Tag Archives: CNBC

Sanity Returns To The Auto Industry

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Electric cars may be a good idea if you live in a city with a temperate climate, but they are a problem if you live in a place with very cold winters or if you plan a long trip. Cold weather significantly impacts the life of the battery, and a long trip in an electric vehicle requires planning based on where the car chargers are and whether they are fast-charging or slow-charging. There may be a future for electric cars, but I believe some more tweaking of the technology is necessary. Ultimately, the free market should determine the success or failure of electric cars–not the government.

On Tuesday, Breitbart reported:

General Motors has announced plans to expand production of gas-powered vehicles and SUVs in Michigan as well as the manufacturing of pickup trucks.

The Detroit-based auto manufacturer said in a statement on Tuesday that it will “begin production of the Cadillac Escalade, as well as the Chevrolet Silverado and GMC Sierra light duty pickups at Orion Assembly in early 2027 to help meet continued strong customer demand.”

According to CNBC, the Escalade is produced in Arlington, Texas, while the Silverado and Sierra trucks are made at an assembly plant in Fort Wayne, Indiana, which will continue to produce the vehicles.

The article concludes:

While GM has seen a surge in EV sales recently, overall customer demand for EVs have not met expectations.

“For years, the automotive industry has been in a state of EV euphoria. Automakers trotted out optimistic sales forecasts for electric models and announced ambitious targets for EV growth. Wall Street boosted valuations for legacy automakers and startup entrants alike, based in part on their visions for an EV future,” CNBC reported.

“Now the hype is dwindling, and companies are again cheering consumer choice. Automakers from Ford Motor and General Motors to Mercedes-Benz, Volkswagen, Jaguar Land Rover and Aston Martin are scaling back or delaying their electric vehicle plans,” it added.

The Latest Inflation Numbers

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When reading statistics about anything, remember that a good statistician can make numbers say anything he wants them to say. With that in mind, I think the June inflation numbers look really good.

On Tuesday, CNBC reported:

  • The consumer price index, a broad-based measure of goods and services costs, increased 0.3% on the month, putting the 12-month inflation rate at 2.7%, in line with expectations.
  • Core inflation picked up 0.2% on the month, with the annual rate moving to 2.9%, with the annual rate in line with estimates.
  • While the evidence in June was mixed on how much influence tariffs had over prices, there were signs that the duties are having an impact. Apparel and home furnishing prices rose, though vehicle prices fell.

…Excluding volatile food and energy prices, core inflation picked up 0.2% on the month, with the annual rate moving to 2.9%, with the annual rate in line with estimates. The monthly level was slightly below the outlook for a 0.3% gain.

Inflation in June 2022 was 9.1 percent, but began going down slowly after that. Somehow, though, even when the rate of inflation comes down, the price of everything does not go back to where it started.

The article concludes:

Amid the previously muted inflation ratings, Trump has been urging the Federal Reserve to lower interest rates, which it has not done since December. The president has insisted that tariffs are not aggravating inflation, and has contended that the Fed’s refusal to ease is raising the costs the U.S. has to pay on its burgeoning debt and deficit problem.

Central bankers, led by Chair Jerome Powell, have refused to budge. They insist that the U.S. economy is in a strong enough position now that the Fed can afford to wait to see the impact tariffs will have on inflation. Trump in turn has called on Powell to resign and is certain to name someone else to the job when the chair’s term expires in May 2026.

Markets expect the Fed to stay on hold when it meets at the end of July and then cut by a quarter percentage point in September.

The Federal Reserve was established in 1913 for the purpose of concentrating America’s wealth in the New York City Banks (yes, I know that wasn’t what you were told). It needs to go away. For further information, see The Creature from Jekyll Island by G. Edward Griffin.

This Could Be The Start Of Something Big!

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On Friday, CNBC reported the following:

  • With government red ink swelling throughout the year, June saw a surplus of just over $27 billion, following a $316 billion deficit in May.
  • Customs duties totaled about $27 billion for the month, up from $23 billion in May and a 301% gain from June 2024.

CNBC notes:

That brought the fiscal year-to-date deficit to $1.34 trillion, up 5% from a year ago. However, with calendar adjustment, the deficit actually edged lower by 1%. There are three months left in the current fiscal year, which ends Sept. 30.

A 13% increase in receipts from the same month a year ago helped bridge the gap, with outlays down 7%. For the year, receipts are up 7% while spending has risen 6%.

The government last posted a June surplus in 2017, during President Donald Trump’s first term.

Increasing tariff collections are helping shore up the government finances.

Customs duties totaled about $27 billion for the month, up from $23 billion in May and 301% higher than June 2024. On an annual basis, tariff collections have totaled $113 billion, or 86% more than a year ago.

The article notes that the interest on the debt is a major budget item:

Net interest on the $36 trillion national debt totaled $84 billion in June, down slightly from May but still higher than any other category with the exception of Social Security. For the year, net interest — what Treasury pays on the debt it issues minus what it earns on investments — is at $749 billion. Total interest payments are projected at $1.2 trillion for the full fiscal year.

Lowering interest rates would bring down that cost.

The June Jobs Report Is Out

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On June 3rd, Fox Business posted an article about the June Jobs Report. The economy is improving rapidly, but there are still some weak spots.

The article reports:

The U.S. economy added jobs in June at a faster pace than in recent months, despite economic uncertainty stemming from trade, tax and monetary policy.

The Labor Department on Thursday reported that employers added 147,000 jobs in June. That figure was above the estimate of economists polled by LSEG, who projected 110,000 jobs would be added.

The unemployment rate ticked down slightly to 4.1%, which was lower than economists’ expectations of 4.3%.

Job gains in the prior two months were both revised, with job creation in April revised up by 11,000 from a gain of 147,000 to 158,000; and May job gains were revised up by 5,000 from a gain of 139,000 to 144,000. Taken together, employment in April and May was 16,000 jobs higher than previously reported.

The workforce participation rate has remained steady.

I don’t know how to reconcile this information with a post from CNBC on Wednesday that reported:

Private sector hiring unexpectedly contracted in June, payrolls processing firm ADP said Wednesday, in a possible sign that the economy may not be as sturdy as investors believe as they bid the S&P 500 back up to record territory to end the month.

Private payrolls lost 33,000 jobs in June, the ADP report showed, the first decrease since March 2023. Economists polled by Dow Jones forecast an increase of 100,000 for the month. The May job growth figure was revised even lower to just 29,000 jobs added from 37,000.

The article at Fox Business concludes:

“The U.S. job market continues to largely stand tall and sturdy, even as headwinds mount – but it may be a tent increasingly held up by fewer poles,” said Cory Stahle, Indeed Hiring Lab economist. “The headline job gains and surprising dip in unemployment are undoubtedly good news, but for job seekers outside of healthcare and social assistance, local government, and public education, the gains will likely ring hollow.”

The market viewed the June jobs report as solidifying the outlook for the Federal Reserve to leave interest rates unchanged for its fifth consecutive meeting later this month. 

The probability of a 25-basis-point interest rate cut in July declined from 23.8% a day ago to 6.7% on Thursday following the report’s release, according to the CME FedWatch tool.

We need an interest cut now to help with the government’s interest payments and to help the real estate market. Right now the real estate market is being held hostage by the refusal to cut interest rates.

If The Strait Of Hormuz Is Closed, Who Loses?

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On Monday, CNBC posted an article about Iran’s Parliament voting to block the Strait of Hormuz. Twenty percent of the world’s oil is shipped through the Strait of Hormuz.

The article reports:

  • Should Iran follow through on its threat to close the Strait of Hormuz, it could alienate its neighbors and trade partners.
  • But the possibility of a closure of the strait is low, experts said, despite Tehran’s rhetoric around closing the strait.
  • A closure would provoke Iran’s markets in Asia, particularly China, which accounts for a majority of Iranian oil exports.

The article continues:

Data from the U.S. Energy Information Administration revealed that Iran had shipped 1.5 million barrels per day via the Strait of Hormuz in the first quarter of 2025.

Furthermore, a closure would also provoke Iran’s market in Asia, particularly China, which accounts for a majority of Iranian oil exports.

“So very, very little to be achieved, and a lot of self inflicted harm that Iran could do” Hari said.

Her view is supported by Andrew Bishop, senior partner and global head of policy research at advisory firm Signum Global Advisors.

Iran will not want to antagonize China, he said, adding that disrupting supplies will also “put a target” on the country’s own oil production, export infrastructure, and regime “at a time when there is little reason to doubt U.S. and Israeli resolve in being ‘trigger-happy.’”

Clayton Seigle, senior fellow for Energy Security and Climate Change at the Center for Strategic and International Studies said that as China is “very dependent” on oil flows from the Gulf, not just Iran, “its national security interest really would value stabilization of the situation and a de-escalation enabling safe flows of oil and gas through the strait.”

Iran does not need to alienate anyone right now. I am sure many of the Middle Eastern countries are breathing a sigh of relief knowing that Iran at the moment does not have nuclear capability.

The Statistics On The American Economy

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On June 17th, CNBC posted an article on some of the latest economic numbers.

The highlights of the article are:

  • Retail sales declined 0.9%, even more than the 0.6% drop expected from the Dow Jones consensus.
  • However, excluding a series of items such as auto dealers, building materials suppliers, gas stations and others, sales increased 0.4%.
  • The pullback in retail sales came despite surveys showing that consumer sentiment actually increased in May.

The article concludes:

The pullback in retail sales came despite surveys showing that consumer sentiment actually improved in May, though compared with levels that had been falling through the year. The ongoing trade war ignited by President Trump’s tariffs had dented consumer and business optimism, though an easing in some of the rhetoric amid a 90-day negotiating period has led to better readings.

GDP declined at a 0.2% annualized pace in the first quarter but is projected to rebound. Second-quarter growth heading into the retail sales release was pegged at 3.8%, according to the Atlanta Federal Reserve’s GDPNow tracker of rolling data. The gauge will be updated later Tuesday.

In other economic news Tuesday, import prices were flat against a forecast for a 0.1% decline, according to the Bureau of Labor Statistics. Export prices fell 0.9%.

We are in an economic transition period right now. I am hopeful that when the smoke clears, income taxes will be lower, the amount of revenue going to the government because of tariffs and the fact that revenue increases when taxes are lower (see laffer curve), government spending will be down, and Americans will have higher wages and more buying power.

About Those Tariffs…

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On Sunday, CNBC reported the following:

China’s exports growth missed expectations in May, dragged down by a sharp decline in shipments to the U.S., with analysts saying effects of the Beijing-Washington trade truce will be visible in June data.

Chinese exports to the U.S. plunged 34.5% from a year ago, marking the sharpest drop since February 2020, according to Wind Information, when the Covid-19 pandemic disrupted trade. Imports from the U.S. dropped over 18%, and China’s trade surplus with America shrank by 41.55% year on year to $18 billion.

Overall exports rose 4.8% last month in U.S. dollar terms from a year earlier, customs data showed Monday, shy of Reuters’ poll estimates of a 5% jump.

Imports plunged 3.4% in May from a year earlier, a drastic drop compared to economists’ expectations of a 0.9% fall. Imports had been declining this year, largely owed to sluggish domestic demand.

That was largely offset by its shipment to the Southeast Asian bloc, which jumped nearly 15% from a year, and those to European Union countries and Africa, which rose 12% and over 33%, respectively.

The article concludes:

While noting that it took time for the recovering demand to feed through to actual shipments, Huang cautioned that the existing tariffs are unlikely to be reduced further, if not hiked again, and will lead to slower export growth by year-end.

Chinese Vice Premier and lead trade representative He Lifeng is expected to meet with the U.S. trade negotiation team led by Treasury Secretary Scott Bessent in London later in the day for renewed trade talks.

The second-round of meetings come after tensions flared up again between the two sides, as they accused each other of violating the Geneva trade agreement.

Washington had blamed Beijing for slow-walking its pledge to approve the export of additional critical minerals to the U.S., while China criticized the U.S. decision to impose new restrictions on Chinese student visas and additional export restrictions on chips.

China’s Ministry of Commerce said on Saturday that it would continue to review and approve applications for export of rare earths, citing growing demand for the minerals in robotics and new energy vehicle sectors.

The trade negotiations are needed by both countries. Neither America nor China has a totally winning hand. We need China’s rare earth minerals, and China needs the American markets. There is some major unrest in China among workers as manufacturing slows in reaction to declining exports to America. I also expect that there will be some grumbling among Americans who may (at least temporarily) be paying higher prices for some products.

The Trump Presidency And Your Wallet

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On Friday, Breitbart posted an article about the impact of the Trump economy on personal income.

The article reports:

Americans’ personal income in the first four months of 2025 is “almost triple the expectations,” making for a “great” start of the year, CNBC’s Rick Santelli exclaimed on the air, urging viewers to “give credit” to the Trump administration.

The longtime CNBC editor revealed the “powerful” numbers on Friday morning, sharing that personal income increased 0.8 percent in April. 

“This is a great four-month start to any year,” he said.

“When you look at income, for the first four months of the year, they’re powerful numbers — up 0.6 in January, up 0.7 in February, up 0.5 last month, up 0.8 this month. This is a great four-month start to any year.”

Santelli also lauded the fact that 0.8 percent is the “strongest” income month-over-month jump since May 2021, when it was 1.9 percent.

He went on to lament how the Trump administration is “criticized for just about anything under the sun,” despite the president’s “transparency” and positive accomplishments.

The article concludes:

“This administration is criticized for just about anything under the sun. I’ve never ever in my lifetime had glimpses into the politics of an administration in the form of transparency like this one. Why don’t we… give credit where credit is due?”

Part of the reason for the increase in consumer spending power is the lowering of the rate of inflation.

On Friday, The Daily Caller reported:

President Donald Trump achieved an economic victory after a prominent inflation reading dropped to its lowest reading in four years.

The personal consumption expenditures (PCE) index, one of The Federal Reserve’s primary inflation measurement models, showed a decrease in inflation in April 2025 to a level not seen since March 2021, according to a Commerce Department report.

The index, which measures goods and services spending, showed an increase of $47.8 billion, or 0.2%, with major gains in housing and health care the report stated.

In April, the PCE and Core PCE, which measures without noting volatile food and energy prices, both rose by only 0.1% from the previous month, according to the report. The consumer price index also indicated a drop in inflation to a four-year low as well, with a seasonal adjusted 0.2% in April, as reported by the Daily Caller News Foundation earlier this month.

This is the economic relief Americans needed. If Congress would just pass the spending cuts recommended by the Department of Government Efficiency (DOGE), Americans would enjoy more financial freedom.

Views On The Trump Economy Are Slowly Changing

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The Democrat rant that ‘the economic sky is falling’ seems to have fallen on deaf ears. The economy is slowly coming back after four years of inflation and slow job growth. The workforce participation rate is steady, but climbing slightly, and inflation is somewhat under control. We can all rejoice in the significant drop in gasoline prices.

On May 27th, CNBC posted the following headline:

Consumer confidence for May was much stronger than expected on optimism for trade deals

I love how when a Republican is in the White House, good news is always unexpected.

The article reports:

Consumer optimism got a much-needed boost in May on hopes for trade pace between the U.S. and China, according to a survey Tuesday.

The Conference Board’s Consumer Confidence Index leaped to 98.0, a 12.3-point increase from April and much better than the Dow Jones consensus estimate for 86.0.

Much of the positive sentiment, according to board officials, came from developments in the U.S.-China trade impasse, most notably President Donald Trump’s halting of the most severe tariffs on May 12.

“The rebound was already visible before the May 12 US-China trade deal but gained momentum afterwards,” said Stephanie Guichard, the Conference Board’s senior economist for global indicators.

May’s rebound followed five straight months of declines. Consumers and investors had grown sour on economic prospects amid the intensifying trade war that Trump has launched against U.S. global trading partners, with China a particular target.

I think all of us consumers feel optimistic when we don’t have to mortgage our house to buy a steak or fill up our gas tank.

The article concludes:

The present situation index increased to 135.9, up 4.8 points, and the expectations index posted a major surge to 72.8, a 17.4 point gain. Investors also showed more optimism, with 44% now expecting stocks to be higher over the next 12 months, up 6.4 percentage points from April.

Views on the labor market also improved, with 19.2% of respondents expecting more jobs to be available in the next six months, compared to 13.9% in April. At the same time, 26.6% expect fewer jobs, down from 32.4%.

Survey officials said sentiment improved across age, income and political affiliation, though noting that the “strongest improvements” came from Republicans.

Let’s hope Congress can pass laws that keep this going.

Good News About The American Economy

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On Wednesday, CNBC reported that retail sales were up during the month of March.

The article reports:

Points
  • The advanced estimate of retail sales showed an increase of 1.4% on the month, better than the 1.2% Dow Jones estimate and higher than the 0.2% increase in February.
  • Excluding autos, the numbers also were stronger than expected, with sales up 0.5% compared with the 0.3% forecast.

Consumer spending was stronger than expected in March as demand remained high despite declining sentiment, the Commerce Department reported Wednesday.

The advanced estimate of retail sales showed an increase of 1.4% on the month, better than the 1.2% Dow Jones estimate and higher than the 0.2% increase in February. The year-over-year rise was 4.6%, according to numbers adjusted for seasonality but not prices, while the monthly increase was the biggest since January 2023.

Excluding autos, the numbers also were stronger than expected, with sales up 0.5% compared with the 0.3% forecast. Economists expected the auto sales number to jump as buyers tried to get ahead of President Donald Trump’s aggressive tariffs.

Motor vehicle and parts dealers reported a surge of 5.3% in sales.

The reading points to spending holding strong despite the crosscurrents of looming tariffs and expectations that the economy is weakening.

Obviously, part of the increase is due to the fear that as the tariffs kick in, prices will increase. However, it does indicate that Americans have enough trust in the future to buy things.

The article concludes:

The retail report counters multiple recent sentiment readings that show widespread fear that Trump’s tariffs will sink the economy into recession and spike prices. Last week, the closely watched University of Michigan consumer sentiment survey posted its second-lowest reading ever and expectations for one-year inflation were the highest since 1981.

Aside from the big move in auto-related sales, sporting goods, hobby and music stores saw a 2.4% increase, while building material and garden stores rose 3.3%. Food service and drinking places were up 1.8%, while gasoline stations reported a 2.5% decline as prices fell during the month.

As gas prices go down, consumers have more money to spend. That also may be part of the increase in retail sales.

Every Little Bit Helps

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On Wednesday, CNBC reported that the inflation rate went down in February.

The article reports:

  • The consumer price index for both all-items and core increased 0.2% in February, slightly below expectations.
  • On an annual basis, headline inflation was at 2.8%, while core was at 3.1%. Both also were 0.1 percentage point below the Wall Street consensus and the previous month’s levels.
  • The report provided some relief as consumers and businesses worry about the looming impact tariffs might have on inflation

The article concludes:

“The February CPI (Consumer Price Index) release showed further signs of progress on underlying inflation, with the pace of price increases moderating after January’s strong release,” said Kay Haigh, global co-head of fixed income and liquidity solutions at Goldman Sachs Asset Management. “While the Fed is still likely to remain on hold at this month’s meeting, the combination of easing inflationary pressures and rising downside risks to growth suggest that the Fed is moving closer to continuing its easing cycle.”

The Fed meets next week and is widely expected to hold its key borrowing rate in a target range between 4.25%-4.5%.

Economic growth is trending negative in the first quarter, according to the Atlanta Fed’s GDPNow tracker of incoming data. The measure has pegged Q1 growth at a 2.4% decline, which would be the first negative growth quarter in three years.

I would like to remind everyone that even though President Trump has been ‘flooding the zone,’ we are only less than two months into the Trump presidency. Gas prices are going down and egg prices are going down. Both of those are good things. As far other economic new is concerned, I don’t necessarily believe the initial figures when they come out. Remember the revisions on job creation during the Biden administration. The people who told those lies may still be working for their government, and I suspect their goal is not to make President Trump look good.

The Federal Reserve has not been America’s friend for a long time. It didn’t even start out that way. If you read The Creature From Jekyll Island by G. Edward Griffin, you will find out that the true purpose of the Federal Reserve was to concentrate America’s wealth among the New York City banks. They should lower interest rates slightly, but I doubt they will.

It Doesn’t Pay To Lie To People Who Know The Truth

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On Tuesday, Townhall posted an article about a recent appearance on CNBC by Secretary of Commerce Gina Raimondo. It did not go according to the Secretary’s plan.

The article reports:

Secretary of Commerce Gina Raimondo needs to stop going on CNBC. It might be time for anyone in the Biden-Harris orbit to drop going on a network that reports on the economy because they know the talking points, the spin for this shoddy economy left to us by this administration. Raimondo tried to sell the Democratic Party line on it, but Squawk Box co-host Joe Kernen wouldn’t allow this propaganda to go unchallenged.

He torched Raimondo, adding that there was no recession under Donald Trump, wages were up, the stock market was booming, and the tariff policy he pushed was continued under Biden. Raimondo was trying to paint a picture of economic chaos, only for Kernen to say that everything is in shambles and wages are down under Biden. There’s also an open border and crime crisis engulfing the nation.

These are facts. They are inconvenient to some Americans, but they are facts.

The article notes:

All Raimondo could say was that’s not true, without citing any facts to push against the reality that Biden’s America is one heaping lawless wasteland with no economic activity. The stock market performance right now isn’t sustainable, with everyone and their mother warning that a reset is coming. The unemployment that Democrats like to attach to Trump was over the hysterics brought about by COVID.

Also, no one in the media wants to ask Raimondo and others what happened to the one million jobs never created in 2023. The revised numbers wiped out that figure, discovering they were never created. It’s another damning economic development that Raimondo seemed unfamiliar with, so what does she do all day?

If voters consider the facts and vote for President Trump, we can regain what we have lost under President Biden.

Follow The Money

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On Friday, CNBC reported that the U.S. government has decided not to pursue further charges against FTX founder Sam Bankman-Fried.

The article reports:

  • Prosecutors have decided against pursuing a second trial against disgraced FTX founder Sam Bankman-Fried.
  • In a note to Judge Lewis Kaplan on Friday, the U.S. government said that much of the evidence that would have been presented had already been submitted during the first trial.
  • In November, following a month’s worth of testimony from nearly 20 witnesses, a jury found the former FTX chief executive guilty of all seven criminal counts against him.

The article notes:

The second trial, which had been slated to start in March, addressed an additional set of criminal counts, including conspiracy to bribe foreign officials, conspiracy to commit bank fraud, conspiracy to operate an unlicensed money transmitting business and substantive securities fraud and commodities fraud. 

Damian Williams, the U.S. attorney for the Southern District of New York, wrote in the letter to the Court that “a second trial would not affect the United States Sentencing Guidelines range for the defendant, because the Court can already consider all of this conduct as relevant conduct when sentencing him for the counts that he was found guilty of at the initial trial.”

I suppose it is just an incredible coincidence that after Sam Bankman-Fried donated $100 million in stolen customer funds to US politicians, the US Government announced they’re dropping six charges against SBF and will not prosecute him for a political campaign finance violation. Any guesses on what the second trial would reveal about campaign finance violations and the people who received funds illegally?

 

It’s Really All A Matter Of Perspective

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CNBC has posted its list of the ten best states in America to live in and its list of the ten worst states in America to live in. When you look at the lists that CNBC has compiled and compare them to how Americans are ‘voting with their feet,’ you really wonder what the people who put together the lists were thinking.

This is the list of the 10 best states to live and work in according to CNBC:

10. Connecticut

8. (tie) Massachusetts

8. (tie) Colorado

7. Washington

6. Oregon

5. Hawaii

4. Minnesota

3. New Jersey

2. Maine

1. Vermont

These are the ten worst states to live and work in according to CNBC:

10. Florida

9. Arkansas

8. Tennessee

7. Indiana

6. Missouri

4. (tie) Alabama

4. (tie) South Carolina

3. Louisiana

2. Oklahoma

1. Texas

Please note that the only state in the ‘best’ places to live that has a Republican governor is Vermont, where Phil Scott is the Governor. The rest are Democrats. Based on the states chosen as ‘best’, I don’t believe there was much consideration given to the cost of living in the ‘best’ states.

Also note that in the ten ‘worst’ states, the only one with a Democrat governor is Louisiana, where John Bel Edwards is Governor. The rest are Republicans.

It is interesting to compare the CNBC list to the relocation habits of Americans. Below is a map posted at world population review illustrating states that have gained population and states that have lost population.

Believe the mainstream media at your own risk!

Actually, The Tax Payers Are The Ones Who Paid For This

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Om Saturday, CNBC posted an article about the Silicon Valley Bank.

The article reports:

  • Silicon Valley Bank employees received their annual bonuses Friday just hours before regulators seized the failing bank, according to people with knowledge of the payments.
  • The payments were for work done in 2022 and had been in process days before the bank’s collapse, these people said.
  • On Friday, SVB CEO Greg Becker addressed workers in a two-minute video in which he said that he no longer made decisions at the 40-year-old bank, according to the sources.

Who made the decision?

The article continues:

On Friday, SVB CEO Greg Becker addressed workers in a two-minute video in which he said that he no longer made decisions at the 40-year-old bank, according to the people.

The size of the payouts couldn’t be determined, but SVB bonuses range from about $12,000 for associates to $140,000 for managing directors, according to Glassdoor.com.

SVB was the highest-paying publicly traded bank in 2018, with employees getting an average of $250,683 for that year, according to Bloomberg.

After its seizure, the FDIC offered SVB employees 45 days of employment, the people said. The bank had 8,528 employees as of December.

A spokesman for the FDIC declined to comment on the bonuses.

There are two sides to this discussion–the employees did earn their bonuses in the prior year and it was customary to pay them at this time, but essentially the taxpayers all over the country were responsible for paying those bonuses. Those are pretty generous bonuses for a business that failed.

On Monday, The New York Post noted that despite what we are being told, the taxpayers will be bailing out the Silicon Valley Bank.

The New York Post reports:

The cost of bailing out two banks that catered to the tech industry will likely be paid by average Americans in the former of more fees, less service and potentially higher taxes — despite President Biden’s pledge otherwise, experts warned Monday.

The dire predictions came as the price of regional bank stocks fell due to fears of further collapses, with trading in more than a dozen of them paused during a massive market sell-off.

The extraordinary rescue announced Sunday night will use the Federal Deposit Insurance Corp.’s Deposit Insurance Fund to make whole all customers of the Silicon Valley Bank and Manhattan’s Signature Bank, which did business with tech startups and the cryptocurrency industry, respectively.

But the fund gets its money in quarterly payments from FDIC-insured banks, which will likely make customers shoulder the burden of any added costs, said William Luther, director of the American Institute for Economic Research’s Sound Money Project.

Hold on to your wallet–President Biden is in the White House.

The Coming Increase In Gasoline Prices

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On Monday, Ed Morrissey at Hot Air reported that the Organization of the Petroleum Exporting Countries (OPEC) is planning a major decrease in oil production in order to get the price of oil back to $100 a barrel.

The article quotes a CNBC article:

An influential alliance of some of the world’s most powerful oil producers is reportedly considering their largest output cut since the start of the coronavirus pandemic this week, a historic move that energy analysts say could push oil prices back toward triple digits.

OPEC and non-OPEC producers, a group often referred to as OPEC+, will meet in Vienna, Austria, on Wednesday to decide on the next phase of production policy.

The oil cartel and its allies are considering an output cut of more than a million barrels per day, according to OPEC+ sources who spoke to Reuters.

“The OPEC ministers are not going to come to Austria for the first time in two years to do nothing. So there’s going to be a cut of some historic kind,” Dan Pickering, CIO of Pickering Energy Partners, said, referring to the group’s first in-person meeting since 2020.

This is the cost of America giving up its energy dependence. I can’t emphasize often enough that we were energy independent under President Trump and were able to help the American economy and the American consumer by the domestic production of oil. The election of Joe Biden changed all of that. Even if the Republicans take Congress this year and a Republican becomes President in 2024, it will take a while to bring American energy back to what it was under President Trump. Hopefully the American economy can hold out that long without collapsing.

The article concludes:

Of course, Biden could put the US on a footing that would allow us to dictate not just production levels but also heavily influence oil prices to deny Vladimir Putin his excess revenue stream. Rather than choke off exploration and extraction, Biden could cancel his EO 13990 and reverse his lease-sales policies to encourage more investment in oil and natural gas production. That would unleash massive new resources for both domestic use and export, and even the initial steps would shock oil futures markets into accounting for sudden new production levels from the US. Biden won’t do it, however, because he’s more in thrall of his progressive-environmental Left than he is focused on economic and strategic national-security concerns.

So once again, we’ll be dancing to any tune that OPEC+ plays. It’s yet another reminder of Joe Biden’s 1970s revival in all the wrong ways.

I could have dealt with leisure suits and platform shoes coming back–but I can’t deal with gas lines and ultra-expensive gasoline again.

How Does Loan Forgiveness Work?

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On Wednesday, CNBC posted an article about the tax impact of the student loan forgiveness. Obviously, the loan forgiveness is a cost to the federal government, but is there any financial return?

The article reports:

If you’re poised to benefit from President Joe Biden’s up to $20,000 in student loan forgiveness, you may also be wondering if the erased debt will trigger a tax surprise come April.

The short answer is: It won’t, at least on your federal tax return. 

Biden on Wednesday announced that he will forgive $10,000 in federal student debt for most borrowers, limited to borrowers making less than $125,000 per year, or $250,000 for married couples filing together or heads of households.

He will also cancel up to $20,000 for Pell Grant recipients, Biden said in a tweet.

The article notes how actually paying their student loans has impacted their taxes in the past:

Borrowers with federal or most private student loans are usually able to subtract up to $2,500 a year in interest payments they’ve made on their loans from their gross income, reducing their tax liability.

The deduction is considered “above-the-line,” which means you don’t need to itemize to qualify for the break. 

There are income phaseouts, and individuals who earn above $85,000 and couples who make more than $175,000 in 2022 are not eligible at all. Your lender is supposed to report your interest payments to the IRS on a tax form called a 1098-E, as well as provide you with a copy. You claim the deduction on line 20 of Schedule 1.

Most borrowers haven’t been eligible for the deduction in more than two years because they haven’t been making payments on their loans.

Since March 2020, the government has allowed most borrowers to press the pause button on their payments without interest accruing. “You can claim the student loan interest deduction based only on amounts actually paid,” Kantrowitz (higher education expert Mark Kantrowitz) said.

The article concludes:

If the debt forgiveness cleared your balance entirely, you’ll no longer be able to claim the deduction. Yet you should be eligible if you’re still left with student debt and resume your payments.

More than 12 million taxpayers claimed the student loan interest deduction in 2018, with tax savings of up to $550, according to Kantrowitz.

Just for reference, this is what has happened to college tuition since the government got involved. Since this chart was posted, there have been more increases.

Prepare For Gas Lines

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In the 1970’s we had gas lines. Part of the problem was our reliance on oil from the Middle East and part of the problem was the government’s efforts to keep the cost of gasoline down. Those efforts together created the perfect storm. To put things in perspective, in 1969 a gallon of gas cost $.35 or $2.75 in today’s dollars (according to dollartimes.com). In 1978, a gallon of gas cost $.65 a gallon or $2.99 inflation adjusted (according to CNBC). By 1981, the cost was $1.35 a gallon or $4.46 inflation adjusted (CNBC). With the exception of 2011-2014, gasoline has generally stayed between $2 and $3 a gallon. Right now the price is over $4 a gallon, and obviously that impacts everything Americans buy. The Biden administration desperately wants to lower the price of gasoline before the mid-terms. However, there is some disagreement as to how to do that. The easiest way would be to open up drilling in America and bring back our energy independence, but considering who the Biden administration is beholden to, that is highly unlikely. So we are left with more risky solutions.

On Monday, The Daily Caller posted an article about one suggested solution.

The article reports:

Several economists slammed a Democratic proposal making its way through Congress that would enable energy price controls amid record high fuel costs.

Such a policy, which prohibits private companies from increasing prices regardless of market conditions, would have catastrophic consequences including energy supply shortages and increased inflation, the economists argued in a series of interviews with The Daily Caller News Foundation. Democrats have alleged in recent weeks that inflation is being driven by corporate price gouging and that Big Oil is using the Ukraine crisis as cover to raise prices and boost profits.

Oil is a commodity. It is subject to supply and demand. When America drastically decreased the amount of oil it was producing (under the Biden administration) and the amount of fossil fuel it was exporting, the supply shrank and the cost went up. The war in Ukraine did not help, but the problem was there before the war.

The article continues:

“I just can’t believe they’re dumb enough to do this,” Benjamin Zycher, an economist and senior fellow at the American Enterprise Institute, told TheDCNF in an interview.

“If prices are controlled at below-market clearing levels, then you get shortages because the quantity demanded is greater than the quantity supplied at the legal maximum price,” he continued. “And that’s why you get gasoline lines and allocation controls.”

The House Rules Committee announced that it would review the Consumer Fuel Price Gouging Prevention Act — a bill that enables the president to issue an emergency declaration banning energy prices issued in an “excessive or exploitative manner,” according to its sponsors — on Monday before reporting it to the floor. House Speaker Nancy Pelosi, who told reporters last week that oil and gas companies were exploiting consumers, promised that there would be a floor vote on the legislation this week.

The article concludes:

Economists, meanwhile, have also rebuked the argument that oil companies are price gouging amid the Ukraine crisis.

“[Retail gas stations] don’t necessarily drop their price as rapidly as what wholesale prices and oil prices are doing,” Garrett Golding, a business economist tasked with analyzing energy markets at the Federal Reserve Bank of Dallas, told TheDCNF in an interview. “Some people want to call that price gouging because it’s not in lockstep with where wholesale prices are. But the fact of the matter is, what they’re doing is making back the money that they were losing on the way up and that’s how they stay in business.”

Golding and fellow Dallas Fed economist Lutz Kilian published a May 10 paper laying out why gasoline prices haven’t risen and fallen in lockstep with oil prices over the last few months. They said pump prices are also affected by operating expenses such as rent, delivery charges and credit card fees, and that prices are set by retail gas stations, not oil drillers.

Democratic Reps. Kim Schrier and Katie Porter, the sponsors of the Sponsors of the Consumer Fuel Price Gouging Prevention Act, and Pelosi didn’t immediately respond to requests for comment from TheDCNF.

Democratic Massachusetts Sen. Elizabeth Warren introduced similar legislation Thursday that would implement a federal ban on “unconscionably excessive price increases.” House Democrats, led by Illinois Rep. Jan Schakowsky, unveiled a companion to Warren’s legislation.

Democrats are not likely to let facts get in the way of increasing federal control over our lives.

Does Your Government Work For You?

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Yesterday The Washington Times posted an article about President Biden’s $1.75 trillion expansion of the federal safety net.

The article reports:

An analysis by the Tax Foundation, a nonpartisan fiscal watchdog, estimates that President Biden’s $1.75 trillion expansion of the federal safety net could kill more than 103,000 jobs over the next decade and add $750 billion to the federal deficit.

The estimate is based on a thorough analysis of the White House’s spending “framework” and the corresponding 1,684-page bill text released by House Speaker Nancy Pelosi, California Democrat. Experts from the Tax Foundation say the proposal would fall far short of White House promises.

“We estimate that the House bill would reduce long-run economic output by nearly 0.4% and eliminate about 103,000 full-time equivalent jobs in the United States,” the experts wrote. “It would also reduce average after-tax incomes for the top 80 percent of taxpayers over the long run.”

It should be shouted everywhere that according to a CNBC article posted in August 2021, more than 100 million U.S. households, or 61% of all taxpayers, paid no federal income taxes last year, according to a report from the Tax Policy Center. Think about that for a minute. If you are not paying taxes, why should you care how much the government is spending or how much the government is planning to raise taxes? This is not a good situation.

The article at The Washington Times concludes:

Mr. Biden is backing a 5% “wealth tax” on those with adjusted gross income above $10 million. The figure jumps to 8% on adjusted gross income over $25 million.

“I can’t think of a single time when the middle class has done well but the wealthy haven’t done very well,” Mr. Biden said. “I can think of many times, including now, when the wealthy and the superwealthy do very well and the middle class doesn’t do well.”

Despite the rhetoric, Tax Foundation economists say, the provisions would affect all workers by killing more than 29,000 jobs.

The White House did not immediately respond to requests for comment. 

The report was released one day after Sen. Joe Manchin III, West Virginia Democrat, accused his colleagues of engaging in “budget gimmicks” to hide the true cost of the spending package.

“As more of the real details outlined … what I see are shell games and budget gimmicks that make the real cost of this so-called $1.75 trillion bill estimated to be twice as high,” he said. “That is a recipe for economic crisis. None of us should ever misrepresent to the American people what the real cost of legislation is.”

Actually, the middle class did very well during the Trump administration. Trump administration policies helped increase the number of Americans in the middle class.

Does anyone remember the Luxury Tax of 1990.

On September 10, 2011, The American Enterprise Institute posted the following:

Flashback:Wall Street Journal editorial on January 6, 2003

“Most Americans celebrated as the ball fell in Times Square New Year’s Eve. But for auto dealers this new year is especially sweet. January 1 marked the expiration of the federal luxury tax on cars, the last vestige of the destructive luxury tax package in the infamous 1990 budget deal.

Starting in 1991, Washington levied a 10% luxury tax on cars valued above $30,000, boats above $100,000, jewelry and furs above $10,000 and private planes above $250,000. Democrats like Ted Kennedy and then-Senate Majority Leader George Mitchell crowed publicly about how the rich would finally be paying their fair share and privately about convincing President George H.W. Bush to renounce his “no new taxes” pledge.

But it wasn’t long before even these die-hard class warriors noticed they’d badly missed their mark. The taxes took in $97 million less in their first year than had been projected — for the simple reason that people were buying a lot fewer of these goods. Boat building, a key industry in Messrs. Mitchell and Kennedy’s home states of Maine and Massachusetts, was particularly hard hit. Yacht retailers reported a 77% drop in sales that year, while boat builders estimated layoffs at 25,000. With bipartisan support, all but the car tax was repealed in 1993, and in 1996 Congress voted to phase that out too. January 1 was disappearance day.

The end of any federal tax is such a rarity that it’s well worth celebrating. And the luxury tax lesson of economic damage is worth keeping in mind as politicians begin to wail that President Bush’s new tax proposals aren’t punitive enough on the rich.”

HT: Pete Friedlander

The recession that followed the 1990 luxury tax cost President George H.W. Bush re-election. The Democrats might want to keep that in mind.

 

Not So Good Economic News

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It’s interesting to me that when a Democrat is President, the media paints a very rosy picture in its predictions about job growth and general economic growth. They always seem surprised when the facts don’t live up to their predictions.  When a Republican is President, the media is always surprised when the job numbers are better than the predictions.

CNBC is reporting today that job growth in August was well short of the estimates.

The article reports:

U.S. companies created far fewer jobs than expected in August as the Covid resurgence coincided with cutbacks in hiring, according to a report Wednesday from payroll services firm ADP.

Private payrolls rose just 374,000 for the month, well below the Dow Jones estimate of 600,000 though above July’s 326,000, which was revised downward slightly from initial 330,000 reading.

Most of the new jobs came from leisure and hospitality, which added 201,000 positions in a somewhat hopeful sign that an industry beset by a labor shortage continues to recover.

Education and health services combined to add 59,000 for the month as hospitals in some parts of the country were swamped with virus cases and schools begin to reopen.

“The delta variant of COVID-19 appears to have dented the job market recovery,” said Mark Zandi, chief economist at Moody’s Analytics, which works with ADP on the report. “Job growth remains strong, but well off the pace of recent months. Job growth remains inextricably tied to the path of the pandemic.”

The apparent letdown comes at a pivotal time.

The article notes that recent economic growth has been disappointing, blaming the low growth on the Delta variant of Covid. Somehow they fail to mention that President Biden almost instantly reversed the economic policies of the Trump administration which had fueled the recovery from the Covid recession.

Why Economics Needs To Be Taught In School

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Yesterday Newsbusters posted an article about some comments recently made on mainstream media about inflation. The comments indicated that economics is not universally taught in our colleges.

The article notes:

Did CNBC get its understanding of economics from the back of a cereal box? The outlet is arguing that the silver lining to skyrocketing inflation is — “rising wages.”

The liberal outlet noted how “[a]s the economy picks up in the wake of the Covid pandemic, concerns about inflation are also gaining steam.” After conceding that prices of goods are rising, CNBC took a nosedive into ineptitude: “Companies facing a labor shortage are also paying more to get workers to walk in the door.” Did CNBC even consider that rising prices of goods are eating into American pay? Bloomberg News just reported that American pay boosts “are failing to keep pace with surging prices for everyday goods.” CNBC seemed to only figure that out after the story was originally published. Its original headline was “The upside to inflation: rising wages.” The headline has since been changed to alter the entire context of the story: “It’s not certain rising wages will be enough to outpace inflation.”

Rising wages are a good thing when they are part of a strong economy.

On November 2, 2020, The Federalist reported:

Many on the left refuse to admit President Trump’s populist policies have provided massive benefits to working-class Americans. Matthew Yglesias argued at Vox that Trump’s refusal to endorse a federal $15 per hour minimum wage proves Trump has abandoned populist ideals. Progressives claim the Trump economy helps billionaires, not workers, and snidely dismiss his outreach to minorities.

Yet, during the first three years of the Trump presidency, wage growth was off the charts, especially for low-income workers and African Americans. The third-quarter economic data released Thursday confirm once again that Trump is on the job for U.S. workers.

The Biden campaign has tried to tie COVID-linked economic devastation to Trump’s leadership. The new third-quarter economic data once again shows that’s wrong. The total number of U.S. wage earners increased more than 5 percent in that period, and the third-quarter rebound for African Americans occurred at a 17 percent faster rate than for wage earners as a whole.

During the Trump administration, inflation remained at about 2 percent.

On May 18, 2021, The Post Millennial reported:

It’s not just anecdotal evidence, the Consumer Price Index released last week shows that prices are up across the board by .8 percent for April. That’s after a .3 increase for January, .4 increase for February, and a .6 increase for March. In contrast, the last few months of the Trump administration had increases as well, albeit much lower. October showed a .1 percent increase, while November and December both showed increases of .2 percent.

Newsbusters also notes:

CNBC’s “Key Points” section also contradicted itself by admitting that prices of goods were increasing while lauding how pay was increasing at the same time. Newsflash, CNBC: rising costs of living takes away from the benefit of a pay increase.

    • “Although consumers may be paying more for everyday items, it’s not all bad news.”
    • “As inflation takes hold, wages may increase, too.”

CNBC must have realized this contradiction and changed its “Key Points” section to reflect new points entirely:

    • “As inflation takes hold, wages may increase, too.”
    • “The question is, will it be enough to outpace the rise in prices.”

CNBC couldn’t stop contradicting its points. It even warned that economists were saying rapid increase in wages could in fact cause inflation, further undercutting the entire story:

And still, some economists fear a too-rapid increase in wages could prompt companies to raise prices and create the very phenomenon of inflation, causing more harm than good.

No kidding. Elections have consequences, but at least President Biden doesn’t do mean tweets.

The Economic Cost Of Giving Up Energy Independence

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One of the accomplishments of the Trump administration was bringing America to a place of energy independence. The policies that led to energy independence were immediately reversed (via executive order) by the Biden administration. Americans have seen the results of that reversal in the form of higher gasoline prices at the pump and an increase in the cost of heating and cooling our homes.

Yesterday CNBC reported that U.S. oil benchmark West Texas Intermediate crude futures traded as high as $76.98, a price not seen since November 2014.

The article notes:

Oil jumped to its highest level in six years after talks between OPEC and its oil-producing allies were postponed indefinitely, with the group failing to reach an agreement on production policy for August and beyond.

On Tuesday, U.S. oil benchmark West Texas Intermediate crude futures traded as high as $76.98, a price not seen since November 2014. But by 11 a.m. on Wall Street those gains were erased, and the contract for August delivery dipped $1.60, or 2.1%, to trade at $73.56 per barrel. Brent crude hit its highest level since late 2018 before also reversing gains, and last traded 3.1% lower at $74.77 per barrel.

The article concludes:

Oil’s blistering rally this year — WTI has gained 57% during 2021 — meant that ahead of last week’s meeting many Wall Street analysts expected the group to boost production in an effort to curb the spike in prices.

“With no increase in production, the forthcoming growth in demand should see global energy markets tighten up at an even faster pace than anticipated,” analysts at TD Securities wrote in a note to clients.

“This impasse will lead to a temporary and significantly larger-than-anticipated deficit, which should fuel even higher prices for the time being. The summer breakout in oil prices is set to gather steam at a fast clip,” the firm added.

Wouldn’t it be nice if we were not dependent on the whims of OPEC.

 

California Charities Do Not Have To Reveal Their Donors

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CNBC is reporting today that the Supreme Court has ruled 6-3 that California charities do not have to reveal a list of their donors.

The article reports:

The Supreme Court on Thursday struck down a California rule requiring nonprofits to disclose the names and addresses of their largest donors, delivering a victory to a pair of conservative groups that had challenged the requirement as unconstitutional.

The 6-3 decision, which divided the nine justices along ideological lines, reversed a 2018 appeals court ruling siding with California’s attorney general.

The rule had forced nonprofits to give the state their so-called Schedule B forms, which include the personal information of all donors nationwide who had contributed more than $5,000 in a given tax year. The state had argued that it needed that information to help it police misconduct by charities.

“We do not doubt that California has an important interest in preventing wrongdoing by charitable organizations,” wrote Chief Justice John Roberts in the majority opinion.

But “there is a dramatic mismatch” between “the interest that the Attorney General seeks to promote and the disclosure regime that he has implemented in service of that end,” Roberts wrote.

The conservative chief justice noted that about 60,000 charities renew their registration each year, and that virtually all of them were required to provide a Schedule B form.

“This information includes donors’ names and the total contributions they have made to the charity, as well as their addresses. Given the amount and sensitivity of this information harvested by the State, one would expect Schedule B collection to form an integral part of California’s fraud detection efforts. It does not,” Roberts wrote.

As much as I believe in transparency in donations, the Supreme Court was right to protect the names of the donors. A number of years ago, donors who supported a ballot referendum were harassed because of their donations. Unfortunately, that is not an unusual event. Americans need to be free to give to the charities of their choice without being harassed for their donations.

Something We Need To Pay Attention To

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On Monday CNBC posted an article about a recent statement put out by Deutsche Bank economists.

The article reports:

In a forecast that is well outside the consensus from policymakers and Wall Street, Deutsche issued a dire warning that focusing on stimulus while dismissing inflation fears will prove to be a mistake if not in the near term then in 2023 and beyond.

The analysis especially points the finger at the Federal Reserve and its new framework in which it will tolerate higher inflation for the sake of a full and inclusive recovery. The firm contends that the Fed’s intention not to tighten policy until inflation shows a sustained rise will have dire impacts.

“The consequence of delay will be greater disruption of economic and financial activity than would be otherwise be the case when the Fed does finally act,” Deutsche’s chief economist, David Folkerts-Landau, and others wrote. “In turn, this could create a significant recession and set off a chain of financial distress around the world, particularly in emerging markets.”

As part of its approach to inflation, the Fed won’t raise interest rates or curtail its asset purchase program until it sees “substantial further progress” toward its inclusive goals. Multiple central bank officials have said they are not near those objectives.

In the meantime, indicators such as the consumer price and personal consumption expenditures price indices are well above the Fed’s 2% inflation goal. Policymakers say the current rise in inflation is temporary and will abate once supply disruptions and base effects from the early months of the coronavirus pandemic crisis wear off.

The Deutsche team disagrees, saying that aggressive stimulus and fundamental economic changes will present inflation ahead that the Fed will be ill-prepared to address.

“It may take a year longer until 2023 but inflation will re-emerge. And while it is admirable that this patience is due to the fact that the Fed’s priorities are shifting towards social goals, neglecting inflation leaves global economies sitting on a time bomb,” Folkerts-Landau said. “The effects could be devastating, particularly for the most vulnerable in society.”

I realize that the Deutsche team’s conclusions may not be the majority opinion, but based on what I am currently seeing, I tend to think they are correct. Endless deficit spending has never led a nation into continued prosperity.

After All, It’s Only Taxpayers’ Money

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CNBC is reporting today that President Biden will issue an executive order to raise the minimum pay for federal contract workers to $15 an hour by March of next year. The current minimum is $10.95. Future increases will be tied to inflation. (Has it occurred to him that such a rapid increase in wages will fuel inflation?

The article reports:

President Joe Biden on Tuesday will continue his push for a national $15 minimum wage with an executive order that raises pay to at least that level for hundreds of thousands of federal contract workers, according to senior White House officials.

The move will increase the current minimum wage of $10.95 by nearly 37% by March of next year and continue to tie future increases to inflation.

It will apply to federal workers from cleaning and maintenance staff to food service contractors and laborers, sweeping in tipped workers who were previously left out of the last increase under former President Barack Obama.

White House officials insist it won’t increase costs for taxpayers because of benefits including increased worker productivity.

Biden has expressed his belief that strong unions and higher wages can resurrect America’s middle class while helping bridge economic and racial inequities, and the executive order is his latest step in support of the organized labor movement.

So what happens when the minimum wage is raised? First of all, it provides a bargaining chip for unions in their wage negotiations. This creates higher wages across the board which leads to inflation. There is no evidenced that increasing wages increases worker productivity. The people who will actually be financially impacted by this move in a negative way are senior citizens and those in the middle and lower economic classes–the inflation that will follow will be much more difficult to manage for those two groups than for the wealthy.

Getting a significant wage increase is useless if the price of everything you need also increases significantly.