The End of A Greater Lawlessness

 Answering Kennedy’s Call

I believe we are at another turning point in history, a return to an era of lawfulness that one political party has ignored since the deaths of JFK, Brother Bobby Kennedy, and Martin Luther King, Jr.

And that’s for a few reasons. First was Joe Biden becoming our President, defeating the most lawless president in history, now a convicted felon, and enabling legislation that has given more rights to Americans, rather than taking them away.

Secondly, President Biden has chosen VP Kamala Harris to succeed him in the upcoming presidential election, a former District Attorney and California Attorney General, who understands lawlessness and lawbreakers.

Who would believe events could turn so quickly, from a MAGA Trumpocracy looking backward and promising to destroy our democracy, to a Black-Asian woman who is already exciting many of the younger generation by saying we should look forward to a brighter future?

The JFK assassination on December 22, 1963, was a turning point for me—from hope in Kennedy’s New Frontier to a better future and end to the Cold War, to the hopelessness of a Vietnam War and all that followed.

It reminded me in many ways of the 1960s when there was just as much social unrest and different ideas of democracy. This was the era of McCarthyism and communist witch-hunting, right wing against left wing political views, the civil rights movement, and an unpopular war in Vietnam that was fracturing American communities.

I coped with the dysfunction and cynicism then by searching for communities that could mirror my values and ideals by working in public service organizations and as a Peace Corps Volunteer.

It’s been a long wait for the return to the optimism and can-do spirit I experienced in the 1960s. I began to understand why when I began writing about what was then called the Age of Narcissism.

Social historian Christopher Lasch was perhaps the first to broach the subject in various critiques of modern American society. This included his 1979 best-seller, The Culture of Narcissism: American Life in an Age of Diminishing Expectations that took “what was still mainly a narrow clinical term and used it to diagnose a pathology that seemed to have spread to all corners of American life,” per a NY Times summary of his book.

Former President Trump is a man who epitomized such narcissism and has been diagnosed by multiple mental health professionals with a Narcissistic Personality Disorder (NPD), “using other people as instruments of gratification even while craving their love and approval,” in the words of Lasch.

Lasch saw this as a societal pathology that took individualism to its destructive extreme of ‘me first’ over any concern for others with the breakup of communities and headlong rush to a post-WWII, consumer-driven economy. The extended family was transformed into the nuclear family of a married couple with children; grandparents migrating to senior living centers; as the growing middle class moved to the suburbs and away from traditional family and community values.

“In Lasch’s definition (drawn from Freud), the narcissist, driven by repressed rage and self-hatred, escapes into a grandiose self-conception, using other people as instruments of gratification even while craving their love and approval,” said the review. “Lasch saw the echo of such qualities in “the fascination with fame and celebrity, the fear of competition, the inability to suspend disbelief, the shallowness and transitory quality of personal relations, the horror of death.”

Is this just the beginning of an end to the Age of Narcissism, a turning point away from the worship of celebrity? I believe so. And who better to turn that page than such a highly qualified woman, former Vice President, and maybe our first female president?

Harlan Green © 2024

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Much Improved Q2 Economic Growth

Financial FAQs

Today’s second quarter Gross Domestic Product (GDP) grew 2.8 percent, double first quarter’s 1.4 percent, which will give a huge boost to confidence that no recession is imminent, but also enough ammunition for the inflation hawks that say inflation is still too high.

BEA.gov

This is when the BEA said the price index for gross domestic purchases increased just 2.3 percent in the second quarter, compared with an increase of 3.1 percent in the first quarter. And the personal consumption expenditures (PCE) price index increased just 2.6 percent, compared with an increase of 3.4 percent.

These are declining inflation rates that affect consumers and tell us it’s time for a rate drop. Gas prices have plunged, as have grocery prices.

But I find it worrisome that manufacturing is still faltering. We won’t see a full recovery from the pandemic otherwise, because manufacturing is part of our infrastructure modernization, as well as the CHIPS Act renewal that is bringing back the microchip factories important to our national security.

The services sector is powering our growth at present, which includes health care, leisure and hospitality, and means consumers are still going on vacation, as can be seen from the crowded airports and highways.

MarketWatch’s Jeffry Bartash reports the first reading of the S&P U.S. services index of purchasing managers climbed to a 28-month high of 56.0 in July, from 55.3 in the prior month. Numbers above 50 signal growth.

The service side of the economy — retailers, banks, hospitals and the like — employs most Americans and has driven the expansion since the pandemic, said Bartash.

The preliminary U.S. manufacturing PMI, however, fell to a six-month low of 49.5, dipping back into contraction territory. Manufacturers are even more important today to win the cold war and actual wars that are a major reason authoritarian governments still exist.

What is powering most of the expansion? The Federal Reserve’s consumer credit measure for May—the 2nd month of the second quarter—just showed a big jump in consumer borrowing, I said last week. Total consumer credit rose $11.3 billion in May, up from a $6.5 billion gain in the prior month, per the Federal Reserve.

Consumers’ personal savings have shrunk, which is why they are now even more dependent on credit, and why I’ve been saying such spending can’t continue with the sky-high 8.5 percent Prime Rate translating to 20 percent plus credit card rates.

And how about the housing market? Both existing and new-home sales are declining to post-pandemic lows because of excessively high construction costs and mortgage rates, at a time when we need more housing than ever.

When will the Fed get the message?

Harlan Green © 2024

Harlan Green on Twitter: https://twitter.com/HarlanGreen

More Lawlessness--Republicans' Climate Denial

 Answering Kennedy’s Call

NYTimes

One year ago, on August 16, 2022, President Biden signed the Inflation Reduction Act into law – the largest investment in clean energy and climate action ever.

“The Inflation Reduction Act is a transformative law that is helping the United States meet its climate goals and strengthen energy security, investing in America to create good-paying jobs, reducing energy and health care costs for families, and making the tax code fairer,” the White House said in its latest update.

Whereas at the top of the Republican’s MAGA list in its 2024 platform is weaken as many environmental laws as possible in order to return fossil fuels and the non-renewable, most pollution intensive industries to dominance.

Trump’s acceptance speech said as much: “…And next we will add the actual and incredible waste of taxpayer dollars that is fueling the inflation crisis. They spent trillions of dollars on things doing with the green new scam. It’s a scam…We will not allow it to be spent on meaningless green new scam ideas.”

“And I will end the electric vehicle mandate on day one, thereby saving the US auto industry from complete obliteration, which is happening right now. And remember we have liquid gold under our feet, more than any other country by far. We are a nation that has the opportunity to make an absolute fortune with its energy. We have it and China doesn’t.”

This is after the last Trump administration spent four years dismantling major climate policies and rolling back many more rules governing clean air, water, wildlife and toxic chemicals.

In all, a New York Times analysis, based on research from Harvard Law School, Columbia Law School and other sources, counts nearly 100 environmental rules officially reversed, revoked or otherwise rolled back under Mr. Trump. More than a dozen other potential rollbacks remained in progress by the end but were not finalized by the end of the administration’s term.

President Biden’s four years have reversed such climate change denial. Just twelve months after the law was signed, the Inflation Reduction Act is already having a significant impact on American workers and families and “is delivering for underserved communities and those that have been too often left behind,” said the White House.

“Outside groups estimate the Inflation Reduction Act’s clean energy and climate provisions have created more than 170,000 clean energy jobs already, companies have announced over $110 billion in clean energy manufacturing investments in the last year alone, the law is delivering billions of dollars to protect communities from the impacts of climate change, and millions of seniors are saving money because their insulin is capped at $35 per month,” said the White House in its update.

The Republican Party’s attack on environmental regulations has been unrelenting in its support of the fossil fuel industry.

But in the early 1970s when I joined the U.S. Environmental Protection Agency, the Clean Air Act, the Clean Water Act, and the Endangered Species Act were all passed with broad bipartisan support and signed by Republican President Richard Nixon.

What happened? The 1973 Arab oil embargo shut off OPEC supplies and led to long car lines waiting at gas stations to fill their tanks, for those that remember.

It was a very traumatic decade of soaring inflation that caused Big Business to bankroll lobbyists to support Big Oil producers, which set the environmental movement back. Oil production became a national security priority; fracking was developed to make the US the largest oil producer in the world.

The result of that decade was the beginning of what became Reaganomics, or trickle-down economics. It wasn’t even an economic theory—just make the one precent wealthier and enough will trickle down to the other 99 percent to lift all boats.

Worldwide temperatures have been increasing ever since; tornadoes and hurricanes more frequent and damaging, wildfires and floods as well. Even the Pentagon has jumped on the environmental bandwagon with its reports that have said global warming now endangers our national security.

Even the Big Oil industry has admitted the danger in many studies. But not the Republican Party, apparently, which makes its climate denial platform a national security threat as well.

Harlan Green © 2024

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

The Greater Lawlessness--Republicans War On America

 Answering Kennedy’s Call

Trump’s selection of J.D. Vance as Vice-President means the chaos of Trump’s first administration will continue on steroids, as Trump will have a VP who will assist him in continuing to tear down one institution after another that protects ordinary Americans.

JD Vance looked down on working class whites he grew up among when he wrote his memoir, “Hillbilly Elegy”. “You can walk through a town where 30 percent of the young men work fewer than 20 hours a week and find not a single person aware of his own laziness,” as cited by Paul Krugman in a recent NYTimes Op-ed.

“We don’t study as children, and we don’t make our kids study when we’re parents,” he said. But now that he’s the Republican Vice President candidate, those lazy males have suddenly become victims of the surge of illegal immigrants that are “poisoning the blood of Americans”, in Trump’s words, and taking their jobs Vance has said in numerous speeches and interviews.

But that’s not the case. The unemployment rate of adult white males is just 4 percent, below the current national unemployment rate, said Krugman, a Nobel prize winner in economics.

As an example of the chaos during his first administration when Trump was taking babies away from immigrant mothers and attempting to build a wall, I wrote this 2017 Huffington Post piece on how his immigration policies will damage the US economy.

“For most of the past half-century, adults in the U.S. Baby Boom generation – those born after World War II and before 1965 – have been the main driver of the nation’s expanding workforce, reports the PEW Research Center. But as this large generation heads into retirement, the increase in the potential labor force will slow markedly, and immigrants will play the primary role in the future growth of the working-age population (though they will remain a minority of it).

Huffington Post

“The stakes are enormous if Republicans succeed in removing most of the estimated 11 million undocumented worker (only half of which are from Mexico and the Latin countries), and cut legal immigration in half, as they have promised to do. Economic growth will plummet, since it is mainly based on growth of the working age population, as well as labor productivity, which has also fallen since 2000,” I wrote then.

It is one more example of the Bully Mentality I’ve been writing about ad nauseum that is particular to the Republican Party—the bullying behavior of the strongest preying on the weakest that has made citizens of the red states they control the poorest.

How much of a bully is JD Vance? He is now mimicking Donald Trump’s behavior. In an interview with ABC News "This Week" anchor George Stephanopoulos, Vance doubled down on his views of the 2020 election, saying the results shouldn't have been immediately certified, and he went on to suggest Trump should ignore "illegitimate" U.S. Supreme Court rulings.

"If I had been vice president, I would have told the states, like Pennsylvania, Georgia and so many others, that we needed to have multiple slates of electors and I think the U.S. Congress should have fought over it from there," he continued. "That is the legitimate way to deal with an election that a lot of folks, including me, think had a lot of problems in 2020. I think that's what we should have done."

It is returning to the Law of the Jungle, the Darwinian struggle where the fittest survive and prosper that Donald Trump now with the assistance of his Vice Presidential candidate will return America to.

It is monumental hypocrisy of a man from Kentucky who grew up among the very people he has made into victims, a red state that has suffered so much from what is now the official policy of Donald Trump’s party.

Harlan Green © 2024

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Retail Sales Falter

 The Mortgage Corner

Fed Chair Powell has said it again. Second-quarter economic data including last week’s consumer price report “do add somewhat” to confidence that inflation is heading down to the central bank’s 2 percent goal at an Economic Club of Washington interview— a condition for rate cuts, report various media. He repeated that labor markets are now in a “better balance,” and an unexpected weakening in labor markets would also be a reason to adjust rates.

That is already happening with the latest revisions to unemployment data and the unemployment rate now up to 4.1 percent. It ticked up to 4.1 percent in June from 3.8 percent in March. The sudden rise in the unemployment rate in the middle of the work year should alarm Fed officials.

Further evidence of slowing job growth is that average hourly wage growth fell to 3.9 percent. It makes up to two-thirds of production costs for most businesses and is now the main driver of inflation.

1another reason a rate cut seems more likely is that retail sales were unchanged in June once again. It actually fell when inflation is factored. It’s now been flat for three consecutive months.

FREDretail

Advance of U.S. retail and food services sales for June 2024, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $704.3 billion, virtually unchanged (±0.5 percent)* from the previous month, but up 2.3 percent (±0.5 percent) above June 2023. Total sales for the April 2024 through June 2024 period were up 2.5 percent (±0.5 percent) from the same period a year ago.

Housing is another reason a rate cut is needed sooner. Though for sale inventories are up to a 3.7-month supply, according to Realtors, builders have been slashing prices because of the sky-high mortgage rates.

Nearly one third of home sellers in Sun Belt cities are slashing their asking prices as the number of properties for sale in those markets surges.

The share of home listings with a price cut was the highest in metropolitan areas across the South as homeowners competed to entice buyers, according to June monthly data from real-estate company Realtor.com. The report includes data for home listings in the 50 largest U.S. metropolitan areas going back to 2016, said the NAR.

Total existing-home sales¹ – completed transactions that include single-family homes, townhomes, condominiums and co-ops – retreated 0.7% from April to a seasonally adjusted annual rate of 4.11 million in May. Year-over-year, sales were down from 4.23 million in May 2023.

"Eventually, more inventory will help boost home sales and tame home price gains in the upcoming months," said NAR Chief Economist Lawrence Yun. "Increased housing supply spells good news for consumers who want to see more properties before making purchasing decisions."

It is also putting more affordable housing on the market. In the NAR’s June report, as in the previous four months, the growth in homes particularly priced in the $200,000 to $350,000 range outpaced all other price categories, as home inventory in this range grew by 50.0 percent compared with last year, surpassing even last month’s high 45.1 percent growth rate. This increase is again primarily fueled by a greater availability of smaller and more affordable homes in the South.

Total housing inventory² registered at the end of May was 1.28 million units, up 6.7 percent from April and 18.5 percent from one year ago (1.08 million). The 3.7-month supply at the current sales pace is up from 3.5 months in April and 3.1 months in May 2023.

All the discounting won’t cure the housing shortage but it will create more affordable housing.

Consumer spending itself has now slowed for three consecutive months because of too high interest rates, as has the job market, which has now taken a dangerous downturn.

So why wait for a September rate cut, as many are predicting? The Fed’s FOMC meets next in July.

Harlan Green © 2024

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

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Prices Are Falling!

 Popular Economics Weekly

Today could be historic for inflation watchers. It’s the first time since July 2022 that retail prices in June as measured by the U.S. Consumer Price Index (CPI) have declined.

It will be history making and effect the financial markets, housing, and maybe the presidential election where inflation has seemed to be Americans’ major worry—at least according to the polls.

The easiest signs of actual deflation for consumers are the drop of gas prices to pre-pandemic levels. Gas prices dropped 3.8% in June, the government said. And the cost of used cars and trucks fell 1.5%.

I said last month that it will probably be hard to believe for many scarred by the post-pandemic inflation scare that still believe inflation is too high, but there was no inflation increase in May for both wholesale (PPI) and retail (CPI) inflation indexes.

FREDcpi

The FRED graph illustrates that we now have had two months of no price increases. It could have been predicted because consumers have known for months that stores were discounting, and been frequenting big box retailers like Target, Walmart and Costco.

It also tells us that housing (rents) have been declining after an initial uptick in the first quarter due to various shortages. Housing inventories have increased some 40 percent year over year, per the National Association of Realtors.

This will cause bonds in particular to rally because interest rates, including mortgages, will finally begin to decline from their two-year highs.

San Francisco Fed Chairman was the first to jump on the rate cutting bandwagon this morning. She said she now supports cutting interest rates.

“With the information we have received today, which includes data on employment, inflation, GDP growth and the outlook for the economy, I see it as likely that some policy adjustments will be warranted,” Daly said in a roundtable with reporters cited my MarketWatch’s Greg Robb.

The increase in rents in the past 12 months slowed to 5.1% in June from 5.3% in the prior month and touched the lowest level since April 2022. Rents are expected to slow even further, but just how much is unclear. Before the pandemic, they were rising about 3.5% to 3.9% a year.

The cost of "imputed" housing, meanwhile, rose a scant 0.3% in June. That's the smallest increase since July 2021. This category, known to economists as OER, is a indirect proxy for how much the cost of housing is rising.

The Biden administration’s Treasury Department is doing its part with funds to support building more affordable housing.

“Executive agencies have the power to act quickly to promote homeownership. We applaud the Biden Administration’s comprehensive, multi-agency response targeting solutions at every level of government. It will take an all-of-government approach to yield results in this fight,” said NAR’s Chief Advocacy Officer Shannon McGahn.

So, Fed Chair Powell was correct in saying at his latest congressional testimony that the Fed will not have to wait for inflation to decline to its 2 percent target rate before cutting interest rates

He was making a brave statement, because the inflation hawks will now say easing credit could stimulate another inflation surge, because consumers will therefore be able to borrow more, thus increasing the demand side of the supply-demand equation.

But lower interest rates will also stimulate more home building, increasing the supply side of the housing shortage that has kept most housing unaffordable for entry-level and first-time homebuyers.

The rather sudden drop in prices could mean more, maybe economic growth itself slowing further, and we see actual deflation? Let’s wait and see.

Harlan Green © 2024

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Q2 Economic Growth Is...?

 Financial FAQs

Estimates of 2024 second quarter economic growth have been all over the map, but I will attempt to separate the wheat from the chaff, so to speak.

Firstly, GDP growth is mostly dependent on consumer spending, which makes up some two-thirds of it. And right now, consumers continue to spend after hesitating in Q1 led to just 1.4 percent Q1 GDP growth. But I believe Q2 will be better, which will keep the budget deficit within an acceptable range. More on that later.

The Federal Reserve’s consumer credit measure for May—the 2nd month of the second quarter—just showed a big jump in consumer spending. Total consumer credit rose $11.3 billion in May, up from a $6.5 billion gain in the prior month, the Federal Reserve said Monday.

The rise in May translates into a 2.7% annual rate says MarketWatch’s Jeffry Bartash, stronger than the 1.5% rise in the prior month. Revolving credit, like credit cards, jumped by a 6.3% annual rate in May after a rare 0.8 % fall in the prior month. Nonrevolving credit, typically auto and student loans, rose by a 1.4% rate after a 2.4% rise in the prior month.

Why is this important? Revolving credit (i.e., cards) is spent on everyday items as well as travel and leisure, and we are in the summer season of most travel. This jump is spending should mean a boost in consumer confidence going into the fall.

The Atlanta Fed GDPNow estimate of Q2 growth jumped today, which I believe is the best indicator of what the BEA’s Q2 initial estimate of growth might look like that will be out in two weeks.

AtlfedGDPNow

“The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2024 is 2.0 percent on July 10, up from 1.5 percent on July 3…after last Friday’s employment report from the Bureau of Labor Statistics and this morning’s wholesale trade report from the US Census Bureau…”

Real Domestic Private Investment, a major component of GDP growth, has also been surging. It is now growing at 5 percent in Q1 and is up a total 11 percent from Q1 2023 when it was shrinking. This is huge, because, remember I mentioned in a recent blog that more private investment in infrastructure as well as CHIPS and other manufacturing incentives built into Bidenomics lessens the need for taxpayer funding and hence lowers the budget deficit.

And in more good news, Fed Chair Powell remarked at today’s house congressional hearing that the Fed will not wait to reach its 2 percent target rate before beginning to cut rates.

This is the best of news, though it will now have investors worrying about some unseen dangers that may lie ahead that the Fed may be worrying about. What are they? Watch the news!

Harlan Green © 2024

Harlan Green on Twitter: https://twitter.com/HarlanGreen