America First Economist for @VinceCoglianese, @Heritage, @Comm4Prosperity, @Richzeoli, and @RichValdes; VAMO Podcast spoti.fi/3Mhcf8Y w/ @cmt_anthony
Washington, DC
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Housing permits fell in Sep, -0.2% M/M and -3.0% Y/Y, while starts tanked, -5.2% M/M and -7.4% Y/Y, and completions rose 2.0% from Aug but were down a whopping 14.0% Y/Y; folks just can't afford today's prices and today's interest rates...
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ADP: private payroll growth slowed considerably for the 4 weeks ending Oct 3, down to 18.5k/wk or ~74k/mo, the first slowdown in job growth since mid Aug:
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Homebuilder sentiment tanks, down to a reading of 29 for Oct which is even below the pandemic low of Apr '20 and the lowest print since Jun '12; present sales, expected sales, and traffic of buyers all declined; people simply can't afford today's prices at today's interest rates:
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Unsurprisingly, US imports from the Mid East have plummeted this year while ones from Asia are growing:
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Chinese imports of hybrid vehicles to Europe continue surging as European automakers slowly lose marketshare in their own backyards:
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Interest on the national debt in the last fiscal year was a stratospheric $1.360 trillion, which is ~48% of all personal income taxes collected during that same period; it's the 3rd largest line item in the budget, behind only the Social Security Administration and HHS...
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Federal gov't ran a deficit just under $2 trillion in the last fiscal year (ended Sep 30) w/ tax receipts up $169 billion, but outlays up $386 billion - headed in the wrong direction:
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Fiscal year closed w/ a $27 billion deficit in Sep, compared to a $198 billion surplus in Sep '25; tax receipts were up $14 billion but outlays grew $239 billion; that was partly due to some Aug outlays falling in Sep this year b/c of how the calendar lined up:
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The manufacturing recovery cont'd in Sep w/ industrial production up 0.7% M/M and 2.2% Y/Y, fastest annual increase in 4 yrs and closing in on record high; capacity utilization also cont'd marching higher, up 1.2 percentage points Y/Y:
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Either dishonest or ignorant: Ukraine has reduced Russian diesel exports roughly 90% from ~1 million barrels/day to ~100k, depending on source data; anyone who thinks that kind of supply shock won't affect prices doesn't understand econ 101...
h/t @Rory_Johnston
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Export prices are zooming higher, up 2.2% M/M in Sep (~30% annualized!) and 11.6% Y/Y - last month, both import and export price indices had their fastest annual increases since Jul '22, as agricultural export prices in particular accelerated sharply in Sep:
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High energy prices are pushing up countless other prices, especially on imports b/c most of the world has been more affected by the energy shock than the U.S. - import prices rose 1.1% M/M in Sep and 8.1% Y/Y (worst since Jul '22) as even non-fuel imports rose 0.7% M/M, 6.0% Y/Y:
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$40.3 trillion and Congress still won't enact the @DOGE cuts - w/ friends like these...
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Cybercrime losses have quadrupled due to foreign criminal organizations, many in southeast Asia w/ links to the CCP; they're sophisticated operations that also frequently engage in human trafficking and conduct espionage; way more needs to be done to crack down on this:
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DAL Fed: weekly economic index rises to 3.05% for week ended Oct 10, was 2.68% for Oct 3; 13-wk moving average is 2.91%:
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No SPR drain last week, leaving private stockpiles to handle to load and leading to a drawdown there of almost 8.6 million barrels; gasoline inventories rose from previous week while diesel ones declined:
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Retail inventories show a very similar pattern, w/ current levels only moderately higher than '19 and the nominal increase since then being almost entirely due to higher prices, not more physical stuff in inventories:
And here's the level of those inventories if you adjust for prices - we're basically at '19 levels w/ the difference being inflation; there's not more stuff in inventories, just higher prices; you can really see here how bad was the inflation in '21 and '22:
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And here's the level of those inventories if you adjust for prices - we're basically at '19 levels w/ the difference being inflation; there's not more stuff in inventories, just higher prices; you can really see here how bad was the inflation in '21 and '22:
Manufacturing and trade inventories rose 0.4% M/M and 4.6% Y/Y for Aug while sales rose 1.1% M/M and 10.2% Y/Y; of course, this is before adjusting for inflation which has been accelerating:
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Manufacturing and trade inventories rose 0.4% M/M and 4.6% Y/Y for Aug while sales rose 1.1% M/M and 10.2% Y/Y; of course, this is before adjusting for inflation which has been accelerating:
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Initial UI claims remain ~200k w/ continuing claims ~1.7 million; given how the employment level has surged (unlike nonfarm payrolls which exclude a lot of self-employment), it seems less like no-hire-no-fire, and more like an exploding gig economy:
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PHL Fed: manufacturing activity grew again in Oct but at cooler pace while outlook dimmed but stayed positive; new orders, shipments, jobs, and average workweek all grew, though slower than Sep; current prices index jumped to highest level this year as fuel costs are passed on:
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Here's the inflation-adjusted chart - real retail sales have absolutely risen this year, just nowhere near as much as the nominal figure, and it's mostly due to higher energy prices:
Retail sales for Sep came in at 0.8% M/M and 6.3% Y/Y, but the monthly rise was buoyed by skyrocketing prices at the pump; sure enough, strip out gas and the figure was much smaller; adjust for prices across all retail sales and the increase falls to 0.1% M/M, 2.5% Y/Y:
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Retail sales for Sep came in at 0.8% M/M and 6.3% Y/Y, but the monthly rise was buoyed by skyrocketing prices at the pump; sure enough, strip out gas and the figure was much smaller; adjust for prices across all retail sales and the increase falls to 0.1% M/M, 2.5% Y/Y:
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NY Fed: after bottoming out in Jan '24, manufacturing activity is soaring, at highest level since '21 w/ new orders, shipments, and backlogs all rising for Oct; 2 red flags are supply availability at lowest level since Jun '22 and inflationary pressures remaining elevated:
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ATL Fed: sticky-price CPI rose only slightly in Sep to 2.8% but the flexible CPI predictably leapt to 6.1%, due to surging energy prices; the longer these high fuel costs stick around, the higher inflation expectations go and sticky CPI follows:
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CLV Fed: median and trimmed-mean CPI have stopped their slide as higher energy prices start to hit more products and services throughout the economy; no matter how you slice it, each metric rose, as least fractionally, in Sep - not good...
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PPI rips higher as conflicts in Middle East and Eastern Europe disrupt global energy markets and send prices soaring - both wars need to wrap up ASAP for prices to go down quickly:
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PPI was red hot this morning b/c of surging energy prices, though the high price of diesel is already starting to hit a few other prices w/ fast pass-through on transportation costs; regardless, it's painfully obvious that goods inflation was much cooler before the Iran war:
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Bad foreign actors are increasingly using AI to scam Americans into wiring money, billions of dollars annually, and it's not just grandma sending cash to the stereotypical Nigerian prince; they impersonate loved ones, colleagues, etc. and target younger Americans w/ social media:
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CLV Fed: 10-yr inflation expectations spike for Oct to 2.73%, highest since Jun '02, even as inflation risk premia remain relatively tame:
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CHI Fed: retail sales ex-auto were up 0.4% M/M in Sep but inflation-adjusted sales were down 0.6% as consumers spent more money but bought less; the huge spike in prices since Feb has driven up nominal sales while real sales have lagged...
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Rent prices are reaccelerating in the CPI; this metric has a large lag (and some other problems) and is not reflecting real-world prices at the moment, which show less inflation for rents:
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Food price inflation has actually been slowing, but today's higher diesel and fertilizer prices (both due to the energy shock) will put upward pressure on food prices in the months to come:
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Unlike diesel, gasoline, and jet fuel, we're so awash w/ natural gas that its utility price in the CPI was actually lower in Sep than Feb:
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Energy prices in Sep were just shy of their record high and continued driving the CPI higher last month:
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Annualized inflation last month skyrocketed to 8.1%, second highest rate of the year behind only Mar:
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In the coming months, high diesel prices will put upward pressure on countless other prices throughout the economy b/c of higher transportation costs; that'll put upward pressure on core inflation and the energy shock will look less and less like an energy shock:
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People are dissatisfied w/ the economy b/c prices have risen faster than wages since the start of '21; we were actually making very good progress on this front, but higher energy prices after Feb this year due to Mid East and Eastern Europe have thrown a wrench in the works:
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The wages of war: inflation was running an annualized 2.5% from Jan '25 through Feb '26, but has jumped to 4.7% b/c of disruptions in energy markets...
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Investment Manager Index shows risk appetite returns in Oct as equity outlook shifts up from negative to neutral; consumer staples & discretionary are bearish, but real estate is worse, while IT is most bullish; political environment and gov't policy remain drags on equities:
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Small business optimism declined slightly in Sep, falling marginally below the long-run average; uncertainty remains elevated and inflation is still a top concern; outlook deteriorated as financing costs continued marching higher:
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Existing-home sales rose 1.5% M/M in Sep, down 2.2% Y/Y; the housing market remains frozen and the recent uptick in mortgage interest rates only further dampens what little activity is happening in the market; median sale price was $417,500 last month, up 1.3% Y/Y:
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Global supply chains remained stressed in Sep, largely due to conflicts in Mid East and Eastern Europe disrupting flows of both crude oil and refined products; in addition to supply problems, demand neared the highest level of the year last month, exacerbating overall stress:
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ADP: private payroll growth slowed slightly for the four weeks ending Sep 26, first slowdown in 8 weeks; 4-wk moving average is 24,750/wk or ~99k/mo:
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China continues dumping products in the EU after tariffs added costs to US sales and the CCP looks around for markets to absorb its massive production volumes:
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$40.3 trillion in debt b/c Congress lacks the fortitude to cut spending, despite @DOGE handing them hundreds of billions of dollars in cuts on a silver platter - either start cutting soon or the bond vigilantes will make you:
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