{"id":82564,"date":"2024-03-23T01:00:43","date_gmt":"2024-03-23T08:00:43","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=82564"},"modified":"2024-03-26T13:05:16","modified_gmt":"2024-03-26T20:05:16","slug":"black-coffee-23-mar-2024","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id82564-black-coffee-23-mar-2024.html","title":{"rendered":"Black Coffee: Look Who’s Manning Their Battle Stations"},"content":{"rendered":"

\"\"It’s time to sit back, relax and enjoy a little joe …<\/em><\/p>\n

Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance.<\/p>\n

I hope everybody had a wonderful week. And with that, let’s get right to this week’s commentary, shall we?<\/p>\n

It is what it is, but it’s not what it seems.<\/em><\/p><\/blockquote>\n

— Paul Hewson<\/strong><\/p>\n

Damn the torpedoes; full speed ahead!<\/em><\/p><\/blockquote>\n

\u2014 David Farragut<\/strong><\/p>\n

Credits and Debits<\/strong><\/p>\n

Debit:<\/strong><\/span> Did you see this? After a long run, the share of borrowers with a 30-day past-due missed payment against their credit accounts is rising again. Indeed, credit scores have been steadily improving over the past ten years, but increases in missed borrower payments and rising consumer debt levels are finally starting to take a toll. As a result, the national average credit score just fell<\/a> for the first time since 2014; according to a new report from FICO, the average American’s credit score is now 717 – which is considered good, but 23 points below the excellent threshold that guarantees the best loan rates. Then again, I guess everything is relative …<\/p>\n

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Debit:<\/strong><\/span> Now for some American history: The 1973 Arab oil embargo<\/a> not only shook the global energy market, but it also reordered the global economy with the resulting weaponization of energy. After a persistent bout of inflation topped out at 6% in 1970, inflation as measured by CPI fell back to slightly under 4% by the first quarter of 1973. That period from the late 1960s through the early 1970s is much like today; in both cases, politicians and central bankers celebrated the decline in the CPI. However, in late 1974 the CPI exploded to 12%. So … is a larger follow-on inflation surge in the cards this time around? We don’t have a good answer at the moment … er, unlike this guy:<\/p>\n

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Credit:<\/strong><\/span> As macro analyst Larry MacDonald opined this week, “We hear the comparisons (and) they’re growing louder by the week (that) 2023-2024 looks a lot like 1973-1974. The key difference this time is that oil prices are currently subdued, thereby keeping that second inflationary conflagration at bay. For now. However, that may be changing<\/a>. In the meantime, the currency printing continues. As for the excess cash that isn’t being used to drive up prices on basic living expenses, well … if we haven’t made it clear enough by now, a lot of it is finding its way here:<\/p>\n

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(h\/t: @LibertyPillMeme)<\/p><\/div>\n

Debit:<\/strong><\/span> Speaking of inflation, according to the US Bureau of Labor Statistics, auto insurance has risen more than 20%<\/a> from a year ago – that’s the largest jump since 1985. You know what that<\/strong><\/em> means \u2026 auto insurance has actually risen at least 50% over the past year. As one customer observed, “If it weren\u2019t for insurance, I could afford most of the things I am insured against.” Meanwhile, back at the dealership …<\/p>\n

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Credit:<\/strong><\/span> There’s no doubt that inflation is negatively impacting America’s middle class. In fact, a new report by Bloomberg<\/em> reinforces the conventional wisdom that many middle class Americans are using debt just to maintain their standard of living. One 40-year old Denver resident who is carrying a monthly mortgage of $1650 – and $4000 in credit card debt – complained that, “I\u2019m making the most money I’ve ever made, and yet I\u2019m still living paycheck to paycheck<\/a>. There’s this wild disconnect between what people are experiencing and what economists are (reporting).\u201d You can say that again …<\/p>\n