Economics Lesson _ (Oct. 4, 2023)

 After prayers this morning, I took a look at the economic charts, graphs for the future. 

It just does not look good.....Too many people are coming on Bloomberg, CNBC, Fox Business and are talking about the " Soft Landing." 

Sadly, most of the time, these "so-called" experts talk about a " Soft Landing," there is a recession coming.

Now how deep a recession, or how long, well, I do not know and neither do they. I am not going to speculate on the recession long lasting economic impact. 

Right now, we have not felt the full impact of the Federal Reserve's raising of the interest rate. 

I know they are talking like housing mortgages, the traditional 30 mortgage is going to be over 8%, the way the interest rates are trending. 

Simple math going from 3% to 8% interest means, even with a 20% down payment, on a $400,000 house, you would be paying $900+ more a month. 

And good lord, have you looked at the prices of pick-up trucks right now? And with 7-8% rates. Who can afford a truck, and people are buying them with 8-9-10 year note payments. 

Glad I drive a beater, and looked yesterday, and only have put 700 miles on my Honda since June. ( I am sure if and when we buy a vehicle again, it'll be a Toyota Corolla or a Honda Civic, something like that.)

Then there are the numbers being produced by the National Bureau of Economic Research, everything they show has an economic downturn by late 2023-early 2024. 

There are also several things that also playing into a poor economy....

1. Oil Prices. Blame the Russians and the Saudis here. They've cut production. ( Neither are America's friend)

2. The present UAW strike again Chrysler( I refuse to call it whatever it is called now), GM, and Ford. It is costing the economy, so far, $5 billion dollars and I am not so sure the Big 3 auto makers are not using the strike to drive up car prices. 

3. Student Loan Resumption.  This is not the blog to debate the cost of college, but with people having to start back paying college loans, how much money being put into the economy before, is now gone? 

4. The government shutdown. Say what you want, in 45 days, the Congress is looking at the US Government shutting down. How much money will be removed from the economy if the idiots on Capitol Hill don't get their act together?

Banks are also starting to look at loans. Many banks are giving few loans to people, especially in the business world, at the small business start-up level. Say what you will, most business in America is at the small business level. Heck, some banks are looking at and questioning loans to even larger business customers. 

Finally, the consumer has in fact kept us out of the recession, so far, trouble is, so many are buying, using their Visa, Mastercard, Discover cards. And the limits are running out. What happens then, is people will stop buying frivolous items?  Already repossessions on cars are at an increase ......Later this week, I may discuss China and what it may do to the American economy....The Chinese have built a BILLION homes with no one to occupy them. The Chinese economic system is in trouble.