Genetski explains why folks are unhappy with Bidenomics
Rather than try to report on the findings and opinions of experts, it is sometimes better to have them speak for themselves. Every now and then, I prefer to simply repost the economic analysis of Robert Genetski. He is not only a long-time personal friend, he is one of the most knowledgeable (and correct) economists in America. Major financial institutions rely on his information. Investors use it to chart their investments. Businesses and organizations seek him as a speaker. Public officials invite his testimony. And his books are read by millions of people. You can sign up for his newsletter at, ClassicPrinciples.com.
Here is his latest analysis (highlights added).
Stocks were mixed this past week. The Nasdaq registered a 2% gain returning to its all-time high while the S&P500 rose 1%. Small cap ETFs and the Dow had slight losses.
Technical indicators are mixed. The Nasdaq remains in the strongest position of all indexes while the S&P500 is indecisive at its 21-day moving average. The Dow is technically the weakest index, after falling below its 50-day moving average.
Economic news was not good. Inflation remained well above the Fed’s target sending longer-term interest rates sharply higher. Moody’s AAA corporate bond rate is at 5.3%, the highest in five months. Higher bond rates tend to reduce the value of stocks.
Financial markets reacted to the news by shifting their expectations of a first interest rate cut to July or September and a second cut in December. As with Fed projections, these changes are highly sensitive and subject to the latest news cycle.
One positive is how the stock market performed. When stocks hold onto gains despite setbacks it indicates most investors remain positive.
For a variety of reasons, it has taken longer than normal for the impact of the Fed’s policy to slow spending. However, the longer interest rate curves remain inverted, the more monetary restraint increases financial stress for businesses and consumers.
Key Developments
As we indicated in last week’s report, the March CPI rose faster than expected. Monthly inflation was reported at a 4% to 5% annual rate for both the total and core (ex-food and energy). This brought the yearly inflation to the 3½% to 4% vicinity.
Although headlines praised March wholesale inflation as below expectations, the recent uptick remains real. After declining to 1% – 2%, producer prices rose 3½% to 4% in the first three months of 2024.
The week ahead
Monday’s March retail sales report will provide the most recent view of consumer spending. We expect overall retail sales to remain weak as consumers find their personal battle with inflation more challenging. Although still at a moderate historical level, the Fed reports the highest rates of credit card delinquency rates since 2013.
Retail sales data show only a slight gain over the year, with a downtrend for the three months ending in February. Expect the overall weakness in retail to continue as consumers struggle with credit card debt.
March retail sales will get an illusory boost from soaring oil and gasoline prices and will face downward pressure from a weakness in auto sales. Vehicle sales were reported down at a 15% annual rate in March and were down at a 9% annual rate in the first quarter.
Also on Monday, Homebuilders release their April Index for new home activity. Their Index is the most current and most reliable measure of new home activity.
We were surprised when the March Index moved to 51 (slightly above breakeven). Driving the Index higher was builder confidence that mortgage rates would be coming down and attracting new buyers. We expect the recent surge in interest rates might send the April Index below 50.
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There you have it. I would draw particular attention to the increase in credit card use — and the rising number of credit card delinquencies. As I have reported in previous commentaries, it shows that the highly praised consumer sales figures are based on folks spending money they do not have. It is putting them into a credit trap in which they can barely keep up with the growing interest costs. And the credit trap is more than the various credit cards. It also includes car payments and mortgages. This is reflected in the slowing down of both the housing and car markets.
To make matters worse, inflation has inched up again. Prices are still going up well above the Federal Reserve target rate. What appears like very small increases in inflation – a mere 3 or 4 percent – is another kick in the gut for the middle- and low-income consumers. And that matters a lot more than the stock market and the GNP.
In terms of the 2024 presidential election, there is decreasing opportunity for Bidenomics to reverse the negative numbers, the downward trends and the sad reality of the “kitchen table” economy. The time is drawing nigh.
So, there ‘tis.
Finally, Horist gets a real economist, yet cannot pin him to a forecast. Remember Stetsonian economics: “wherever you are in the economy, you have never been there before. ” Genetski provides lots of facts, but little of next big thing. Reader’s digest version:
Market mixed, both values and technical indicators.
Economic news was not good. Inflation remained well above the Fed’s target sending longer-term interest rates sharply higher. (yet still running 3.5-4% for year —- 2% is the mark)
Financial markets reacted to the news by shifting their expectations of a first interest rate cut to July or September and a second cut in December (That’s their guess)
One positive is how the stock market performed. Values are holding.
For a variety of reasons, it has taken longer than normal for the impact of the Fed’s policy to slow spending.
The Week Ahead
We expect overall retail sales to remain weak as consumers find their personal battle with inflation more challenging.
Although still at a moderate historical level, the Fed reports the highest rates of credit card delinquency rates since 2013.
Retail sales data show only a slight gain over the year, with a downtrend for the three months ending in February. Expect the overall weakness in retail to continue as consumers struggle with credit card debt.
Also on Monday, Homebuilders release their April Index for new home activity. Their Index is the most current and most reliable measure of new home activity.
Horist spreads FUD from this, Genetski did not. Horist has FEAR for our economic future whereas this Genetski states compelling facts, the word “mixed” twice for the market, inflation going the wrong way for a month, a single data point. But is it a trend or a blip? Inflation hit the covid bottom in June of 2020 and began rising on Trump’s watch unabated for the rest of his term; Horist loves the policies. After Trump’s gratuitous election year stimulus 4q20, in January of 2021, based on Trump policies that Horist loves, inflation begins to skyrocket. Biden’s Spring 2021 stimulus adds fuel to the fire ignited by Trump economic policies. From June of 22 to June of 23, Biden dropped Trump’s inflation every month for 12 months in a row. Since June of 23, we have “saw-toothed under 4% but mostly just over 3%. Currently, the uptick brought us to 3.5% — all goods included.
Market pundits guess that rate cuts may wait a quarter over previous estimates since the Fed has not announced, but this could change back in a flask and stocks held their value, a positive note. A Captain Obvious moment.
There you have it: market mixed, values hold, inflation has one-month upward tick – not a trend yet, personal credit bad — 30-39 yr olds – many with college loans – most affected. The future: news at 11….. Must see how Spring Reports come in. The 1q24 credit one, probably bad, is yet to come. Inflation, unemployment, etc. monthly and inflation is the highest priority to watch.
Horist concludes that the sky is falling, credit crunch, sales slowdowns: “There you have it. I would draw particular attention to the increase in credit card use — and the rising number of credit card delinquencies. As I have reported in previous commentaries, it shows that the highly praised consumer sales figures are based on folks spending money they do not have. It is putting them into a credit trap in which they can barely keep up with the growing interest costs. And the credit trap is more than the various credit cards. It also includes car payments and mortgages. This is reflected in the slowing down of both the housing and car markets.” Actually Horist, like guns, credit/interest is just a tool. It’s the person that traps themselves.
(Stetson note from Fortune: “New vehicle sales in the U.S. rose nearly 5% in 2024 as buyers defied high interest rates, but EV sales growth slowed” 4/3/2024 (ooops)).
(Stetson note from Forbes: “NAR released a summary of existing-home sales data showing that housing market activity this February increased 9.5 % from January 2024. February’s existing-home sales reached a 4.38 million seasonally adjusted annual rate. February sales of existing homes declined 3.3% from February 2023.” 3/26/2024 (oooops again))
Horist sees FUD in this, blames Biden, has FEAR for our economic future whereas this learned gent states a lot of compelling facts, the word “mixed” twice for the market, inflation going the wrong way. But is it a trend or a blip? And gee – market guesses that rate cuts may wait a quarter over previous estimates since the Fed has not announced, but this could change back in a flash and Genetski admits that stocks held their value, a positive note.
As I have said, yes, “the time is drawing nigh” and nigh is the Spring so Horist is jumping the gun a bit while jumping the shark too. It may not be blue sky, but the sky is not falling yet. A downward inflation trend tempered by a single upwards datapoint even in a saw-tooth trend does not reverse the downward trend. Not yet, except by political panderers. And, yes, the 2023 debt crunch is all around — sovereign, personal, but not business. The debt data is 4q23, 1q24 will be released may-june and probably will not be good, but that will be the Spring marker. Delinquencies and overuse are most prevalent in 30-39 age range, college loans play a part, BUT the economy is strong, unemployment is extremely low, wages are up, —- Biden can still pull this off, Spring —– as I have said —– is crucial. Inflation and debt are warnings, yet no recession and full employment are positives and freaking miracles that Horist conveniently ignores. If inflation rises again, then I will become concerned for Biden’s economic policies and his chances for the Presidency. But Genetski did not toss the red flag, Horist did. And I continue to wait upon all the Spring indicators.
Frank Stetson … LMAO … What a crock of nonsense. in your pathetic need for attention, you constantly beg for a complete point-by-point rebuttal. Well, here it is. READ THE COMMENTARY. In terms of spin, you are a brain in a blender. LOL
I read your full spin and omission ridden commentary then I read Frank’s reply. You are upset that he caught you engaging in using spin and omission by only using one source. Larry, you do the same as Trump. You have a thought box and you find people who agree with your thoughts and then claim you must be right because of them all the while ignoring plenty of other evidence that would speak against your so called “expert”.
Frank has some very good points which show he did read your article. He actually posted pieces of it within his rebuttal. Only a fool would claim he did not read your commentary when such evidence exists.
Tom .. In every recent post, you arrogantly pretend to know what is in my mind. Frank never upsets me. He just amuses me on occasion. LOL And I stand by my interpretation of Frank’s opinions. And if you take a moment to re-read my response, you will see that I did NOT say that Frank did not read the commentary, I proposed that as my rebuttal he go back and read it again — since he did not seem to grasp what I wrote the first time around. My commentary was the rebuttal. Do you get it now?
Thiught they were all spot on Tom
Yeah, you can yemmer yammer until the cows come home, but for the retired people we are screwed period! You can have this indicator and you can have that indicator, but the truth is inflation wiped out our savings, and our pensions do NOT grow, and the prices are not going back down ever! Thanks joe Biden for screwing us with your stupid war against fossil fuels with your BS climate fantasy!
If inflation wiped out your savings, then either you had very little savings or you have a bloated budget with a small pension and need to cut it back anyway! My savings are doing fine. I have not had to touch them. My investments are doing fine, making me money hand over fist – hard to find time to count it all. Vote Trump and you will get another corporate giveaway tagged to the national debt. Will this help you? By the way, what Larry did not point out was that Trump was the one who started this whole inflation cycle, Biden made it worse – but lets not give Trump a free pass!
Tom … What is with you and Frank constantly bragging about your wealth? However, it does let me understand why you guys are clueless with regard to what millions of Americans are suffering under Bidenomics. It does not affect you, so you think the problem does not exist. And AGAIN you lie. I have often noted that the inflation began with Trump’s final and unwise stimulus package. BUT, Biden could have advanced polices to mitigate it, but he chose to put the inflationary pressures on steroids. Ergo, Biden gets most of the blame. And from what you wrote, you agree on that point. As YOU say, “Biden made it worse.” Most people understand that despite you habit of lying about my writings. Or is it again, a reading comprehension problem? Or a memory problem?
Ron.
I’m retired. My savings will reach an all time high this quarter. As Trump left office I moved from equities to fixed income since I knew Trump’s fake free money would never continue. My pension continues to earn 8% for over a decade; I have not spent a cent yet. I guess you didn’t roll yours. I continue to spend, will probably get an ev this year to take advantage of tax credits and lower prices due to sales slump. Yes, prices not going down, but often alternatives available, plus I am retired, use less, certainly not spending more. I get 50 mpg’s so laugh at gas prices. Even took the ole truck out for fun this weekend blowing a good number of gallons on a lark just looking around. .
Trump ignited the inflation spike, Biden inflated upon that but also has brought it way down. Perhaps better planning would help. Don’t save, invest. Roll your pension, roll your social security, invest. Get a hybrid or ev. Solar. Or continue losing by following Trump as you will. The Trump tax cuts screwed me personally and the nation entirely; check the deficits they caused.
There is NOTHING FAKE ABOUT $2.00 Fuel!
The “fake” was all the free money Trump borrowed from the Chinese and gave to us in stimulus and tax cuts that did not bear fruit in terms of tax receipts. He promised GDP above 4%, actually mouthed off and said he could see double that and then totally failed to deliver. He did worse than Hoover. This is what set up our inflation and gave you al those free bucks. Biden doubled down on the stimulus — matching Trump, but Trump’s tax cuts are a double whammy —- first, you get free money, and you spend it. Then we borrow more when the tax receipts don’t come in. And under Trump, he did not make his promise.
Of course, there will be inflation. And then a tightening of money. Why no recession is a mystery and miracle to all, so far.
So, yeah, $2 fuel is better than $3.50 fuel. But at 50mpg, I still just don’t care. It’s all half-priced to me. You have issues with the price, I don’t care about the price. Point is that “free money” is a drug, a heroin shot that will end badly. Plus the loan which you pass to the kids. That’s Trump’s forte, passing debt on to others.
Thanks for getting me to take a closer look because I think I am closer to getting it now. First, our attitude, as in consumer sentiment sucks. We’ve been through the mill and like a NJ earthquake, the aftershocks just keep coming. Pandemic, prices, supply chain, shortages, outages, loss of an entire generation, life under Trump or Biden would be tough no matter how super either might be. When you look at the numbers, you can see where it’s much tougher times for paycheck to paycheck, but those of us fortunate enough to rise a bit above that are beginning to roll in it again. My bottom line will surpass anything Trump this quarter, God willing and the creek don’t rise (the creek part is a big if given all the floods). Markets OK, high interest rates means more money for less risky investments, easily jockey jobs for more money, GDP growth promises happier days ahead, but if you are unskilled or stuck in a job you can’t move out of, and living paycheck to paycheck, or close to that, the recovery has not touched you and everything that sucked in the pandemic still sucks, but no pandemic. How come it’s not trickling down, over or around?
Let’s run the numbers.
Jobs
Trump — about 180K jobs a month, pre pandemic
Biden —- about 400k jobs a month
Unemployment
Trump/Biden — about the same if pandemic is removed. Who cares, it’s basically full employment under both
Wages
Trump — about 9% for three pre-pandemic years for blue collar
Biden — about 15% for same
Credit Card Delinquency Rates
Trump is actually worse here than Biden even though it’s a key warning metric right now in Biden’s economy
GDP growth
Trump —- around 14% total if you take pandemic out. Trump had good-sized recession. He pledged 4% promised 8%, delivered 2.6% before the pandemic hammer fell
Biden —– around 22% if you remove pandemic, Biden had non-recession recession, hitting about 3.5%, pretty OK, almost good.
Gas Prices
Trump — $2
Biden — $5, about $3.50 now, bit of a go figure in that more domestic oil being drilled under Biden than Trump
Home Prices
Trump — started rising with pandemic
Biden —- pandemic pushed through roof, mortgage interest too, but demand still high, go figure on this one
Spending power —- better under Trump
Stock value —- better under Biden
Student debt —- better under Biden
Consumer sentiment —- sucks under Biden, it’s worse and we have PTSD (pandemic Trump stress disorder) so it hurts even worse
Deficit —- sucks under Trump, like record-setting suck, Biden has tightened the reins but his fourth year can still do him in.
While I can see your pain Darren et al, I don’t personally share it. I have invested in higher mpg, less btu’s for heat or whatever for colder. I have three freezers and can score a half-a-cow if the price is right, haven’t bought chicken or beef in six months. I spend money to save money all the time. Hard to do that paycheck to paycheck yet I also don’t see how much longer this period in our economy might last. While inflation is the key, corporate profits will be the driver. We need lower prices, sales, cut-throat competition. We need business to cry out for our demand, not just wait for us to shove those free Trump dollars their way. Vote with your wallet and the market will respond. Buy that lower priced gas, drive a bit to do so. Put the pressure on and they will respond. Their percentage profit margins are all fatter than previous, they can easily suck up some price.
Hey, it’s all I got, but the numbers really do seem to show why there are two views of the Biden economy. Unfortunately for Joe, these views may not be party based.
Lying piece of shit
Who can you be talking about?