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M Notes:  Wed, 12-28 Thumbnail

M Notes: Wed, 12-28

My Top 10 Economic Stories of the Year


10.  UNEMPLOYMENT RATE:  We started 2022 with a U3 of 3.9%.  We’re ending the year at 3.7%.  It was a bright spot in a difficult year. 

9.  PRICE OF OIL:  We started 2022 with oil (WTI) at $75/barrel.  It went as high as $130/barrel (which led to $5/gallon for gas).   It closes the year around $80/barrel.    

8.  10-YEAR TREASURY:  We started 2022 at 1.51%.  At the end of October is was at 4.29%.  Now it’s at 3.85%. That’s an increase of over 150%. 

7.  MORTGAGE RATES:    We started the year around 3%.  Now mortgage rates are near 7%.  No surprise… new home sales are down -6% YOY, while existing homes sales are down -28% YOY. 

6.  NATIONAL DEBT:  It’s over $31 Trillion (and counting).  I went to usdebtclock.org and counted how long it takes for our National Debt to go up $1 million…. about 40 seconds.  Remember, this is not a Revenue problem it’s a Spending problem.  And it will only get worse after the $1.7 Trillion Omnibus package passed thru Congress last week.   

5.  FTX COLLAPSE:  FTX was the second largest crypto company.  Their demise has resurfaced questions regarding Crypto:  Is this a new form of money?  Is this a real investment?  Or is this a Ponzi scheme?  One thing for sure… the FTX collapse sent a shudder throughout the Crypto world. 

4.  BORDER CRISIS:  For fiscal 2022 (Oct 2021-Sep 2022) over 2 million illegal border crossings took place.   Even with the Supreme Court delaying the outcome of Title 42, it could get worse.  And with over 230,000 crossings just last month (November)… it’s having a clear economic impact on our southern States.   

3.  FEDERAL RESERVE:  Their interest rate increase this year was historic.  In an active year the Fed might raise their rate up/down 25 basis points (1/4 point) each quarter… for maybe a 1% annual change.  This year… it went up 4.25% (from basically 0%).  The Fed badly missed Inflation last year and has been playing catch up this year.  The ol’ investing adage is still true… “Don’t fight the Fed”… even when they get monetary policy wrong. 

2.  WAR IN UKRAINE:  Ukraine has been called the “breadbasket” of Europe.  Globally they supply 10% of the wheat, 13% of the barley, 15% of the corn and 50% of sunflower oil.  Russia’s war has led to food shortages, energy shortages, and Billions is aid flowing to Ukraine.  There must be a special place in Hell awaiting Vladimir Putin.   

1.  INFLATION:  We started 2022 at 7%.  Midyear we hit 9%.  And now we’re back just above 7%.  Inflation has been sticky.  Federal Reserve Chair Jerome Powell bristled at a question during his recent Press Conference when asked if the Fed should reconsider and raise their 2% inflation target.   Even by the Fed’s own forecasts, Inflation won’t be near 2%... for years.  Inflation effects everything and everyone.  And it’s my #1 economic story of the year.