There are three indicators that I find interesting.
Housing inventory is rising.
Consumer confidence is declining.
Retail sales are declining along with a gloomy Walmart forecast.
These are all occurring in a context where inflation is rising, thousands of government employees are losing their jobs, insurance rates of all kinds are increasing much faster than inflation, and the major global economies (EU, China, Japan, South Korea) are slowing.
This has the feeling of a balloon about to deflate.
@btresist thank you for your excellent post. Please post links to these indicators so I can add them to the Control Panel and watch them weekly.
Thanks,
Wendy
What is striking to me is that the inventory is rising rapidly in places like Florida and Texas. These are also places where insurance rates are rising rapidly. Still way too early to call it a trend but it could be some serious overbuilding is occurring due to overly optimistic assumptions about population growth.
Consumer confidence is from the conference board US Consumer Confidence
It has been stuck in a zone since the pandemic but the decline in the last couple of months feels different to me, like the start of a trend rather than just random fluctuation. But that’s just a feeling.
Retail sales is like housing inventory. I don’t think there is one single repository of data so best to do a google and extrapolate from multiple sources. KPMG is an example Retail sales stumbled badly into 2025
What is striking about retail sales is that it is declining before the price hikes from tariffs have hit.
My take is that much of the past resilience in the American economy comes from faith that the American government knows what it is doing. I think that faith has been shaken of late. I don’t see that changing anytime soon.
This is a shocking statement to anyone that’s done the simple arithmetic!!! Should we do the arithmetic here yet again? Let’s do it with fake, but truly representative, numbers. But we will use rosy assumptions, interest on debt is only 3%, GDP goes up by 3.5% EVERY SINGLE YEAR, no recessions, no slower growth, no expensive wars, no issues at all. And assume we only spend $1T more than revenue each year (this is WAY down from 1.8T recently).
If this is what anyone considers to be “knowing what it is doing”, then please explain what exactly you mean by that. And if anyone wants to use different assumptions, go ahead and post them here for us to see.
Sure. During the two most recent economic crises we had democrat presidents do what had to be done to keep the banks and auto industries from failing (Obama) and to keep households from going massively in debt and losing their homes (Biden). Both also did what they could to curb the debt in an environment where raising taxes wasn’t possible. Obamacare substantially slowed the rise in healthcare costs to below the rate of inflation. https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2778346#google_vignette
Biden invested in US infrastructure, which will greatly increase US productivity and would have let the trump tax cuts end, which would have significantly increased US tax revenues. Given the difficult circumstances they had to work with, both did well to restore confidence in the US economy at substantial political costs.
In contrast, the repubs are doing what is politically expedient and in doing so are rapidly losing the confidence of US consumers and businesses. We’ve already seen evidence of slowing retail sales, softening housing market, plunging consumer confidence. Now we have evidence of reduced hiring.Unemployment claims rise to 242,000, the highest in 3 months - CBS News
Again, far too early for anything conclusive, but by the time the public sees conclusive data the market will have already reacted. What we are seeing is multiple evidence of economic pessimism occurring with an administration that only knows how to create uncertainty. That’s a bad combination.