This week, Darius sat down with Maggie Lake from Real Vision to discuss the resiliency of the US economy, the housing market, and much more.

If you missed the interview, we have you covered. Here are three takeaways from the conversation that have significant implications for your portfolio: 

1. The Resiliency of the US Economy Will Likely Continue 

Our research shows the US economy has nowcast itself into “GOLDILOCKS” for the past five months. GOLDILOCKS is a regime marked by growth trending higher and inflation trending lower.

The strength of the economy will likely continue because:

  • Goods demand is increasing — real goods PCE increased 5.4% on a three-month annualized basis in the most recent month.
  • Corporations have been reducing inventories for the past five quarters, reducing 72 basis points off of GDP per quarter, on average. This, paired with increasing demand, could lead to inventory restocking the next few quarters.

2. New Home Sales Are Surging Because The Existing Home Sales Market Has Been Starved of Supply

Today, homeowners are unwilling to sell their homes and trade their ~3.5% mortgage (the effective mortgage rate nationally) for the current market rate of ~7%.

This supply shortage is causing a spike in new home builds:

  • Building Permits are growing at 7% on a three-month annualized basis.
  • Housing Starts are growing 31% on a three-month annualized rate of change basis.
  • New Home Sales are growing at 21% on a three-month annualized basis.

3. “Bidenomics” Is Also Contributing to Our “Resilient US Economy” Theme

The US economy is experiencing a record non-war, non-recession budget deficit under the current administration.

Last year, the deficit was -3.7% of GDP. 

Today, it is -8.4%.

That 470 basis point difference equates to approximately $1.3 trillion of incremental fiscal stimulus supplied to the US economy, further contributing to its resiliency. 

That’s a wrap! 

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