Connect with us

Uncategorized

NY Fed Survey Finds Sharp Deterioration In Household Finanancial Sentiment As Long-Term Inflation Seen Rising To 15 Month High

NY Fed Survey Finds Sharp Deterioration In Household Finanancial Sentiment As Long-Term Inflation Seen Rising To 15 Month High

After four…

Published

6 months ago

on

NY Fed Survey Finds Sharp Deterioration In Household Finanancial Sentiment As Long-Term Inflation Seen Rising To 15 Month High

After four months of declines in the 1-Year inflation expectation as reported by the NY Fed's consumer survey, August saw a reversal in this series which traditionally is also a proxy for the price of oil (which just hit a 2023 high this morning), however this was offset by a small decline in 3 year inflation expectations. However, the most concerning observations was that the inflation outlook at the 5-year point hit the highest since march 2022 while households turned even less optimistic about their financial situation.

Here are the details: as shown in the chart below, while inflation expectations at the one-year horizon were slightly higher at 3.63% in Aug. from the previous month’s 3.55%, three-year-ahead inflation expectations, conversely, fell to 2.79% from 2.91%. Finally, 5-year-ahead inflation expectations rose from 2.90% to 3.00%, the highest since March 2022.

The report also noted that median inflation uncertainty (the uncertainty expressed regarding future inflation outcomes) was unchanged at the one-year-ahead horizon and decreased at the three- and five-year-ahead horizons.

Turning to median home price growth expectations, the survey found that these increased by 0.3% point to 3.1%, its highest reading since July 2022... which of course is just the opposite of what the Fed wants to achieve, and suggests that the Fed's tightening plans have failed miserably at slowing the growth in what is arguably the most important asset class for the US middle class. The increase was most pronounced for respondents under the age of 60 and those with a high school education or less.

Next, turning to year-ahead commodity price expectations, these rose across the board in August, increasing by 0.4% for gas (to 4.9%), 0.1% for food (to 5.3%), 0.8% for the cost of medical care (to 9.2%), and 0.2% for the cost of college education (to 8.2%) and rent (to 9.2%).

But while the latest reversal in the downward trend of inflation is troubling, what is even more concerning was the report's finding that the median expected growth in household income fell to 2.94% (the decline was largest for respondents with a high-school education or less) to the lowest since July 2021...

... prompting the report authors to write that "perceptions about current credit conditions and expectations about future conditions both deteriorated."  Digging into the details of the household finance survey reveals substantial deterioration across all indicators, and especially when it comes to applying - or receiving - new credit:

  • Median household spending growth expectations fell by 0.1 percentage point to 5.3%.
  • Perceptions of credit access compared to a year ago deteriorated in August, with the share of households reporting it is harder to obtain credit than one year ago hitting a new series high. Expectations for future credit availability also deteriorated in August, with the share of respondents expecting it will be harder to obtain credit in the year ahead increasing.
    • The application rate for any kind of credit over the past twelve months declined to 40.3 percent from 40.9 percent in February, its lowest reading since October 2020. Application rates declined to 11.9 percent for auto loans and 12.5 percent for credit card limit requests, but increased to 24.8 percent for credit cards, 6.5 percent for mortgages, and 5.3 percent for mortgage refinances.
    • The overall rejection rate for credit applicants increased to 21.8 percent, the highest level since June 2018. The increase was broad-based across age groups and highest among those with credit scores below 680.
    • The rejection rate for auto loans increased to 14.2 percent from 9.1 percent in February, a new series high. It increased for credit cards, credit card limit increase requests, mortgages, and mortgage refinance applications to 21.5 percent, 30.7 percent, 13.2 percent, and 20.8 percent, respectively.
    • The proportion of respondents reporting that they are likely to apply for one or more types of credit over the next twelve months rose to 26.4 percent from 26.1 percent in February.
    • The average reported probability that a loan application will be rejected increased sharply for all loan types. It rose to 30.7 percent for auto loans, 32.8 percent for credit cards, 42.4 percent for credit limit increase requests, 46.1 percent for mortgages, and 29.6 percent for mortgage refinance applications. The readings for auto loans, mortgages, and credit card limit increase requests are all new series highs.
  • The average perceived probability of missing a minimum debt payment over the next three months fell by 0.6 percentage point to 11.1%.
  • The median expectation regarding a year-ahead change in taxes (at current income level) declined by 0.2 percentage point to 4.1%.
  • Laughably, the median year-ahead expected growth in government debt declined to 8.9%, its lowest reading since February 2020: just the opposite will happen.
  • The mean perceived probability that the average interest rate on saving accounts will be higher in 12 months decreased by 0.8 percentage point to 30.1%.
  • Perceptions about households’ current financial situations compared to a year ago deteriorated slightly in August, with the share of households reporting a worse situation compared to a year ago rising. Similarly, year-ahead expectations about households’ financial situations deteriorated in August with the share of households expecting a worse financial situation in one year from now rising.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now decreased by 1.9 percentage points to 35.2%.

Finally, looking at the state of the labor market, we finds that...

  • Median one-year-ahead expected earnings growth rose by 0.1 percentage point to 2.9% in August. The series has been moving within a narrow range of 2.8% to 3.0% since September 2021.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—increased by 1.8 percentage points to 38.5%, remaining below its 12-month trailing average of 40.2%.
  • The mean perceived probability of losing one’s job in the next 12 months rose by 2.0 percentage points to 13.8%, its highest reading since April 2021. The mean probability of leaving one’s job voluntarily in the next 12 months also increased by 1.9 percentage points to 18.9%. Both increases were most pronounced for respondents with a high school education or less and annual household income below $50k.
  • The mean perceived probability of finding a job (if one’s current job was lost) decreased by 0.1 percentage point to 55.7%.

Putting it all together, inflation expectations (especially longer-term) are once again rising and hit the highest in 15 months, while household perceptions about their current financial situations and expectations for the future deteriorated sharply.

More in the full report here.

Tyler Durden Mon, 09/11/2023 - 12:45

Read More

Related Topics:
Continue Reading

Uncategorized

One city held a mass passport-getting event

A New Orleans congressman organized a way for people to apply for their passports en masse.

Published

8 hours ago

on

March 15, 2024

By

While the number of Americans who do not have a passport has dropped steadily from more than 80% in 1990 to just over 50% now, a lack of knowledge around passport requirements still keeps a significant portion of the population away from international travel.

Over the four years that passed since the start of covid-19, passport offices have also been dealing with significant backlog due to the high numbers of people who were looking to get a passport post-pandemic. 

Related: Here is why it is (still) taking forever to get a passport

To deal with these concurrent issues, the U.S. State Department recently held a mass passport-getting event in the city of New Orleans. Called the "Passport Acceptance Event," the gathering was held at a local auditorium and invited residents of Louisiana’s 2nd Congressional District to complete a passport application on-site with the help of staff and government workers.

A passport case shows the seal featured on American passports.

Amazon

'Come apply for your passport, no appointment is required'

"Hey #LA02," Rep. Troy A. Carter Sr. (D-LA), whose office co-hosted the event alongside the city of New Orleans, wrote to his followers on Instagram  (META) . "My office is providing passport services at our #PassportAcceptance event. Come apply for your passport, no appointment is required."

More Travel:

The event was held on March 14 from 10 a.m. to 1 p.m. While it was designed for those who are already eligible for U.S. citizenship rather than as a way to help non-citizens with immigration questions, it helped those completing the application for the first time fill out forms and make sure they have the photographs and identity documents they need. The passport offices in New Orleans where one would normally have to bring already-completed forms have also been dealing with lines and would require one to book spots weeks in advance.

These are the countries with the highest-ranking passports in 2024

According to Carter Sr.'s communications team, those who submitted their passport application at the event also received expedited processing of two to three weeks (according to the State Department's website, times for regular processing are currently six to eight weeks).

While Carter Sr.'s office has not released the numbers of people who applied for a passport on March 14, photos from the event show that many took advantage of the opportunity to apply for a passport in a group setting and get expedited processing.

Every couple of months, a new ranking agency puts together a list of the most and least powerful passports in the world based on factors such as visa-free travel and opportunities for cross-border business.

In January, global citizenship and financial advisory firm Arton Capital identified United Arab Emirates as having the most powerful passport in 2024. While the United States topped the list of one such ranking in 2014, worsening relations with a number of countries as well as stricter immigration rules even as other countries have taken strides to create opportunities for investors and digital nomads caused the American passport to slip in recent years.

A UAE passport grants holders visa-free or visa-on-arrival access to 180 of the world’s 198 countries (this calculation includes disputed territories such as Kosovo and Western Sahara) while Americans currently have the same access to 151 countries.

Read More

Continue Reading

Uncategorized

Fast-food chain closes restaurants after Chapter 11 bankruptcy

Several major fast-food chains recently have struggled to keep restaurants open.

Published

11 hours ago

on

March 15, 2024

By

Competition in the fast-food space has been brutal as operators deal with inflation, consumers who are worried about the economy and their jobs and, in recent months, the falling cost of eating at home. 

Add in that many fast-food chains took on more debt during the covid pandemic and that labor costs are rising, and you have a perfect storm of problems. 

It's a situation where Restaurant Brands International (QSR) has suffered as much as any company.  

Related: Wendy's menu drops a fan favorite item, adds something new

Three major Burger King franchise operators filed for bankruptcy in 2023, and the chain saw hundreds of stores close. It also saw multiple Popeyes franchisees move into bankruptcy, with dozens of locations closing.

RBI also stepped in and purchased one of its key franchisees.

"Carrols is the largest Burger King franchisee in the United States today, operating 1,022 Burger King restaurants in 23 states that generated approximately $1.8 billion of system sales during the 12 months ended Sept. 30, 2023," RBI said in a news release. Carrols also owns and operates 60 Popeyes restaurants in six states." 

The multichain company made the move after two of its large franchisees, Premier Kings and Meridian, saw multiple locations not purchased when they reached auction after Chapter 11 bankruptcy filings. In that case, RBI bought select locations but allowed others to close.

Burger King lost hundreds of restaurants in 2023.

Image source: Chen Jianli/Xinhua via Getty

Another fast-food chain faces bankruptcy problems

Bojangles may not be as big a name as Burger King or Popeye's, but it's a popular chain with more than 800 restaurants in eight states.

"Bojangles is a Carolina-born restaurant chain specializing in craveable Southern chicken, biscuits and tea made fresh daily from real recipes, and with a friendly smile," the chain says on its website. "Founded in 1977 as a single location in Charlotte, our beloved brand continues to grow nationwide."

Like RBI, Bojangles uses a franchise model, which makes it dependent on the financial health of its operators. The company ultimately saw all its Maryland locations close due to the financial situation of one of its franchisees.

Unlike. RBI, Bojangles is not public — it was taken private by Durational Capital Management LP and Jordan Co. in 2018 — which means the company does not disclose its financial information to the public. 

That makes it hard to know whether overall softness for the brand contributed to the chain seeing its five Maryland locations after a Chapter 11 bankruptcy filing.

Bojangles has a messy bankruptcy situation

Even though the locations still appear on the Bojangles website, they have been shuttered since late 2023. The locations were operated by Salim Kakakhail and Yavir Akbar Durranni. The partners operated under a variety of LLCs, including ABS Network, according to local news channel WUSA9. 

The station reported that the owners face a state investigation over complaints of wage theft and fraudulent W2s. In November Durranni and ABS Network filed for bankruptcy in New Jersey, WUSA9 reported.

"Not only do former employees say these men owe them money, WUSA9 learned the former owners owe the state, too, and have over $69,000 in back property taxes."

Former employees also say that the restaurant would regularly purchase fried chicken from Popeyes and Safeway when it ran out in their stores, the station reported. 

Bojangles sent the station a comment on the situation.

"The franchisee is no longer in the Bojangles system," the company said. "However, it is important to note in your coverage that franchisees are independent business owners who are licensed to operate a brand but have autonomy over many aspects of their business, including hiring employees and payroll responsibilities."

Kakakhail and Durranni did not respond to multiple requests for comment from WUSA9.

Read More

Continue Reading

Uncategorized

Industrial Production Increased 0.1% in February

From the Fed: Industrial Production and Capacity Utilization
Industrial production edged up 0.1 percent in February after declining 0.5 percent in January. In February, the output of manufacturing rose 0.8 percent and the index for mining climbed 2.2 p…

Published

12 hours ago

on

March 15, 2024

By

From the Fed: Industrial Production and Capacity Utilization
Industrial production edged up 0.1 percent in February after declining 0.5 percent in January. In February, the output of manufacturing rose 0.8 percent and the index for mining climbed 2.2 percent. Both gains partly reflected recoveries from weather-related declines in January. The index for utilities fell 7.5 percent in February because of warmer-than-typical temperatures. At 102.3 percent of its 2017 average, total industrial production in February was 0.2 percent below its year-earlier level. Capacity utilization for the industrial sector remained at 78.3 percent in February, a rate that is 1.3 percentage points below its long-run (1972–2023) average.
emphasis added
Click on graph for larger image.

This graph shows Capacity Utilization. This series is up from the record low set in April 2020, and above the level in February 2020 (pre-pandemic).

Capacity utilization at 78.3% is 1.3% below the average from 1972 to 2022.  This was below consensus expectations.

Note: y-axis doesn't start at zero to better show the change.


Industrial Production The second graph shows industrial production since 1967.

Industrial production increased to 102.3. This is above the pre-pandemic level.

Industrial production was above consensus expectations.

Read More

Continue Reading

Trending