Readings/Reports vs Reality - The Math Isn't Math-ing

The Federal Reserve Is Reading Their Wallet, Not The Common Wallet..

One of the things that I felt that we could see with the other side of the pandemic is that we would see a great reset. Which in retrospect, we have. There are some good things to it and some not-so-good things to it. 

Like most, people learn some insight about personal finance/money from their childhood/parents - so did I. But it becomes interesting when you have a different “test” on top of what you were taught. Mine came in 2010 when I found myself unemployed during one of the biggest economic pains of our time. I found myself unemployed for years, with no savings, technically with college still under my fingernails, and a dwindling retirement account due to withdrawing more than I wanted. My parents went through their hardships, but this battleship I was dealing with was the assist to my persistence in talking about money. 

Don’t worry, I’m going somewhere with this.

I learned about money when I didn’t have any or enough to survive. Yet, I started watching more about the economy - especially about the unemployment numbers. Some of the readings weren’t matching up with the reality which I and millions of Americans were experiencing. The claims numbers they were sharing didn’t match what Americans claimed was going on. The statistics can be screwed to tell the story which you want to showcase. Data tells the decision is often what I said in Corporate America, I’m now saying the same when looking at the information within the readings and reports that shows the pulse of the economy. 

Fast forward to this pandemic of an economy. We find ourselves with the following: 

• CPI inflation is at its lowest point since April 2021.

• First Core CPI inflation dropped below 5.0% since December 2021.

• (The “core" basis, which strips out the more volatile costs of food and gas, prices in June climbed 4.8% vs 0.2% over last year.

• While the readings show the cooling is happening in the Federal Reserve wallets, the core of it all is still showing certain variables to be up.)

• Fed “paused” interest rate hikes at the last meeting.

• The first job report missed in 15 months, while millions find themselves laid off or looking for a better role to fill the gap that inflation continues to place on wallets.

• GDP looks fine while treasures look mixed, but while a recession isn’t being declared, personal recessions are hitting those I mentioned in the sentence before. 

• Real Estate is confused due to mortgage rates and commercial looking in a state of confusion. The affordability of homes and land is going out the window due to interest rates on top of inflation.

• Affirmative Action and Student Loan Forgiveness is a nice to have that looks like we will not have it. 

• In June, US Government spending “unexpectedly” jumped 15%.

• Also even if it doesn’t feel like it, the WSJ shared that wages are moving up as inflation moves down. Inflation-adjusted average hourly wages rose 1.2% in June from a year earlier per the Labor Department. At the same time, we saw where consumer spending is down. Wages are up to match the energy of inflation still being seen even while we aren’t kicking up our spending.

Things aren’t adding up like a calculator.

When watching some of the latest moves from the Federal Reserve to fix the wound that we have been dealing with even before Rona, I thought about who’s wallet was J.Pow and company worried about or trying to ‘help’. 

The Federal Reserve is more worried about the wallets of their own corporations, and the 1% while being out of touch with how even the readings are not reading the rooms of Americans' wallets. They are more focused on looking like they are making things right vs giving the reality that the things above and more are still bodying how Americans earn, spend, save, and invest. Even though inflation seems to be slowing, it is also slowing how fast we spend due to costs still being high as hell. 

Yes, two things can be correct at the same time - it’s doing an injustice to only look at one room but not what’s going on in the whole house (of the economy). Why are we only reading one room to ignore the rooms of what’s going on with consumers and the rest of the world? The pause or/and hikes we could see in the future would benefit the wallet or face of the Federal Reserve but not necessarily the wallet consumers. Wages are up but if inflation comes at it with an uppercut, can consumers actually feel it the increase?

The reports of how much credit card debt Americans have or people using BNPL to buy groceries to cut retirement contributions due to inflation and the list goes on. They can’t pause payments like mortgage or rent while the pause we did have on student loans is about to be a thing of the past. It’s legit giving the tale of two economies. The Federal Reserve is trying to course correct the economy going into a recession while there are people in the thick of their own no matter the employment status. 

Food for thought: could the economy be actually strong if we are skipping leg day to work out systems to help Americans? 

They say a watched pot doesn't boil - so maybe the ignoring of the reality of the reading could be what they are doing to avoid how bad it truly is. No?