Boots & Sabers

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Category: Economy

Ford Drops Prices to Lure EV Buyers

Market working.

DEARBORN, Mich. — Ford Motor is lowering the starting prices of some all-electric F-150 Lightning pickup trucks as it prepares to resume shipping the vehicles after quality issues.

 

[…]

 

The cost reductions are the latest electric vehicle price changes for the broader automotive industry amid slower-than-expected consumer adoption. Ford’s cuts come three months after it adjusted Lightning prices, including increasing some model prices.

Auto Insurance Up 45.8% Since December of 2021

Ouch

Auto insurance costs have been on the rise for some time, growing every month as part of the index since December 2021. Since then, costs have increased by 45.8%, according to U.S. Bureau of Labor Statistics. However, auto insurance remains a small portion of the CPI, with a 2.85% weighting.

 

The uptick comes on top of historically high prices for new and used vehicles since the coronavirus pandemic. It’s also become increasingly more expensive to repair vehicles due to supply chain shortages, mechanic wage increases and additional technologies in vehicles such as microprocessors, cameras and other sensors  all of which contribute to higher vehicle and insurance costs.

Biden’s Inflation Continues to Hammer Americans’ Paychecks

Ouch. It’s frustrating that the media continues to push the notion that the Federal Reserve is the only entity that has a lever to manage inflation without even mentioning the root cause of inflation – massive government spending. As long as Biden continues to spend, inflation will continue. It really is that simple. If you want to pull inflation back, start ending government programs and reduce spending.

A hotter-than-expected consumer price index report rattled Wall Street Wednesday, but markets are buzzing about an even more specific prices gauge contained within the data — the so-called supercore inflation reading.

 

Along with the overall inflation measure, economists also look at the core CPI, which excludes volatile food and energy prices, to find the true trend. The supercore gauge, which also excludes shelter and rent costs from its services reading, takes it even a step further. Fed officials say it is useful in the current climate as they see elevated housing inflation as a temporary problem and not as good a measure of underlying prices.

Supercore accelerated to a 4.8% pace year over year in March, the highest in 11 months.

 

[…]

 

Further complicating the backdrop is a dwindling consumer savings rate and higher borrowing costs which make the central bank more likely to keep monetary policy restrictive “until something breaks,” Fitzpatrick said.

 

The Fed will have a hard time bringing down inflation with more rate hikes because the current drivers are stickier and not as sensitive to tighter monetary policy, he cautioned.

Renting Is Much Cheaper Than Buying

The powers that be want a nation of renters.

Buying a house in the United States is considerably more expensive than renting right now, and the real estate market is expected to stay that way for at least the next five years, according to a new analysis.

 

The analysis out Thursday from CBRE, a firm that tracks real estate prices, shows the average monthly payment on a new apartment lease in the U.S. is $2,165. The average monthly payment on a mortgage for a new home is $2,997, meaning it costs households, on average, 38% more to buy than to rent, according to the analysis.

 

Notably, the gap between buying and renting will continue to be a big hurdle for aspiring homeowners for at least five years, the analysis found — mortgage payments are still expected to cost 11% more than rent in the year 2030.

 

Higher mortgage rates and a nationwide housing shortage are key factors behind persistently high home prices, according to the CBRE report. The report estimates there is a shortage of 3.8 million housing units in the U.S., mainly in single-family homes and smaller multi-unit dwellings.

Of course, even though renting is cheaper in terms of monthly expense, you will pay it forever and never own anything. Buying a home is still the #1 way that most families build wealth. That’s what they want you to rent and build their wealth.

Aramco CEO Says We Should Abandon Fantasy Energy Goals

Yes. This has been obvious for a while, but what is different here is that there is a major energy company CEO saying it so forcefully. Major energy companies have been unwilling to voice these views for fear of regulatory punishment and because they wanted a slice of the taxpayer pie being doled out for alternative energy schemes. Nasser’s comments mark a break in the SOP.

HOUSTON — Saudi Aramco CEO Amin Nasser said Monday that the energy transition is failing and policymakers should abandon the “fantasy” of phasing out oil and gas, as demand for fossil fuels is expected to continue to grow in the coming years.

 

“In the real world, the current transition strategy is visibly failing on most fronts as it collides with five hard realities,” Nasser said during a panel interview at the CERAWeek by S&P Global energy conference in Houston, Texas.

“A transition strategy reset is urgently needed and my proposal is this: We should abandon the fantasy of phasing out oil and gas and instead invest in them adequately reflecting realistic demand assumptions,” the CEO said to applause from the audience.

 

[…]

 

Nasser said the world should focus more on reducing emissions from oil and gas in addition to renewables. The CEO said efficiency improvements alone over the past 15 years have reduced global energy demand by almost 90 million barrels per day oil equivalent. Wind and solar, meanwhile, have substituted only 15 million barrels over the same period, he said.

 

“We should phase in new energy sources and technologies when they are genuinely ready, economically competitive and with the right infrastructure,” Nasser said.

BLS Revises Job Gains Down

This is the only part worth noting in the BLS jobs report today. They revise the previous month’s numbers to be worse every single time. Every. Single. Time. So whatever they report today, you can count on it actually being worse. One might begin to suspect that the BLS has been corrupted into a propagandist mouthpiece of the administration.

The change in total nonfarm payroll employment for December was revised down by
43,000, from +333,000 to +290,000, and the change for January was revised down by
124,000, from +353,000 to +229,000. With these revisions, employment in December
and January combined is 167,000 lower than previously reported. (Monthly revisions
result from additional reports received from businesses and government agencies
since the last published estimates and from the recalculation of seasonal factors.)


Debt Rising by $1 TRILLION Every 100 Days

This is a nation killer. Nothing else will matter when this crushes our economy.

The debt load of the U.S. is growing at a quicker clip in recent months, increasing about $1 trillion nearly every 100 days.

 

The nation’s debt permanently crossed over to $34 trillion on Jan. 4, after briefly crossing the mark on Dec. 29, according to data from the U.S. Department of the Treasury. It reached $33 trillion on Sept. 15, 2023, and $32 trillion on June 15, 2023, hitting this accelerated pace. Before that, the $1 trillion move higher from $31 trillion took about eight months.

35% of Gen Z Spends Compulsively

If they want to spend their way to bankruptcy, that’s their business. It becomes my business when they are asking me, a taxpayer, to bail them out for their bad decisions.

On a recent episode of Caleb Hammer’s YouTube show, Financial Audit, Abigail admitted the student loan she took out wasn’t necessary. “I don’t need to use them like I use them, I know that,” she said.

 

“You’re borrowing from the government, potentially from taxpayers,” Hammer responded. “You’re going about this in such an irresponsible way and your actions are showing that you just don’t give a s–t.”

 

However, according to a recent survey, Abigail isn’t alone in her addiction to spending money or misallocating funds.

35% of American Gen Z’s surveyed by Credit Karma admitted to “doom spending,” which it described as a pattern of compulsive spending (think: clothing or high-end skincare products) that helped people cope with anxieties about the economy and world affairs.

 

Abigail seemed to be on a similar path when she appeared on Financial Audit.

 

Her college is relatively close to where she lives and is, as Hammer described, “insanely cheap.” Nevertheless, she managed to accumulate $11,000 in student loans — all of which were allocated to fund her lifestyle choices.

 

In addition, she has $8,000 in auto loans for a car she admitted she didn’t need to buy in the first place.

 

She also has thousands of dollars in credit card debt, which could have been avoided because her cost of living is lower than the national average. She currently lives with her parents and doesn’t pay for groceries or utilities.

 

When Hammer asked Abigail if she’d “just given up” she said “probably.”

 

She added, “That’s been my problem for the past few years: knowing I’m hurting myself and just not doing anything about it. I just feel like I don’t have any self-esteem.”

Homeowners Increasingly Underinsured as Premiums Skyrocket

Bidenomics.

Mark Friedlander, a spokesperson for the Insurance Information Institute, a trade group, said home insurance premiums had cumulatively risen 32% from 2019 to 2023, while rebuilding and replacement costs had gone up 55%. Analysts for the group estimated that in 2023, home insurers experienced their biggest underwriting loss — the difference between collected premiums and paid-out claims — since 2011. Behind the loss were huge storms that caused more than $50 billion in damage that insurers had to pay for.

 

A survey last year by the institute and researchers for Munich Re, a reinsurer, found that 88% of U.S. homeowners had property insurance, down from 95% in 2019. Only 4% had flood insurance, even though 90% of the country’s natural disasters involve flooding.

 

Once insurers raise premiums, many homeowners are discovering that their lenders are willing to explore ways to make their payments more affordable. Banks that collect mortgage payments must ensure that borrowers’ coverage meets requirements set by the government-backed Fannie Mae and Freddie Mac housing agencies, but are open to owners tweaking it within those requirements, said Pete Mills, the chief economist at the Mortgage Bankers Association, the trade group for the mortgage industry.

 

Amy Bach, the executive director of United Policyholders, a nonprofit advocacy group that helps insurance consumers navigate tricky claims processes, said she found herself recommending a multitude of strategies these days to keep policies affordable.

 

“For most consumers, what they’re facing now is: What is the least worst option for me, given the pricing?” she said. She advises lowering the coverage on the contents of a house or cutting coverage for outbuildings like garages, sheds, pools or retaining walls.

 

“We had been saying, ‘Raise your deductible,’ but now, what does that mean?” Bach said. “My parents’ home on Long Island has a $33,000 wind deductible,” meaning they would have to pay that much out of pocket — a huge share of the cost of a new roof — before getting any help from their insurer.

And before you tell me that it isn’t Bidenomics, it absolutely is. The key number is, “rebuilding and replacement costs had gone up 55%.” Some of that is due to the demand for new housing and remodeling while corporations restrict supply by purchasing homes, but a huge contributor is the inflationary economy and high interest rates that are pervasive elements of the Biden economy. Yes, if it costs 55% more to replace your home whose value is already inflated, insurance rates are going to go way up.

Japan Enters Recession

Oof.

Japan’s economy dipped into a technical recession, after unexpectedly contracting again in the October-December period, provisional government data showed Thursday. High inflation crimped domestic demand and private consumption in what’s now the world’s fourth-largest economy.

 

The latest gross domestic product print complicates the case for interest rate normalization for Bank of Japan Governor Kazuo Ueda and fiscal policy support for Japanese Prime Minister Fumio Kishida. It also means Germany took Japan’s place as the third-largest economy in the world last year in dollar terms.

Provisional gross domestic product contracted 0.4% in the fourth quarter compared with a year ago, after a revised 3.3% slump in the July-September period. This was way below the median estimate for 1.4% growth in a Reuters poll among economists. The GDP deflator in the fourth quarter stood at 3.8% on an annualized basis.

 

The Japanese economy also contracted 0.1% in the fourth quarter from the previous quarter, after shrinking a revised 0.8% in the third quarter from the second. This was also weaker than expectations for 0.3% expansion.

Car Insurance Rates Skyrocket

Inflation becomes a snowball effect.

Car insurance rates have climbed 36% since January 2020, according to an ABC News analysis of consumer price data released by the Bureau of Labor Statistics.

 

Within the past year alone, rates for car insurance have soared more than 20%, BLS data shows.

 

“Prices for a lot of things have gone up over the last few years,” Tom Simons, an economist at Jefferies who studies the auto industry, told ABC News. “The difference with car insurance is that it’s still going up while others have subsided.”

[…]

 

The rate increases tie directly to the surge in vehicle prices, analysts told ABC News, noting that the elevated car prices left owners more likely to seek repairs for their current vehicle than opt to buy a new one.

In turn, a spike in demand for car repairs sent up the price of such services, which led to ballooning insurance rates, analysts added. Those rates have continued to rise as repair shops weather expenses like pay increases for in-demand workers and high costs for parts, even as the supply shortages have begun to ease.

Tax me now!

This is such idiotic pandering.

More than 250 billionaires and millionaires on Wednesday reiterated their call on elected representatives of the world’s leading economies to introduce higher taxes on the very richest in society.

 

In an open letter to political leaders gathered at the annual World Economic Forum in Davos, Switzerland, the rich signatories said they wished to deliver a clear message: “Tax our extreme wealth.”

“We are surprised that you have failed to answer a simple question that we have been asking for three years: when will you tax extreme wealth?” the letter said.

 

“Our request is simple: we ask you to tax us, the very richest in society. This will not fundamentally alter our standard of living, nor deprive our children, nor harm our nations’ economic growth. But it will turn extreme and unproductive private wealth into an investment for our common democratic future.”

First, nothing stops these people from giving their money to government or privately funding things. They could help build roads, sponsor police departments, kick in for the welfare bill, or whatever. They are agents of choice.

Second, the reason that I oppose higher taxes – even if only target at the mega rich – is because that’s never where it stops. We have centuries of history of small, targeted taxes being expanded into the middle and lower classes. More government spending creates demand for more government spending that must be satiated.

Third, notice the comment, “unproductive private wealth.” Unless a rich person is hoarding cash in their mattresses, that wealth is not unproductive. In fact, concentrations of wealth are a necessary part of capitalism and vital to making capitalism work. You need concentrated wealth to invest in new ventures and innovation to progress the economy and raise the standard of living for everyone. There’s a word for when we give all of the money to government and allow the government to make those decisions: Communism. These people are Communists advocating for communism. The fact that they are rich only means that they expect to continue to ride atop a Communist society but with the violent power of government added to the power of their purses.

EV Sales Rising, But Still Small Fraction of Sales

Interesting stats in this story.

Ford’s overall 2023 sales are lower than the industry’s sales growth, which auto data firm Motor Intelligence reports topped 15.6 million last year — marking a 12.3% increase from 2022 and the segment’s best performance since more than 17 million vehicles in 2019.

 

“In a year of challenges, from a labor strike to supply issues, our amazing lineup of gas, electric and hybrid vehicles and our fantastic dealers delivered solid growth and momentum. We have the products that customers want,” Ford CEO Jim Farley said in a release.

 

Electric vehicle sales came in at 72,608 for the year, up 18% from 2022 and boosted by nearly 26,000 EVs sold during the fourth quarter.

EV sales are increasing at a faster rate than overall sales, but percentages are deceptive when being based on such a small number. Overall, EV sales were still only about 3.6% of Ford’s sales despite them pushing it hard. It’s telling that the quote from Ford’s CEO leads with “GAS, electric and hybrid…”

Liberals Kills Jobs in California

Just a reminder that the real minimum wage is $0. This is the result of rich liberal politicians thinking that they know better than everyone else. I’m sure that the thousands of newly employed Californians appreciate the liberals in Sacramento looking out for them.

With the minimum wage in California increasing to $20 an hour for fast food workers in 2024, some Pizza Hut franchisees say they’re preparing to eliminate jobs as well as delivery options for customers.

 

As first reported by ABC News Los Angeles station KABC, two major Pizza Hut franchisees with restaurants in Orange, Los Angeles, Riverside, San Bernardino and Ventura counties are planning layoffs that would impact 1,200 workers.

 

The mass layoffs would also reportedly impact another 800 workers at Pizza Hut locations in Sacramento, Central California, Southern Oregon, and the Reno-Tahoe area, according to KABC.

 

The cuts would eliminate the franchisees’ delivery services for customers in those locations, they said. Customers will instead have to rely on services like Uber Eats or DoorDash.

 

[…]

 

The wage legislation, AB 1228, which was signed into law by California Gov. Gavin Newsom in late September, is the catalyst for this decision by operators, the franchisees say.

 

[…]

 

Although a decision has not been made official, Chipotle CEO Jack Hartung said on a November earnings call that the pricing at the popular fast-casual Mexican restaurant would have to change “to take care of the dollar cost” and cover the new margins.

 

“We are definitely going to pass this on. We just haven’t made a final decision as to what level yet,” he said.

 

AVs “unlikely to be profitable anytime in the foreseeable future”

Innovation is hard and expensive. This is the trial and error of capitalism. When government decides to weigh in and force something that is economically unviable, it retards the system’s ability to innovate.

But there’s growing concern across the industry, not just with GM and Cruise, about the viability of autonomous vehicles, or AVs, as a business instead of as a niche science project.

 

“AV technology, while they’ve made a lot of progress with it, is unlikely to be profitable anytime in the foreseeable future, certainly not this decade,” said Sam Abuelsamid, principal research analyst at Guidehouse Insights. “If they need to make cuts, robotaxis seem like the obvious place to do that.”

 

Some Wall Street analysts are holding out hope that GM and Barra can turn Cruise around and eventually refocus on growing the business, as the Detroit automaker takes a more hands-on approach with the company. Several are expecting updates at an investor event in March.

 

“The plan to pause Cruise operations and reduce spending on Cruise in 2024 are only first steps. Once again, we expect these concerns to be addressed and cured at the capital markets day in early 2024 but expect skepticism to remain in the interim,” Morgan Stanley analyst John Murphy said in a Nov. 29 investor note.

 

If GM can’t turn the operations around, Cruise would join a list of its past defunct growth businesses, partnerships and investments since 2016.

Top Insurance Firm Discriminated Based on Gender and Race

Racism and sexism are detestable in all their forms.

As businesses push forward on hitting diversity goals, a major insurance company in the U.K. is telling its 22,000 strong workforce that senior white male new hires must be personally approved by none other than the CEO.

 

Aviva’s boss Amanda Blanc said the policy forms part of the company’s efforts to stamp out sexism in the financial services industry.

 

[…]

 

“The scope of the charter is to get more women into senior management roles,” Blanc explained the reasoning for the measure. “My belief is if you have more women in senior management roles, this behavior will go away.”

Because women are incapable of sexism or racism, I guess.

Biden Proposes Destroying Patent Protections

This will gut a good chunk of the innovation in the American economy in all sectors. If people do not have confidence that their patents will be protected, they will decline to make nig investments in creating new things. The profits reaped by people who invent new important things is the price of getting new important things.

The Biden administration on Thursday opened the door to seizing the patents of certain costly medications from drugmakers in a new push to slash high drug prices and promote more pharmaceutical competition.

 

The administration unveiled a framework outlining the factors federal agencies should consider in deciding whether to use a controversial policy, known as march-in rights, to take patents for drugs developed with taxpayer funds and share them with other pharmaceutical companies if the public cannot “reasonably” access the medications. Doing so could lead to the development of lower-priced generic alternatives, which could cut into key drug companies’ profits and reduce costs for patients.

For the first time, officials can now factor in a medication’s price in deciding to break a patent.

China Fading

While it is good that China’s economic prowess may be waning, it is also destabilizing if Communist China seek to replace their economic might with military might.

The Chinese economy’s decades-long run of tremendous growth has finally found its end, Ruchir Sharma wrote in the Financial Times.

 

NY Deadbeats Get One Year to Move Out After Eviction

And politicians wonder why housing is scarce and rents are high. Who would want to be a landlord with these kinds of risks?

• If you lose a housing case and the judge orders your eviction, you can ask the court for up to one year to move if you can show that you cannot find a similar apartment in the same neighborhood. The judge will take into account your health conditions, whether you have children enrolled in school, the hardship on the landlord if you remain, and any other life circumstances that could affect your ability to move.

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