks for a burger, some fries and a drink at McDonald’s.  But this is the economic environment that we live in today.

Has your income gone up by more than a thousand dollars a month over the past three years?

If not, you are falling behind.

According to economist Mark Zandi, the average U.S. household is now shelling out an additional $1,019 a month just to purchase the exact same goods and services that it did three years ago…

The typical U.S. household needed to pay $213 more a month in January to purchase the same goods and services it did one year ago because of still-high inflation, according to new calculations from Moody’s Analytics chief economist Mark Zandi.

Americans are paying on average $605 more each month compared with the same time two years ago and $1,019 more compared with three years ago, before the inflation crisis began.

In the old days, I actually enjoyed going to the grocery store.

But now it has become such a painful experience.

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Biden’s New Regulation Could Make Up to 1 Million Jobs Vanish, According to Manufacturing Leader

The Biden administration is in the process of putting in place a rule one manufacturing leader says could kill off a million manufacturing jobs.

Jay Timmons, president and CEO of the National Association of Manufacturers, made his prediction in an advance copy of his annual state of manufacturing address, according to Fox Business.

The remarks said that while Biden claims to support manufacturers, “what he won’t tell you is that his federal agencies are, at this very moment, working to undermine his manufacturing legacy — those agencies are undermining your success.

“In fact, just two weeks ago, they announced one big regulation that could wipe out up to 1 million jobs. It’s referred to as National Ambient Air Quality Standards or PM2.5,” he said.

“It’s not the name that matters. It’s the consequences. It’s stricter than rules they have even in Europe,” he wrote.

“And in vast portions of the country, we will barely be able to build new manufacturing facilities as a result,” Timmons said.

The rule imposes a stricter air quality standard on what’s known as fine particle pollution.

“Michigan would be one of the states hit hardest. And if new manufacturing investments dry up, that spills over to the rest of the state economy,” Timmons said.

“It affects the family trying to sell their home, the teacher hoping for new investments in schools, the students looking for job opportunities here in the state,” Timmons said

Timmons said that forcing manufacturers to move to other nations defeats the goal of clean air rules.

“And to what end? You cannot solve the world’s environmental challenges by driving manufacturing investment away from the United States to countries with lower standards,” he said.

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Good Times, Bad Times: Eviction Edition

Happy Tuesday and welcome to another edition of Rent Free. Despite the ink still wet on many state-level YIMBY reforms prodding local governments to allow housing, we’re already witnessing a concerted counter-revolution from the forces of local control. This week’s stories include:

  • Slow-growth activists in the Boston-adjacent suburb of Milton, Massachusetts, have successfully overturned state-required zoning reforms that allowed apartments near the town’s train stations.
  • Local governments in Florida are trying to defang a new state law allowing residential high-rises in commercial zones with lawsuits and regulatory obstructions.
  • A lawsuit against Arlington, Virginia’s exceedingly modest “missing middle” reforms that were passed last year trundles on.

But first, our lead item is a short take on how America’s overregulated, undersupplied housing market turns good things, like economic growth, into bad things, like more evictions.

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WE GET WHAT WE PAY FOR: THE CYCLE OF MILITARY SPENDING, INDUSTRY POWER, AND ECONOMIC DEPENDENCE

Military spending makes up a dominant share of discretionary spending in the United States; military personnel make up the majority of U.S. government manpower; and military industry is a leading force in the U.S. economy. This report finds that as a result, other elements and capacities of the U.S. government and civilian economy have been weakened, and military industries have gained political power. Decades of high levels of military spending have changed U.S. government and society — strengthening its ability to fight wars, while weakening its capacities to perform other core functions. Investments in infrastructure, healthcare, education, and emergency preparedness, for instance, have all suffered as military spending and industry have crowded them out. Increased resources channeled to the military further increase the political power of military industries, ensuring that the cycle of economic dependence continues — militarized sectors of the economy see perpetual increases in funding and manpower while other human needs go unmet. 

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And the Winner Is…Not You

Of all the government or quasi-government institutions, there is perhaps none as openly opaque in its operations and unaccountable for its failures as the Federal Reserve. For, unlike its top rivals for this most dubious of distinctions, like the CIA, NSA, or DOD, which do their law bending and money wasting largely of sight and out of mind, the nation’s money supply is so ubiquitous, so ever-present in the lives of the ordinary person that its activities must of necessity take place before the public eye. Hence, the gradual development of Fed Speak; that is, the art of speaking so technocratically that none but the most arcanely initiated have any hope of understanding what is being said or done.

Consider a few commonplace examples, which one can find in the regularly published minutes of the Federal Reserve’s meetings:

The Fed will “conduct overnight reverse repurchase agreement operations at an offering rate of 0.8 percent and with a per-counterparty limit of $160 billion per day,” and further “engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the Federal Reserve’s agency MBS transactions.”

Mm-hm. Yes. Indeed—perfectly clear.

Translated: the Fed intends to “buy and then sell back at a set date and price any qualifying security from any qualifying corporation or institution,” essentially, a futures contract meant to help operations that are either illiquid or overleveraged stay in business; and, further towards that end, the Fed intends to “continue to sell short various portions of its now nearly $3 trillion in mortgage backed security holdings,” again in an effort to help illiquid or highly levered dealers and traders of these securities stay liquid.

That Fed Speak elides more than it illuminates is, of course, intentional and operates on a number of levels: first, no ordinary person understands any of this; second, those who do understand benefit from these arrangements, i.e. the major banks, and consequently love it and have lobbied for it; and, lastly, the above combination along with their desire to pass the buck to anyone else means your congressional reps have no interest in intervening with the Fed’s activities, even when it blatantly violates the rules Congress put in place when it set the Federal Reserve up—all Fed purchases having been statutorily mandated to occur in the “open market,” that is at market prices (i.e. not executed as futures contracts).

Lev Menand’s latest book, which I reviewed last year, for all its sympathy for the Federal Reserve’s activities (having been himself an employee), could not avoid deeming the Fed completely out of control, acting since 2008 and through COVID without any bounds at all: an exploding balance sheet, unlimited credit facilities for troubled banks—this is not “Free Market Capitalism,” but rank corporatism, and a major reason young people increasingly view socialism or populist conservatism as preferable alternatives.

For, much like the national security establishment, it isn’t as though these gross violations of the principles of liberal, capitalist government have even produced any notable successes: quite to the contrary, they have produced little but abject failure.

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This Is A Tale Of Two Americas, And Those At The Bottom Of The Economic Food Chain Are Being Hit Extremely Hard

If you have plenty of money and you are able to shield yourself from what is happening to the tens of millions of people that are wallowing in poverty, life in America is still good in 2024.  Stock prices have been hovering near record highs, and companies that cater to the rich and famous have been raking in the cash.  But for most of the rest of the country, things are not going so well.  Homelessness has been rising at the fastest rate we have ever seen, crime is out of control all over the nation, and large companies are laying off workers at a very frightening pace.

If you live in the version of America that is still living the high life, good for you.

But if you live in the version of America that the rest of us live in, conditions are rapidly deteriorating.

Earlier today, I came across an article in the San Francisco Standard that detailed what life is like in Oakland, California these days…

A Prius hanging out of a dumpster. Stripped-down cars. Burning trash cans. These are some of the East Oakland sights set to a new catchphrase that’s blowing up on social media: “Oakland, California, … donde la vida no vale nada.”

Even cops, government officials, firefighters and kids are repeating the catchphrase on social media and on the streets of the Town.

That catchphrase was created by a man named Gregorio Ramon.

He has posted hundreds of videos on social media that document what is happening to the city where he has his home…

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The Sindex: Cigarette Prices Outpacing Inflation

Inflation stressing you out? Making you wish you had just a touch of nicotine in your system? Unfortunately, that’ll cost a lot. While prices economywide have risen 3.1 percent in the last year, cigarette prices have jumped 8 percent. On top of federal and state taxes that often make up half the price of a pack, tobacco companies tend to raise their prices faster than inflation to make up for declining sales volume. These and the rest of the numbers in the Reason Sindex use data from November 2023.

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