저자: 미상 · 외국인
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Beige Book(연준 지역 경기보고서)이 2022~2024년 들어 가장 나쁘다는 주장. 12개 연은 중 10곳이 노동시장 냉각·약화, 소비 둔화(저소득층 신용의존·BNPL 증가), 제조업 감소를 보고. 실업수당청구 분기 변화율이 20% 넘으면 경기침체 신호인데 아직 16.5% 수준이라 향후 1~2분기 급증 가능성 경고. 임금·물가 압력은 대체로 완화. 경기침체 시 연준 대폭 금리인하 예상, 금리민감주에 우호적이라는 입장(약세 경기침체 전망, 역설적 강세 관점).
다듬은 글
Well, folks, this is officially the worst Beige Book I've read since this hardening cycle began . The Beige Book is a report published by the Federal Reserve that offers perspectives from its 12 member banks on what is happening in the economy. And well, let's just say things are starting to get bad.
In fact, it is almost the exact opposite of what we saw in December 2021, when the Federal Reserve based its rate hike regime on the explosive growth of each of these 12 districts. Now, before we get into the Beige Book, which we will, I want to draw your attention to something we're discussing this morning on the market opening live stream, and it's precisely this.
What you see here is a graph of initial unemployment claims. It's old news to say that unemployment data is delayed and that we don't receive it until it's too late. But what is very , very interesting is that if you look at the change from monthly to quarterly, they are more or less the same, but in this case, in fact, we used the quarterly change.
If you look at the quarterly change in unemployment claims, as soon as you saw a movement of 20% or more in quarterly claims, we were practically already in a recession. And the end of the recession aligns almost perfectly with the peak of unemployment claims. So you can see peak, peak, peak, peak, peak and then the gray bar, obviously, means the end.
Now, what you'll notice is that, at least until today, we do n't actually have any indication that unemployment claims have skyrocketed. Which means that, before we get into the Beige Book, it's worth noting that over the next one to two quarters, we could really see a substantial increase in unemployment claims.
One must be careful when viewing these figures and not look at them on a weekly basis, precisely because they are very volatile. But when you reduce this to a quarterly basis, you can see here, look, we've had a small uptick. We went from about 206,000 unemployment claims to 240,000. But wait a minute, 240,000 over 206,000 is approximately 16.5%.
We have not yet seen that movement exceeding 20%. Expand that and remove the COVID effect from it. Look at this throughout history. When the peaks occur, the big peaks, not the COVID-type peaks, but the big peaks in quarterly periods, they come quickly and suddenly, indicating that we are in a recession.
Every time there was a big spike, we were in a recession. We haven't had that big peak yet. They were in a recession . So they had small upticks like this one of 10 to 15%. Those were not indicators of recession. We discovered that they have to exceed 20%. We haven't seen that yet, but it can happen very quickly.
And the reason I mention this in relation to the Beige Book is that we're going to review the Beige Book from the bottom up. So basically, we'll start in the San Francisco district and work our way up. And I want you to see some of the things we've highlighted here in the Beige Book. By the way, I have the Beige Book linked on ehack.com, which, again, is where I provide all the value I can for free because that makes me happy.
So, what do we have here? San Francisco. I'll give you the summaries and we'll analyze specific parts of some areas, but I want you to pay attention to a theme that's happening in all of them. In fact, I'm going to write a short record. Every time we hear about work weakness, we'll make a small mark.
And whenever we hear about inflationary pressures outside of isolated pressures, I mean, like everything is getting more expensive, right? That matters. We'll write a short note. Insurance doesn't matter that much, mainly because yes, everyone has to pay for insurance, but it's an extremely lagging indicator .
Many people don't understand this. So I guess what we could do is give a quick little example of what this might look like. So, when you think about being an insurance company, I want you to reflect for a moment. Let's say it's January and you pay for insurance for someone or give someone an insurance policy for 12 months, right?
Very common. Some insurance contracts are signed for longer periods, but I would say that most are probably 12-month policies. Okay, let's say that suddenly whatever it is you 're insuring, let's say it's building materials, okay? Let's say there's a rapid inflation in construction materials in March.
Then, suddenly, we'll put a little X here or an asterisk here. And we will call it the inflationary impetus for construction materials. When will we really start seeing higher prices for building materials? Will we see it immediately in March? Well, no . Because even if lumber prices rise, sellers need time to adjust those prices.
So there will be a lag between an inflationary impulse and actual inflation in commodities such as copper, timber and others, especially because many are bought under contract, sometimes 6 to 18 weeks in advance. So there could be another delay here of, you know, 2, 3, 4 months, whatever. Let's say you do n't really start to see an increase in inflationary prices until the second half of that 12- month period.
Well, you won't see a full year of higher costs until you get to the following year. So, let's say, for example, this is year one, okay? You won't really see a full year's worth of those higher costs until the following year. So , in year two, you'll say, "Wait a minute, we just had a whole year of higher costs compared to the previous year." Wow, that's a lot.
Do you know what we're going to do? We'll have to raise our premiums for year three because everything has become more expensive. So , from the inflationary surge until prices rise and insurance premiums increase, there is probably a lag of at least 12 to 18 months, but not everyone took out their insurance in January.
So it could take another 6 to 12 months for everyone to adjust to the higher rates. So when I hear people talking about inflation insurance, I think: do they realize it's one of the most lagging indicators of inflation there is? Motor vehicle insurance, health insurance, these are huge laggards. Okay, now that we've got that out of the way, let's move on to San Francisco.
So, what does Saint Francis tell us? This is the entire west side. It's not just San Francisco. This includes Southern California and other parts. Anyway, we'll review some of this. So, what do we have here ? The availability of labor improved. Ah, okay. Then, the availability of labor improved. Good.
Well, that's not necessarily a bad catalyst, is it? But it's a form of work relaxation. So we'll mark a point for workplace relaxation. Price pressures eased. The residential real estate sector weakened even further. Drop in job turnover. So, fewer people are quitting or being laid off at this time.
Wage increases are returning to normal levels. Therefore, there is no wage and price spiral. There is no wage pressure. Multifamily vacancies are increasing and rents are falling. This is a big problem that many people are not paying attention to. But when we start to see price pressures decrease in the residential real estate sector, especially in multi-family properties, we need to be very cautious because if you want to buy a multi-family property, I want you to know this.
When you buy a multi-family home, it's like insurance, but in reverse. You could be that carefree, happy multi-family home buyer . And this is something we are studying daily with House Hack. And the seller says, "Hey, look how beautiful my income has been for the last 12 months." And you think, " Wow, I feel like I'm doing a good job based on the last 12 months ." Brilliant.
But what are today's rents? How has property been managed lately? How many concessions have been made in the last 12 months? And how many broken promises have been made in the last 12 months? And what will that mean for your next 12 months? That could make you very sad. So you have to be very careful with multi-family buildings, especially when rents are starting to fall.
If you look at Zillow's rental market trends, you 're literally seeing rents collapse in certain areas. I mean, we're talking about if the average rent is around $2,500, you're seeing rents drop between $200 and $400 . So, we're talking about drops of 10 to 20% in rents. He's quite aggressive. Well, that's San Francisco.
That's the San Francisco district. Oh, but it gets much more entertaining. And soon they'll be paying attention to something that's really causing concern here. Dallas, what does Dallas say? Although bankers remain pessimistic and expect future business activity and loan demand to decline, the slowdown is expected to be milder than in previous expectations or cycles.
Wait a minute. That's literally what they say in every damn recession. In every recession they say, "Yes, you know , we're going into a recession, but don't worry, it won't be as bad as the last time." Okay, what else are we hearing in other sectors? Okay, we hear about weakened demand , a neutral to pessimistic outlook, and moderate wage growth.
Oh, that's the second district for moderate wage growth. So far, nothing about inflationary pressures or widespread increases, right? So, the increased demand for childcare means that more people are returning to work because they need to survive. Companies feel they have excess staff. Oh no, that's a prelude to layoffs.
Hello. Urgent Care said the wages are unsustainable. That is also a potential prelude to layoffs or longer waiting times. But some of these, many of these are anecdotes, remember? So we have to discard the lowest, the worst, and the highest anecdotes. Weakening of demand in general and simply observing the averages.
Weakening demand, some price growth in services, stable goods, expected price increases of three and a half percent this year. Many companies go in expecting price increases and then say, "Oh, wait a minute. Uh, the price increases were actually much smaller than expected." Like, for example, this morning I was reading on the market opening livestream , and someone was talking about General Mills, and they were saying, "Well, General Mills says they have pricing power and they can raise prices as much as they want." And it's funny because I'm thinking, "Dude, what earnings report are you reading?" "." Like, is it from one or two years ago?
" Turns out they were reading an earnings report from a year ago. Well, because you read General Mills' earnings report from less than a month ago. And what do they tell you? They say it's because our prices have basically kept pace with inflation. Now, they've responded to inflationary pressures, but they've been lagging behind inflation.
So, in other words, they can't even keep up with their prices because they'd lose too much demand. They'd sacrifice too much in volume, and that's not worth it for them. The retail sales outlook worsened. Manufacturing declined. That's not good. That's not a great report at all. Okay. How about the next district, Kansas?
Consumer spending fell. Even fast food declined. That was bad. Look at this. I have that highlighted, or I need to highlight it, right here. Contacts noted that sales volume at low-cost fast-food restaurants, which had been solid during previous downturns elsewhere, declined moderately. Brother, when people start cutting back on food and eating less, and food insecurity increases, that notion..." People are saying, " Oh yeah, well, people are still spending on food." Wrong.
They'll eat less because you basically start going hungry when you don't have enough money. This is awful. Like, this Beige Book is— this is very, very different. And I don't say that in the sense of " this time is different." I mean, this time is the same. I mean, it's really bad. It's telling you that a recession is just around the corner.
The Atlanta Fed's real GDP GDP Now indicator , which I put on e-hack.com, shows 2.4% for the last quarter. The last quarter. But I have a feeling that's going to plummet. So I'm kind of nervous about that. Anyway, loan demand weakened. Seasonal labor is subdued. Oh, there's another one . Notable reduction in labor utilization/hours worked.
Dude, a notable reduction in hours worked and labor utilization. That's not good. Consumer spending and the Discretionary saw substantial decreases. That's not good. What 's next? Let's move on to another one. You can read the whole document, by the way. On hack.com. It's linked there. I 'm just giving you the summary here.
And obviously adding commentary here . Minneapolis: Decreasing demand and earnings. Price increases were slight. Wage pressures continue to moderate. So nobody here is really talking about runaway inflation. Nobody is talking about a wage price spiral. Job offers remain flat or negative. Recent hiring demand slowed.
Uh-oh. There's another one. Four. Future demand is expected to increase. Ah, but remember, companies have expectations based on hope, but hope isn't reality. Okay. Hope isn't a strategy . They don't hire unless the candidate is perfect. Wage growth flattens, finally slows. Price increases are slight.
A substantial majority saw no price increases. The exodus from the private to the public sector has slowed. The High food prices are driving people to raise chickens and ducks and sell eggs on the side of the road. Dude, consumer spending has moderated. This is literally in the Beige Book. This is what the Fed bases its policy on.
Let's do another one. St. Louis. Mixed business activity, steady wage pressures , less urgency to hire. One company raised daycare prices by 10%. A brewery saw an increase in volume but a decrease in profits. So you have these anecdotal points, whether they're hotspots or very weak points. But overall, slower consumer spending, a slight decrease in manufacturing, less urgency to hire, and prices are still rising modestly.
Modestly is like, you know, maybe 2 or 3 percent or something like that. Steady wage pressures and less urgency to hire. Let's look a little more at labor here. Employment levels have remained unchanged. The labor market is still tight . Reports of easing. The urgency to hire has slowed. More companies are using Internships and apprenticeships.
Construction sources indicated an increase in new jobs due to flexibility . That's good. Up in jobs here. Wages have continued to grow slightly since our last report. Here's the daycare. The logistics company reported wages up 4 %, while a restaurant reported they rose even more, between 5% and 7%. This is a slightly warmer report.
So, I would say this is not a weak report. I'm not going to rank this one on the one-to- four scale. I would say this is, um, moderate. Okay. So, we'll put District Five here. I don't actually think they're District Five, but I'll call them moderate for this one. But it's certainly not a boom, right?
All right. Let's move on. So, that's the St. Louis district. What do we have in Chicago? Consumer spending slightly up, employment moderately up, prices and wages moderately up, labor market cooling. Oh, okay. We'll call that one down. Number six, uh, Wage pressures eased, rent concessions on the rise.
There it is again. Falling rents, stagnant manufacturing, no expectations of input problems or shortages. That's Chicago. A brief summary of what we have in the Atlanta district. Wage pressures eased even further. Hiring slowed. The labor market cooled. Very good. Well, there's another one. Lower demand for goods and services led to reduced hours and hiring demand.
That's not good. However, the president of this bank, I don't even think he's read his own Beige Book, because he says, "Oh yeah, we don't think we're going to cut until the third quarter," which would be like July. Brother, that would be a big mistake. You're going to have to cut fast. Anyway. Many companies are offering discounts and promotions.
Yet there is optimism . Optimism is not a strategy. Slower manufacturing, freight, insurance, and labor are still rising. Of course, they were rising before the pandemic. Many refer to The pre-pandemic situation, but that's not a surprise. Everything was more expensive before the pandemic. Richmond, consumers on the sidelines in the housing sector.
Demand for loans softened, price growth moderated, but it's still somewhat elevated compared to historical rates. Services rose 3.8%, manufacturing rose 2.8%. This was interesting. They showed price increases and expectations. So those were the price expectations. And those price expectations were 3.8 and 2.8, which is still a little warm in services.
I'll give them that. So, I'm going to list them as, uh, warm in services. We'll put number eight as warm in services. And let's see here. Okay, there we go. So, less price pass-through. It's a way of saying there's a limit; we're facing higher inflation, but there's a limit to how much we can pass on, right?
Retail demand went up a bit, but profits went down. That's when volumes start to plummet. So, did they say anything about labor? Here? Uh, labor, labor , labor. Okay, here we go. Labor market. So what do we have here? One company increased wages by 15% of total revenue, of total revenue. Okay, I don't know how, significantly reducing margins.
That's more or less an anecdote. One, that's an anecdote. Okay. What do we have at a broad level? It grew at a moderate pace. The tight labor market kept wage pressure on, causing several contacts to make operational changes. A company that manages parking lots reported likely price increases and a reduction in its services.
Then we have the specialized software company. Due to rising wages, this firm expects to cut investment plans, as they need to continue hiring higher-paid workers to meet demand. Other contacts reported expanding their talent tools to find workers. For example, an engineering firm hired engineers with no work experience and spent time training them .
Okay? In other words, they're still struggling to find labor here. Okay. So, let's also mark this district as one that It still has a few more challenges with labor. So , although we could see, hey, Richmond, this is like your area of Virginia, not as bad as some of the others we 've seen. Price growth has moderated a bit.
You see a slowdown here, but this region doesn't look particularly bad. This seems to be one of those that's still moving forward. So, we'll put them in moderate for number eight. There it is. Good. So, number nine. Let's see where we're going to put number nine. This is the Chicago district. Bankers aren't developing projects like they used to .
Clients have increased their use of BNPL. Okay. This is bad. This supports my thesis that if we have a recession without job losses, people will be heavily in debt. Credit card spending is higher than it was. And credit card delinquency, let's look at that quickly. Delinquency, St. Louis, Fred, let's look at this, is higher than it was before the pandemic.
Look at this. Credit delinquency is already It's rising, and unemployment is at historic lows right now. I mean , we have historic low unemployment, but credit card delinquency rates are already higher than at any time since 2012. So now, yes, there are still hot coals in this "Beige Book," but combine that with the weakness you're starting to see.
They talk about increased use of BNPL, strong sales on discounted items but not others, jobs being replaced by automation, people being laid off to adjust staffing, expecting 3% wage growth, but companies skeptical that spending will hold given the high use of credit and BNPL. But we're optimistic. That doesn't sound good.
It's certainly not labor pressure, and it's certainly not inflationary pressure. In fact, we only have one region that has been slightly hot on inflation so far. We have two that have moderate labor. Everyone else is saying the labor market is going to hell. This is just the beginning. As if the layoff cycle hasn't started yet.
It could happen over the course of One quarter. We might see unemployment claims that came in low today, but they could change just as quickly. Here's how it works. Step one, optimism disappears. So we have bad GDP readings or bad sales in the first quarter. Optimism disappears. Then come the layoffs.
When the layoffs come, unemployment claims skyrocket. Boom, we're in a recession. Big rate cuts at the Federal Reserve . Who benefits from that? The poor or the rich? Well, frankly, probably the richest people. People with exposure to assets, real estate, stocks, and interest rate-sensitive shares. Who gets left behind?
The poor. The rate cuts really won't help. Okay, it's all trickle-down, huh? So, we have the next one. That was nine. So this should be ten. In Philadelphia, business credit tightened. More credit card use again. Wage and price inflation appeared to slow even further. Again, less inflationary pressure.
No wage and price spiral. Tourism declined slightly. The Lower-income earners can't afford cars. Manufacturers reported fewer workers and reduced working hours . Boom. Another sign of labor market weakness. Lower-income earners paid more on credit and spent less. Shorter workweek. More selective hiring.
Decline in employment. Wage pressures eased. Manufacturing in modest decline. Consumer spending in modest decline. Resistance to upward price increases. Doesn't sound good. I mean, I know we can look at a couple of sectors—well, a couple of regions, I guess we should call them, not sectors. I keep thinking about that German Coast Guard commercial on YouTube.
It's a good one. If you haven't seen it yet, it's a great meme. German Coast Guard. Coast Guard. What are you thinking? You'll have to see it . Okay. But anyway, the Federal Reserve Bank of New York reports declines in employment. Labor market conditions cooled but remain solid. Inflationary pressures barely changed.
Prices are rising modestly. Manufacturing It fell sharply. A slight increase in services, business services firms indicated a decline, and personal services pointed to a sharp contraction. RIP job declines. Mark them down. 11. Sharp contraction in personal services. That contributes to underlying inflation.
Not good. Not good. This is a bad Beige Book. It's the worst I've seen so far. Boston's economic activity declined slightly on average. Employment remained steady on average. Wage growth remained moderate. Hiring became easier, overall. Employment remained steady on average. Above-average wage increases to offset price inflation.
Online prices stabilizing, weaker demand for semiconductors and computers was what we had here. Let's look at the labor market. Stable employment, moderate wage growth. Uh, the count in hospitality and retail sales increased slightly, while employment remained unchanged in IT firms. Hiring became easier.
Okay, I'll mark that down . 12. IT firms applied above-average wage increases to, uh, offset price inflation. So There's a bit of wage pressure here. I'm going to note that down. So, we had one with a warm inflation report in services, one with wage pressures— uh, tepid wage pressures, let's call it that.
So, out of all the districts, because that's it. That 's the Beige Book for you. Out of each of the districts, what did we get from the Beige Book? We had 10 that said the labor market was cooling and weakening. Two that said there was a warm labor market , one that mentioned tepid wage pressures, and one that reported inflation in services.
All the others reported no inflationary pressures or low pressures. If anything, employment is cooling rapidly, and parts of the economy are starting to cool very quickly, so it probably won't be long before unemployment claims spike. And again, I'm concerned because even though we know unemployment is a lagging indicator, what I 'm mentioning now is a leading indicator of what's to come.
These reports, these anecdotes, the change Over time, the Beige Book, being a bad Beige Book, is not good. I honestly think what we should do—because frankly, I think it would be very helpful— is conduct a thought experiment. Let's pick a Beige Book at random. Okay. So, what we'll do is go to my GoodNotes.
That's where all my old stuff is. I don't use GoodNotes anymore, but I'm going to go to GoodNotes. And we'll type "beige book." And what we'll do is search for an archived "beige book ." Ah, here's one. 11 months ago. Good. So, we go to the "beige book" and the summary, because we don't want to read the whole thing.
And also, it's highlighted . We'll go to the January 2023 "beige book." Okay. So, what do we have here? The labor market. Oh my god. Employment continued to grow at a modest to moderate rate in most districts. Only one reported a decline in employment. Good heavens. We literally went from one reporting a decline to every one reporting one.
Well, I guess that A couple, maybe. I mean, like 10 out of 12 reporting a decline. Some districts noted that labor availability had increased . Businesses continued to report difficulties filling positions. Many companies were hesitant to lay off employees even as demand for goods and services slowed and planned to reduce their staff through attrition if necessary.
Okay, that's quite significant. It's quite a big difference. We're talking about one reporting a cooling versus 10 reporting a cooling. Okay, that's interesting. Pricing. Manufacturers reported a decrease in transportation costs. Many retailers noted increasing difficulty in passing on cost increases, suggesting greater price sensitivity.
That 's very similar. If anything, it's worsened. More discounts and promotions than a year ago. Good to know. That's consistent. A consistent lack of price pressures. What else do we have here? We have that, overall, contacts expected little growth in the coming months. Auto sales remained stable on average, with inventory increasing.
Tourism was moderate to robust. What else? The non-financial sector experienced a Stable demand. Well, that changed because we've seen loan demand plummet and credit card usage rise. Labor shortages remained an issue. The rate of increase in input prices slowed. Now we're talking about decreases in input prices.
Wage pressures grew at a moderate pace that has since weakened. The proportion of contacts reporting higher costs and selling prices declined markedly. This is very interesting. So it shows you some difference. Let's look at one more. Let's rewind a little further. Ready? Now this one is going to be extreme.
I think we're going to go to June 2021. Are you ready for this? June 2021. The effects of higher vaccination rates were perhaps most noticeable in consumer spending, with increases in leisure, travel, and restaurants boosting strength in other categories. Homebuilders saw strong demand . Supply chain disruptions drove up costs.
Employment and wages. Job growth was strongest in the food sector. and hospitality. Difficulty in hiring new workers, especially low-wage workers and truck drivers. Wage growth remained moderate, but hiring bonuses and increases nts were beginning to emerge. This is like pre-cycle, right? Price pressures increased even further.
All of this leads to inflation. Look at that change over time. This indicated in May 2021 the pain that was coming. Good. In May 2021, it was like, " chaos is about to begin." Good. And what happened then? The chaos began, what, 7 months later, starting in December 2021. So 7 months later, the chaos erupted from May 2021.
Now , we could be 7 months ahead with a bad "Beige Book", thinking about a recession by August with that same amount of advance notice. It wouldn't surprise me. Recession in the second or third quarter, massive increase in unemployment claims, the Fed cuts twice as much as people think. Don't know. I am bearish on the recession.
Ironically bullish because of what that means for interest rate-sensitive stocks. And I realize that it's strange. It's like, wait a minute, shouldn't things go down in a recession? I think they would be surprised. I think what goes down in a recession are the stocks bought by the bottom 50% . Because?
Well, that's why. Are you ready for this? Go to the Beige Book now. Go to today's Beige Book. Write the word "freely ". Enter. Right here. Where is? Freely. Freely. Freely. Free. There it is. Low- income households spent less but paid more on credit, while wealthy households continue to spend freely.
Who will be there when interest rates fall? Well, tech companies will continue to spend freely because they are cash-rich companies. But now we have to ask ourselves, what do rich people spend their money on when interest rates are very low? And what things can't others afford but the rich can ? Expensive cars, houses, and home improvements like solar energy.
It's crazy. I've been positioning myself for this for two years. You know, people say, "Are you changing your mind?" No, man. So far, this is going according to plan. Willing to change his mind, but that's a sign that big trouble is coming. It will mean major cuts. Don't announc any other type of .
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