Weekly Market Update by Retirement Lifestyle Advocates

The Biggest Economic Headwind Is Still Debt

         Now, with the election (mostly) over, the number one economic story that no one is talking about is debt.  When President-Elect Donald Trump takes office, the national debt of the United States will exceed $36 trillion.

         During the first month of fiscal year 2025 (October), the operating deficit of the United States was more than $257 billion dollars.  (Source:  https://mises.org/power-market/were-already-track-2-trillion-deficit-year)

         Despite collecting a whopping $326 billion in tax revenues during the month, spending totaled about $584 billion.  Deficit spending at that level virtually assures a $2 trillion operating deficit for the year, and that assumes that tax revenues don’t fall, which may be unlikely since it seems that a recession here is inevitable.

         While public debt is at record highs, so is private sector debt.  According to the New York Federal Reserve Bank, Americans now collectively owe a record-high $1.17 trillion on their credit cards (Source:  https://libertystreeteconomics.newyorkfed.org/).  Credit card debt rose by $24 billion in the third quarter and is up more than 8% from one year ago.

         Student loan debt is also at a record high, now exceeding $1.6 trillion (Source:  https://www.nbcnewyork.com/news/business/money-report/30-of-federal-student-loan-borrowers-have-gone-without-food-or-medicine-cfpb-finds/5981318/).  The Consumer Financial Protection Bureau conducted a survey of more than 3,000 student loan borrowers.  The survey was conducted between October 2023 and January 2024.

         The survey findings were somewhat shocking.  30% of borrowers surveyed stated that they’d gone without food, medicine, or other necessities because of their monthly bills.

         According to the Federal Reserve Bank of New York’s Center for Microeconomic Data, total household debt in the United States is now $18 trillion!

Retail Closures Reach Highest Level Since the Pandemic

         As of November 8, there have been almost 6,500 retail store closures this year.  That’s per data compiled by Coresight Research.  (Source:  https://www.foxbusiness.com/lifestyle/us-retail-closures-hit-highest-level-since-pandemic)

         During this time frame, there have also been about 5,300 store openings; however, closures are outpacing openings, which is a negative shift from 2022 and 2023.

         Inflation is the number one cause cited for these closures.

Silver Demand Continues to Increase

         For the fourth consecutive year, the demand for silver will be larger than the supply.

         Demand for silver from all sources:  industrial use and use in the manufacture of silver jewelry and silverware, will drive total silver demand to 1.21 billion ounces this year.  That’s a 1% increase over last year (Source:  https://www.moneymetals.com/news/2024/11/13/industrial-silver-demand-on-pace-to-set-a-new-record-003617).

         Industrial demand, fueled by the solar energy industry, is expected to increase by 7% and exceed 700 million ounces for the first time. 

         While mining output of silver is also projected to increase, there will still be a shortfall of more than 180 million ounces this year, similar to last year’s shortfall.

Inflation Is Once Again Accelerating

         Despite the Fed’s victory lap, declaring that inflation is under control, prior to the central bank cutting rates a whopping .75% over the past couple of months, core CPI is increasing.

         Month-over-month, the Consumer Price Index, which does not include energy or food components, rose .28% from September into October.  The last three months have all risen at about this pace, which is an annualized rate of 3.5% or better.  (Source:  https://wolfstreet.com/2024/11/13/beneath-the-skin-of-cpi-inflation-overall-cpi-accelerated-for-4th-month-core-cpi-for-3rd-month-on-re-spiking-used-vehicle-prices-rising-homeowner-costs/)

         Homeownership costs, including in the CPI as “owner’s rent equivalent,” rose the most.  If you’ve been a long-time reader of “Portfolio Watch,” higher inflation comes as no surprise to you.  Expect more to come short of a balanced (or nearly balanced) federal budget.

Trust a Bookie Not a Pollster

         Regardless of where you stood politically prior to the election and how you now feel about the results, there is one area on which nearly everyone should be able to agree – the pollsters had the election outcome VERY wrong while the bookies had it right.

         Once respected pollster Ann Selzer, who released a pre-election poll that had Harris up three points over Trump in the State of Iowa, has decided to “transition to other ventures and opportunities” after she missed the actual outcome in Iowa by 16 points.  Trump won the state by 13 percentage points.  (Source:  https://www.zerohedge.com/markets/famed-iowa-pollster-ann-selzer-retires-after-bombshell-miss)

         At the same time, the betting platform Polymarket had the race called perfectly.  What’s the lesson here?

         Pollsters don’t have skin in the game, book makers do.  When in doubt, trust the analyst who plays with his or her own money.

Grocery Inflation

         The Bureau of Labor Statistics recently reported that the cost of groceries from 2020 has increased 20% (Source:  https://www.zerohedge.com/personal-finance/how-much-do-americans-spend-groceries-each-state).

         That’s the highest level of food inflation since the 1970’s.  The Census Bureau reported that the average family now shells out about $270 per week for groceries.  Not surprisingly, Hawaii has the largest weekly outlay for groceries at $334 per week.  Wisconsin residents enjoy the lowest food costs in the nation, with an average weekly outlay for food of $221.

         This week’s RLA radio program features an interview that I did with prolific libertarian author and commentator Mr. Jeffrey Tucker, the Founder and President of the Brownstone Institute. You can listen to the program now by clicking on the "Podcast" tab at the top of this page.

“When I die, I want to die like my grandfather, who died peacefully in his sleep.  Not screaming like all the passengers in his car.”

                                                      -Will Rogers