Eric Basmajian

The 20% of the Economy That Drives 100% of Recessions Why conventional analysis fails — and the three sectors you should actually be watching. blog.epbresearch.com/p/the-20-of-th…

"Florida housing" is not one market. Ocala, Panama City, and Punta Gorda have active inventory 60%+ above the 2018/2019 baseline. Miami, Naples, and Key West are still below. Same state. Opposite conditions. The divergence is the story that is building.

@rev_cap @NickTimiraos @stevehou What’s normal has changed. We’ll see if this expansion ends with a positive or negative real rate average.

@NickTimiraos @stevehou If you look at any period of history other than 2010-19, interest rates now are finally in a normal place, and given core PCE is 3% and moving higher, by any historical benchmark or actual rule of policy, interest rates should be moving higher too What was abnormal was 2020-21

Can we really call it an “era” much less “easy”? Those rate cuts felt begrudging, painful, and controversial the whole way through. [god, just look at how much they aged poor Jay Powell, who’s still being sued for a remodeling cost overrun.] The Republicans hated the first three cuts, esp that first jumbo cut drove them mad, cried hell and swore it would cause the repeat of 70s. The melodrama was insane. Ended up fine. Then Trump won the same Republicans that hated the first three cuts now cried foul again. They complained the Fed was “too late” and wasn’t cutting enough, and that it was “unfair” and “political”. Meanwhile the Dems started disliking the cuts also complaining that inflation was a rising risk. And just to prove their point, the Dems and their upper middle class voters spent money on restaurants and holidays and brought inflation back. So now, we are stuck, long term rates are barely lower, we’ve got higher prices, stubborn inflation, tariffs, a war with Iran with surging gas prices, and everybody is unhappy. Except Jensen. Jensen seems really happy. He’s living the dream, selling 75% margin GPU chips to everybody even the Chinese. He’s jetting to Taiwan to slurp Taiwanese beef noodles every other month. There’s a lesson in all this. I just haven’t figured it out yet.

Supply shocks are a nightmare for the Fed with a dual mandate.

Higher inflation estimates with the same rate path imply a less restrictive real policy rate in the near term.

While consumer spending represents 70% of the US economy, the portion that is truly cyclical is only about 16%. Source: @EPBResearch

While consumer spending represents 70% of the US economy, the portion that is truly cyclical is only about 16%. @EPBResearch @augurinfinity augurdigest.com/p/augur-digest…

👇This is the way (to look at marginal consumer spending) spot on, again @EPBResearch !

Consumer spending is 70% of GDP. This number gets cited constantly as proof that the consumer “drives” the business cycle. Here is what that 70% actually looks like when you break it down… Less than 20% really matters. 1/

“The economy is 70% consumption” is true, but it wildly overstates how much the “consumer” really drives business cycles. The business cycle is really driven by a narrow slice of the economy: blog.epbresearch.com/p/the-20-of-th… 7/7

Motor vehicle consumption swings from 8.4% growth in expansions to -4.8% in recessions. That is a swing factor. 6/

Financial services & insurance: 7% of spending Average expansion growth rate: 3.6% Average recession growth rate: 5.2% 4/

Health care: 18% of spending Average expansion growth rate: 3.8% Average recession growth rate: 3.5% Essentially no difference. 3/

Housing and utilities: 16% of spending Average expansion growth rate: 2.9% Average recession growth rate: 2.0% 2/

The US-Iran conflict has reignited recession fears. Here's what the data from five decades of geopolitical shocks actually shows about when or how these events matter.

A simplified visual of supply shocks and the impact on growth, inflation & Fed policy.

First podcast back from my health related hiatus. It was great to catch up with @davidlin_TV youtu.be/p-9rjdU5X08?si…