The Fed Has Two Bad Options in 2025: Accept Higher Inflation or Risk a Recession
El-Erian: Expect slower U.S. growth and higher Treasury yields — but America will continue to outperform other major world economies
by Mohamed A. El-Erian
Market Watch
Political and geopolitical upheaval — and the limited prospects for significant improvements — pose a risk to U.S. economic exceptionalism.
It is something of a tradition every December to take stock of the year that is ending and consider what might lie ahead. This is true on a personal level: in my family, we tend to do this around the dinner table. It is also true more broadly, with the time of year inviting an examination of the intersection of economics, national politics, and global geopolitics.
You would be forgiven if, as a starting point, you expected these three areas to be in alignment. They are deeply interconnected, which suggests self-reinforcing dynamics. But 2024 brought some unusual dispersion in this relationship that actually widened, rather than narrowed, over the course of the year.
The Bond Market Crisis: Inflation, Debt, and the Fed’s Balancing Act
by Money Metals
GoldSeek
In a gripping Christmas-week interview, Mike Maharrey spoke with Michael G. Pento, a noted economist, portfolio strategist, and author of The Coming Bond Market Collapse, to dissect the Federal Reserve’s actions, inflation concerns, and the burgeoning U.S. debt crisis.
[…] Federal Reserve Policy and Inflation
Michael Pento expressed frustration with the Federal Reserve’s continued pursuit of its 2% inflation target, criticizing its mismanagement of monetary policy. Over the past 43 months, inflation exceeded this target, yet the Fed aggressively cut interest rates, including a recent 50 basis point cut. According to Pento, these actions aim to sustain bubbles in equities and real estate, provide relief to the government’s rising debt service costs, and support Treasury markets.
Credit Card Defaults Spike to Highest Level Since Aftermath of 2008 Financial Crisis
by Sean Moran
Breitbart.com
American credit card defaults have risen to the highest levels since the aftermath of the 2008 financial crisis as consumers grapple with years of high inflation.
Credit card lenders wrote off $46 billion in delinquent loan balances in the first three quarters of 2024, a 50 percent increase from the same period last year. These forms of write-offs are are viewed as a highly monitored measure of loan distress.
This is the highest level since 2010, according to industry data gathered by BankRegData.
Mark Zandi, the head of Moody’s Analytics, said, “High-income households are fine, but the bottom third of US consumers are tapped out. Their savings rate right now is zero.”
Gold Has Nowhere to Go but Up in 2025
from King World News
As we get ready to kickoff a new year, gold has nowhere to go but up in 2025.
December 31 (King World News) – Matthew Piepenburg, partner at Matterhorn Asset Management: Another year is ending, which means it’s time to look back in order to better look forward.
For 2025, I see no other realistic option or scenario ahead other than a weaker dollar and rising gold.
This is not “selling my book,” it’s just a common-sense approach to the realities of history, debt markets and the signals of my often-repeated mantra that can’t be repeated enough, namely: “The bond market is the thing.”
Below, we see why.
Trump’s Crackpot Crypto Scheme to Reduce Inflation Would Be a Financial Catastrophe
A federal crypto reserve would only benefit the scoundrels and scammers who helped fund Trump’s presidential campaign.
by Chris Lehmann
The Nation
President-elect Donald Trump’s pledge to create a federal crypto reserve is a terrible idea. The most vivid proof was supplied by the crypto markets themselves, which saw Bitcoin prices rocket into six figures after Trump nominated a raft of crypto-boosters for the incoming administration and amid speculation that the federal government would soon hoard the data-mined tokens.
The theory behind a currency reserve is that it serves as a hedge against inflation. In this view of things, gains in the crypto market can help release pressure on prices in the real economy, since the government’s reserves would appreciate at rates faster than inflation. But to have the prices of an asset rally to unprecedented heights on the mere possibility that it may form part of the US Treasury’s holdings is a sign that it’s less a storehouse of durable value than a volatile plaything for speculators and scammers. Indeed, the extreme volatility of crypto is why it’s subject to persistent market manipulation of the sort made infamous by the now-jailed crypto baron Sam Bankman-Fried: When an asset creates no economic worth of its own, the volume traders who build markets around it must commandeer a vast infrastructure of smoke and mirrors to disguise the dirty secret of its complete inutility. This is also why, amid the pre-holiday fever of crypto-speculation, news broke that North Korean hackers had engineered a $308 million theft of holdings from crypto broker DMM Bitcoin this spring—a heist that forced the company to shut down earlier this month.
Economic Forecast for 2025 and Beyond: Growth with Continued Inflation
by Bill Conerly
Forbes
The economic forecast for 2025 shows growth, but at a slower pace than 2024. Inflation will remain above the Federal Reserve’s target, with President-elect Trump’s policies limiting production while stimulating spending. The greatest risk is not a recession but limited production capability as immigration falls.
Economic Momentum Entering 2025
The United States economy has grown nicely through 2024. The last two quarters in particular grew faster than the long-run average, and the Atlanta Federal Reserve’s GDPNow estimate for the fourth quarter continues the above-average trend. Employment grew every month this year (though we don’t yet have December 2024 data).
Inflation Stress and Concern Remain Elevated Despite Stabilizing Prices
by Anthony Murphy and Isha Parmar
Federal Reserve Bank of Dallas
Despite consumer price inflation falling considerably since peaking in 2022, household inflation-related stress and concern remain elevated, having dropped only slightly.
Although most economists and policymakers tend to focus on the decline in inflation (the change in prices), a large share of households—especially low-income households—remain focused on still-elevated prices and the resulting difficulties paying expenses.
More than four in 10 households (45 percent) reported feeling highly stressed by rising prices in third quarter 2024, little changed from 47 percent in third quarter 2022. The incidence of high concern about anticipated inflation in the upcoming six months remained elevated at 57 percent of households in third quarter 2024 compared with 61 percent in third quarter 2022.
U.S. Homelessness Hits New Record in 2024
by AFP
Breitbart.com
The number of people in the United States experiencing homelessness reached a new record this year, with lingering inflation and high housing prices among likely drivers, a government report said Friday.
An estimated 771,480 people were homeless on a single night in January 2024, rising 18 percent from 2023, said the Department of Housing and Urban Development (HUD) in an annual assessment.
This translates to about 23 in every 10,000 people in the country, home to the world’s biggest economy.
The uptick came as households felt the pressure from housing costs, with the median rent for January 2024 being 20 percent higher than that in January 2021, according to the National Low Income Housing Coalition.
Investors Wary of Inflation as Trump Pursues ‘America First’ Policy
by Shruthi Nair
AGBI
“We [the Middle East] need to be much more picky about particular geographies, asset classes and even themes that we favour,” said Ben Powell, chief investment strategist at BlackRock’s Investment Institute, speaking to AGBI at Abu Dhabi Finance Week.
Charted: Starbucks Price Inflation (2014-2024)
by Kayla Zhu
Visual Capitalist
How Have Starbucks Prices Changed Since 2014?
This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.
Once known for their affordability, fast food prices have climbed steadily over the years, making quick meals and sweet treats considerably less budget-friendly.
A prime example is Starbucks, where the cost of 10 popular menu items has seen a notable rise from 2014 to 2024, as highlighted in this visualization.
The data comes from Finance Buzz and was accessed in May 2024.
FinanceBuzz analyzed menu prices from 2014, 2019, and 2024 for 10 items available consistently across those years, sourcing data from menu price websites, restaurant official sites, and archived records via the Wayback Machine.