I prefer looking at indicators that aren't easily manipulated to show "preferred" results like the CPI or BLM Labor reports so I pay attention to reports about same store sales or corrugated boxes (cardboard) sales which are far more reliable and provide deep historical perspective.
All of the most reliable indicators are confirming what business owners and consumers are experiencing every day: Based on the disparity between incomes and expenses, we are already in recession territory and headed lower.
Inflation has become entrenched across the board in every single aspect of our lives and businesses. Yet, the TV keeps driveling on about how "resilient" our economy is and how inflation is now under "control"
So tired of the gaslighting…"Inflation can be defined as the overall general upward price movement of goods and services in an economy."
Wednesday’s Wall Street Journal:
Adding to the absurdity is the fact that those in charge have been consistently and spectacularly WRONG on just about every. Single. Thing. The fact that Powell & Yellen are still in charge is another sign we must pay attention to and plan accordingly. There are many other signs that we're headed for a significant contraction in economic activity such as the personal savings rate:
"And the personal savings rate has collapsed to just 4.4%, its lowest level since Sept. 2008 (the dark days of Lehman). And why is this? To afford shelter, gas, and food, consumers are drawing from emergency funds due to the worst inflation storm in a generation."
Or, how about the fact that consumers have experienced 26 straight months of negative real wage growth:
"The latest inflation data shows consumers have endured the 26th straight month of negative real wage growth. What this means is that inflation is outpacing wage gains. And bad news for household finances, hence why many have resorted to record credit card usage."
Oh, and about those credit cards:
You get the picture right? The signs are pretty clear if we choose to see them and understand what they mean. There are many others which point in the same direction like logistics costs for businesses:
"In 2022, U.S. business logistics costs, or what is spent to keep the nation’s logistics network humming, grew by an astounding 19.6% to a record $2.3 trillion, representing 9.1% of national gross domestic product, according to the 34th annual State of Logistics Report."
Or student loan payments starting again for millions of citizens (consumers) after 40 months of suspended payments:
"Student loan payments are set to resume in the coming months. For more than 40 million Americans carrying student loan debt, the timeline to resume making payments is now on the horizon."
And even restaurants are feeling the pain:
"Casual-dining industry same-store sales rose just 0.9% in May, according to Black Box Intelligence, as traffic dropped 5.4%. We expect cash-strapped low- and middle-income diners to cut restaurant visits and checks through year-end due to more than two years of real income declines and ballooning credit-card balances."
Lenders see all of these signs and we have to adjust risk-premiums accordingly which has reduced the number of approvals in many industries. CRE Loans are still being issued but very selectively.
Some jurisdictions also affect approvals such as CA, NY, VA where economic challenges due to state policies and other factors are insurmountable. 7 out of 10 lenders no longer make offers to businesses in CA due to laws imposed recently (Jan 2022).
Regardless of conditions, I am issuing working capital funding's almost every day. Life goes on, we do what we must to keep going. Call me if you need to fund any expenses, I return calls and emails.