Beige Book - November 2025

Economic activity was little changed since the previous report, according to most of the twelve Federal Reserve Districts, though two Districts noted a modest decline and one reported modest growth. Overall consumer spending declined further, while higher-end retail spending remained resilient. Some retailers noted a negative impact on consumer purchases from the government shutdown, and auto dealers saw declines in EV sales following the expiration of the federal tax credit. Reports of travel and tourism activity reflected little change in recent weeks, with some contacts noting cautious discretionary spending among consumers. Manufacturing activity increased somewhat, according to most Districts, though tariffs and tariff uncertainty remained a headwind. Revenues in the nonfinancial services sector were mostly flat to down, and reports of loan demand were mixed. Some Districts reported declines in residential construction, while others said it was unchanged, and home sales activity varied. A few Districts noted ongoing recovery in the office real estate market. Conditions in the agriculture and energy sectors were largely stable, though some contacts cited challenges from the low-price environment for oil and for some crops. Community organizations saw increased demand for food assistance, due in part to disruptions in SNAP benefits during the government shutdown. Outlooks were largely unchanged overall. Some contacts noted an increased risk of slower activity in coming months, while some optimism was noted among manufacturers.

Labor Markets

Employment declined slightly over the current period with around half of Districts noting weaker labor demand. Despite an uptick in layoff announcements, more Districts reported contacts limiting headcounts using hiring freezes, replacement-only hiring, and attrition than through layoffs. In addition, several employers adjusted hours worked to accommodate higher or lower than expected business volume instead of adjusting the number of employees. A few firms noted that artificial intelligence replaced entry-level positions or made existing workers productive enough to curb new hiring. Across most Districts, employers had an easier time finding workers, but there were still pockets of difficulty related to certain skilled positions and fewer immigrant workers. Wages generally grew at a modest pace; however, some sectors such as manufacturing, construction, and health care experienced more moderate wage pressure because of a tighter labor supply. Furthermore, rising health insurance premiums continue to put upward pressure on labor costs.

Prices

Prices rose moderately during the reporting period. Input cost pressures were widespread in manufacturing and retail, largely reflecting tariff-induced increases. Some Districts noted rising costs for insurance, utilities, technology, and health care. The extent of passthrough of higher input costs to customers varied, and depended upon demand, competitive pressures, price sensitivity of consumers, and pushback from clients. There were multiple reports of margin compression or firms facing financial strain stemming from tariffs. Prices declined for certain materials, which firms attributed to sluggish demand, deferred tariff implementation, or reduced tariff rates. Looking ahead, contacts largely anticipate upward cost pressures to persist but plans to raise prices in the near term were mixed.
emphasis added

Why Are The Elites Moving Into High Security 'Fortress Communities'

Authored by Michael Snyder via TheMostImportantNews.com,

The elite aren’t stupid. They can see that our society is coming apart at the seams all around us, and so they want to live some place safe. In fact, for many among the elite security has become the number one priority when choosing a new home. Unfortunately, the vast majority of us do not have the resources to move into high security communities guarded by teams of armed professionals. When things really start hitting the fan, most Americans are just going to have to deal with the chaos that is suddenly erupting all around them.

But for the ultra-wealthy, one of the benefits of having so much money is being able to shut yourself off from the rest of the world.

In Delray Beach, Florida a community known as Stone Creek Ranch has become extremely trendy among the elite for one particular reason.

It has a heavily armed security unit that watches over it 24 hours a day…

On paper, Stone Creek Ranch—a “prestigious” enclave made up of less than 40 luxury homes—is a world away from Miami, Manalapan, and Palm Beach: It offers no beaches, no celebrity-approved nightlife, and no glitzy designer shopping.

Yet it offers one very particular luxury that is proving to be quite the draw among the one percent: total and absolute privacy that is safeguarded by a team of armed professionals who watch over the community 24/7—a majority of whom come from previous jobs in law enforcement or the military.

Prospective residents’ entry into the community is policed just as carefully: Any homebuyers seeking to purchase one of just 37 private residences within Stone Creek are required to go through rigorous criminal background checks before they can even attempt to secure a home there.

Considering how fast conditions in our society are deteriorating, it sounds like a wonderful place.

But you will never get to live there unless you have tens of millions of dollars…

Just last month, Hollywood A-lister Mark Wahlberg made headlines when he dropped $37 million on a newly constructed megamansion inside the enclave — only to be followed weeks later by Rockstar energy drink founder Russ Weiner, who is in contract on two properties in the community, worth a total of $43 million.

Indian Creek Village is another high security community in southern Florida.

The island boasts “a high-tech security system that’s straight out of a spy movie”, and the list of residents includes Tom Brady and Jeff Bezos…

Indian Creek Village, known as the “Billionaire Bunker,” isn’t just another gated community. It’s the ultimate fortress for the ultrarich. Nestled in South Florida’s Biscayne Bay, this private island is where some of the world’s wealthiest people, including Jeff Bezos and Tom Brady, have decided to stake their claim. But living here isn’t just about luxury. It’s about security and lots of it.

You can’t just stroll onto Indian Creek. Not a chance. The island is locked down with a high-tech security system that’s straight out of a spy movie. “The wealthier you become, the more you want perfect security,” Setha Low, director of the Public Space Research Group at CUNY, told Business Insider recently. And Indian Creek delivers. An Israeli-designed radar system rings the island. It’s a system that can detect anyone approaching half a mile away. Cameras are everywhere: hidden in hedges, mounted on poles and linked to a command center that monitors every move.

The police force here? They’re more like personal bodyguards for the residents. With 19 officers for just 89 residents, Indian Creek has a cop-to-citizen ratio that makes New York City look understaffed. And these aren’t your average officers. They’re trained in tactical operations and armed with fully automatic weapons. They also spend most of their time patrolling the island’s perimeter, ensuring no one gets too close.

Once upon a time, the ultra-wealthy preferred living in large cities such as Los Angeles or New York City.

But now everything has changed.

On Twitter, New York City Council Member Vickie Paladino shared a very disturbing incident that just occurred in her area…

Last night in Malba, a large group of individuals from outside my district conducted an illegal ‘takeover’ of a quiet residential street at approximately 12:30am. This is not the first time it’s happened.

A private security guard attempted to calm the situation — he was assaulted by the mob and his vehicle was set on fire. He suffered significant injuries. A local resident was also assaulted.

Response to this incident was less than ideal. Residents reporting the incident to 911 were told that ‘quality of life team’ and 311 should handle the situation. Unacceptable. In fact, these violent street takeovers should be met with maximum force by the police department.

We have NEVER had these problems before. Now it’s an epidemic. What changed? We stopped arresting criminals.

I am meeting this morning with the chief of department and the local precinct at the scene to discuss exactly what happened last night. I have already been assured that Malba will receive four dedicated patrol cars from this point forward, as well as additional security upgrades that we cannot disclose.

However, the city MUST do something to stop this lawlessness. All the speed cameras in the world do absolutely NOTHING to prevent these incidents — we need police response and the most severe consequences for these criminals, not to simply allow them to drive away after they’ve completed their mayhem.

These incidents are happening citywide, and they’re happening because there are no longer any real consequences to this kind of criminality. But let me make something very clear to the criminals — you are risking your lives bringing this chaos into our neighborhoods.

Why would the elite want to live in a place where this sort of thing is happening?

Why would anyone want to live in a place where this sort of thing is happening?

Of course conditions are not just deteriorating in our core urban areas.

In southeastern Wisconsin, thieves from South America are systematically looting home after home…

A wave of high-end residential burglaries across southeastern Wisconsin has prompted a coordinated law enforcement response and drawn political attention at both the local and national levels.

The Mequon Police Department (MPD) says the burglaries share striking similarities, suggesting a professional operation.

The suspects, dressed head to toe in black, with faces covered and gloves on, have entered homes through wooded backyards, often targeting cul-de-sacs or properties near golf courses.

Stolen items include jewelry, designer handbags, watches and cash, all consistent with organized theft groups that target affluent neighborhoods nationwide.

All over the nation, crime and violence are out of control.

If you have the resources to move somewhere more secure, that is probably a good idea.

But of course most of the population doesn’t have the resources to move somewhere more secure.

In fact, we have reached a point where millions upon millions of Americans are just trying to figure out a way to keep the lights on…

Misty Pellew’s family lived in the dark for several days this month.

Pellew’s power was shut off Nov. 13 because of $602 in unpaid bills, the latest in a string of financial humiliations that began six months ago after her husband lost his $20-an-hour excavation job in northeastern Pennsylvania. The recent government shutdown dealt another blow, delaying federal funding for programs that helped the family pay for food and utilities.

Although Pellew’s lights were temporarily turned back on last week, they were set to be disconnected again if she didn’t pay another $102. With an overdrawn bank account, she was bracing to be without power again. Last time, her family ate peanut butter and jelly sandwiches for dinner and slept in hoodies and gloves to keep warm.

This is what life looks like for so many people out there right now.

In New York City, residential power shutoffs are up fivefold compared to one year ago…

In some areas, such as New York City, the surge has been dramatic — with residential shutoffs in August up fivefold from a year ago, utility filings show.

Needless to say, Americans aren’t just getting behind on their power bills.

As economic conditions have steadily gotten worse, delinquency rates have risen to historic levels…

Credit card balances alone jumped $24 billion, reaching an all-time high, while the share of balances in serious delinquency—90 days past due—climbed to a nearly financial-crash level of 7.1 percent.

Auto loans tell a similar story, with serious delinquency rates at 3 percent, the highest since 2010. And a spike in resulting defaults has triggered a wave of repossessions in 2025, with 2.2 million vehicles already repossessed, per figures from the Recovery Database Network (RDN), and forecasts of a record 3 million by year’s end.

“Delinquencies, defaults, and repossessions have shot up in recent years and look alarmingly similar to trends that were apparent before the Great Recession,” the Consumer Federation of America said in a recent report.

When you are drowning in debt, relocating to a better place that will be more secure for your family is nothing but a pipe dream.

Most Americans will have to deal with whatever is ahead wherever they are located right now.

But the ultra-wealthy have enough money to live wherever they want, and the fact that so many of them are choosing to live in “fortress communities” says a lot about where things are heading.

Michael’s new book entitled “10 Prophetic Events That Are Coming Next” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.

*  *  * BLACK FRIDAY STARTS NOW

Tyler Durden Wed, 11/26/2025 - 13:40

Huge Explosion Kills 5 At Arms Depot In Idlib, Syria

On Wednesday a huge explosion rocked the town of Kafr Takharim in Idlib province in northwestern Syria, killing five people and injuring nine others, according to regional sources.

The blast and resulting large plume of smoke over the town unleashed immediate speculation that it could have been a US or coalition airstrike targeting terrorist entities. Israel has also frequently bombed Syria of late, so there is that possibility as well, though the Israelis don't typically bomb that far north near the Turkish border.

However, AFP is citing government security forces who say the deadly explosion was the result of an accidental detonation of a weapons depot.

Image source: Levant24

All of the deceased were workers at or near the weapons storage site, and it was "caused by a warehouse containing missiles and ammunition, and occurred due to work underway" - according to a Syrian official.

The AFP detailed, "Images circulating online showed widespread destruction, fire and damage to farmland, while videos showed shrapnel reaching shops and residential buildings."

The report reviewed further that "In August, four people were killed in an explosion at a weapons depot on the outskirts of Idlib, authorities said."

And the New Arab explains that the post-war situation has resulted in dangerous storage situations when it comes to arms and bombs:

Arms and ammunition depot explosions are common in Syria, which has been the scene of brutal conflict for 14 years and where weapons are often not properly secured, while bombs have also detonated as they are stripped down for scrap metal.

During the Obama years and first Trump administration, some US officials admitted that Idlib became the biggest al-Qaeda and terror safe-haven in the world. This is even after a US covert program helped jihadists take Idlib from Assad government forces in 2015.

Massive explosion leaves populated area completely scorched in Syria's Idlib countryside

Injuries reported after huge blast in ammo depot — SOHR pic.twitter.com/fJcT8nFwGk

— RT (@RT_com) November 26, 2025

Currently, Syrians in the region are returning to their homes only to find them occupied by foreign fighters, as even mainstream media has belatedly begun to acknowledge.

NPR this week has documented that Christians have often had their homes confiscated by Sunni jihadists, who are often foreigners. As Syrians attempt to return to their homes in the north after years of war, the following is a common scene:

He found foreign fighters living in the house. Someone had also ripped out most of his fruit trees – he never figured out who — and the harvests from his large olive groves, at the foot of the village, had been taken over by foreign fighters as well.

There were women living in his home, too. He couldn't tell who they were because he wasn't allowed to speak to them. He says they wore full black niqabs, leaving only their eyes uncovered. "The male fighters largely did not speak Arabic, so I could not communicate with them," he says.

A huge explosion rocked the Idlib countryside at what seems to be the site of an arms depot pic.twitter.com/9at5L7DMi4

— حـ ރ (@hassanspeaksss) November 26, 2025

Absurdly, the mainstream media is only now - after Assad was overthrown nearly a year ago - coming to admit and document the huge role that international jihadist terrorists played in accomplishing regime change in Damascus.

Tyler Durden Wed, 11/26/2025 - 13:20

JP Morgan Says Oil Prices Could Plunge Into $30s By 2027

Authored by Michael Kern via OilPrice.com,

• JP Morgan predicts the international crude benchmark, Brent, could drop into the $30s per barrel by 2027 due to an overwhelming market oversupply.

• Goldman Sachs forecasts the U.S. benchmark WTI Crude will average $53 per barrel in 2026 amid a 2 million bpd surplus and advises investors to short oil right now.

• The oil market is expected to rebalance in 2027 after the current large supply wave, including output from OPEC+ and non-OPEC producers in the Americas, works through the system.

The international crude benchmark, Brent, could dip to the $30s per barrel handle by 2027 as oversupply could overwhelm the market, according to a JP Morgan forecast posted by users on X.  

Brent Crude prices have dropped by 14% year to date, and traded relatively stable at $62.59 per barrel early on Monday, as the oil market awaits news from the renewed negotiations on peace in Ukraine. 

The U.S. and Ukraine held on Sunday in Geneva what the two sides described as “highly productive” talks and agreed to continue intensive work on a “refined” peace plan, which the U.S. first proposed last week. 

Despite the fears of a glut, analysts and investment banks don’t see oil prices moving down to $40 or below, even as oil is set to decline in the near term with strong supply from OPEC+ and the non-OPEC producers in the Americas.  

Peace in Ukraine could also weigh on energy prices as some sanctions and restrictions on Russia could be eased, analysts say. 

Oil prices are set to further drop into next year from current levels amid a large surplus on the market, with the U.S. benchmark WTI Crude expected to average $53 per barrel in 2026, according to Goldman Sachs.

The investment bank’s call for next year is that oil prices are on track for further declines and investors should short oil right now, Daan Struyven, co-head of global commodities research at Goldman Sachs, told CNBC last week. 

The surplus next year will be 2 million bpd on average, Goldman reckons, but notes that 2026 will be the last year of the current big supply wave hitting the market.

The oil market is set to rebalance in 2027 as 2026 will see “the last big oil supply wave the market has to work through,” Goldman’s Struyven added.   

Tyler Durden Wed, 11/26/2025 - 13:00

Armed Robber Targets Sam Altman's Ex-Boyfriend's House, Forces Transfer Of $11 Million In Crypto

Updated

A thief barged into a house owned by Lachy Groom - a wealthy tech investor who once dated OpenAI CEO Sam Altman, tied up a victim, and made off with $11 million in Crypto Saturday evening in San Francisco, the NY Post reports.

Sam Altman and Lachy Groom, attend the annual Allen & Company Sun Valley Conference in 2018 in Idaho. Getty Images

Dressed as a delivery worker, the armed robber rang the door at Groom's $4.4 million home on Dorland Street while carrying a white box, asks for Joshua - who lives with Groom - while claiming to be a UPS driver. The victim answers the door and identifies himself as Joshua. 

The thief then asked for him to sign for the package - asking if he can borrow a pen. The suspect then followed Joshua inside when a loud bang can be heard. 

Robber posing as a delivery driver steals $11,000,000 in crypto after pulling a gun and duct-taping the victim in San Francisco pic.twitter.com/Jny8HfVvGC

— BAY AREA STATE OF MIND (@YayAreaNews) November 24, 2025

According to the report, the suspect pulled a gun, tied up the victim with duct tape, and then stole $11 million worth of Ethereum and Bitcoin (exact method unknown), in what is believed to have been a hit by an organized crime group that the suspect was part of.

The suspect then tortured the victim, beating him while he held a phone up on loudspeaker as foreign voices on the line repeated his personal information that they had obtained. The thief then poured liquid on the victim before the crypto wallets were emptied.

The whole thing took around 90 minutes. 

Homeowner Lachy Groom, 31, is a venture capitalist and the ex-boyfriend of Open AI’s Altman, 40, who dated the billionaire sometime before he got married in 2024, sources with knowledge of their relationship said. Groom bought the property from Altman’s brother in 2021 for $1.8 million, property records show. Details of their relationship have not previously been reported. Attempts to reach Groom were not returned.

The Post has learned Joshua is a fellow tech investor who lives with Groom at the 4-bedroom Dorland Street home. 

Altman and Groom have invested together in various companies. Groom, a native Australian, has founded four startups and sold three before he turned 18. 

Sam Altman and Lachy Groom pose together in a social media image from 2014. Lachy Groom/Facebook

Prominent San Francisco tech investor Garry Tan shared the security footage from the heist on Monday morning - writing in a since-deleted tweet: "We have to find the perpetrator," adding "Time is of the essence." 

"Self custody of crypto seems like a good idea until it isn’t. Vault storage (at Coinbase or elsewhere) for long term holding is safest," said Tan. 

Correction: Article updated to reflect that Groom was not the one who was attacked. We apologize for the error.

Tyler Durden Wed, 11/26/2025 - 12:40

Rand Paul Warns Trump War In Venezuela Will 'Fracture' MAGA Movement

Via The Libertarian Institute

Senator Rand Paul said that President Donald Trump’s warmongering in Latin America could fracture the GOP. 

"I think once there’s an invasion of Venezuela, or if they decide to re-up the subsidies and the gifts to Ukraine, I think you’ll see a splintering and a fracturing of the movement that has supported the President," Paul told Margret Brennan on Sunday. "I think a lot of people, including myself, were attracted to the president because of his reticence to get us involved in foreign war."

Getty Images

Paul has been highly critical of the President ordering strikes on drug boats in the Caribbean and Eastern Pacific. The US has destroyed 22 ships, killing at least 83 people. The Senator has condemned the strikes as extrajudicial killings. 

The US has engaged in a massive military buildup in the Caribbean and threatened Venezuelan President Nicolas Maduro. Multiple reports have said the White House is preparing for strikes in Venezuela. 

Paul pointed to Secretary of State and National Security Advisor Marco Rubio for pushing regime change in Caracas.

"I think it’s clear that Senator Rubio, as a senator, was very much an advocate of regime change," he explained. 

Fractures have already emerged within Trump’s MAGA movement over his foreign policy. Some conservative commentators have demanded that Tucker Carlson and others be removed from the movement over their stance on Israel. 

Republican Representative Marjorie Taylor Greene recently announced her resignation from Congress after sparring with Trump on the Jeffrey Epstein files, Israel, and Venezuela. 

Sen. Paul has been loudly saying Congress must be involved and it either meets the legal definition of war or not...

The Admin is pretending we’re “at war” with Venezuela to justify blowing up boats all without a vote, without transparency, and without answering to Congress. If it’s war, declare it. If it’s not, stop acting like it is. pic.twitter.com/ATntKrnvpr

— Rand Paul (@RandPaul) November 24, 2025

Multiple polls have shown that invading Venezuela is widely unpopular with Americans. A Reuters/Ipsos poll from last week has found "just 21% of Americans support the idea of using the US military to oust Venezuelan President Nicolas Maduro, results that come amid a series of reports that the Trump administration is considering a regime change war in Venezuela."

Tyler Durden Wed, 11/26/2025 - 12:20

Georgia Prosecutor Nukes Trump's Election Interference Case That Fani Fumbled

Less than two weeks after a Georgia prosecutor took control of the 2020 election interference case against President Trump and several allies (the one Fani Willis fumbled), the case has been officially dropped. 

"Given the complexity of the legal issues at hand - ranging from constitutional questions and the Supremacy Clause to immunity, jurisdiction, venue, speedy-trial concerns, and access to federal records - and even assuming each of these issues were resolved in the State’s favor, bringing this case before a jury in 2029, 2030, or even 2031 would be nothing short of a remarkable feat," wrote Peter Skandalakis, executive director of the nonpartisan Prosecuting Attorneys’ Council of Georgia who was tasked with finding a new prosecutor to take on the case after Willis was removed by the Georgia appellate court. 

This adds to the pile of Democrat lawfare cases that have blown up in their faces, including those brought by special counsel Jack Smith on election interference and mishandling of classified documents.

Skandalakis said that while he considered severing Trump's case from his codefendants so they could be tried first, doing so "would be both illogical and unduly burdensome and costly for the State and for Fulton County." 

The Georgia case was brought by Willis in early 2021 after a January phone call became public in which Trump expressed frustration with Georgia Secretary of State Brad Raffensperger amid reports of ballots cast for Joe Biden which had been mysteriously 'found.' When Trump asked him to similarly 'find' votes for him, Democrats used it as the foundation of the case.

Willis, as we all know, tanked the case after it came out that she hired her lover to help prosecute the case - which Democrats viewed as their best chance to go to trial because it was handled by a local Georgia prosecutor vs. federal charges which could be pardoned. 

*  *  * BLACK FRIDAY STARTS NOW

Tyler Durden Wed, 11/26/2025 - 12:00

The post Trump RX: The Merger of Pharma Corruption and Trump Crazy appeared first on CEPR.

Strategy Unveils New Credit Gauge To Calm Debt Fears After Crypto Crash

Authored by Zoltan Vardai via CoinTelegraph.com,

Michael Saylor’s Strategy is attempting to calm investor concerns about its balance sheet after the recent Bitcoin market downturn and a sharp pullback in digital asset treasury (DAT) stocks.

Strategy, the world’s largest corporate Bitcoin holder, has rolled out a new credit rating dashboard based on the company’s preferred stock notional value, and claims to have another 70 years’ worth of dividend payment runway to service its debt, even if Bitcoin’s price remains flat.

“If $BTC drops to our $74K average cost basis, we still have 5.9x assets to convertible debt, which we refer to as the BTC Rating of our debt. At $25K BTC, it would be 2.0x,” said Strategy in a Tuesday X post.

The move comes as investors grow increasingly worried that falling crypto prices could force large DAT companies into liquidation, adding more selling pressure to an already weakened market.

Strategy’s BTC Credit dashboard. Source: Strategy.com

Strategy’s dividend runway and “robust” enterprise software cash flow are significantly reducing the liquidation risks for the company, according to Lacie Zhang, research analyst at Bitget Wallet.

“We view MicroStrategy’s 71-year dividend runway claim as realistic under a flat Bitcoin price scenario,” however, long-term projections are dependent on several uncertainties, including “market volatility or regulatory shifts,” Zhang told Cointelegraph.

“I’m not particularly concerned about near-term liquidations for the largest corporate BTC holder, as their diversified funding and hodl strategy positions them well for sustained growth.”

Strategy’s ongoing accumulation, she added, has contributed to broader “industry stability” and supported deeper institutional adoption.

Strategy’s hodl stance may prevent deeper Bitcoin declines, analyst says

Strategy’s ability to avoid forced selling could also help Bitcoin avoid falling below key psychological levels in future downturns, according to Ki Young Ju, founder and CEO of CryptoQuant.

Strategy’s strong financials are a positive signal for the next Bitcoin bear market, as the world’s largest corporate holder is “unlikely to sell,” he said.

This may save BTC from revisiting its realized price of around $56,000 during the next crypto bear market “because players like MSTR are unlikely to sell and those coins are effectively off the market,” wrote the analyst in a Friday X post.

Still, some of the leading DATs suffered significant stock crashes and declines in their market net asset value (mNAV), including Strategy, Bitmine, Metaplanet, Sharplink Gaming, Upexi and DeFi Development Corp.

The mNAV ratio compares a company’s enterprise value to the value of its crypto holdings. An mNAV below 1 makes it more challenging for companies to raise funds by issuing new shares, which may limit their cryptocurrency purchases.

Strategy key metrics, including mNAV. Source: Strategy.com

Strategy’s mNAV stood at 1.16 at the time of writing, meaning the company could still theoretically issue new shares to raise additional capital, according to Strategy’s dashboard.

Tyler Durden Wed, 11/26/2025 - 11:45

WTI Steady Near One-Month Lows Amid Peace Deal Talk, Record Crude Production

Oil prices are steady this morning near one month lows, after a tempestuous few days swinging around Russia peace deal headlines.

US President Donald Trump said “there are only a few remaining points of disagreement,” as he sent negotiators to more meetings, while the Ukrainian leader’s chief of staff said talks in Geneva had laid a “good foundation.”

Goldman said a peace deal may shave off about $5 a barrel from its base-case forecast of $56 next year.

“That would put Brent in 2026 in the low $50s,” analyst Daan Struyven told Bloomberg TV.

API reported a lackluster set of inventory data that calmed the market too...

API

• Crude -1.86mm

• Cushing

• Gasoline +539k

• Distillates +753k

DOE

• Crude +2.774mm

• Cushing -68k

• Gasoline +2.513mm

• Distillates +1.147mm

US Crude stocks rose for the 3rd time in the last four weeks as did product inventories...

Source: Bloomberg

... while Cushing stocks continue to test 'tank bottoms'...

Source: Bloomberg

US Crude production continues to hover near record highs...

Source: Bloomberg

WTI is hovering around $58, near one month lows...

Source: Bloomberg

Much of Russia’s oil and fuel is subject to heavy Western sanctions, with US restrictions on the two biggest producers kicking in last week. However, China, India and Turkey have been eager buyers of the discounted crude, so the impact on global prices from any lifting of curbs is hard to gauge.

“Minute adjustments between the US, Russia, Ukraine and the EU on proposed peace deals have been carefully digested by the market,” Standard Chartered analysts including Emily Ashford wrote in a note.

“Any positive signs of collaboration or agreement have resulted in short-term sell-offs, while the dialing-back of enthusiasm has bolstered prices.”

Oil has retreated by more than a fifth since the middle of June as the Organization of the Petroleum Exporting Countries and its allies restored barrels, while producers outside of the group also pumped more. Worldwide crude supply is expected to exceed demand by a record 4 million barrels a day next year, the International Energy Agency forecast this month.

Tyler Durden Wed, 11/26/2025 - 10:38

Today, in the Calculated Risk Real Estate Newsletter: Freddie Mac House Price Index Up 1.0% Year-over-Year in September

A brief excerpt:

Freddie Mac reported that its “National” Home Price Index (FMHPI) increased 0.13% month-over-month (MoM) on a seasonally adjusted (SA) basis in October.

On a year-over-year (YoY) basis, the National FMHPI was up 1.0% in October, down from up 1.1% YoY in September. The YoY increase peaked at 19.2% in July 2021, and for this cycle, and previously bottomed at up 1.1% YoY in April 2023. The YoY change in October is a new cycle low. ...

As of October, 26 states and D.C. were below their previous peaks, Seasonally Adjusted. The largest seasonally adjusted declines from the recent peaks are in D.C. (-3.2%), Florida (-3.0%) and Texas (-2.5%).

For cities (Core-based Statistical Areas, CBSA), 200 of the 387 CBSAs are below their previous peaks.

Here are the 30 cities with the largest declines from the peak, seasonally adjusted. Punta Gorda has passed Austin as the worst performing city. Note that 5 of the 7 cities with the largest price declines are in Florida.

Florida has the largest number of CBSAs on the list and Texas has the 2nd most.

There is much more in the article!

UBS: AI Mania Has More Fuel, Dubs GenAI The "Steam Engine Of The Mind"

As chatter about an AI-driven market bubble grows louder across Wall Street, with nearly half of BofA's Fund Manager Survey respondents calling the AI/data-center boom a bubble, UBS analysts are out with a note insisting there is plenty more bubble-blowing ahead. 

UBS analyst Andrew Garthwaite wrote that his bullish target for the MSCI AC World is 1,090 by end-2026 (+11%). But he noted that if GenAI delivers even half the productivity surge that late-1990s Tech was believed to produce, the S&P 500 could "easily" justify 7,000.

"We think Gen AI - 'the steam engine of the mind' - will increase productivity more than TMT did back in the late 1990s," Garthwaite told clients. 

He continued, "We also now have all 7 preconditions for a bubble that we are not yet in (historically, the P/E at a bubble peak has been 45x-72x on 12-month trailing earnings for 30-43% of global market cap versus Mag 6 today on 33x)." 

Garthwaite pointed to a previous analysis in the UBS Global Economics and Strategy Outlook that shows today's market performance patterns are similar to those in March 1998. 

"We also highlight that we believe we are far removed from any of the major catalysts that mark a bubble peak," he said. 

The analyst continued:

We think there is more justification for a bubble (which we are not yet in) to form than any of the many others we have seen owing to the uniquely quick adoption rate of Gen AI and the threat of monetisation of government debt (which would lead to a move from nominal to real assets). We see at least a 35% chance of a bubble fully forming, and that would justify 1090 MSCI AC World.

Other factors that are supportive for equities: i) The well-behaved nature of US wage growth (this allows the Fed to be proactive if necessary); ii) the historical performance of equities when we just miss a bear market (2 years later up 43% on average versus 34.6% so far) or when the Fed cut and there is no recession (up 17% a year later); and iii) it is too early to call an end to AI or Tech+ outperformance. The P/E of Tech+ relative to the market is close to its norm, earnings growth is expected to be better than the market until Q2 27, and earnings revisions are better than the market. There are many other supports such as hyperscalers being able to increase capex by c40% before capex is above 2025 operating cash flow, with ICT investment as a % of GDP still at average levels.

Near term, there is a risk of ongoing consolidation continuing. In early November, UBS Risk Appetite had been at a 5-year high and CTA positioning at an 8-year high. These indicators are normalising but are still above average; however, we would be surprised if the sell-off extended by another 5%.

Most important charts from Garthwaite's note:

Bubble preconditions are all in place ... the only missing ingredient is looser monetary policy.

The audience at the UBS European conference held on November 11 was asked: "Are we in a bubble?" 

Here's how they responded...

"In my opinion, the justification for a bubble to form is better than any of the many other bubbles that I have seen during the past 38 years doing global strategy," Garthwaite said. 

Far removed from the peak of a bubble in terms of valuation or catalysts...

ZeroHedge Pro subs can read the full UBS note in the usual place. Notably, the bank's position contrasts sharply with our earlier reporting:

• Fund Manager Survey: Most See AI As A Bubble, Are Done With Massive CapEx Spending, And Love EMs In 2026

• The Stunning Math Behind The AI Vendor Financing "Circle Jerk"

• Oracle Is First AI Domino To Fall After Barclays Downgrades Its Debt To Sell

• AI Megacaps Throw Off New Warning Lights — Or New Fuel — Depending on Your Religion

Meanwhile...

• Hedge Funds Unleash Stock-Buying Frenzy, Cover Tech Shorts

In short, it depends on which institutional desk you read - there's clearly a gap in views about where we are in the bubble cycle. UBS believes the current phase could extend for a few years, a bullish scenario that would coincide with President Trump's affordability push for low- to middle-income households during the midterm election cycle, while higher-income households continue to benefit from market gains: a perfect scenario. 

Tyler Durden Wed, 11/26/2025 - 10:25

Don't Wear Slippers, Pajamas At Airport, Transportation Secretary Duffy Urges

Authored by Bill Pan via The Epoch Times (emphasis ours),

U.S. Transportation Secretary Sean Duffy is asking Americans to dress “with some respect” while flying, as part of his campaign to restore civility to air travel.

Travelers check in at O'Hare International Airport in Chicago on Nov. 25, 2025. Kamil Krzaczynski/AFP via Getty Images

“Whether it’s a pair of jeans and a decent shirt, I would encourage people to maybe dress a little bit better, which encourages us to maybe behave a little better,” Duffy said on Nov. 24 while giving a Thanksgiving travel briefing at New Jersey’s Newark International Airport.

“Let’s try not to wear slippers and pajamas as we come to the airport,” he continued. “I think that’s positive.”

Duffy’s comments came as he warned of what he called a “degradation in civility” among plane passengers. He urged them to show more “common courtesy” and patience during the holiday rush, such as helping fellow passengers who struggle to lift bags into overhead bins and saying “please” and “thank you” to flight attendants.

He also asked travelers to curb behaviors that could irritate those around them, such as watching movies without headphones or removing shoes and placing their feet on the seatbacks in front of them.

“Just be cognizant and courteous. That’s the ask,” he said.

National Civility Push

Earlier this month, the Department of Transportation (DOT) launched a national civility campaign called “The Golden Age of Travel Starts With You.” It is intended to “jumpstart a nationwide conversation around how we can all restore courtesy and class to air travel,” the agency said.

As part of its new initiative, the department is encouraging travelers to reflect on five questions during their trip, including whether they are keeping children under control and “dressing with respect.”

The campaign invokes the memory of the mid-20th-century “Golden Age of Travel,” when Americans typically dressed up for flights. Today, comfort is often prioritized over formality, especially given the tightly spaced economy cabins and the rise of flight delays.

The campaign comes in part in response to what the department describes as a record surge in unruly passenger incidents, including confrontations with crew and fellow travelers.

The Federal Aviation Administration (FAA) reports that such incidents peaked in 2021 before dropping sharply in the years that followed, although incidents remain roughly twice as many as before the COVID-19 pandemic.

In 2021, the FAA started referring the most serious unruly-passenger cases to the FBI for potential criminal review. More than 310 of these cases had been referred since 2021 to the FBI under the partnership, the FAA said last August.

Thanksgiving Travel Outlook

The DOT’s civility push arrives just ahead of the Thanksgiving travel period, which the American Automobile Association expects to draw nearly 82 million people traveling at least 50 miles from home between Nov. 25 and Dec. 1.

Of those, about 6 million are expected to take domestic flights, a 2 percent increase from last year, according to the association. Air passenger volumes have hovered between 5 million and 6 million during Thanksgiving week in recent years.

Separately, on Nov. 16, the FAA announced it would roll back all restrictions on commercial flights at 40 major U.S. airports, including large hubs in New York, Chicago, Los Angeles, and Atlanta. Those limits had been imposed during the record-long federal government shutdown, which left air-traffic controllers working without pay for more than a month.

*  *  * BLACK FRIDAY STARTS NOW

Tyler Durden Wed, 11/26/2025 - 10:05

Chicago Manufacturing PMI Plunges In November

MNI's Chicago Business Barometer Report came in dramatically worse than expected for November, printing 36.3 (the lowest since May 2024), well below expectations of 43.6 and the prior print of 43.8

Under the hood, it was all ugly: 

• Prices paid rose at a faster pace; signaling expansion

• New orders fell at a faster pace; signaling contraction

• Employment fell at a faster pace; signaling contraction

• Inventories fell at a faster pace; signaling contraction

• Supplier deliveries rose at a faster pace; signaling expansion

• Production fell at a faster pace; signaling contraction

• Order backlogs fell at a faster pace; signaling contraction

And this confirms the plummet that we have seen in 'soft' data in aggregate since the shutdown was lifted...

Does it really feel like the worst of COVID currently in Chicago?

Tyler Durden Wed, 11/26/2025 - 09:55

Texas Becomes First US State To Buy Bitcoin For Its Strategic Reserve

Authored by Micah Zimmerman via BitcoinMagazine.com,

On November 20, Texas became the first U.S. state to buy Bitcoin for its Strategic Reserve, acquiring $5 million at roughly $87,000 per BTC, according to Lee Bratcher, President of the Texas Blockchain Council.

The purchase was made through BlackRock’s iShares Bitcoin Trust (IBIT) while the state finalizes plans for self-custody.

The move signals growing state-level interest in Bitcoin as a reserve asset. Texas had previously explored strategic Bitcoin legislation last year, wanting to create a Bitcoin reserve without using taxpayer funds. 

In June of this year, the Texas governor signed the legislation into law, creating a state Strategic Bitcoin Reserve.

Institutional investors are increasingly following suit. Harvard University’s endowment recently tripled its IBIT holdings to $442.8 million, making it the university’s largest publicly disclosed investment. 

Emory University and Abu Dhabi’s Al Warda Investments have also significantly increased Bitcoin ETF exposure.

Bitcoin’s price is currently trading near $87,500, roughly 30% below its all-time high. Lee Bratcher was the first to disclose this news. 

“Texas will eventual self-custody bitcoin,” Bratcher said, “but while that RFP process takes place, this initial allocation was made with BlackRock’s IBIT ETF.

Bratcher is the President and Founder of the Texas Blockchain Council, an industry association with over 100 member companies and hundreds of individuals promoting Texas as a hub for Bitcoin and blockchain innovation. 

He actively championed the state’s Bitcoin reserve legislation, working on the ground to guide it through the state Senate.

Texas isn’t the only state interested in buying bitcoin 

In the legislation explored last year, Texas State Representative Giovanni Capriglione filed a bill to create a Strategic Bitcoin Reserve for the state. 

The legislation proposed that the state buy and hold bitcoin as a strategic asset, store it in cold storage for at least five years, allow resident donations, and enable state agencies to accept and convert cryptocurrencies to bitcoin. 

It also mandated transparency through yearly audits and reports. Modeled after a federal proposal by President Donald Trump and Senator Lummis, the bill mirrored the growing global interest of bitcoin. 

Earlier this month, New Hampshire became the first government worldwide to approve a $100 million Bitcoin-backed municipal bond. The state’s Business Finance Authority (BFA) authorized the conduit bond, allowing private companies to borrow against over-collateralized Bitcoin held in custody, with repayment risk resting solely on the collateral. 

Borrowers must post roughly 160% of the bond’s value in Bitcoin, and automated liquidation protects bondholders if values drop. Fees and any BTC appreciation will fund the state’s Bitcoin Economic Development Fund. 

This move follows New Hampshire and Arizona’s earlier creation of a Strategic Bitcoin Reserve. 

Tyler Durden Wed, 11/26/2025 - 09:25

John Deere Calls "Large Ag Cycle" Bottom Next Year - Just As China Ramps Up U.S. Soybean Buying

Economic conditions for American farmers have been brutal this year, as China shifted much of its soybean and other commodity purchases to South America. But the new Trump-Xi trade deal has sparked hope, with Beijing ramping up U.S. crop purchases once again. If sustained, this could signal that the worst of the farm-sector downturn is finally behind us.

American farmers finally received some clarity from equipment-maker John Deere, which said Wednesday morning in an earnings update that the bottom of the large agricultural cycle may materialize in 2026. 

"Looking ahead, we believe 2026 will mark the bottom of the large ag cycle," John May, chairman and CEO of John Deere, wrote in a statement. 

Deere's fiscal fourth-quarter outlook for 2026 highlights just how fragile the U.S. farm economy remains. It estimated fiscal-year net income between $4 and $4.75 billion, well below the $5.31 billion Bloomberg Consensus, sending shares down about 2% in premarket trading in New York. Deere shares are up 17% on the year, as of Tuesday's closing. 

Here's a snapshot of Deere's mixed quarter, beating estimates on several key lines while showing continued margin pressure across major segments (courtsey of Bloomberg): 

Headline Results

• EPS: $3.93 (vs. $4.55 y/y), topping the $3.88 estimate
• Net income: $1.07B, down 14% y/y but slightly above expectations
• Total net sales & revenue: $12.39B, up 11% y/y

Production & Precision

• Ag: Sales: $4.74B, up 10% y/y and ahead of estimates
• Operating profit: $604M, down 8% y/y
• Margin compression continues (12.7% vs. 15.3% y/y)

Small Ag & Turf:

• Sales: $2.46B, up 6.5% y/y and stronger than expected
• Operating profit collapsed to $25M (-89% y/y)
• Margin plunged to 1% (vs. 10.1% y/y)

Construction & Forestry:

• Sales: $3.38B, up a strong 27% y/y
• Operating profit: $348M, up 6% y/y
• Margins slipped to 10.3% from 12.3% y/y

Deere's call that the agricultural cycle will bottom next year comes as the Trump-Xi trade agreement aims to boost U.S. crop shipments. Rising export demand should help improve farmer sentiment and incomes, laying the groundwork for a more meaningful farm-sector recovery.

The latest word from Reuters is that China has purchased at least 10 cargoes of U.S. soybeans worth around $300 million in contracts signed on Tuesday. The purchases were confirmed by two traders with direct knowledge of the deals. This comes just two days after Trump and Xi spoke by phone, during which Trump touted a "great deal for U.S. farmers."

Tyler Durden Wed, 11/26/2025 - 08:40

Initial Jobless Claims Tumble To 7 Month Lows

The number of Americans filing for jobless benefits for the first time tumbled to just 216k last week - the lowest since April

Source: Bloomberg

Since the shutdown was lifted, jobless claims among workers in the 'Deep Tristate' have tumbled...

Source: Bloomberg

Continuing jobless claims ticked higher - remaining above the 1.9 million level, near its highest since Nov 2021

Source: Bloomberg

...so much for the struggling labor market?

Tyler Durden Wed, 11/26/2025 - 08:36

The DOL reported:

In the week ending November 22, the advance figure for seasonally adjusted initial claims was 216,000, a decrease of 6,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 220,000 to 222,000. The 4-week moving average was 223,750, a decrease of 1,000 from the previous week's revised average. The previous week's average was revised up by 500 from 224,250 to 224,750.
emphasis added

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 223,750.

Political Fallout Is Biggest Risk For Market After 'Botched' UK Budget

“Markets have had to catch up pretty quickly”

The astonishing early reveal of the UK budget’s main measures is causing chaos, with volatile moves in bonds and the pound...

Rachel Reeves’ Budget raises taxes by £26bn, taking the burden to an all-time high of 38 per cent of GDP by the end of the parliament, according to an accidentally released forecast by the Office for Budget Responsibility.

The OBR’s assessment of Reeves’ Budget was published amid chaotic scenes before noon on Wednesday, around 45 minutes before the chancellor delivered her crucial second Budget.

It revealed that Reeves will freeze all personal income tax thresholds until 2030-31, in a move that is expected to raise £8.3bn a year and is the biggest tax-raising measure.

The second-biggest tax measure is a raid on salary sacrifice pension contributions, which will raise an additional £4.7bn. Among the other measures mentioned are charges on electric cars raising £1.4bn, gambling duty reform to bring in £1.1bn, and a council tax surcharge on homes worth more than £2mn, which will raise £400mn in 2029-2030.

Eir Nolsøe summarizes the headlines thus:

• Personal tax thresholds will be frozen until end of decade, raising £8 billion. This will pull 780,000 more people into paying the basic rate of income tax and create 920,000 more higher-rate tax payers.

• National Insurance on salary-sacrificed pension contributions will bolster the public coffers by £4.7 billion.

• Increasing tax rates on dividends, property and savings income by two percentage points, raising £2.1 billion.

• A new mileage-based charge on electric and plug-in hybrid cars from April 2028, at around half the fuel duty paid by petrol drivers. This will raise £1.4 billion.

• A reduction in writing down allowances in corporation tax that will cost firms £1.5 billion. These allowances allow big companies to deduct a percentage of the value of certain items from their profits each year.

• An overhaul of gambling taxes that will bring in £1.1 billion while changes to capital gains tax reliefs on employee ownership trusts raising £0.9 billion.

• The trailed ‘mansion tax’ will hit owners of properties over £2 million from April 2028. It will be implemented as a council tax surcharge and raise £0.4 billion a year by the end of the decade.

• Borrowing to fall from 4.5% of GDP in 2025-26 to 1.9% by 2030-31.

• Meanwhile, debt as a share of GDP will end the decade at 96% of GDP, up from 95% this year. This is two percentage points higher than anticipated in March and twice the debt level of the average rich country, according to the OBR.

• The fiscal watchdog predicts growth will be 1.5% on average a year until the end of the decade, a downgrade of 0.3 percentage points from March. The OBR blamed this on a weaker outlook for productivity gains.

• Welfare U-turns and ending the two-child benefit are poised to cost the taxpayer £9 billion a year by the end of the decade.

Who are the winners and losers of today’s budget?

Let’s start with the winners:

• Lower-income families with children, thanks to the chancellor’s decision to scrap the two-child benefit cap

• Pensioners and low-paid workers also benefit from higher minimum wage rates and state pensions, while all households will enjoy cheaper energy bills

• And let’s not forget the bond market which been positively (so far) surprised by a bigger-than-expected £22 billion buffer

• High street retailers thanks to changes to the business rates regime

• Investment companies owing to the changes being made to ISA to encourage more investment in stocks

The losers list is much longer, and broader. A few include:

• Millions will be dragged into paying higher rates of income tax

• Owners of more expensive properties facing higher levies, which has hit shares in some homebuilders

• Bank of England policymakers are now expected to reach their inflation target a year later than previous forecasts

• Overall, real household disposable income growth is projected to vanish over the next years

• Online gambling companies which will face significantly higher duties

As the most unpopular UK Chancellor ever...

Reeves defended her choices, saying there would almost be £22 billion of headroom in the public finances as a result of her Budget.

I said there would be no return to austerity, and I meant it. This Budget will maintain our investment in our economy and our National Health Service. I said I would cut the cost of living, and I meant it: this Budget will bring down inflation and provide immediate relief for families. I said that I would cut debt and borrowing, and I meant it: because of this Budget, borrowing will fall as a share of GDP in every year of the forecast.

Our net financial debt will be lower by the end of the forecast than it is today and I will more than double the headroom against our stability rule to £21.7 billion – meeting our stability rule and meeting it a year early.

These are my choices. Not austerity. Not reckless borrowing. Not turning a blind eye to unfairness. My choice is a Budget for fair taxes, strong public services, and a stable economy. That is the Labour choice.

However, there’s concern among cyber security experts as to how the OBR leak today happened too.

“It’s truly astonishing that such a market sensitive document could find its way online via official channels in advance of the Chancellor’s speech,” Kenny MacAulay, CEO of accounting software platform Acting Office said by email.

“Basic compliance requirements should be in place to prevent this from happening, and a complete review is required about how and why such a major breach would take place.”

James Baxter Derrington says the Budget “has broken the deal the Labour Party made with the nation and breached its manifesto”.

The extension of the income tax threshold freeze – Rishi Sunak’s invidious invention – is a direct increase in the taxes that working people pay, to the tune of more than £8 billion. Every penny of this will be swallowed up, not by improved public services for us all but by increased benefits payments to a select few. In fact, it will barely cover half of that cost.

For a Chancellor so dedicated to targeting those with the “broadest shoulders”, she has picked one of the most regressive taxes possible. This stealth tax will not target the wealthiest but disproportionately affect those working desperately hard on lower salaries. A party founded on the principle of supporting the working man has just betrayed him.

Continuing in the spirit of prioritising state reliance over rewarding work, Reeves has slashed the amount employees can put into their pensions via salary sacrifice schemes. Don’t worry about funding your own retirement through prudent saving, this government is keen to create a generation of pensioners reliant on the state.

The Telegraph highlights that Reeves has now raised taxes by £70 billion across her two Budgets, more than seven times the £8.5 billion mentioned in the manifesto. Meanwhile the national debt will rise to £3.5 trillion by 2031, more than double the £1.6 trillion before the pandemic (on the measure of public sector net debt excluding the Bank of England, the metric used under the Conservatives) as Rachel Reeves’s borrowing mounts up.

But as Bloomberg strategist, Simon White notes, UK market spreads face the bigger risk from the potential political fallout if the budget lands badly, rather than from any major surprises in the announcement.

Never in recent memory has a UK budget had such grim anticipation, nor been so botched in its preparation.

A smorgasbord of leaks and U-turns has preceded what is expected to be a smorgasbord of tax rises and extra spending commitments.

Nevertheless, the market is not yet having a nervous breakdown. A combination of risk spreads and other UK markets, such as sterling, asset swap spreads and bond spreads, has widened recently, but is still well below where it was at the time of Reeves’ first full budget in October 2024.

The market is giving a cautious pass to Reeves’ tax-raising plans (which have been mostly leaked over the last 24 hours), but it’s an uneasy truce. It’s not inconceivable, as also discussed by my colleagues earlier, that pressure will mount on Reeves to quit if her party’s backbenchers don’t like her policies, or it lands especially badly with the electorate.

Unless the narrative shifts away from soaking working people and savers to inflate an already bloated benefits bill, the blowback may be considerable.

If Reeves comes under risk, the Prime Minister would be in the firing line too. There is talk of a “coronation” for Health Secretary Wes Streeting after the local elections in May. Markets discount to the present, and so does politics. Pressure might grow for a change of leadership much sooner.

Streeting would not be expected to be as fiscally loose as some other leadership candidates, but he is an untested quantity. Nor do we know who his Chancellor would be. What we do know is that a typical Labour MP did not get elected to save money.

Markets abhor uncertainty as well as spendthrift politicians. Risk spreads will widen much more sharply if Reeves plays a poor hand badly today.

Andrew Griffith, shadow business secretary, said:

“This Budget process has been a fiasco from start to finish and the unprecedented leak of the OBR’s report is just the final embarrassment.”

Tyler Durden Wed, 11/26/2025 - 08:26

The Middle Class Is Cracking

Authored by Charles Hugh Smioth via OfTwoMinds blog,

Borrowing more to maintain spending is hanging on by one's fingernails, not middle-class security.

The middle class is cracking, but if you want a statistic that "proves" this, there isn't one. The cracking isn't a statistic, it's the culmination of observations logged over the past 15 years about these critical measures of what it takes to qualify as middle class:

1. How much income a household needs to secure the minimum qualifications of a middle class standard of living / quality of life, based on the conventional standards of the 1960s - 1980s. (The qualifying characteristics are listed below.)

2. The upward or downward mobility of those claiming middle class status. Put another way: if it requires monumental effort and perfect execution to achieve the minimum qualifications of middle class security, then that isn't a "middle class" set of qualifications, that's an elite set of qualifications.

3. Precarity: how much (or little) financial disruption does it take to tip a household into a down-spiral that becomes increasingly difficult to escape. The foundation of any non-trivial definition of "middle class" (any definition that is solely based on income is trivial) is the financial resilience offered by ownership of assets, particularly income-producing assets, and savings that can be tapped to handle emergencies.

I've been addressing these issues for many years. Here are a few of my posts on the decay of the middle class:

Priced Out of the Middle Class (June 28, 2012)

What Does It Take To Be Middle Class? (December 5, 2013)

Misplaced Pride: Most of the "Middle Class" Is Actually Working Class (June 14, 2019)

Squeezed for Decades, America's Working Class Is Finally Up Against the Wall (May 13, 2024)

Here are the minimum requirements to qualify as middle class, drawn up by myself and readers:

1. Meaningful healthcare insurance. By meaningful I mean healthcare insurance that doesn't have high deductibles--if you have to pay thousands of dollars before the insurance kicks in, that's not insurance, it's a simulation of insurance--and insurance that isn't reduced to meaninglessness by limitations on coverage and/or zero coverge for core elements of healthcare.

2. Significant equity (25%-50%) in a home or other real estate.

3. Income/expenses that enable the household to save at least 6% of its net income.

4. Significant retirement funds: 401Ks, IRAs, etc.

5. The ability to service all debt and expenses over the medium-term if one of the primary household wage-earners lose their job.

6. Reliable vehicles for each wage earner.

7. If a household requires government assistance to maintain the family lifestyle, their Middle Class status is in doubt.

8. A percentage of non-paper, non-real estate hard assets such as family heirlooms, precious metals, tools, etc. that can be transferred to the next generation, i.e. generational wealth.

9. Ability to invest in offspring (education, extracurricular clubs/training, etc.).

10. Leisure time devoted to the maintenance of physical/spiritual/mental fitness.

11. Continual accumulation of human and social capital (new skills, networks of collaborators, markets for one's services, etc.)

12. Family ownership of income-producing assets such as rental properties, bonds, family-owned business, etc.

The absolute scale of these requirements is less important than all twelve being included in the household's quiver. In other words, it's not necessary to own equity worth millions, but it is important to own meaningful equity across the range of assets listed above.

Back in 2012, I went through each requirement and arrived at a minimum household income of $106,000-- adjusted for inflation, the equivalent sum today is $152,000. Before you scoff, please read the entirety of Michael Green's careful analysis of what qualifies as "poverty level income" and "middle class income:" How a Broken Benchmark Quietly Broke America (via Cheryl A.)

Green concluded the minimum income needed today is $140,000-- more or less the same as my estimate, especially given his detailed explanation of why this minimum is barebones.

Green's analysis of middle-class precarity dismantles all the statistical rah-rah presented as evidence that we're all getting richer every day, in every way. Like insurance with stupidly high deductibles, this isn't middle class security, it's a simulation of middle class security.

This report in the Wall Street Journal suggests this reality is now so undeniably obvious that the WSJ had to address it: The Middle Class Is Buckling Under Almost Five Years of Persistent Inflation: Workers growing tired of economy in which everything seems to get more expensive.

As Green explained, soaring costs for big-ticket essentials--all the things required to participate in the economy in a meaningful fashion--are crushing the middle class.

Unless you lucked into an early seating for the banquet of wealth served up by The Everything Bubble--then life is good: Feeling Great About the Economy? You Must Own Stocks: Investors' rosy feelings about their stock market gains are powering spending--but it's a different story for everyone else.

This has generated a generational divide in security/precarity and wealth accumulation: those who bought stocks and housing long ago when they were relatively cheap have piled up wealth not by being more productive, but by becoming early owners of capital that has been goosed by policies seeking to boost spending via "the wealth effect."

That this bubble-generated wealth flowed predominantly to older households with incomes that enabled asset purchases effectively made the rich richer. Those without these advantages lost ground, and absent the cushion of wealth piled up by The Everything Bubble, their claim to middle-class security is more a simulation than the real thing.

The middle class is cracking, and the Everything Bubble hasn't even started to pop yet; once it does, job losses will accelerate due to the self-reinforcing nature of job losses reducing income and spending which then triggers more job cuts. How the U.S. Economy Became Hooked on AI Spending: Growth has been bolstered by data-center investment and stock-market wealth. A reversal could raise the risk of recession.

This chart illustrates the reality: the already-wealthy have pulled away as financialization, globalization, precarity and inflation gutted the middle class.

The solidity and economic dominance of the US middle-class is illusory. The middle class is cracking, and borrowing more to maintain spending is hanging on by one's fingernails, not middle-class security.

*  *  *

My new book Investing In Revolution is available at a 10% discount ($18 for the paperback, $24 for the hardcover and $8.95 for the ebook edition) through November. Introduction (free)

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Tyler Durden Wed, 11/26/2025 - 08:05