Even online sales are buckling:
"Data from Adobe indicates that the prices of goods sold on e-commerce websites fell 2.6% in June compared to the same month last year. This represents the sharpest decline since May 2020 and marks the tenth consecutive month of year-on-year declines. Of the 18 product categories monitored by Adobe, half experienced a year-on-year decline, with the most significant decreases in electronics and computers plunged by 12.9% and 16.9%, respectively. Additionally, the price of appliances slid by 8.3%."
"The slowdown in online buying is due to a cash-strapped consumer blasted by the inflation storm. Two years of negative real wage growth, forcing many to draw down on personal savings while ramping up credit card debt, has been a toxic combination. The latest consumer credit report noted Monday that those who are using credit cards to make ends meet with high borrowing costs are abruptly hitting a brick wall. Wait until student loan repayments restart in September, and a much more significant discretionary spending pullback will be seen."
It's hard to reconcile the "Bidenomics" happy talk I hear with reality. Manufacturing isn't "great"; in fact, it sucks! WTH are they talking about?
To me at least, it's pretty obvious the situation is anything but under control. The Federal government itself is in a very big bind because nobody, and I mean NOBODY, borrows more dollars than them as we can all see every day at the US Treasury auction. They used to get dollars for 30 years and pay only 1% (2020 UST 30Y) cuz they're so "safe"- Now they have to pay 4.7% for two years. After the charade about the debt ceiling was over, they set the debt-making -machinery to "11".
* Lenders see the tightness and slower demand so they lend less at higher cost to off-set the risk of default.
* Suppliers demand up-front payments before shipping products decimating cash-flow while waiting for delivery which can take months.
* Shippers are dropping like flies; Yellow filed BK after taking $750B in Government stimulus during covid. Now the government owns Yellow. Nuff said?
* US factory output has also dropped four months in a row, indicating that the huge boost from $8 trillion+ in covid stimulus has now fizzled.
* Corrugated (cardboard) boxes continue to disappoint - less stuff is being shipped, less cardboard is being used:
Bottom line is, regardless of what conditions are on any day, business owners have to open their doors and do business as best they can. Right now the changes are coming fast and furious and, as usual, I'm doing my best to keep requests funded.
I'm sending wires daily to business owners to cover expenses which in many cases is because their regular banks are declining lines of credit even for established, good paying clients.
Don't blame the banks - they are under huge pressure because their deposits are leaving in droves for higher interest rates while their bond portfolio which has to be liquidated to pay those depositors is down 39% due to the Fed hiking. That is, every deposit that leaves brings the bank closer to insolvency.
Here are some other subjects I'm following long with their sources:
* "Consider: a 27.4 drop in goods of all kinds “roaded-in” on semi-trucks to the northeast USA this summer. That’s everything from auto parts to lumber, clothing, and food. What else do you think sent the Yellow Corp trucking company, one hundred years old, spinning into sudden bankruptcy this week? Yellow won’t be bought and reorganized, either. It owes three quarters of a billion dollars in loans to the federal government (i.e., to us taxpayers) and untold pension obligations. Next, 22,000 Yellow Corp workers will hit the unemployment rolls. Yellow Corp had a special role in the supply chain: the LTL (less-than-truckload) niche, often the final journey of a product to the customer. It was also the cheapest. Whoever picks up the work — FedEx, ABF Freight? — will cost more, and so will everything you have to buy."
* US factory output has also dropped four months in a row, indicating that the huge boost from $8 trillion+ in covid stimulus has now fizzled.
* Do things seem “slow” to you this summer? If so, you are definitely not alone. In recent weeks, my wife and I have heard from so many people that are saying that activity at their businesses or organizations has been really slow lately. In other words, less money has been coming in than usual. This has caused a lot of confusion, because when these people turn on their televisions they are told that the U.S. economy is doing just fine. Of course that is not actually true, but these media reports are still causing a tremendous amount of confusion. A lot of people out there are just very frustrated because things are so slow for their businesses or organizations right now while the overall economy is supposedly buzzing along at a really good pace."
* Bank of America has pulled a Wells Fargo - and has agreed to pay $150 million in fines and $100 million to customers for opening unauthorized credit card accounts, improperly charging extra fees, and withholding rewards, according to US regulators.