The Economic Numbers Are Getting Too Bad to Hide

The Bidementia administration has specialized in delivering manipulated initial reports on various aspects of the economy, which typically are revised in subsequent months when little attention is being paid.   That game can only be played for so long and the sophisticated market participants are typically capable of ascertaining truth.  Yesterday there was a very poor auction by the US Treasury of three year notes, once more a record size of $58 billion.  The short end of these auctions had been holding up very well, but this one priced at a significant “tail” or higher interest rate than the Treasury hoped to sell at, and demand was weaker than prior auctions.  Following this auction, yields across all maturities rose.  (ZH Post)

The inflation numbers, we have been told by the Administration, are improving, but maybe all those potential buyers of the debt issued in yesterday’s auction knew something, because today’s inflation report was higher than expectations and dashed hopes that there would be interest rate cuts this year.  Of course, most of the media focuses on what this means for the economy, but what is really important is how it impacts the average consumer, which is very badly, as people already struggle to buy necessities like food, housing, medical care and gas.  And the components showing the highest increase were these necessities, including housing and energy, with medical care inflation reporting also finally catching up with reality.  And car insurance prices are really on a tear.  (CPI Release)

There will be no interest rate cuts this year, I suspect; the Federal Reserve can’t take the risk of really seeing another large burst of inflation.  And again, I will say that supply and demand factors are going to continue to be the key factor in the level of interest paid on US debt, which in turn is the lodestone for every other interest rate.  And even at the current lower level of inflation, consumers are loosing ground.  During the Bidementia administration, real (after inflation) average weekly earnings have DECLINED by 3.9%.  Meanwhile, the price of gasoline has risen 49%, food by 21%,  rent by 21%, electricity by 28% and natural gas by 27%.  Democrats–making everything you need cost more.  That should be Bidementia’s campaign slogan if he were honest.