The Looming Economic Cauldron

The Looming Economic Cauldron

Authored by Steve Cortes via American Greatness,

The current confluence of economic conundrums elevates risks massively for the prosperity of Americans, especially those of modest means.

These unprecedented, concurring economic contradictions flow directly from the dire mistakes of the 2020 virus panic.

The seismic policy errors of the lockdown era have since been exacerbated by Joe Biden and aligned collaborationist Republicans, to create an economic cauldron into the end of 2023.

What are these conundrums?

1. Interest Rates surging into a slowing economy.

2. Energy prices soaring despite China and other Emerging Markets decelerating.

3. U.S. Housing prices rising in the face of plunging Mortgage demand.

Conundrum #1: Rate Rise as Economy Slows

On that first point, just last week, the Federal Reserve roiled capital markets by warning about the need to keep interest rates higher for longer to fight persistent inflation. But soon, even that volatility will likely seem tame by comparison.

In normal economic cycles, interest rates rise anticipating that fast economic growth triggers a shortage of capital and/or high demand for loans. But in this present quagmire, none of those typical dynamics exist.

Since the lockdowns, the “15 days to slow the spread” announcement from the White House and Fauci in March of 2020, benchmark 10 Year Treasury yields have screamed higher, from 0.80% then to 4.50% last week, the highest level since 2007.

But simultaneously, signs of economic slowdown proliferate. For example, the best gauge for production, the ISM Manufacturing PMI, has now registered 10 straight months in contraction, recessionary mode, which is below 50 on that index. See this 5-year chart:


Consumers reflect that factory weakness, too. Though consumer confidence has bounced a bit in recent weeks, it still sits below the worst levels of the lockdown depths of the spring of 2020. In fact, the gold-standard consumer confidence survey from the University of Michigan recently hit the lowest levels of all-time, in an index that goes back to the 1970s. Similarly, credit card losses just hit the worst levels since the Great Financial Crisis of 2008, as stressed borrowers cannot make even minimum payments, per a Goldman Sachs report.

Yet, interest rates charge higher anyway. Why?

The answers all flow from the policy disasters that began with the virus panic. The unscientific and largely illegal lockdowns were temporarily “financed” by taking the U.S. to unprecedented post-WWII levels of spending and borrowing. Throwing money at people to stay home and businesses that were forced to shutter resulted in runaway debt, rocket-ship inflation, plus a systemic level of fraud thrown in, to boot.

Those giant mistakes were only amplified once Biden took office. Rather than taming this insane fiscal profligacy, Biden and his willing GOP allies on the Hill, like Mitch McConnell, simply pretend that the crisis-level binge can continue, and even accelerate.

So, instead of policy and inflation normalizing, the deficit doubled this year vs. last year. Even the biased Washington Post took note, with an alarming article and this graphic:

Source: Washington Post

This path is totally unsustainable. In the prior era of low rates and monetary repression from the Fed, large deficits seemed manageable. No longer. The costs now of financing this ballooning debt will quite literally impoverish our children.

Conundrum #2: Oil Soars While China Slides

For years now, China has been the foremost driver of global oil prices. Its smokestack economy is far more petroleum-centered than America’s. In addition, unlike the U.S., China lacks the kind of vast natural energy resources to meet industrial demand from domestic drilling.

But in recent quarters, a notable and new disconnect emerges – Crude Oil explodes higher even as China tanks.

Look at the price trajectory of Crude since the March 2020 “15 days” propaganda. Black Gold more than doubled and now sits just above $90, threatening last year’s painful highs:

Source: CQG

But, conversely, the capital markets outlook for China falls apart, as evidenced by FXI, the primary vehicle for U.S. investors to trade Chinese shares. It is an ETF (exchange traded fund) basket of Chinese stocks:

Source: CQG

So, what gives? Well, the inflation that was sparked by the 2020 fiscal orgy sent Oil and all commodities to the moon, as inflation protection assets. Then, adding to that crisis, Biden’s war on American energy made production here in “Saudi America” more difficult. Simultaneously, rising rates in the U.S. create a massive headache for Chinese government-run industries, which are heavily indebted in U.S. Dollars. Hence…another conundrum.

Conundrum #3: Housing Prices High Even as Mortgage Demand Tanks

Given sky-high interest rates and an embattled consumer, naturally mortgage demand falls off a cliff. In fact, mortgage applications have now plunged at the worst clip in almost 30 years.

Here is Joel Kan, chief economist from the Mortgage Bankers Association assessing the present desert of demand: “Mortgage applications decreased for the seventh time in eight weeks, reaching the lowest level since 1996.” He further predicted: “Given how high rates are right now, there continues to be minimal refinance activity and a reduced incentive for homeowners to sell and buy a new home at a higher rate.”

But…despite this collapse in mortgage applications and approvals, home prices remain very elevated. In fact, comparing present prices to levels before the virus panic, St. Louis Fed numbers show a median priced U.S. home rose from $313,000 in the beginning of 2019 to $416,000 today. One would suspect that trouble for potential buyers would compel lower home prices, but no such luck for would-be homeowners.

As a result, housing affordability melts down to the worst levels ever, as I outlined in my previous article on this particular economic enigma.

Conundrum to Cauldron

Taken alone, any one of these three crises listed above can derail an economy.

All three put together, that confluence creates an economic cauldron.

Our country and our movement, therefore, need to get serious immediately about fiscal sanity. Deficits matter again, in spades. We also need to fully unleash American energy, eliminate hurdles to housing construction, and seal the border to raise the wages of American citizens. The economic clock is ticking…time for action.

Tyler Durden
Tue, 09/26/2023 – 15:05

via ZeroHedge News Tyler Durden

When Shelter Becomes A Speculative Asset, Society Unravels

When Shelter Becomes A Speculative Asset, Society Unravels

Authored by Charles Hugh Smith via OfTwoMinds blog,

Does anyone really believe that the renunciation of massive, sustained stimulus of speculation in housing would leave housing valuations unchanged because valuations are solely the result of “shortages”?

Let’s begin by stipulating that speculation (i.e. gambling) is part of human nature. The role of regulations and policy is to limit the damage that gambling inevitably inflicts when “sure things” cliff-dive into losses.

In other words, where the speculative frenzy and money flows matters. When the South Sea Bubble expanded circa 1713-1720, this flood tide of speculative capital did not distort the cost of shelter and bread in England; it was limited to a purely financial marketplace of shares in the company. When the bubble imploded in 1720, the losses fell mostly on wealthy investors like Isaac Newton.

The same can be said of the speculative mania of the dot-com era: the bubble and collapse were limited to the tech sector and those participating in the sector and the speculative frenzy. The cost of rent and bread did not double due to the speculative bubble’s inflation or bursting.

In contrast, when speculation floods into shelter / housing, it fatally distorts the cost of housing non-speculators must pay. I say fatally because shelter, along with food, energy and water (the FEW resources), are essential to life. These are not discretionary things we can decide not to have. When the price of essentials soars due to speculation that only rewards the speculators at the expense of non-speculators, the fuse of social disorder is lit.

Anyone who believes policies that encourage the wealthy to hoard housing to the point that the bottom 80% (or the bottom 95% in some areas) cannot afford to buy a home are just peachy is overdosing Delusionol. The social consequences are severe and uncontainable once the worm turns.

Exhibit #1 in Shelter Becoming a Speculative Asset is a modest house in the San Francisco Bay Area that sold for $135,000 in mid-1996. By modest I mean small, old, and on a small lot in a neighborhood of other small lots and homes. (A screenshot of the Zillow history is below.)

Today the home’s value is estimated to be about ten times higher: $1.35 million. Let’s do some basic math to understand just how distorted this market has become.

The median household income in 1996 was about $39,000. For a house costing $135,000, this represents 3.5 ratio of income to housing, well within the traditional ratio of 4 to 1 (4 X income = cost of the home).

Median household income has almost doubled to $75,000, roughly in line with inflation according to the Bureau of Labor Statistics. According to the BLS, the house that cost $135,000 in July 1996 would now cost $264,000 when adjusted for inflation, and the $39,000 median income would be $76,000.

Let’s say the house appreciated above the rate of inflation to $300,000 today. That’s still within the 4 to 1 ratio of income to house cost (4 X $75,000 = $300,000.) So even though the house rose 2.2X in cost, it would still be affordable to a median household.

At a value of $1.35 million, a household would need to make $337,500 annually–an income that is in the top 5% of households–to buy the house today. In other words, an income that is 4.5 times the median household income is the minimum needed to buy this modest house.

The house is now worth 4.5 times what it would have been worth if it had appreciated well above inflation.

The conventional argument holds that this four-fold increase in housing costs is due solely to a shortage of housing. Let’s consider some data before concluding this is the only dynamic in play.

Chart #1: Case Shiller housing index: this chart shows two massive housing bubbles in the past 20 years.

Chart #2: Federal Reserve’s purchases of mortgage backed securities (MBS) to goose the housing market. The “housing shortage” argument claims the unprecedented Fed purchases of trillions of dollars of MBS is not correlated to the housing bubble, but this claim makes no sense: dropping mortgage rates to unprecedented lows while soaking up trillions of dollars in securitized mortgages was like injecting speculative crack cocaine into the housing market. Gosh, how did we survive without the Fed buying $2.5 trillion in mortgages?

Chart #3: the current housing bubble compared to the 2000-2006 housing bubble: today’s bubble is even more extreme than housing bubble #1.

Chart #4: housing per capita (per person) has reached a new high: if there’s such a severe shortage of housing, how can the housing per capita be at an all-time high? Population rose 4 million in the past 4 years while 5 million housing units were added–plus a pig-in-a-python of housing in the pipeline.

Chart #5: household net worth is $50 trillion above trend, the direct result of massive monetary and fiscal stimulus. Tens of trillions of dollars were borrowed into existence and pumped into so-called risk assets–assets such as housing that the wealthy buy for speculative appreciation.

Chart #6: total debt–private and public–soared from $20 trillion in 1996 to $95 trillion now. Is it merely coincidental that this is $55 trillion above the trendline of inflation, which would have placed total debt at $40 trillion today?

Chart #7: net worth of the top 1% households, which soared from 23% of all net worth to 32%: this 9% gain in the percentage of all household net worth represents a gain of $14 trillion above and beyond the $28.7 trillion in gains registered by the 23% they owned in 1990.

1990 total net worth: $21 trillion, 23% = $4.8 trillion; 2023 total net worth: $146 trillion, 23% = $33.5 trillion; $33.5 trillion – $4.8 trillion = $28.7 trillion.

This unprecedented bubble in housing valuations is due not to shortages but to decades of massive financial stimulus that incentivized speculative capital to flood into housing as a low-risk way to skim stupendous gains for creating zero gains in productivity. If you doubt this, then run this scenario and tell us what happens:

The Fed dumps its entire portfolio of mortgage backed securities and stipulates it will never buy any again. It also renounces all the other stimulus gimmicks that incentivized expansions of debt and speculation.

Does anyone really believe that the renunciation of massive, sustained stimulus of speculation in housing would leave housing valuations unchanged because valuations are solely the result of “shortages”? If so, there’s a little shack under the Brooklyn Bridge I’ll let you have for a couple of million. I’m sure the Airbnb rent will mint you millions.

*  *  *

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Tyler Durden
Tue, 09/26/2023 – 14:25

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US Orange Juice Prices Hit Record Highs As Supplies Tumble To 1968 Lows  

US Orange Juice Prices Hit Record Highs As Supplies Tumble To 1968 Lows  

Orange juice futures have surged to record highs as stockpiles in the US tumble to a half-century low due to Florida citrus groves battered by years of disease and hurricanes. It’s a perfect storm hitting the OJ market, as supermarket prices have risen this year. Fortunately, suppliers have ramped up imports from Brazil to mitigate sliding US inventories. 

Bloomberg cites new data from the US Department of Agriculture that shows frozen orange juice concentrate fell to 235.5 million pounds by the end of August. This marks the lowest level since December 1968 and comes as Florida’s 2022-23 season is the weakest since the 1936-37 harvest. As a result, OJ futures have tripled in the last several years, nearing $3 per pound. 

“Low stocks and a dim outlook for future output from Florida and Brazil have also driven up futures prices to record highs in September,” Bloomberg said. 

In July, industry group CitrusBR said exports of orange juice from Brazil to the US jumped 55% for the 12 months ended in June. This means more Americans than ever are drinking OJ from Florida Brazil. 

“Even if the next Florida crop shows some slight recovery, production levels are already set to be very low,” said Ibiapaba Netto, executive director at CitrusBR. 

Breakfast lovers can’t catch a break after two years of food inflation. 

Tyler Durden
Tue, 09/26/2023 – 14:05

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Is It Time To Stop Backing Ukraine?

Is It Time To Stop Backing Ukraine?

Authored by Leighton Woodhouse via Public Substack,

There is no victory in this war. There are only bad and worse outcomes…

Last February, as Russia’s invasion of Ukraine entered its second year, President Biden visited Poland and pledged the United States’ eternal support for the Ukrainian military. “Our support for Ukraine will not waver,” Biden declared. “NATO will not be divided, and we will not tire.”

A few days before, Vice President Kamala Harris had made the same promise. “The United States will support Ukraine for as long as it takes,” she told an audience in Germany. “We will not waver.”

“If Putin thinks he can wait us out, he is badly mistaken,” the Vice President went on.

“Time is not on his side.”

But that’s not what the United States’ top military officer appears to believe. Two weeks ago, Chairman of the Joint Chiefs of Staff Mark Milley told the BBC that the vaunted Ukrainian counteroffensive has only until the autumn weather turns, and the cold and the rain impede the maneuverability of Ukrainian forces, to achieve its goals. Time is running out for the Ukrainian army’s best and perhaps only chance at driving the Russians out of Crimea and the Donbas region.

For months, analysts and media pundits hyped the Ukrainian counteroffensive as the campaign that could finally turn the momentum of the war against Russia. “This assault could turn the tide of the battle for Ukraine, just as the Allied assault on the Normandy beaches altered the trajectory of World War II,” trumpeted Washington Post columnist David Ignatius. The counteroffensive would “achieve significant breakthroughs and accomplish much more than most analysts are predicting,” former General David Petraeus told Washington Post columnist Max Boot. Russian forces may “collapse over broad areas,” Petraeus further speculated.

Privately, the Biden administration was less optimistic. A top secret intelligence document leaked on Discord anticipated only “modest territorial gains” by the Ukrainian army. That bleak prognostication appears to be materializing. Ukraine has thus far failed to break through Russia’s defenses, and U.S. intelligence agencies do not expect the Ukrainian army to capture Melitopol — a key objective of the counteroffensive, as doing so would put the Ukrainian army in a position to cut off the land bridge to Crimea, severing Russia’s supply lines. 

In his BBC interview, Milley insisted that the counteroffensive is making “very steady progress,” a talking point that Secretary of State Antony Blinken has also recited. And indeed, late last month, the Ukrainian army punctured the first of Russia’s three defensive layers in Southern Ukraine. But even the best-case scenario, described to The Economist by a Defense Intelligence Agency official, doesn’t put Ukrainian soldiers past the third line of defense until the end of the year, deep into the season Milley expects to stymie Ukrainian progress, and with winter around the corner.

Even if, by some extraordinary turn of events, the counteroffensive broke through Russia’s defenses this year, Ukrainian forces would likely be so depleted as to be in no position to push beyond that point and take back Crimea. For months, the Ukrainian government has struggled to conscript troops, as fighting-age men have hidden from recruitment officers, bribed them, or simply ignored summonses. In January, rates of desertion and disobedience among Ukrainian soldiers forced President Zelensky to sign a bill increasing prison sentences to a decade or longer. Though Russia, too, is facing similar problems, it has a larger population to draw on.

If the counteroffensive fails and Russia maintains control of Crimea, the only way Ukraine could prevail over the long term would be with NATO troops directly in combat — a suicidal situation that would invite a global nuclear confrontation. And even then, a victory for Ukraine that comes years rather than weeks from now could come at the price of the total destruction of the entire country.

In interviews, Ukrainians have characterized the counteroffensive as a “disappointment.”

“I want the price they paid to be reasonable,” the wife of a combat veteran told The Washington Post in August.

“Otherwise it’s just useless, what they went through.”

Her husband, who lost a leg to a landmine, told the Post that soldiers on the frontline are unprepared and unmotivated. Another Kyiv resident said that new soldiers last just two to three days on the front.

And yet, the Biden administration is pushing for another $24 billion aid package for Ukraine. “There’s no alternative,” President Biden said about continued financing of the war.

Ukraine is turning into the proxy version of Afghanistan or Iraq: an endless conflict in which victory is always around the corner, in which the Pentagon and the defense industry push for escalation after escalation regardless of the reality on the ground, in which deaths mount and a country is destroyed only to end in defeat or a Pyrrhic victory years later, once enough American voters have had their fill of war.

But Biden is wrong: there is an alternative. It’s time to stop backing Ukraine and force an end to the war.

There is no happy ending to this conflict.

A combination of Russian aggression and Western recklessness has destroyed Ukraine’s brief experiment in independence.

If the current counteroffensive fails, as it seems likely to, there will be no good options for the country. Either Ukraine will be partitioned now under one peace treaty, or it will be partitioned in the future under another, and only after many more people have died and a great deal more destruction has been wrought on Ukraine’s infrastructure and economy. In either case, the country will revert back to its centuries-long struggle for national unification, with Russia playing its old historical role as the enemy of that project. This is the price Ukrainians will pay for peace, a price that both Russia and the United States have imposed on them. But the cost of further war will be much greater.

No fair-minded person is happy about these grim prospects for Ukraine. But as one of the two countries capable of ending the conflict, it’s time for the United States to take stock of reality and accept that there is no winning this war. Our generals, our diplomats, and the American elite will be the last to accept this. Left to their own devices, they will allow the fighting to go on forever. It’s time we force them to make a different choice.

Subscribers can read the full substack here…

Tyler Durden
Tue, 09/26/2023 – 13:45

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Biden Orders Border Patrol To Cut Barbed Wire Fences Holding Back Masses Of Migrants

Biden Orders Border Patrol To Cut Barbed Wire Fences Holding Back Masses Of Migrants

Only five days ago, the Mayor of Eagle Pass, Texas issued an emergency order due to a huge influx of illegal immigrants crossing into the US from Mexico, and only a few days after that the latest border numbers revealed record migrant crossings in 2023 (over 2.2 million so far).  Despite the multitude of warnings since Joe Biden entered the White House, there has been no discernible effort on the part of the federal government to stop the tide. 

In fact, more and more evidence suggests the Biden Administration is deliberately thwarting all efforts to secure the southern border while consistently lying about their intentions. 

Case in point, Biden fought to end Title 42, which was the only legal recourse keeping abuse of the asylum option in check.  Biden has filed a lawsuit asking courts to stop Texas efforts to fence off the Rio Grande with bright orange razor wire buoys, which have proven very effective.  Biden and Democrats have tried to stop Texas Governor Greg Abbott from relocating migrants to blue leaning “sanctuary cities” (they’ve been given a taste of their own medicine and they don’t like it).  Biden has ordered border patrol agents to “process” illegal immigrants for asylum status, instead of using their energies to send them packing back across the border.  And, Biden has ordered those same agents to open border fences against the wishes of state governments so that migrants can easily pass through.

Now, it appears the White House is taking things a step further, ordering border patrol to cut barbed wire fences put in place by Texas DPS as the only effective means for preventing mass migrations. They are actively welcoming in large groups of illegals and opening a path for them.

There has been a clear dereliction of duty when it comes to Biden and his actions on the border.  It is also obvious that his relocation of more border agents and national guard to the region is meant to keep migrants moving into the US while preventing state governments from establishing any form of protection.  What happens next is predictable – A massive surge in third world population, even beyond what the US has witnessed so far, followed by rising crime, rising economic instability, rising poverty and a rising homeless population.  

Unless state governments and the public step in, the crisis will only expand. 

Tyler Durden
Tue, 09/26/2023 – 13:25

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2Y Auction Prices At Highest Yield Since July 2006

2Y Auction Prices At Highest Yield Since July 2006

With US debt issuance now in openly exponential mode, as the Trasury just added $100 billion in debt in just the past 5 business days after the US federal debt surpassed $33 trillion for the first time ever…

… moments ago the US did what it does so well and it issued another $48 billion in 2Y paper (the largest such offering since April 2022), in what was a well-received auction.

The first coupon auction of the week priced at a high yield of 5.085%, higher than last month’s 5.028% and the highest since the 5.09% yield of the July 2006 auction. Also, notably, the offering priced on the screws with the When Issued which also traded at 5.085% ahead of the pricing.

The bid to cover of 2.728 was less impressive, dropping from 2.942 in August and the lowest since April.

The internals were in line with last month, with Indirects awarded 65.02%, unchanged from the 65.01% in August, and with Directs taking down 20.99%, or just above last month’s 20.01%, Dealers were left holding 13.99%, below the 14.98% in August and also below the 16.7% six-auction average.

Overall, this was a solid, if not stellar 2Y auction, which in light of another concession day (2Y yields pushed higher along with the entire curve all day), was not surprising. After all, in a year or so, when the US is in a deep recession, many will be wishing they had another opportunity to lock in 2Y interest above 5%.

Tyler Durden
Tue, 09/26/2023 – 13:19

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Americans Worried About A Credit Crunch; What Happens When Consumers Can’t Charge It?

Americans Worried About A Credit Crunch; What Happens When Consumers Can’t Charge It?

Authored by Michael Maharrey via,

Americans are worried about a looming credit crunch. That’s a big problem for an economy that runs on credit cards.

One of the reasons for economic optimism you’ll hear bandied about out there in the mainstream is “the American consumer is strong” and consumer spending is “holding up” despite price inflation. But nobody seems to ask an important question: how have Americans been able to continue spending?

The answer is credit cards.

So, what’s going to happen when consumers finally max out the plastic?

We may be getting close to that point, and many people are worried that they aren’t going to be able to borrow the money they need to keep spending.

As prices skyrocketed last year, Americans blew through their savings to make ends meet. Aggregate savings peaked at $2.1 trillion in August 2021. As of June, the San Francisco Fed estimated that aggregate savings had dropped to $190 billion.

In other words, Americans ate away $1.9 trillion in savings in just two years.

Then they turned to credit cards.

Americans used stimulus money to pay down credit card debt during the pandemic. Americans owed a little over $1 trillion in revolving debt when the pandemic began. It fell below that level in 2020 thanks to an 11.2% drop. We saw small upticks in credit card balances in February and March of 2021 as the recovery began, with a sharp drop in April when another round of stimulus checks rolled out. But Americans started borrowing in earnest again in May 2021. Since then, we’ve seen a relatively steady increase in revolving debt.

As of the end of July, Americans owed $1.27 trillion in revolving credit.

The bigger problem is the double whammy of rising debt and rising interest rates. Average credit card interest rates eclipsed the previous record high of 17.87% months ago. The average annual percentage rate (APR) currently stands at 20.71%.

As a result, more and more Americans are struggling to pay their credit card balances.

Now there is another looming problem. It’s getting harder for Americans to borrow money.

And that has them worried.

Nearly 60% of the respondents in a New York Fed consumer expectations survey said it’s harder to get credit cards, mortgages and other loans than it was a year ago. It was the highest level since the New York Fed started the data series back in 2013.

Another Fed survey of loan officers reveals their fears aren’t unfounded. Banks reported that lending standards tightened across all consumer loan categories and all categories of residential real estate (RRE) loans. Meanwhile, the number of banks reporting tighter standards for credit cards rose by 36%.

Banks have also significantly tightened standards for business loans.

This is a recipe for disaster.

We have an economy that runs on debt and borrowing. Debt has become much more expensive with rising interest rates and it’s getting harder to get loans. Meanwhile, more and more Americans are maxing out their credit cards, and they are starting to have trouble paying the bills.

It seems likely that at some point in the near future, the tidal wave of debt is going to drown the “resilient American consumer” and the American economy is going to plunge over a cliff.

The mainstream narrative is that the economy is fine because consumers are still spending despite high price inflation and rising interest rates. But nothing about this is fine.

The underlying assumption is that Americans wouldn’t keep spending if they were really in trouble. But I think a lot of people are spending on credit cards precisely because they are in trouble. They don’t have a choice.

A JD Power analyst made this very point.

The pandemic-era savings cushions are gone, the economy is shaky and consumers are leaning more heavily than ever on their credit cards to cover day-to-day expenses. Consumers are using their cards for a lot of everyday purchases. Grocery shopping is the lead purchase type that consumers say they are making.”

Even the mainstream is starting to recognize this isn’t a sustainable trajectory. Bloomberg reported, “Despite persistent inflation and high interest rates, consumer spending has remained resilient and helped power the economy. Some have resorted to credit cards and savings to do so, but with savings shrinking and delinquencies on the rise, some economists doubt the current spending momentum is sustainable.”

It’s not.

Americans have managed to kick the can down the road using credit cards and accumulated savings. The question is how much road is left?

Tyler Durden
Tue, 09/26/2023 – 13:05

via ZeroHedge News Tyler Durden

The Lockdowns Made Homeschooling More Diverse

Homeschooling father and son | Photo 103782184 © Wavebreakmedia Ltd |

New polling from The Washington Post shows that contrary to stereotypes, homeschooling families are more diverse and less religious than ever.

The new data indicate that parents have a wide range of reasons for deciding to homeschool their children and that COVID-era school closures played a major role in inspiring many parents to pull their children out of the traditional educational system.

“Everything was up in the air,” during the pandemic, one parent told the Post. “We were like, let’s just try to home-school, and we’ve been doing it ever since.”

According to the poll, which was conducted by the Post and the Schar School of Policy and Government at George Mason University, three-quarters of homeschooling parents said that they chose to homeschool due to “concern about the school environment.” Around two-thirds also agreed that providing “moral instruction” as well as “dissatisfaction with academic instruction at other schools” also motivated their departure from traditional schooling.

While 31 percent of parents said they chose to homeschool their child in part because COVID policies at local public schools were too strict, a similar proportion—27 percent—said part of their decision to homeschool was because local public schools’ COVID policies were too lax.

According to research from the Urban Institute, homeschooling increased by 30 percent between the 2019–20 and 2021–22 school years. Nationally, over 5 percent of school-age children are now estimated to be homeschooled.

“Interviews with new home-school parents suggest many were intrigued by home schooling before the pandemic but wouldn’t have tried it absent the abrupt school closures in March 2020,” notes the Post. “While many parents were anxious to get their children back into school, some found they liked having their kids at home.”

The uptick in homeschooling has also led to more racial diversity in the homeschooling space. Prior to the pandemic, about 70 percent of homeschoolers were white. Now, that number has decreased to just under 50 percent, driven primarily—according to the Post‘s poll—by a rise in Hispanic families choosing to homeschool.

Homeschool families are also less focused on religion than they were before the pandemic. In 2012, 64 percent of homeschool parents said they did so in order to provide religious instruction. By 2023, that number had dropped to just 34 percent. 

“Families,” Robert Kunzman, a professor at Indiana University’s School of Education and director of the International Center for Home Education Research, told the Post, “who choose home schooling less for ideological reasons and more for matters of circumstance and what meets the needs of their child in the present moment will help change our conception of what it means to be a home-schooler.”

Since waves of COVID school closures in 2020 and 2021 sent parents scrambling, more and more families have realized just how poorly local schools were serving their children. Instead of putting up with the status quo, an increasing portion of them are deciding to take their children’s education into their own hands.

The post The Lockdowns Made Homeschooling More Diverse appeared first on

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Washington State Prison System Sued for Using Unreliable Drug Tests To Put Inmates in Solitary

drug test results with a stack of pills on top of them | Keng Po Leung /

Another state prison system is facing a lawsuit over its use of inaccurate drug field tests to throw incarcerated people in solitary confinement.

The class-action lawsuit, filed last Friday by Columbia Legal Services in a Washington state circuit court, alleges that the Washington State Department of Corrections (DOC) uses unreliable field kits to test mail for drugs and then uses the unverified results to put inmates in solitary confinement, move them to higher security prisons, and strip them of visitation rights and other privileges. This violates inmates’ due process rights and protections against cruel punishment under the state constitution, the suit argues.

“DOC continues to use these tests even though, upon information and belief, items that have tested ‘presumptive positive’ include blank notebook paper and manila envelopes purchased directly from DOC’s commissary or from DOC-approved vendors,” the suit says.

According to the lawsuit, one of the plaintiffs spent four months in solitary confinement after greeting cards shipped directly to him from a card company tested positive for drugs. The results were later invalidated by a lab. Another plaintiff, Gregory Hyde, was kept in solitary confinement—meaning he was in a cell for 23 hours a day—for nearly five months because some books of crossword and sudoku puzzles that his father mailed him tested positive for synthetic marijuana, also known as “spice,” a popular drug in prisons.

“I think DOC is using its power to punish people who can’t fight back,” Hyde said in a press release. “My elderly father just wanted to send me some puzzle books. Now they’re saying he’s a drug dealer. Now my father is too far away to see because I got transferred to a different facility. My father is impoverished and on a fixed income. I think it’s an abuse of power.”

The lawsuit comes roughly two years after a Massachusetts judge ordered that state prison system to stop using similar field tests, finding that they were “highly unreliable” and “only marginally better than a coin-flip.” That suit followed claims by over a dozen Massachusetts attorneys who said they were falsely accused of sending drugs to their incarcerated clients.

Reason reported in 2021 on how these cheap field tests, which use instant color reactions to indicate the presence of compounds found in certain drugs, are used extensively in prison systems across the country to punish inmates, despite clear warnings from the manufacturers that the results should be confirmed by outside labs. 

The problem is that the compounds these kits test for are not exclusive to illicit drugs and are in fact found in dozens of legal substances. Police also use these tests during traffic stops, and over the years, officers have arrested and jailed innocent people after drug field kits returned presumptive positive results when tested on bird poop, donut glaze, cotton candy, and sand from inside a stress ball. A 2017 investigation by a Georgia news station found that one brand of test kit produced 145 false positives in the state in one year.

The issues with these tests have led at least one other state prison system to voluntarily stop using them. In 2020, the New York Department of Corrections and Community Supervision suspended the use of NARK II test kits for contraband. 

In criminal cases, the results of drug field tests are always verified by an outside lab. However, incarcerated people have far fewer rights in administrative disciplinary hearings, and they don’t have the right to demand that “presumptive positive” tests be sent out for confirmation.

The lawsuit says the DOC agreed to change its policies after receiving Columbia Legal Service’s threat of litigation. However, Columbia Legal Services says the changes weren’t adequate to protect incarcerated people’s rights.

“DOC’s repeated and prolonged use of solitary confinement before and after any infraction hearings is inhumane,” Alison Bilow, an attorney for Columbia Legal Services, said in the press release. “Prolonged solitary confinement is internationally recognized as a form of torture. DOC must be required to stop its use of these cheap tests to unfairly punish people, especially with its barbaric use of solitary confinement.” 

The Washington State Department of Corrections declined to comment on the lawsuit, citing the pending litigation.

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Will the Government Shutdown Result in ‘Hunger for Millions’ as Reuters Claims?

hungry baby |  Irina Heß/Westend61 GmbH/Newscom

“Biden, US officials warn of hunger for millions in a government shutdown,” reads a Reuters headline from yesterday. The article details how Agriculture Secretary Tom Vilsack told reporters this week that the “vast majority” of the 7 million who receive benefits from the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) program will see their benefits disappear after the government shuts down, which is likely to happen this Saturday at midnight due to congressional inability to approve spending bills.

“Nearly half of U.S. newborns rely on WIC, the USDA says,” according to Reuters.

Just one problem: That’s not true.

If you scroll down to Figure 6 on the Department of Agriculture’s helpful site, you can input your state and see the current numbers as well as how those trends have changed over time. The “coverage rate”—the number who participate in the program, out of the total number who are eligible—hovers around roughly 50 percent. But half of U.S. newborns are not eligible for WIC in the first place, as it is a means-tested program designed to serve the poor, and half of newborns in the United States are not in poverty or close to it.

In my state of New York, for example, there were 1,449,500 children aged 0-4 and pregnant or postpartum women (all of whom would be theoretically eligible for WIC, if meeting the need requirement); of that total population, 48.7 percent would be eligible for the program (so about 706,000), and about half of that number ends up actually taking advantage of benefits (roughly 353,000).

For the record, other parts of the USDA’s site partially contradict that panel of information. During fiscal year 2022 (which may have seen an uptick due to pandemic-related disruptions), WIC administered benefits to “an estimated 39 percent of all infants in the United States.” This seems high to me given what we know about poverty statistics. It’s hard to get a straight answer, even using the agency’s own data and infographics. But one thing becomes clear: it is not true that half of U.S. newborns rely on this means-tested government program, which is what Reuters claimed (albeit with the handy hedge word nearly).

The official national poverty rate as of 2022 hovered at around 11.5 percent, per Census Bureau data. There are plenty of issues with how poverty gets measured in the U.S. As I wrote recently in Roundup:

Poverty in America is measured in two ways: via the Official Poverty Measure (OPM), which uses cash and cash-like government benefits (welfare and unemployment checks), and the Supplemental Poverty Measure (SPM), which factors in food stamps and tax credits. Depending on which measure you look at, you’ll get a different sense of how dire (or not) the situation is. For example, stimulus checks, expanded food stamp benefits, and expanded child tax credits were counted only under the SPM (not the OPM). When they expired last year, the poverty rate (as counted by the SPM) rose.

But the buried lede in all of this trouble with counting is that there are actually a lot of programs designed to take care of the needs of the American poor. WIC, for example, tends to be available to those with “a family income of at or below 185 percent of the U.S. poverty level”; 37 percent of WIC recipients are also enrolled in Medicaid but not Temporary Assistance for Needy Families (TANF) or SNAP; 31 percent of WIC recipients used both Medicaid and SNAP but not TANF; 4 percent use all mentioned programs.

None of this is to downplay the hardships or indignities of poverty. Rather, it is important for news outlets to accurately report what is really happening on the ground so that we don’t have a warped sense of the scale of the country’s problems. If fully half of American infants are starving or in danger of it—and if that money will soon be pulled because Congress can’t agree on appropriations bills—that would be a dire situation. Thankfully, that’s not really what’s happening, and there are generally multiple welfare programs that serve these groups at once.

Even if the government shuts down and WIC payments get temporarily suspended, the Supplemental Nutrition Assistance Program (SNAP) will still continue to cut checks for the needy, at least for the entire month of October, for example. The longest government shutdown in history lasted for 34 days, so it’s likely that SNAP would have enough runway to continue to administer benefits for the duration of the shutdown. Meanwhile, the Department of Housing and Urban Development says that it will continue to administer housing vouchers but that “the processing or closing of FHA-insured loans may be delayed.”

In other words: some of the programs that poor people rely on to scrape by may be temporarily halted or skeletal in staffing, but basic necessities will, in some form, remain available. Media outlets and politicians looking to score points should not claim otherwise.

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