2011 Congressional Budget Office projections V.S. the actual 2021 Budget numbers for Jan-July 2021
In August of 2011 during the debt ceiling crisis, the Congressional Budget Office (CBO) projected that the federal budget would show a deficit of close to $1.5 trillion, or 9.8 percent of GDP.
8/1/2021 we are entering a new debt ceiling crisis with congress on a 6 week vacation, combined with an expired rent moratorium where 6.2 million renters face evictions, the homeowners of said tenant’s houses will likely never receive back-pay for rent owed possibly causing record high bankruptcies akin to 2008 or worse, and without taking this into account, CBO projects a federal budget deficit of $3.0 trillion this year as the economic disruption caused by the 2020–2021 coronavirus pandemic, while the legislation enacted in response continue to boost the deficit (which was large by historical standards even before the pandemic).
At 13.4 % of gross domestic product (GDP), the deficit in 2021 would be the second largest since 1945, exceeded only by the 14.9 % shortfall recorded in 2020.
For the period of economic expansion from the second quarter of 2009 through the fourth quarter of 2019, real GDP increased at an annual rate of 2.3 %.
For the period of economic expansion from the second quarter of 2020 through the first quarter of 2021, real GDP increased at an annual rate of 14.1 %.
Which in my opinion and as shown below by these reports is due to the insanely high level of newly printed money and covid stimulus payments.
CBO estimates from 2011 would be heaven in comparison to the reality we’re facing, which is a crippled economy, and stock market on the verge of collapse. Evident as follows;
In 2011 CBO projected the 3 month Treasury bill to be worth 4.4% in 2021.
The actual 3 month Treasury bill rate for July 2021 is worth between 0.01 and 0.06%.
In 2011 the projected 10 year Treasury note bill rate was projected to be 5.4% for 2021
The actual 10 year Treasury note bill rate is 1.24% In July 2021
Part 2 of 4
7/29/2021 Report Released by the U.S. Department of Commerce, Beureau of Economic Analysis, on the Gross Domestic Product, Second Quarter 2021
A report by the Beureau of Economic Analysis, BEA, shows that the 2nd quarter of 2021 has been a bloodbath in terms of loss of income, savings, and increased expenses for the average American.
Personal Income: “Current-dollar personal income decreased $1.32 trillion in the second quarter, or 22.0 percent, in contrast to an increase of $2.33 trillion (revised), or 56.8 percent, in the first quarter of 2021.” –
This means that income literally was cut by nearly 22% on average in 2nd quarter of 2021.
Disposable personal income decreased $1.42 trillion, or 26.1 percent, in the second quarter, in contrast to an increase of $2.27 trillion, or 63.7 percent (revised), in the first quarter. – Again all fake gains thru the stimmy.
Real disposable personal income decreased 30.6 percent in Q2, in contrast to an increase of 57.6 percent in Q1. – and again Trump & Biden Bucks.
This means that (money considered as non-essential, 🙄) decreased by over $890 billion for Americans in Q2 of 2021 alone.
AT THE SAME TIME, Personal outlays (expenses) increased $680.8 billion in Q2, after increasing $538.8 billion for Q1. – This means that expenses have increased by $150+ Billion in average from Q1 2021 to Q2 2021 for Americans! Can you say inflation?
Personal savings was $1.97 trillion in the second quarter, compared with $4.07 trillion (revised) in the first quarter of 2021
The personal saving rate—personal saving as a percentage of disposable personal income—was DOWN 10.9 percent in the second quarter, which was already DOWN 20.8 percent in the first quarter.
This means Americans have lost $3 TRILLION in savings Q2 2021 ALONE.
Where does it go? Banks and lenders?
Inflation seems to be the only thing that’s going up this quarter.
“The price index for gross domestic purchases increased 5.7 percent in the second quarter, compared with an increase of 3.9 percent (revised) in the first quarter… The PCE price index increased 6.4 percent, compared with an increase of 3.8 percent in the 1st quarter.
5/1/2021 Report Released by the U.S. Department of Commerce, Bureau of Economic Analysis, on GDP and the Economy for Q1 2021
The acceleration in real GDP growth reflects artificial economic strength.
The GDP is primarily based in the continued economic recovery from the COVID-19 pandemic as government assistance payments were distributed to households and businesses. An acceleration in consumer spending and upturns in federal as well as state and local government spending more than accounted for the acceleration in real GDP.
These were partly offset by downturns in private inventory investment and exports and by decelerations in residential fixed investment and nonresidential fixed investment. Imports slowed.
The US Economy by the U.S. Department of Commerce, Bureau of Economic Analysis says;
“The acceleration in consumer spending reflected an upturn in spending on goods and an acceleration in spending on services.
Within goods, all components of both durable and nondurable goods contributed to the upturn. The leading contributors were upturns in spending on motor vehicles and parts as well as on food and beverages purchased for off-premises consumption.
Within services, the leading contributors to the acceleration were upturns in spending on food services and accommodations and on transportation services.
An upturn in federal government spending was the second largest contributor to the acceleration in real GDP. The upturn primarily reflected an upturn in nondefense spending on intermediate goods and services purchased by government. In the first quarter, the processing and administration of Paycheck Protection Program loan applications by banks on behalf of the federal government added approximately $13.2 billion ($52.6 billion at an annual rate) to nondefense services. Federal government purchases of COVID-19 vaccines for distribution to the public contributed to the upturn in nondefense goods.
The upturn in state and local government spending reflected an upturn in consumption expenditures, led by compensation of employees, that was partly offset by a downturn in gross investment, led by a downturn in structures.
The downturn in private inventory investment was led by a larger decrease in retail trade and a downturn in manufacturing. Within retail trade, the largest contributor was a larger decrease in inventory investment by motor vehicle dealers. Within manufacturing, there were downturns in both durable and nondurable goods manufacturing inventory investment.
The downturn in exports reflected downturns in both goods (led by a deceleration in industrial supplies and a downturn in foods, feeds, and beverages) and services (led by a deceleration in transport and a downturn in royalties and license fees).
Residential fixed investment slowed, largely reflecting a slowdown in new residential structures, notably single-family units, and a downturn in brokers’ commissions.
Nonresidential fixed investment slowed, reflecting a slowdown in investment in equipment that was partly offset by a smaller decrease in investment in structures. Investment in intellectual property products grew at about the same rate as in the fourth quarter.
The slowdown in equipment investment was more than accounted for by a slowdown in transportation equipment that was partly offset by an acceleration in information processing equipment.
The smaller decrease in structures was more than accounted for by a smaller decrease in investment in industrial structures.
Imports slowed. As a subtraction in the calculation of GDP, imports contributed to the acceleration in first-quarter GDP. The main contributor was a downturn in automotive vehicles, engines, and parts”
Can you say they’re taking our jobs overseas? Reducing lending to home buyers because there are no home buyers qualified looking to buy BECAUSE OF THEIR CURRENT FINANCIAL STATE OF SAVINGS $$ ?
July 21, 2021 CBO released report:
“Additional Information About the Updated Budget and Economic Outlook: 2021 to 2031”
“As the pandemic eases and demand for consumer services surges, real (inflation-adjusted) GDP in CBO’s projections grows by 7.4 percent this year and surpasses its potential (maximum sustainable) level by the end of the year.”
A.K.A a market crash is insinuated by CBO and they directly state that the GDP of this nation surpassing maximum sustainability!
Meanwhile, CBO claims unemployment will decrease….
“Employment grows quickly in the second half of 2021 in CBO’s projections and surpasses its prepandemic level in mid-2022. Inflation rises in 2021 to its highest rate since 2008 as increases in the supply of goods and services lag behind increases in the demand for them. By 2022, supply adjusts more quickly, and inflation falls but remains above its prepandemic rate through 2025. As the economy continues to expand over the forecast period, the interest rate on 10-year Treasury notes rises, reaching 2.7 percent in 2025 and 3.5 percent in 2031—still low by historical standards.”
But unemployment hasn’t decreased at all.
7/21/2021 U.S. Bureau of Labor Statistics released report states, “The national unemployment rate, 5.9 percent, was little changed over the month”
Part 3 of 4
The Debt Ceiling Dillema
“A two-year deal to suspend the debt ceiling lapsed at midnight (7/31/21) following inaction from Congress and President Biden to give the U.S. more borrowing authority. The Treasury Department will now begin taking what it refers to as “extraordinary measures” to prevent the U.S. from defaulting on its debt.”
“Republican leaders have told Democrats that there can be no bipartisan debt ceiling agreement without a slate of debt reduction measures targeting the roughly $28 trillion national debt. Several GOP lawmakers have floated a deal similar to the 2011 Budget Control Act, which ended a debt ceiling standoff shortly before the U.S. suffered its first ever credit downgrade.”
CBO says, “the Treasury would probably run out of cash sometime in the first quarter of the next fiscal year (which begins on October 1, 2021, most likely in October or November, the Congressional Budget Office estimates. If that occurred, the government would be unable to pay its obligations fully, and it would delay making payments for its activities, default on its debt obligations, or both.
The timing and size of revenue collections and outlays over the coming months could differ noticeably from CBO’s projections. Therefore, the extraordinary measures could be exhausted, and the Treasury could run out of cash, either earlier or later than CBO projects.
Yellen has also said uncertainty driven by the coronavirus pandemic and the federal government’s fiscal response has made it harder to pin down exactly how long the U.S. to avoid a default.”
Yellen stated that the default could happen as soon as early September.
This means we could see the US Treasury’s ability to pay almost all bills completely crippled well before or after Congress’ return to duty as they just began a 6 week vacation on 7/31/21.
Our GDP is a complete farce that was being held up by stimulus payments, government covid spending, Repurchase/Reverse Repurchase Agreements of Treasury Bills to the tune of now over $1 Trillion per day, imports and exports are down huge while sea ports are more severely congested than ever before as are airline cargo carriers. Mortgage applications, sales, and broker commissions are down heavily, trucking rates are at all time highs with minimal availability especially for ocean and rail drayage, warehouse storage for said freight is at maximum capacity with available space at all time lows & prices at all time highs due to supply and demand, retail trade and manufacturing are down significantly as well in Q2. Consumer spending is down as well as savings to lows not seen in many years as well.
Essentially the bubble from stimulus has already been popped. It’s only a short matter of time before we see the effects on our country and it will be reflected on the stock market first and foremost as it is already being seen by the banks unwillingness to invest in long term stocks/bonds/treasuries using the record high $1 Trillion per day Repurchase / Reverse Program to prevent the dollar and market from collapsing together.
A 2015 report from the Government Accountability Office analyzing the 2013 debt ceiling standoff found that “investors reported taking the unprecedented action of systematically avoiding certain Treasury securities,” which are considered almost as safe as cash, causing widespread issues across credit markets.
“Industry groups emphasized that even a temporary delay in payment could undermine confidence in the full faith and credit of the United States and therefore cause significant damage to markets for Treasury securities and other assets,” the report said.
The last 2 times the debt ceiling crisis occurred in 2011 and 2013, rating agencies to re-evaluate the rating of US government debt.
On October 15 2013, Fitch Ratings placed the United States under a “Rating watch negative” in response to the crisis.
On October 17 2013, Dagong Global Credit Rating downgraded the United States from A to A−, and maintained a negative outlook on the country’s credit.
In 2013 while lawmakers and the Obama Administration came to an agreement on the debt ceiling, from September 19th to October 9th, the S&P 500 moved below its 50 day moving average and the SPY lost 5.2%.
On 8/9/2011 during the Debt Ceiling Crisis The Dow Jones Industrial Average plunged 634.76 points as approximately $2.5 TRILLION was erased from global equities.
That’s $2,500,000,000,000.00 in one day.
The S&P 500 Index lost 6.7 percent to 1,119.46, its lowest level since September, as all 500 stocks fell for the first time since Bloomberg began tracking the data in 1996.
Part 4 of 4
7/30/21 -Federal Reserve announced commercial bank asset and LIABILITY numbers release H8
The Liabilities have grown big time since last year.
Federal Reserve released COMMERCIAL BANK ASSET & LIABILITIES numbers for July 2021 and year over year losses have increased tremendously in the tens of trillions of dollars, a large majority of this is based on derivatives, options calls/puts, mortgage back securities, swaps of all kinds, rehypothecated shares, naked shorts, synthetic shares up the ass… See screenshot for explanation of subsection 22 losses description.
All of the 11 Tables provided shows an increase of losses.
The only table pictured is TABLE 2 showing an increase of $1.54 Trillion in unrealized losses in the form of derivatives, securities, swaps, etc…
On Table 2 (of 11) alone, their RESIDUAL Assets (less liabilities) <minus expenses> increased only $40 Billion compared to the $1.54 Trillion increase in losses.
So even though they had huge increases in revenue (covid stimulus), the net gain was hugely diminished by the losses in these sectors.
Office of the Comptroller of the Currency released report stated that 4 large banks held 89 percent of the total banking industry notional amount of derivatives, a total of 1,385 insured U.S. commercial banks and savings associations held derivatives at the end of first quarter 2021.
derivative contracts remained concentrated in interest rate products, which represented 72.7 percent of total derivative notional amounts.
the percentage of centrally cleared derivatives transactions increased quarter-over-quarter to 38.2 percent in first quarter 2021.
In 2011, gridlocked House Republicans and the Obama White House came within days of a drop-dead default over the debt ceiling. The S&P 500 fell for five days in a row leading up to the weekend that lawmakers finally struck a deal. Over 4% of the entire stock market was lost in those 5 days.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.
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