The Real State Of The Economy

Remember when owning your house was something of a hedge against inflation? When everything else fell apart, at least your house maintained its worth and you had a place to live. Well, it seems as if President Biden is even threatening that small amount of stability. First the administration changed the mortgage rules to penalize people with good credit ratings (article here), now higher interest rates are beginning to slow down the housing market.

On Thursday, The Conservative Treehouse reported the following:

As higher interest rates continue to put pressure on borrowers, the ability of the average person to afford a mortgage diminishes. Higher mortgage rates lead to downward pressure on residential home values as fewer borrowers can afford higher payments. Simultaneously, commercial real estate is dropping in value as vacancies continue increasing.

Put both of these issues together and already tenuous banks holding mortgage bonds as assets can become more unstable.

…A perfect storm starts to realize.

(Wall Street Journal) U.S. existing-home sales decreased 2.4% in March from the prior month to a seasonally adjusted annual rate of 4.44 million, the National Association of Realtors said Thursday. March sales fell 22% from a year earlier.

March marked the 13th time in the previous 14 months that sales have slowed. The housing market had a surprisingly strong February, when sales rose a revised 13.75% from the previous month. But after mortgage rates ticked higher, March sales resumed the extended period of declines.

The housing market’s slowdown is now starting to weigh on prices, which have fallen on an annual basis for two consecutive months for the first time in 11 years. The national median existing-home price decline of 0.9% in March from a year earlier to $375,700 was the biggest year-over-year price drop since January 2012, NAR said.

Median prices, which aren’t seasonally adjusted, were down 9.2% from a record $413,800 in June. Home prices in the western half of the U.S. experienced some of the biggest gains for many years but are now falling the fastest.

[…] Housing starts, a measure of U.S. home-building, fell 0.8% in March from February, the Commerce Department said this week. Residential permits, which can be a bellwether for future home construction, dropped 8.8%.

The housing market slowdown shows one of the main ways that the Fed’s aggressive interest-rate increases are rippling through the economy. Housing is one of the most rate-sensitive economic sectors, and high housing costs have been a big contributor to inflation.

The article concludes:

As mortgage rates rise, just as a consumer would pull back from the housing market, so too will institutional investment groups now control the slow dumping of the asset to remove the equity they pumped into it.  Much of the investment housing will be retained as rental housing, with the monthly rents being part of the returns on the investments.    However, as this dynamic unfolds further investment purchases of houses stop, because the asset overall is declining in value.  This halt of investment activity also worsens a steeper drop in home values.

Notice this line within today’s WSJ article: “The housing market had a surprisingly strong February, when sales rose a revised 13.75% from the previous month.

What happened in February?  The BIG CLUB [Blackrock, Vanguard, Citadel, etc.] moved liquid assets out of banks into hard assets (real estate), to avoid a predictable banking issue which surfaced a month later in March.  They knew what was going to happen in banking, they moved their own assets to avoid it.

I am not sure that the American economy can survive the Biden administration’s economic policies. Even if you hated President Trump, the impact President Biden has had on stock portfolios, real estate values, the price of gas, etc., has had a serious negative impact of the middle class.

A Quick Summary Of The Trump Economy

Elections have consequences. Thank goodness that one of the consequences of the 2016 presidential election is a rollback of some of the regulations that were crippling the American economy. The Gateway Pundit has a summary of what has happened to the American economy under President Trump:

The DOW daily closing stock market average has risen nearly 14% since the election on November 8th. (On November 9th the DOW closed at 18,332 – on May 19th the DOW closed at 20,804).
* Since the Inauguration on January 20th the DOW is up 5%. (It was at 19,827 at January 20th.)
* The DOW took just 66 days to climb from 19,000 to above 21,000, the fastest 2,000 point run ever. The DOW closed above 19,000 for the first time on November 22nd and closed above 21,000 on March 1st.
* The DOW closed above 20,000 on January 25th and the March 1st rally matched the fastest-ever 1,000 point increase in the DOW at 24 days.
 * On February 28th President Trump matched President Reagan’s 1987 record for most continuous closing high trading days when the DOW reached a new high for its 12th day in a row!
* The S&P 500 and the NASDAQ have both set new all-time highs during this period.
* The US Stock Market gained $2 trillion in wealth since Trump was elected!
* The S&P 500 also broke $20 Trillion for the first time in its history.

Somehow this news has escaped the mainstream media.

The article also includes the following:

The article goes on to list job statistics and home sales statistics. I strongly suggest that you follow the link to read the entire article.

The article concludes:

In Summary

President Obama left President Trump with a weak economy and all sorts of domestic and foreign policy nightmares.  To date President Trump has had little time to address all of these messes but if he handles these as well as he has the economy Americans will soon be in a much better and safer place.

Overall based on the above data it is clear that President Trump is doing a solid, if not excellent job.

The mainstream liberal media won’t report this, but when looking at the economy, President Trump the businessman thumps the former community organizer Barack Obama.

Despite what the media is telling us, this does not sound like a White House in chaos. It sounds like a White House that is getting the country back on a solid economic footing despite tremendous opposition from the media.