Eric Basmajian Profile picture
EPB Research identifies the most critical economic inflection points so that you can prepare for the next market regime.
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Dec 1 β€’ 25 tweets β€’ 9 min read
Home prices are falling across the United States.

Some areas are seeing home prices crash faster than the 2008 crisis, while other areas are actually still rising!

Where is the housing crash hitting the hardest?

Let's find out πŸ‘‡

1/
On a national basis, home prices are starting to fall.

As of September, home prices are down about 2.2% from the peak, which may not seem like a lot, but it's the largest decline in national home prices since the 2008 period.

2/ Image
Dec 1 β€’ 7 tweets β€’ 2 min read
Private sector real income is now over $1 trillion below the pre-COVID trendline.

1/ Image Before today's income data, the gap between the pre-COVID trendline and real private sector income was $954 billion.

2/ Image
Nov 18 β€’ 7 tweets β€’ 3 min read
This week, several major coincident economic indicators were released, including industrial production and retail sales.

Here's the quick recap πŸ‘‡

1/
As a reminder, the economy is defined by what I call the "four corners."

Recessions/expansions are determined by the collective growth across income, consumption, production, and employment.

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Nov 14 β€’ 19 tweets β€’ 7 min read
In just the last several weeks, we have seen MAJOR layoff announcements from:

-Meta
-Stripe
-Paypal
-Microsoft
-Amazon

Here is an update on the labor market and why these mass layoff announcements will keep coming πŸ‘‡

1/
This is not just a technology story.

We have also seen layoffs from Redfin and trucking giant C.H. Robinson

freightwaves.com/news/ch-robins…

@FreightAlley

2/
Oct 27 β€’ 18 tweets β€’ 4 min read
Oct 22 β€’ 10 tweets β€’ 3 min read
Home prices...

Will they fall?

What about supply?

Here's some data on supply and how it impacts home prices...πŸ‘‡

1/10 Right now, most people are suggesting that supply in the US housing market is very tight.

To some extent, this is true.

The months supply of total US housing is just over 4.

Anything below 5 signals a "tight" market.

2/
Oct 19 β€’ 4 tweets β€’ 2 min read
The economy is being held up by industrial production and employment.

Income and consumption are borderline recessionary.

1/4 Image It's rare to see production and employment outperform income and consumption by such a wide margin.

It's happened, but it doesn't last long.

On average, employment and production have underperformed income and consumption.

2/4 Image
Oct 18 β€’ 6 tweets β€’ 2 min read
Coincident data for September is still too strong to be in a recession.

A quick look at income, consumption production, and employment for September...

1/6
Every economy has income, consumption, production, and employment.

These segments of the economy work together in a cyclical fashion.

More income > more consumption > more production > more employment

2/6
Oct 6 β€’ 7 tweets β€’ 3 min read
Growth continues to slow through September based on the ISM Manufacturing and ISM Services data.

Stocks, bonds, and gold...what is the market pricing in?

1/ Image While growth is cycling downward, estimates are that inflation will remain high.

The chart below shows the growth rate of core PCE with estimates for September and October based on the Cleveland Fed nowcast.

2/ Image
Sep 26 β€’ 16 tweets β€’ 4 min read
Is the bond market broken?

My timing on bonds leaves much to be desired, but the moves in the Treasury market are quite logical.

This is the fundamental case for why the Treasury market is NOT broken...πŸ‘‡

1/
Long-term bonds trade on two major factors: the expected path of the Fed Funds rate & expectations of nominal GDP growth.

As my friend @GreekFire23 says, "The Fed shifts the curve and growth twists the curve."

What does this mean?

2/
Sep 20 β€’ 25 tweets β€’ 8 min read
America’s middle class is vanishing.

In the last 20 years, the share of wealth held by the middle class dropped more than 8%, while the share of wealth held by the top 1% increased almost 8%!

Why is this happening, and is this trend going to continue?

Let’s find out πŸ‘‡

1/25 Since 2002, the share of wealth held by the middle class has dropped from 36% to 28%.

2/25
Sep 16 β€’ 25 tweets β€’ 7 min read
As the government grows larger, the economy gets weaker.

It can be argued that over 50% of government spending is wasted!

Why does the economy get weaker as the government gets larger?

Let's find outπŸ‘‡

1/25 To start, this is not about some dogmatic political belief but rather analysis that comes from well-documented academic research, the logic of incentive structures, and empirical data.

Also, what do we mean by "weaker"?

2/25
Sep 9 β€’ 25 tweets β€’ 9 min read
The US Government is bankrupt.

By 2032, entitlement spending plus interest on the debt will be 100% of tax revenue!

This has massive implications for the economy...but it's not what you think.

Let's see where this is heading πŸ‘‡

(Hint: It's not hyperinflation)

1/25 The Federal Government has about $31 trillion in debt on $25 trillion of GDP.

This ratio of ~125% debt to GDP is the highest in US history, and it's only set to get worse.

2/25 Image
Sep 1 β€’ 22 tweets β€’ 7 min read
The economy has been slowing for over a year, but we haven't seen mass layoffs yet.

What's going on in the labor market?

Is something different this time, or are layoffs next?

Let's see πŸ‘‡

1/
To start, we have to set the stage.

The economy has been slowing since the spring of 2021, but growth across income, consumption, production, and employment is not recessionary...yet...

2/ Image
Aug 29 β€’ 4 tweets β€’ 3 min read
@lebas_janney @panekkkk I build composite leading indicators.

Similar to how Geoffrey Moore used M2 as one component of his leading indicator, real M2 improves the efficacy of a leading index of real home price growth.

You can use real ODL or another measure of liquidity if M2 ruffles your feathers. @lebas_janney @panekkkk It's the basket approach that drives the efficacy of a leading indicator process.

Plumbing guys lose their minds over M2. It's a highly imperfect measure; we all know that. But it's been used as a component of many leading indicators for a reason.
Aug 29 β€’ 25 tweets β€’ 7 min read
Volumes in the housing market are imploding.

New home sales are -51% from 2 years ago.

So, is this as bad as 2008 or not?

Let's see πŸ‘‡

1/25 Before I start, a big thank you to my friend @MacroAlf for promoting my Twitter page.

I got over 10,000 new followers!

So let's see if we can add some value...

2/
Aug 22 β€’ 9 tweets β€’ 3 min read
The economy HAS NOT bottomed.

Rather, we likely have AT LEAST another 2-3 quarters of material downside...

Here's why πŸ‘‡ The housing market is a leading indicator.

If you want to see my video breakdown about how and why housing leads the economy, check out this video.

Aug 5 β€’ 4 tweets β€’ 2 min read
The Jobs Report in One Chart πŸ‘‡

This chart shows the average growth of:
- Payrolls (employment)
- Real Aggregate Earnings (income)
- Aggregate manufacturing hours (production)

There was a sequential improvement in average growth, but nothing to change the trend...

1/ Remember, these are COINCIDENT data points which means they define the trend, but they don't tell you where we are GOING.

The trending direction of growth is clearly down, despite the sequentially stronger data in July.

2/
Jul 28 β€’ 10 tweets β€’ 3 min read
How about a real thread on GDP with some nuance?

Forget the political games.

Let's look under the hood. 🧡

1/
To start, let's take a step back.

From 2009 through 2020, real GDP per capita (the standard of living) increased at a horrible 1.5% annualized pace.

Terrible.

We are failing to recapture that weak trend, so our people are feeling more miserable. Not good.

2/
Jul 19 β€’ 6 tweets β€’ 2 min read
The housing market is clearly cooling off, but building permits have been roughly flat over the last 16 months.

There are some shifts going on under the surface.

1/ Single-family permits are falling sharply.

Despite popular wisdom, households are not that strong. Student loans, consumer debt, etc.

Everything was okay until interest rates started to go up.

Now the demand for single-family homes is cooling.

2/
Jul 18 β€’ 6 tweets β€’ 3 min read
HUGE decline in the NAHB Housing Market Index.

This is the second largest monthly drop since 1985.

Wow. Traffic of prospective buyers, a leading indicator of housing demand, collapsed to 37 in July.

The housing market is a leading indicator of economic activity, and it's moving lower at an accelerating pace.