America Goes On A Buyer's Strike: Explosive Inflation Leads To Record Collapse In Home, Car Purchase Plans

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America Goes On A Buyer's Strike: Explosive Inflation Leads To Record Collapse In Home, Car Purchase Plans



America Goes On A Buyer's Strike: Explosive Inflation Leads To Record Collapse In Home, Car Purchase Plans
Tyler Durden's Photo

BY TYLER DURDEN
FRIDAY, JUL 16, 2021 - 12:31 PM
For the past several months we have warned about the pernicious effects soaring prices are having on both corporations ("Buckle Up! Inflation Is Here!") and consumers (""This Is Not Transitory": Hyperinflation Fears Are Soaring Across America"), prompting even otherwise boring sellside research to get (hyper) exciting, with Deutsche Bank (which warned this week that "Inflation Is About To Explode "Leaving Global Economies Sitting On A Time Bomb"") and Bank of America (which "Just Threw Up All Over The Fed's "Transitory" Argument") now openly claiming that the Fed is wrong, and the US is facing an unprecedented period of far higher, non-transitory inflation, with DB going so far as to warn "policymakers will face the most challenging years since the Volcker/Reagan period in the 1980s."
But none of this has spooked the Fed into conceding - or believing - that inflation is anything more than transitory. And maybe just this once, the Fed has a point because all else equal, by which we mean lack of rising wages, the best cure to higher prices is, well, higher prices.
Presenting Exhibit A
: Last month we observed that anticipating an end to Biden's stimmy bonanza end and that soon they will have to live again within their means, Americans' buying intentions (6 months from today) as measured by the Conference Board, had cratered across the 3 major spending categories: homes, automobiles and major household appliances.

The drop was so massive, it amounted to the biggest one-month drop in intentions to purchase appliances...

... and homes...

This confirms what we noted earlier, namely a record divergence between crashing homebuyer confidence (due to record home prices) and soaring homebuilder confidence (also due to record home prices). Guess which one will matter in the end.

Fast forward to today when we just got Exhibit B: the June UMichigan Sentiment Survey. Here things quickly got ugly, because not only did all the sentiment indicators miss across the board...

... but in a stark reversal of last month's "good news" when inflation expectations dropped slightly, in the preliminary July number, 1 year inflation expectations unexpectedly exploded higher, from 4.3% to 4.8%, surpassing the May high and printing at the highest level since June 2008 (confirming the NY Fed's own survey of consumer expectations that this is anything but transitory), with 5-10 year inflation expectations also rising from 2.8% to 2.9%, pouring cold water on any "transitory" argument.

But what we found even more concerning is what chief economist, Richard Curtin said namely that "rather than job creation, halting and reversing an accelerating inflation rate has now become a top concern." As Curtin adds, "Inflation has put added pressure on living standards, especially on lower and middle income households, and caused postponement of large discretionary purchases, especially among upper income households."
It gets worse because as the UMich director notes next, "consumers’ complaints about rising prices on homes, vehicles, and household durables has reached an all-time record."

This can also be seen in the following chart showing records across the board for "bad buying conditions" due to high prices for houses, durable goods and autos. In other words, due to soaring prices, America is going on a buyers' strike!

The silver lining is that so far, excess savings from trillions in stimmies have successfully offset this looming threat. As Curtin elaborates, "purchase rates have benefitted from record increases in accumulated savings and reserve funds" but as he concedes, "a critical issue is whether consumers will find greater value in keeping a significant portion of their savings as a precautionary hedge, or spending a significant portion in an effort to avoid their inflationary erosion and to benefit from buying-in-advance of increasing market prices."
The mask will quickly fall away however, giving way to a full blown stagflation in early 2022, if inflation is not transitory, and here is Curtin admitting just that: "the precautionary impulse will quickly fade if the β€œtransitory” spike in inflation extended into 2022." Meanwhile, "resurgent consumer spending propelled by fiscal stimulus is likely to increase inflation" while "small policy steps could now have a large impact on ending inflationary psychology."
This means that another round of stimmies - which is what the current round of Delta strain fearmongering is all about - could actually have negative consequences this time.
But wait, it gets worse: as Curtin admits, this time may indeed be different, because "every instance of a comparable rise in near-term inflation expectations since 1990 was eventually countered by the maintenance of a much lower expected long-term inflation rate" something we have not yet seen this cycle. That's because "the factors that now underlie the recent surge in inflation are quite unique. A rising inflation in the months ahead may convince consumers that they underestimated its eventual rise, causing them to revise how high it will climb and how long the inflation runup will last."
In other words, if the Fed is wrong that inflation is "transitory", then the US economy is about to suffer a very painful hard-landing. Not only that, but the last trace of Fed "credibility" will be erased.
Oh, and for those saying wage hikes may be permanent we have some bad news: employers know very well that the extended unemployment benefits bonanza ends in September at which point millions of currently unemployed workers will flood back into the labor force sending wages sharply lower, and is why instead of raising base pay, most potential employers offer one-time bonuses, which - as the name implies - are one-time. As for higher wage pressures, well... just wait until October when everything reverses, Uncle Sam is no longer a better paying competitor to the US private sector, and wages slump.
What does that mean for the economy? Well, all those producers and retailers who got used to bumper demand and pushed their prices sharply and not so sharply higher, will face a stark choice: either drag prices right back down, or sell far fewer goods and services. That, or just await the next bailout.
One thing is certain: six months from today - if today's soaring inflation has not faded away - the US economy will be far, far uglier.
 

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CuzinEd

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Have you been living under a rock on Mars? Car and home sales have been down for about a decade now. At least since the early 2010's. Why do you think rent is so high? Cause no one is buying homes and everyone is renting. That's why the construction trade took a big hit and is still shit. No one was building houses anymore and stores are closing down all over the place, since at least 2009-2010, it's been that way for a while now.

Also millennials don't buy cars. They do ride sharing. One person buys a car and then they all share it and pitch in with the payments. Also many millennials don't even drive. Tucker Carlson reported a while ago that more women have their drivers license now than men. Some of the millennials don't even have a license. They just use Uber or Lyft. Also some them can't even afford a car. Most millennials are lower middle class. That's a car payment that's usually about $200-250 a month or more plus an insurance payment.

The inflation isn't that explosive. I have already seen some of it. Stuff went up a few dollars. People are acting like were all going to be taking wheelbarrows full of dollars to a grocery store to buy a can a soup and a loaf of bread. That's hyperinflation. What we are seeing now is no where close to that. We are seeing normal inflation that happens all the time. Especially after money is printed.

There isn't going to be an economic collapse. You aren't going to collapse your way out of this.

OmG gUyZ tHe EcOnOmY iS gOiNg To CoLlApSe ToMoRrow. LOLOLOLOLOLOLOLOL
 

zuckerborglol

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Have you been living under a rock on Mars? Car and home sales have been down for about a decade now. At least since the early 2010's. Why do you think rent is so high? Cause no one is buying homes and everyone is renting. That's why the construction trade took a big hit and is still shit. No one was building houses anymore and stores are closing down all over the place, since at least 2009-2010, it's been that way for a while now.

Also millennials don't buy cars. They do ride sharing. One person buys a car and then they all share it and pitch in with the payments. Also many millennials don't even drive. Tucker Carlson reported a while ago that more women have their drivers license now than men. Some of the millennials don't even have a license. They just use Uber or Lyft. Also some them can't even afford a car. Most millennials are lower middle class. That's a car payment that's usually about $200-250 a month or more plus an insurance payment.

The inflation isn't that explosive. I have already seen some of it. Stuff went up a few dollars. People are acting like were all going to be taking wheelbarrows full of dollars to a grocery store to buy a can a soup and a loaf of bread. That's hyperinflation. What we are seeing now is no where close to that. We are seeing normal inflation that happens all the time. Especially after money is printed.

There isn't going to be an economic collapse. You aren't going to collapse your way out of this.

OmG gUyZ tHe EcOnOmY iS gOiNg To CoLlApSe ToMoRrow. LOLOLOLOLOLOLOLOL
You put a lot of effort into being wrong all the time.
 

CuzinEd

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You put a lot of effort into being wrong all the time.
No, I am not wrong.

Here is a little fun fact for you dummy.

You could pay off a car in 5 years. But for nearly a decade now they advertise that you can take 6-7 years to pay off a car. It's been that way for a nearly a decade now. They have been begging people to buy cars for nearly a decade. Even lengthening the amount of time so you can make smaller payments. Why? Cause no one is buying cars.

People not buying cars isn't a sign of anything, other than the US economy being shit. People didn't just stop buying cars as soon as Beijing Biden became president. It's been going on for a long time.
 

Gio

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I think inflation is going to start cooling off in the short term since the stimulus is running out. I think the fed will wait for a correction before it starts printing again. Many commodities are showing signs of weakness already. I think inflation will really start picking up in the next 2-3 years
 
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Panzerhund

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Cause no one is buying homes and everyone is renting. That's why the construction trade took a big hit and is still shit. No one was building houses anymore and stores are closing down all over the place, since at least 2009-2010, it's been that way for a while now.
Citation needed!

Construction of new homes is all I see and hear.
 

Highlander

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I kept telling everyone that despite the influx of subpar service jobs out there, the economy is still tanking.

Modern wages are worse than slavery and should be considered certified White serfdom.

Even if Trump had remained in office, nothing would've changed.
 

WOSS

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Has anyone been to a doctors offfice lately? They’re switching to the hand pumped blood pressure test sleeve. Shits regressing all over on the tech front. The more billion dollar multinationals scoop up, the more trad lifestyle people will regress to
 

WOSS

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No, I am not wrong.

Here is a little fun fact for you dummy.

You could pay off a car in 5 years. But for nearly a decade now they advertise that you can take 6-7 years to pay off a car. It's been that way for a nearly a decade now. They have been begging people to buy cars for nearly a decade. Even lengthening the amount of time so you can make smaller payments. Why? Cause no one is buying cars.

People not buying cars isn't a sign of anything, other than the US economy being shit. People didn't just stop buying cars as soon as Beijing Biden became president. It's been going on for a long time.
The economy is so shit rent is going up $200 a year here. Even undesirable places with nothing but food service jobs are seeing the same rent increases. Someone must be paying for it.

Zooners are going to be so poor they are going to have to rent tents and bicycles and hate the millennials who were able to buy those luxuries outright. Haha, we’re laughing all the way to hell
 

Im the horse

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Citation needed!

Construction of new homes is all I see and hear.
Me too. They can’t slap those shoddily built dumps up quickly enough around here. 3-400k for literal garbage. But this is a white area in a free-ish state so all the Yankees and other assorted scum are flooding in. The virtue signaling and leftist shit is already starting, of course. Much better to do that from a safe white conservative area, apparently.
 

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WOSS

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Citation needed!

Construction of new homes is all I see and hear.
That has drastically slowed down with the lumber shortage here, but in many cases the damage was already done as dot heads and nigs littler the landscape with shitting streets and nightly firework displays. Pray towards yellow stone. It is our only hope.

King Jesus we plead you for a righteous fire
 

AquinasJohnPaul

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No, I am not wrong.

Here is a little fun fact for you dummy.

You could pay off a car in 5 years. But for nearly a decade now they advertise that you can take 6-7 years to pay off a car. It's been that way for a nearly a decade now. They have been begging people to buy cars for nearly a decade. Even lengthening the amount of time so you can make smaller payments. Why? Cause no one is buying cars.

People not buying cars isn't a sign of anything, other than the US economy being shit. People didn't just stop buying cars as soon as Beijing Biden became president. It's been going on for a long time.
What, no double post that time?

If I were a mod I'd ban you until you stop being a faggot retard who can't stop double posting.
 

HairMoccasins

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The economy is so shit rent is going up $200 a year here. Even undesirable places with nothing but food service jobs are seeing the same rent increases. Someone must be paying for it.

Zooners are going to be so poor they are going to have to rent tents and bicycles and hate the millennials who were able to buy those luxuries outright. Haha, we’re laughing all the way to hell
I get the feeling they will hate us like we hate the boomers.


Even lengthening the amount of time so you can make smaller payments. Why? Cause no one is buying cars
Its not because they are desperate.
More payments=more interest collected on loans.
 

Italo-Canadian

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But this is a white area in a free-ish state so all the Yankees and other assorted scum are flooding in. The virtue signaling and leftist shit is already starting, of course.
I see this with Sicilians; a lot of them after leaving Italy or moving to a different part of Italy remain the shitty people they were back home; they don't stop to think that the reason why Italians or anyone who knows about Sicilians finds them disagreeable is because they're antisocial. They need to change their mode of thinking, which is easier said than done.
 

adolfschicklgruber

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Go try to buy a graphics card with a supposed 300 dollar retail price. 9 mill ammo has settled around 35 c a round…for cheap shit. β€œA few dollars” my ass; try triple the price or more on almost everything. Food is being kept fairly affordable because that’s how the revolution starts.
 

Italo-Canadian

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Food is being kept fairly affordable because that’s how the revolution starts.
The Chinese and American governments are suppressing food inflation for the time being, but with droughts in many parts of the world that are major agricultural commodity producers, this will change quickly soon. China's been buying massive quantities of corn and soybeans.
 

Morgan Harvestein

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Like an erect penis about to ram into an anus and use the rectum to ejaculate into the feces because those are our values????

😬 Yikes! I've been reading too much Daily Stormer lately...
that escalated quickly
 

Jjames

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Zooners are going to be so poor they are going to have to rent tents and bicycles
Our billionaire one percenter globalist leaders probably saw that the servants in the Indian hotels were living in cardboard shacks in the alleys between the high rise buildings in downtown street shitter cities and actually manage to show up to work with pressed uniforms and they were like "Hell Yeah, that's what we need back in the good old USA".
 

WOSS

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return to tradition
In Dublin, Ireland, the need for housing was increasing rapidly due to the wealth of the city. At this point the government became involved in creating housing for all the new orphans and foundlings. However, this institution was more like a jail rather than a home for the children living on the streets. In the late eighteenth century the governors of Dublin created a house for the children: β€œThe governors also resolved that, thenceforth, illegitimate children born in the house would be taken to the foundling institution immediately after birth…the governors further decided that other children accompanied by their mothers would be taken from the mother in every instance where the Visitor decided that she had not finished her daily task to his satisfaction”
https://webpage.pace.edu/nreagin/tempmotherhood/spring2002e/Orphans of Europe.html
 
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