Imagine if you and your buddies walked into a studio and tried to make a song so bad you improvised some lyrics on the spot with a piano, spliced together some conga drum tracks, and then went back into the studio later and had another guy play some horrific keyboards. Then imagine that you were so unimpressed with the result that you created a fictitious band and released the song under that name for the express purpose of getting DJs to play your real band’s better music.
Then imagine that the ugly song becomes such a monster hit you must form a real band in the fake band’s name just to play that one-hit-wonder.
Sounds crazy, right?
Well, that’s exactly what happened this week in 1969 to the actual (fake) band Steam with their song “Na Na Hey Hey (Kiss Him Goodbye).” You’ve probably heard the song’s chorus break out spontaneously at sporting events to cast off the losing team. Or perhaps you recall the music from this scene in Remember the Titans. It’s even been a mainstay of a WWE matches.
The hook is so infectious you’ll never get it out of your head. If there were a thermonuclear war tomorrow, three things would survive: Cockroaches, scorpions, and the hook from this song.
This month’s economic indicators are a lot like that: surviving and thriving, no matter the environment.
Let’s start with the obvious point: Consumers are still spending in the Black Hills, as evidenced by more than $820 million in gross sales last month. And builders are still building, setting a record for new building valuations: $392 million as of last month, but well over $400 million at the time of this writing. More importantly, in the battle between wages and housing, housing costs have risen at almost half the rate of wages. This is all good news, especially as the year-over-year inflation numbers for the region are now below the generally accepted target of 3%. Labor force participation is still higher than historical numbers, and unemployment is very low.
Primary sector jobs are also up.
This is all to say it’s time for the Fed to cut interest rates. If they wait much longer, they risk squandering consumer sentiment, builder sentiment, housing sentiment, or any other type of sentiment we can make up and killing legitimate projects with interest-rate risk. The market seems to agree, as mortgage rates have recently tumbled in anticipation.
Take it to the bank (pun intended): We can’t see a scenario in which the Fed doesn’t cut rates at the next opportunity. It would be absolute madness and shocking if they don’t. And no one wants to see them kiss this economy goodbye, especially during the holiday spending season.
Stay safe and God-speed.
Tom
