24/7 Wall Street reports that homelessness increased this year in the US.(1) It’s the first increase in seven years. Most of the problem is concentrated in larger urban areas. In order, the cities with the largest number of homeless are:
- New York
- Los Angeles
- San Antonio
- San Diego
- San Jose
Texas and California tie, each having three cities in the top ten.
The problem is likely to get much worse.
Mortgage rates will shortly hit 5%, with another increase in rates by the Federal Reserve expected before year end. That’s will raise credit card payments, already increasing, and push more people into foreclosure at the same time that assistance for those having trouble paying mortgages is expected to expire.
Households with high credit card debt — and this debt is at record levels in the US — are in trouble.
Households with adjustable rate mortgages are in trouble, and it may already be too late to refinance.
And recall, part of the cause of high rates is the record level of Federal deficit spending this year. Trump has been using road construction projects to prop up the economy, increasing the Federal deficit by more than 80% over 2017. That drives both higher rates and inflation.
As ye sow, so shall ye reap.
Inflation is increasing, wages are not increasing, US inventories are increasing and exports are declining. An article in Newsweek today says that the decline in auto and home sales is in fact the first salvo of a major economic collapse.(2) Forbes concurs.(3/4)
So are smart investors.(5) In this context, the timing of the Sears K-Mart bankruptcy is no accident.