Consumer Confidence Plunges Below COVID-era Levels!

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Unleash Prosperity Hotline – Weekend Edition
Issue #1016
05/10/2024, 05/11/2024, 05/12/2024
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1) Consumer Confidence Plunges Below COVID-era Levels!
Joe Biden sounded frustrated in his CNN interview this week on the economy. He keeps touting how well things are going and can’t fathom why people aren’t joining the Bidenomics celebration. The answer is that Americans aren’t as stupid as he thinks they are: they know they are poorer than under Trump and the economy is in big trouble.

That’s the takeaway from the just-released consumer confidence numbers. The University of Michigan’s preliminary read for May plunged by 12.7% in the biggest point drop since August 2021. The reading missed expectations by the largest spread on record, more than twice the previous largest miss. Both current conditions and future expectations plummeted as inflation expectations climbed, with short-term hitting 3.5% and long-term 3.1%. Those are both the highest readings since November 2023.

Previously, Fed Chair Powell was quick to cite the decline in inflation expectations as a reason to stop hiking rates and to soon cut rates. Now that inflation expectations are rising, we think the case for cutting rates is even weaker.

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2) Biden FTC Accuses Big Oil of Slowing Production to Raise Prices – Which Biden Does Every Day
We find this story a mixture of infuriating and comical.

The FTC accused Pioneer Resources founder Scott Sheffield of collaborating with OPEC to cut production to keep prices high. We have no idea whether Sheffield is guilty or not.

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But wait! Colluding to keep oil prices high is exactly what Biden has done every day he's been in the White House. On day one, Biden canceled the Keystone XL pipeline and banned leasing on federal lands and waters.

Biden’s war on American energy has raised oil prices and enriched Russia, Iran, and the rest of OPEC. Remember: there was no OPEC cartel pricing power under Trump because of his "drill baby drill" policy, that lowered prices to around $2 a gallon.

Let us keep it simple: in modern times there has been no better friend to OPEC than Joe Biden.

As "evidence" that the oil industry is colluding, consumer groups point to this chart that shows since Biden has come into office, investment in drilling has gone way down.

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Gee, let’s put our thinking caps on: why would oil and gas producers be reluctant to invest?

If you said it is because they are evil price-fixers, sorry, but you’re reading the wrong newsletter.

The right answer is that Biden wants to put every oil and gas company out of business with his absurd "net zero" carbon dioxide emissions target.

Does anyone want to invest in a product that the government is going to outlaw?

If restricting output and driving up prices is a crime, then Joe Biden, Jennifer Granholm, and John Kerry should be the first to go to jail.

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3) The New York Times Wants America to Surrender the Entire Auto Industry to China
The New York Times whimsically fantasizes about a world where there are only EVs on the road – all manufactured in China.

This is not an editorial.

It is what passes for a “news” story these days:

The world’s two most powerful countries, the United States and China, are meeting this week in Washington to talk about climate change. And also their relationship issues.

In an ideal world, where the clean energy transition was the top priority, they would be on friendlier terms. Maybe affordable Chinese-made electric vehicles would be widely sold in America, instead of being viewed as an economic threat. Or there would be less need to dig a lithium mine at an environmentally sensitive site in Nevada, because lithium, which is essential for batteries, could be bought worry-free from China, which controls the world’s supply.

Got that? Cede the auto industry to China and let them do all the mining, too. That would be ideal. Has anyone at the Times asked any of the members of the UAW about their scheme?

At least when The New York Times starts talking about their version of paradise, we wish they’d tell the truth: in their “ideal world” nobody would even have a car.

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4) Fed Moves to Restrict Debit Card Use
Ever since Sen. Dick Durbin smuggled debit card price controls into Dodd-Frank, the Federal Reserve has imposed an interchange fee rate cap on debit transactions.

In a recent CTUP paper, we found that these price controls reduced average swipe fee revenue for banks by $6 to $8 billion, and caused most banks to stop offering free checking accounts. Free checking had previously relied on a business model funded by swipe fees. Durbin’s policy caused roughly one million mostly poor families to lose their bank accounts. This was a transfer of an estimated $1 to $3 billion in income from low-income families to large retailers and merchants, who benefited from the lower fees.

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So naturally, instead of junking the fees and letting the free market in banking work, the Federal Reserve wants to double down on a policy that clearly isn’t working. The Fed is now proposing to make the debit card price controls even more stringent.

Amazingly, the Fed regulators acknowledge they “cannot determine at this time whether the potential benefits of the proposal to consumers exceed the possible costs imposed on consumers and financial institution.” This new rule sounds just like the way the Fed determines monetary policy: they make it up as they go along.

It’s a textbook case study of how the hidden and unintended costs of regulations almost always outweigh the benefits – and often hurt the poor the most.

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5) Argentina’s Milei Is Winning Over His Critics
We mentioned a few days ago that the shock therapy free market reforms of Argentina’s new free-market president Javier Milei are working. Now even his critics are taking note of the progress.

Ian Bremmer, who runs a political risk research firm and hosts a PBS show, trashed Milei last fall predicting an “economic collapse coming imminently.”

To his credit, Bremmer now admits he was wrong and that Milei “deserves a round of applause.” He notes Argentina has seen its first budget surplus in over a decade, a slowdown in its sky-high inflation, and in the blue-chip swap market, the Argentine peso was the best-performing currency in the world in the first quarter of this year.

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Its resource riches are now getting a serious look from foreign investors. The Argentine Congress is on the verge of passing a compromise version of Milei's reforms.

Bremmer even admits that “a lot of media coverage of Milei really didn't like him because he was a right-wing libertarian….They were knee jerk reacting to, this guy as an idiot.”

Bremmer concludes: “You know, I don't think we should have such a problem with being wrong. And you only have a real problem with being wrong if you are so ideologically attached to what you were saying to begin with… Sometimes the world changes and so you change your mind.”

Britain’s Daily Telegraph adds: “Milei is already proving the global Left-wing economic establishment – addicted to bigger government and endless deficits – wrong. Indeed, it may provide a template for other countries to escape from zero growth.”

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