The latest numbers are horrible, and they are going to get even worse if the Federal Reserve pushes interest rates even higher. We were warned that high rates would have an enormous negative impact on the economy, and that is precisely what has happened. Layoffs are way up so far this year, the commercial real estate market is absolutely imploding, and we are witnessing things happen in the housing market that haven’t happened in more than a decade. For example, last week it was revealed that sales of existing homes have fallen to a level that we have not seen since 2010…
Sales of previously owned homes dropped 2.2% in July from June to a seasonally adjusted, annualized rate of 4.07 million units, according to the National Association of Realtors.
Sales were 16.6% lower compared with July of last year. Homes sold at the slowest July pace since 2010.
Of course in 2010 we were still dealing with the aftermath of the housing crisis of 2008 and 2009.
Needless to say, returning to such a depressed level is not a good thing at all. Compared to July 2021, sales of previously-owned homes were down 32.5 percent in July 2023.
So just about a third of the entire market has been wiped out by higher rates.
And economists at Fannie Mae are warning that this may be the beginning of a “prolonged freeze”…
The U.S. housing market may be stuck in a prolonged freeze.
Fannie Mae economists projected in a revised forecast that stagnation in the housing market could last into 2024, whether the economy avoids a recession or not.
“Regardless of whether a soft landing is achieved over the coming year, we expect existing home sales to stay subdued and within a tight range,” they wrote.
The primary reason for this “prolonged freeze” is higher interest rates.
Last week, the average rate on a 30 year fixed mortgage shot up to the highest level that we have seen since 2001…
The average rate on the benchmark 30-year fixed mortgage rose again this week to the highest level since 2001, spelling even more pain for buyers in a market where housing affordability is already at an all-time low.
Freddie Mac’s latest data released Thursday shows the average rate for a 30-year fixed note has climbed to 7.23%, marking a second consecutive multi-decade record after last week’s average reached 7.09% for the first time since 2002.
Mortgage rates have shifted so dramatically over the past couple of years, and they are now far higher than they were prior to the pandemic…
Freddie Mac reported that rates on the popular 30-year fixed mortgage surged to 7.23% this week, well above the 5.55% rate recorded one year ago and the pre-pandemic average of 3.9%.
It marks the highest level for rates since 2001.
As a result, millions of potential home buyers are being forced to stay on the sidelines because they simply cannot afford the payments that they would be facing if they purchased a home right now.
And millions of potential home sellers are also being forced to stay on the sidelines. Why? Well, millions upon millions of Americans are currently locked into mortgages at very low rates.
Selling a home that has a mortgage at a very low rate and buying another home that comes with a mortgage at a much higher rate is not an attractive proposition for most of them.
So current owners are staying put in unprecedented numbers, and as a result the number of homes on the market is “down 46% from the typical amount before the COVID-19 pandemic began”…
The number of available homes on the market at the end of July was down by more than 9% from the same time last year and down 46% from the typical amount before the COVID-19 pandemic began in early 2020, according to a recent report from Realtor.com.
If homes are not selling, the rest of the economy feels the pain as well. This is a point that Mish Shedlock made extremely well in an article that he recently authored…
If people are not buying houses, they are not buying as much furniture, landscaping, paint, appliances, cabinets, and lawn mowers, etc., to the same extent if housing was strong.
This means truckers are not shipping as much goods as they would be otherwise.
As long as housing is in the gutter, demand for goods and services related to housing will remain in the gutter and so will demand for shipping those items.
He is right on target.
All over the nation, economic activity is slowing down.
And that means that there will be more layoffs. For example, on Thursday T-Mobile announced that it will be giving the axe to thousands of highly paid employees…
T-Mobile on Thursday announced it plans to lay off 5,000 employees, or around 7% of its total staff, over the next five weeks.
The reductions will largely affect corporate and back-office jobs that are “primarily duplicative” to other roles and will reduce the company’s middle management layers, CEO Mike Sievert said in a letter to employees Thursday. The company also plans to reduce its spending on “external workers and resources,” but its retail and “consumer care” staff who work directly with customers will not be affected, he said.
Sadly, if interest rates stay high this will be just the tip of the iceberg. But instead of realizing the damage that has been done and cutting rates, Fed officials are telling us that rates could go even higher…
Federal Reserve Chairman Jerome Powell warned on Friday that additional rate increases might be required to put inflation on a convincing path to the central bank’s two percent target.
“Although inflation has moved down from its peak — a welcome development — it remains too high,” Powell said in his keynote address at the Kansas City Fed’s annual conference in Jackson Hole, Wyoming. “We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”
This is suicidal.
They are supposed to be the “experts”, and so they must understand what higher rates would mean for the economy. But it looks like they are going to raise rates anyway. So I would encourage all of you to brace yourselves for a period of severe economic pain, because it appears that is what is in store for us.
Michael’s new book entitled “End Times” is now available in paperback and for the Kindle on Amazon.com, and you can check out his new Substack newsletter right here.
Article cross-posted from The Economic Collapse Blog.
Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
