The UK is Not Prepared for a Prolonged Recession


Armstrong Economics Blog/Central Banks Re-Posted Nov 11, 2022 by Martin Armstrong

People are simply not prepared for a sharp economic downturn. The Money and Pensions Service conducted a poll in the UK in which it found around 25% of adults have under £100 in savings. The 3,000-person survey found that 17% reported having absolutely nothing set aside. Around 5% reportedly had under £50, while 4% had between £50 and £100.

The drastically increased cost of living has many living paycheck to paycheck. The Building Societies Association (BSA), as reported by the BBC, conducted a separate survey that found that 35% of people in the UK simply stopped saving due to inflation. Around 36% said they are already dipping into their savings accounts to pay the bills.

The Bank of England is anticipating a long recession ahead. The central bank sees economic conditions contracting through the first half of 2024. The central bank’s prediction of five consecutive quarters of contraction would mark the longest recession in UK history. The people have not experienced the full effects of this recession, and most are simply not prepared for what lies ahead.

CPI Report – Inflation on Food, Fuel, Home Heating and Essentials Continues Growing – Overall Inflation Moderation Now Claimed as Calendar Cycles


Posted originally on the conservative tree house on November 10, 2022 | Sundance

The Bureau of Labor and Statistics (BLS) provides the latest data on consumer prices (inflation) [DATA HERE].  We explained in 2021 how inflation would grow on a month-over-month and year-over-year basis until the calendar became more friendly and the government officials could claim “diminished inflation growth.”  Well, we are now entering that phase of economic parseltongue.

October consumer prices increased 0.4% over September.  However, we are now comparing year-over-year (Y0Y) inflation to the period where last year’s prices had already skyrocketed, so YoY inflation seems to be moderating at 7.7%, it’s a false premise. {Go Deep}

As expected, the energy-driven consumer inflation in the food sector has arrived.  The proverbial field inflation is arriving at the fork, and the October CPI now shows the third wave of food price increases we had previously discussed.

Table 2 Details: Egg prices increased +10.1% last month and now 43% higher than last year.  Butter +1.9% last month, 26.7% for year.  Margarine +1.3% for month, 47.1% for year.  Coffee +1.3% for the month, 15.6% for the year.

Heading into baking season we find flour +0.2% for the month, +24.6% for year.  Essentially, as expected, all of the holiday foodstuffs are now rising in price as the increased field and commodity prices hit the store shelves.

Some row crops are starting to moderate in price growth, while dairy products continue rising throughout the fall season.  It is going to be painful on the checkbook grocery shopping this holiday season.

On the energy front, home heating oil increased 19.8% in October and is now a whopping 68.5% higher than last October.  Unleaded gasoline increased another 3.5% and now is now 20.9% higher than last year (Oct ’21), which was already 40% higher than January 2021.

Food, fuel, electricity, home heating and housing costs continue growing monthly, but give the illusion of moderating when compared to last year.

Food away from home (restaurants etc.) are starting to show the cumulative price impacts for restaurants, hotels and cafeterias.  Additionally, as the kids returned to school the lunchroom prices have skyrocketed a jaw-dropping +3.8% for October and +95% compared to last year [Table 2].  Packing lunches for kids is going to become an even more important aspect for the family food budget.

The stock market is happy with the news because the lowered 7.7% (YoY) inflation number, a product of the calendar and nothing else, gives optimism the Fed may moderate the increased federal reserve rate hikes.  However, don’t count on it because inflation is easily identified as embedded now.  Lemons at the grocery store are now $0.99/each.

Think about that.  $1 for a single lemon and roughly 50¢ per egg at the supermarket.  A full shopping cart of groceries now easily exceeding $200.  This is devastating for those on fixed incomes and blue-collar workers.

Wages are nowhere near keeping up with this level of price increase.

(CNBC) The consumer price index rose less than expected in October, an indication that while inflation is still a threat to the U.S. economy, pressures could be starting to cool.

The index, a broad-based measure of goods and services costs, increased 0.4% for the month and 7.7% from a year ago, according to a Bureau of Labor Statistics release Thursday. Respective estimates from Dow Jones were for rises of 0.6% and 7.9%.

Excluding volatile food and energy costs, so-called core CPI increased 0.3% for the month and 6.3% on an annual basis, compared with respective estimates of 0.5% and 6.5%.

A 2.4% decline in used vehicle prices helped bring down the inflation figures. Apparel prices fell 0.7% and medical care services were lower by 0.6%.

“The report overstates the case that inflation is coming in, but it makes a case inflation is coming in,” said Mark Zandi, chief economist at Moody’s Analytics. “It’s pretty clear that inflation has definitely peaked and is rolling over. All the trend lines suggest that it will continue to moderate going forward, assuming that nothing goes off the rails.” (read more)

The Biden energy policy is the root of the consumer inflation. Nothing will happen to moderate overall consumer inflation on Main Street until energy policy changes.

Additionally, with the 2022 election in the rear-view mirror, we should start to see layoffs and unemployment increasing now.  The bureaucrats will now let the recession become evident.

In Politics – People Want to Believe on What They Want to Hear


Armstrong Economics Blog/Politics Re-Posted Nov 9, 2022 by Martin Armstrong

COMMENT: The post dealing with the mid-terms had this gem: “This is why all the Greek philosophers from Socrates to Plato were against democracy. It allowed a thin majority to become tyrannical.”
What then is the alternative, for there will never come a time when we all agree about anything, let alone everything? The unstated alternative is that a minority becomes tyrannical and enforces their vision on everyone. Those are the two choices. There aren’t others just waiting to be discovered. Either the majority has it or the minority has it and as this is supposed to be a battle between ideas, the idea getting the most support should be the one chosen. Otherwise, candidates would try to lose the election so as that their plans would be enacted. Sorry, but that is just too stupid to be taken seriously by anyone with a still functioning brain in their head.
As Churchill noted, “Democracy is the worst form of government there is, except for all the others.” And he was absolutely correct. If you don’t like what the majority is doing, change the minds of those who are persuadable; don’t bitch about not getting your way because your ideas were not popular. That is what infants do!

VK

REPLY: A friend invited me to dinner. There was another there who was a major programmer for Microsoft. He was a Biden supporter and convinced that climate change may have always existed, but we are the cause right now. There are people among the Democrats who have just been brainwashed with sophistry. If they were not being mentally manipulated by a small group of elites with an agenda they would never agree with if the truth were told, then there would be perhaps a more reasonable world.

Then you have egos. Trump felt his endorsing power was not what he and others thought it was. So he told the WSJ he knew some dit on DeSantis. This is the problem. Trump was on the right track and he was what the people rallied behind – term limits and draining the swamp. But now his personal ego is surfacing and that becomes a problem in politics. It is hard to resist when everyone says you control the power.

The best form of government I have ever seen was that of Genoa where the Doge (president) rotated annually amount the wealthy families. This was before Marxism. There was no social warfare. They ran Genoa more like a company competing against Venice and Florence. Because the Doge rotated, nobody would pass a law that was draconian since they would have to live under that law the following years and it would be more than a decade before the wheel would return to their family.

Marxist Socialism has been highly destructive. It has begun the division that undermines the purpose of civilization – that we all come together because we all benefit. When one group targets another, that is it. You begin the process of economic suicide. The Democrats no longer know how to run for office without promising to rob one group for the benefit of another.

Republics are always the worst form of government because they can be bribed. Look at the bankers. They have blown up the world economy countless times and NEVER has a single banker ever been charged. They own the SEC and CFTC – the case is closed for they will never be held accountable – EVER! 

I tried to warn the Republicans, but they too want to hear what they prefer to believe. I warned them that they would NOT be able to reverse what Biden has set in motion.