A Crisis of Confidence: The Fed’s Posturing Obscures an Economy in Distress
"The disconnect between economic reality and public messaging must end."
COLUMBUS, Wis., April 28, 2025 (GLOBE NEWSWIRE) -- As CEO of First American Properties, Michael Eisenga feels compelled to speak candidly about the state of our economy and the misplaced optimism that continues to dominate headlines. While recent shifts in rhetoric acknowledge economic challenges, this recognition is long overdue. We are not entering a downturn—we've been in one.
The Federal Reserve’s recent actions and positioning amount to grandstanding at a time when clarity and humility are needed. The data is unambiguous:
- Of the one-third of companies that reported earnings as of last week, 65% missed top-line revenue estimates—a clear sign of widespread demand deterioration.
- New multifamily apartment lease rates tell a similar story: less than 50% were leased at the end of Q4 2024, reflecting weak housing demand.
- The Cleveland Fed’s new rent index, released last week, points to shelter deflation, a primary contributor to declining CPI, and a warning sign for broader economic activity.
“The notion that our current struggles are solely the result of trade tensions is misleading. The economy was already on unstable footing well before the trade war escalated. We are now facing the consequences of structural imbalances and unsustainable monetary policy” says Michael Eisenga.
Input costs are surging, yet consumers simply cannot absorb these increases. This has translated into erratic investor behavior, with capital fleeing to traditional safe havens: gold is up, while the dollar and bonds are under pressure. Dislocation is becoming the norm, with currency market disruptions—dollar-to-yen and dollar-to-euro—gaining momentum as international players seek to reduce dollar exposure.
Looking ahead, first-quarter GDP, to be reported April 30, could very well show a contraction, and April’s payrolls are expected to reflect the weight of federal layoffs. The job market is not resilient—it is fragile. Bankruptcy filings are running at their fastest pace since 2010, and 90-day delinquency rates are the highest since the Global Financial Crisis.
Lending across the financial sector is stagnant, except among large banks—and even then, the growth is driven primarily by loans to non-deposit financial institutions (NDFIs) like private equity firms, hedge funds, and additionally regional banks. This concentration is sucking liquidity from the broader market and contributing to rate instability, preventing the downward adjustments the economy needs.
We are witnessing a collapse in consumer confidence. The University of Michigan’s Sentiment Index plunged to 52.2 in April, a 32% drop since January, the most dramatic three-month decline since 1990. The Conference Board’s index has now fallen to 97, the third consecutive monthly drop.
Michael Eisenga further states “This is not a sudden crisis—it’s a long-building reckoning. For years, we lived in an economic simulation: mortgage forbearance, suspended student loan payments, $15 trillion in stimulus, and rent holidays. These policies delayed consequences but could not prevent them. Now, reality is asserting itself, and momentum has turned sharply.”
The media and policymakers are only just beginning to acknowledge what many of us in business have seen for the past few years. The same voices that recently declared the economy "strong" are now reversing course—without accountability. This hypocrisy damages trust and further destabilizes an already fragile environment.
The FED should take decisive actions at their May meeting and begin cutting interest rates earnestly.
Michael Eisenga
Chief Executive Officer
First American Properties
meisenga@firstamericanusa.com
