17 Facts That Prove The U.S. Economy Is A Complete And Total Disaster Zone At This Point

If you know people that actually believe that the U.S. economy is moving in a positive direction, just show them this article.  In all the years that I have been writing about the economy, I have never seen anything that even comes close to what we are experiencing now.  More than 100,000 businesses have permanently failed, and tens of millions of Americans have lost their jobs.  If you still have a good job you should cling to it with all of your might, because there are so many families that have no idea how they are going to pay the bills next month, or the month after that, or that month after that.  When it gets to the point where you can’t even pay the rent or the mortgage, financial worries can absolutely consume your life.  If you have been there, you know exactly what I am talking about.  And if you have children, that just makes things even worse.  How do you explain to them that “home” is no longer “home”?

Another group of people that I feel really badly for are all the business owners that have had their dreams absolutely shattered.  Starting a small business from nothing and building it into a success takes a massive amount of work, and I have a tremendous amount of respect for anyone that is able to do that.

Unfortunately, so many once thriving small businesses have now been destroyed by the events of 2020.  For a lot of those small business owners, it isn’t just time and energy that have been lost.  When you make your small business your passion, it becomes a part of who you are, and a lot of small business owners will never be the same again after this.

So please keep in mind that there are real people and real dreams behind each of the numbers that I am about to share with you.  The following are 17 facts that prove the U.S. economy is a complete and total disaster zone at this point…

#1 According to the San Francisco Chamber of Commerce, more than half of all the storefronts in the entire city of San Francisco are no longer in business.

#2 Just a few hours ago, New York City reported that it had an unemployment rate of almost 20 percent during the month of July.

#3 Speaking of New York, 83 percent of all restaurants in the city were unable to pay their full rent last month.

#4 In 2020, the state of Louisiana has lost twice as many jobs as it did after Hurricane Katrina.  By the way, many are concerned that Hurricane Laura could soon become a similar monster storm.

#5 In the state of South Carolina, an eye-popping 52 percent of all renters “are at risk of eviction”.

#6 Americans now owe more than 21 billion dollars in unpaid rent.

#7 Overall, 27 percent of all Americans did not make their rent or mortgage payment last month.

#8 According to the Mortgage Bankers Association, the delinquency rate on residential mortgages increased by 386 basis points last quarter.  That was the most rapid rise that we have ever seen by a very wide margin.

#9 U.S. bankruptcies are already at their highest level in 10 years and they are expected to surge dramatically as we approach the end of this calendar year.

#10 For companies with more than 1 billion dollars in assets, it is being projected that there will be a record number of bankruptcies in 2020.

#11 World trade plunged to the “lowest levels on record” during the month of June.

#12 The percentage of hotel mortgages that are 30 or more days delinquent soared to a whopping 23.4 percent last month.

#13 American Airlines just announced that they will be eliminating 19,000 jobs next month.

#14 31 percent of U.S. workers that were brought back to work after being laid off during the early stages of this pandemic have been laid off a second time, and another 26 percent have been told that layoffs may be coming soon.

#15 According to one recent survey, about half of all U.S. workers that have been laid off during this pandemic believe that their jobs losses are permanent.

#16 The IRS is projecting that it will receive 37 million fewer W-2 forms for this year than originally anticipated.

#17 Over the last 22 weeks, more than 57 million Americans have filed new claims for unemployment benefits.  In all of U.S. history, we have never seen anything that is even worth comparing to this.

Many of the numbers in that list are so catastrophic that it is difficult to believe that they are actually true.

What we experienced back in 2008 and 2009 was a “deep recession”, but what we are experiencing now is so much worse.

And at this point even the mainstream media is admitting that this new downturn will be with us for a long time.  For example, the following comes from a CNN article entitled “We’ll be stuck in this economic slump for years, economists say”

America remains in a deep downturn and is running a serious risk of a worsening recession that will last at least another year, economists warned Monday.

About half of the National Association of Business Economics members expect US gross domestic product — the broadest measure of the economy — won’t return to its pre-pandemic level until 2022. A majority of those experts also say the US job market will be back to its February level in 2022 at the earliest.

Unfortunately, those projections are actually way too optimistic.  Industry after industry is in the process of unraveling, major economic bubbles are bursting all around us, and the economic pain that is on the horizon is going to dwarf what we are going through at this moment.

The mainstream media admits that a “collapse” has happened, but they still believe that eventually things will turn around and get back to where they were before.

And there are some people out there that actually believe that America’s greatest days of economic prosperity are still ahead of us.

You can go ahead and believe that if you want, and I definitely understand that many people would prefer to be optimistic about the future.

But sticking our heads in the sand won’t make the facts go away.  It has taken decades of catastrophic decisions to get us to this point, and anyone that thinks we can just snap our fingers and turn things around is just being delusional.

***Michael’s new book entitled “Lost Prophecies Of The Future Of America” is now available in paperback and for the Kindle on Amazon.com.***

About the Author: My name is Michael Snyder and my brand new book entitled “Lost Prophecies Of The Future Of America” is now available on Amazon.com.  By purchasing the book you help to support the work that my wife and I are doing, and by giving it to others you help to multiply the impact that we are having on people all over the globe.  I have published thousands of articles on The Economic Collapse BlogEnd Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe.  I always freely and happily allow others to republish my articles on their own websites, but I also ask that they include this “About the Author” section with each article.  In addition to my new book, I have written four others that are available on Amazon.com including The Beginning Of The EndGet Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned)  The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions.  I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.  During these very challenging times, people will need hope more than ever before, and it is our goal to share the gospel of Jesus Christ with as many people as we possibly can.

Housing Crash 2: We Have Never Seen Mortgage Delinquencies Rise This Fast In U.S. History

If our economic numbers were going to improve substantially, now would be the time for it to happen.  The COVID-19 pandemic seems to have hit a plateau for the moment, the civil unrest in our major cities has been reduced to a dull roar, and millions of Americans that originally lost their jobs have now gone back to work.  If we are going to get some glimmers of hope for the economy, this is when we should see them, because the environment does not look promising once the summer ends.  Unfortunately, the numbers that we keep getting just continue to directly contradict the narrative that any sort of a “recovery” is taking place.  In fact, the Mortgage Bankers Association is reporting that the delinquency rate on residential mortgages shot up a whopping 386 basis points last quarter…

The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 8.22 percent of all loans outstanding at the end of the second quarter of 2020, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.

The delinquency rate increased 386 basis points from the first quarter of 2020 and was up 369 basis points from one year ago.

When I first saw that number, I could hardly believe it.

386 basis points in a single quarter?

I had never heard of such carnage before, and the Mortgage Bankers Association is telling us that this was “the biggest quarterly rise” in the history of their survey…

“The COVID-19 pandemic’s effects on some homeowners’ ability to make their mortgage payments could not be more apparent. The nearly 4 percentage point jump in the delinquency rate was the biggest quarterly rise in the history of MBA’s survey,” said Marina Walsh, MBA’s Vice President of Industry Analysis.

The delinquency rate on FHA loans is particularly troubling.

During the first quarter, the delinquency rate on FHA loans was 9.7 percent, but by the end of the second quarter that number had shot up to 15.7 percent

Fast forward to today, when the dam of pent up mortgage delinquencies cracked some more, with the Federal Housing Administration reporting that its mortgages which represent the affordable path to homeownership for many first-time buyers, minorities and low-income Americans, now have the highest delinquency rate in at least four decades.

The share of delinquent FHA loans rose to 15.7% in the second quarter, up a whopping 60% from about 9.7% in the previous three months and the highest level in records dating back to 1979, the Mortgage Bankers Association said Monday. The delinquency rate for conventional loans, by comparison, was 6.7%.

We have never seen anything like this before, and these numbers seem to indicate that we are heading for a crisis that will be even worse than the subprime mortgage meltdown that we witnessed during the last recession.

Of course the reason why there are so many delinquencies is because tens of millions of Americans have lost their jobs in 2020.

According to the MBA, mortgage delinquency rates are shooting up the fastest in the states where the job losses have been the most severe

Mortgage delinquencies track closely with the availability of jobs. The five states with the largest quarterly increases in delinquency rates were New Jersey, Nevada, New York, Florida, and Hawaii – all with a prevalence of leisure and hospitality jobs that were especially hard-hit by the COVID-19 pandemic.

The fastest way to fix this emerging crisis would be to get millions of newly unemployed Americans back to work as quickly as possible, and recently there has been some modest improvement in the employment numbers.

However, it is becoming very clear that millions upon millions of the jobs that have been lost during this pandemic are never coming back.  In fact, one recent survey found that almost half of all workers that have been laid off during this pandemic now consider their jobs losses to be permanent

In April, roughly 2 in 10 households experiencing job loss considered their layoff permanent, while the remaining majority believed they would return to their former jobs within a few months. Now, as states have stalled or reversed reopening plans and the coronavirus outbreak worsens, nearly half of unemployed workers believe their jobs are not coming back, according to a poll from The Associated Press-NORC Center for Public Affairs Research.

What this means is that millions upon millions of Americans will continue to miss mortgage payments, and a massive wave of foreclosures looms in the months ahead.

Needless to say, it won’t be a happy time for our nation.

Meanwhile, more businesses are going belly up with each passing day.

For example, we just learned that as many as 300 Pizza Hut locations are going “to permanently close”

Up to 300 Pizza Hut restaurants are slated to permanently close following the bankruptcy of one the chain’s largest franchisees.

NPC International, which filed for Chapter 11 in July, announced an agreement Monday with Pizza Hut’s owner Yum! Brands (YUM)to close roughly a quarter of its restaurants and sell the remaining locations. Specific restaurants and timing have not yet been determined, but NPC said a “substantial majority” of affected locations have dining rooms.

This is a great tragedy for those of us that love pizza, because out of all of the major pizza chains in the entire country nobody makes better pizza than Pizza Hut does.

And yes, I am being quite serious.

As soon as I could walk my parents began taking me to Pizza Hut, and I have been enjoying their pizza ever since.

Unfortunately, I don’t live anywhere near a Pizza Hut today, and so I don’t get to enjoy their pizza very often anymore.

In any event, a lot more companies are going to be waving the white flag in the months ahead.  Economic turmoil is one of the core pillars of “the perfect storm” that is now upon us, and after this current lull our economic problems are going to start accelerating once again.

Sadly, most Americans simply do not understand what is happening.

Most Americans still seem to think that everything is going to turn out just fine somehow.

What they don’t realize is that the whole system is starting to steadily unwind, and things are going to get really ugly as we continue down this road.

***Michael’s new book entitled “Lost Prophecies Of The Future Of America” is now available in paperback and for the Kindle on Amazon.com.***

About the Author: My name is Michael Snyder and my brand new book entitled “Lost Prophecies Of The Future Of America” is now available on Amazon.com.  By purchasing the book you help to support the work that my wife and I are doing, and by giving it to others you help to multiply the impact that we are having on people all over the globe.  I have published thousands of articles on The Economic Collapse BlogEnd Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe.  I always freely and happily allow others to republish my articles on their own websites, but I also ask that they include this “About the Author” section with each article.  In addition to my new book, I have written four others that are available on Amazon.com including The Beginning Of The EndGet Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned)  The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions.  I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.  During these very challenging times, people will need hope more than ever before, and it is our goal to share the gospel of Jesus Christ with as many people as we possibly can.

The Housing Crisis Of 2020: Millions Of Americans Missed Their Last Rent Payments, And Tens Of Millions Could Soon Be Evicted

Week after week we continue to get economic numbers that are absolutely horrific, and it appears that we are heading for a housing crisis that will be even worse than what we witnessed in 2008.  Back then, millions of Americans lost their homes, but this time around it could be tens of millions.  I know that a statement like that may sound overly dramatic, but I believe that many of you that feel that way may change your minds after reading this entire article.

In order to make rent and mortgage payments, Americans need paychecks coming in, and right now people continue to lose jobs at a pace that is hard to believe.

On Thursday, we learned that another 1.3 million Americans filed new claims for unemployment benefits last week.  That was worse than expected, and it represented the 17th week in a row when the number of Americans filing new claims for unemployment benefits exceeded one million.

And as I keep reminding my readers each week, the all-time record for a single week prior to this year was just 695,000.

Overall, more than 51 million Americans have filed new claims for unemployment benefits over the last 17 weeks, and that is by far the largest spike in unemployment in all of U.S. history.

In fact, the numbers that we have been seeing should theoretically be close to impossible.  In February, the number of Americans that were employed peaked at an all-time high of 152 million, and the number of people that have filed new claims for unemployment since that time represents more than a third of that total.

I know that some people are hesitant to use the term “economic collapse”, but what else are we supposed to call this?

Incredibly, one expect quoted by USA Today is telling us that the number of Americans filing new claims for unemployment benefits could actually “increase” next week…

The rollbacks may spark a new wave of layoffs, especially in hard-hit states like Texas, Florida, Arizona and California, and possibly even push the claims totals higher.

“Next week could easily see an increase” in initial claims, economist Ian Shepherdson of Pantheon Macroeconomics wrote in a research note.

Needless to say, this tsunami of unemployment has resulted in a whole lot of people not being able to make their rent payments.

In fact, the Census Bureau has announced that 11.6 million Americans live in households that did not make their most recent rent payments…

According to the latest weekly Census Bureau data, 11.6 million people live in households that missed their last rental payments.

More than 22 million Americans also have no, or only slight confidence, that they will be able to make next month’s rental payments, the figures show.

Ouch.

Large numbers of Americans are getting behind on their mortgage payments as well.  The following comes from Wolf Richter

In April, the share of all mortgages that were past due, but less than 30 days, soared to 3.4% of all mortgages, the highest in the data going back to 1999. This was up from 0.7% in April last year. During the Housing Bust, this rate peaked in November 2008 at 2%

In the months ahead, millions of Americans will fall so far behind on their rent payments that they will be facing eviction.

And millions of other Americans will fall so far behind on their mortgages that they will be in serious danger of losing their homes.

According to Emily Benfer, we could potentially see a total of “20 million to 28 million people” get kicked out of their homes in the months ahead…

“We have never seen this extent of eviction in such a truncated amount of time in our history,” Benfer said when asked about how the current homeless crisis compares to the 2008 housing crisis.

She continued: “We can expect this to increase dramatically in the coming weeks and months, especially as the limited support and intervention measures that are in place start to expire. About 10 million people, over a period of years, were displaced from their homes following the foreclosure crisis in 2008. We’re looking at 20 million to 28 million people in this moment, between now and September, facing eviction.”

We have never seen anything like this before.

And of course Benfer is assuming that there won’t be another major crisis between now and the end of the year.

So what happens if we get to September, October and November and things in this country start going absolutely haywire once again?

The closer we get to the election, the higher societal tensions will run, and they are already so high that we could see a major eruption at literally any moment.

And I should also mention that the $600 weekly bonus payments that were keeping so many unemployed Americans afloat will be terminated at the end of July.  Once those payments stop, millions upon millions of unemployed workers will have a much, much more difficult time making rent and mortgage payments.

Most Americans believe that “the worst is behind us”, but the truth is that we are sleepwalking into an unprecedented economic nightmare.

If you follow my work on The Most Important News, you already know how concerned I am about the end of this year and beyond, and I will be laying out precisely what I believe is coming in my new book which will be released later this month.

The “perfect storm” which I have mentioned so many times over the last couple of years is now here, and most Americans are completely and totally unprepared for it.

I would very much encourage you to take the summer months as an opportunity to make the preparations that you need to make for the chaos that is approaching.  As I detailed two days ago, we are already witnessing nationwide shortages of aluminum cans, soda, flour, canned soup, pasta and rice.  As the problems in our nation intensify, the shortages will only get worse.

Of course in order to store up supplies you must have somewhere to put them, and for tens of millions of Americans it is going to be a real struggle just to keep their homes during the months ahead.

It looks like we are facing a housing crisis that is going to be far worse than anything that we experienced during the last recession, and unless Congress starts making money rain from the sky it doesn’t appear that there is any hope of stopping it.

About the Author: I am a voice crying out for change in a society that generally seems content to stay asleep. My name is Michael Snyder and I am the publisher of The Economic Collapse BlogEnd Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe. I have written four books that are available on Amazon.com including The Beginning Of The EndGet Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned) By purchasing those books you help to support my work. I always freely and happily allow others to republish my articles on their own websites, but due to government regulations I need those that republish my articles to include this “About the Author” section with each article. In order to comply with those government regulations, I need to tell you that the controversial opinions in this article are mine alone and do not necessarily reflect the views of the websites where my work is republished. The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions. Those responding to this article by making comments are solely responsible for their viewpoints, and those viewpoints do not necessarily represent the viewpoints of Michael Snyder or the operators of the websites where my work is republished. I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.  During these very challenging times, people will need hope more than ever before, and it is our goal to share the gospel of Jesus Christ with as many people as we possibly can.

The Economic Numbers That Are Coming Are “Going To Be The Worst In The Post-World War II Era”

We just witnessed the largest quarterly GDP decline since the last financial crisis, and experts are warning that the figure for the second quarter will be far, far worse.  In fact, as you will see below, one expert is telling us to brace ourselves for the worst economic numbers “in the post-World War II era”.  On an annualized basis, U.S. GDP fell by 4.8 percent during the first quarter, and that was a bit worse than most economists were projecting.  And economists were also surprised that consumer spending was down 7.6 percent and business investment was down 8.6 percent during January, February and March.  Under normal circumstances, those would be absolutely horrible numbers, but these are not normal circumstances.  Yes, January and February were relatively normal, but the coronavirus shutdowns began in March and that is why these numbers are so dismal.

Unfortunately, it looks like the economic numbers for the second quarter are going to be much more depressing.  One economist that was interviewed by the New York Times believes that they will actually be the worst that our nation has seen since the end of the Second World War…

“They’re going to be the worst in our lifetime,” Dan North, chief economist for the credit insurance company Euler Hermes North America, said of the second-quarter figures. “They’re going to be the worst in the post-World War II era.”

And at this point even the Trump administration is publicly admitting that the economic numbers are going to start getting really, really bad.  On Monday, Kevin Hassett actually told CNBC that U.S. GDP could fall by up to 30 percent on an annualized basis during the second quarter…

On Monday morning, the White House economic adviser Kevin Hassett warned the second quarter could reflect a 20 to 30 percent decline – something that has not been seen since the 1930s Great Depression.

‘You’re looking at something like minus 20 percent to minus 30 percent in the second quarter. It’s a very grave shock and it’s something we need to take seriously,’ he told CNBC.

But we don’t have to wait until three months from now for numbers that are truly horrific.

On Wednesday, we learned that U.S. home sales in March were down by double digits in every region on the country

Signed contracts to purchase existing homes, referred to as pending home sales, fell 20.8% compared with February and were 16.3% lower annually, according to the National Association of Realtors.

Regionally, pending sales fell 14.5% in the Northeast for the month and were 11% lower than a year ago. In the Midwest, sales decreased 22% monthly and 12.4% annually. In the South sales dropped 19.5% for the week and 17.8% annually, and in the West they fell 26.8% weekly and 21.5% compared with a year ago.

Some states are attempting to gradually “reopen” their economies, and that is good news.

But the bad news is that officials are telling us that all of the restrictions in big states such as California and New York will not be lifted until many months from now, and that is going to greatly depress economic activity for the foreseeable future.

With economic activity so low, companies all over America are laying off workers at a staggering rate.  More than 26 million Americans have lost their jobs so far, and the layoffs just keep on rolling.  For example, we just learned that Uber is planning to let thousands of employees go

Executives at Uber are discussing plans to cut around 20% of the company’s employees, as it copes with a sharp decline in its ride-hailing business due to the coronavirus pandemic, reports The Information.

Layoffs of that magnitude, which haven’t been finalized but could be announced in stages in the coming weeks, could result in more than 5,400 of Uber’s 27,000 employees losing their jobs.

Of course it isn’t just the United States that is facing an unprecedented unemployment crisis.

According to the International Labour Organization, close to half of all the workers in the world “are in immediate danger of losing their livelihoods”…

Some 1.6 billion workers in the informal economy, representing nearly half of the global labour force, are in immediate danger of losing their livelihoods due to the coronavirus pandemic, the International Labour Organization (ILO) said on Wednesday.

The U.N. agency’s latest report sharply raised its forecast for the devastating impact on jobs and incomes of the COVID-19 disease, which has infected more than 3.1 million people globally, killed nearly 220,000 and shut down economies.

This is one of the biggest reasons why lockdowns all over the globe need to be ended as quickly as possible.  If people are not allowed to make a living, they aren’t going to have anything to feed their families.

Even in the United States, we have already seen an explosion of need that is absolutely shocking.  All over the country, people have been lining up for miles to get whatever food that local food banks are able to give them, and we witnessed more examples of this growing phenomenon on Tuesday

Masses of cars waited in line for the drive-thru food giveaway in Pico Rivera, California, as volunteers sporting face masks, gloves and high-vis jackets helped dish out supplies.

Over in Prospect, vehicles were seen snaking through the Big Butler Fairgrounds. It comes as millions of people across America lose their jobs amid the coronavirus pandemic and households have been thrown into turmoil.

If things are this bad already, what is this nation going to look like as we get even deeper into “the perfect storm”?

In recent days I have been writing quite a bit about the coming “meat shortage” that the mainstream media has been warning about, and now we are being told that a serious shortage of boneless chicken is already upon us

Goodbye, boneless chicken.

Food retailers across North America are swapping boneless chicken legs for less popular thighs and drumsticks as a wave of shutdowns at meatpacking plants has reduced supplies of sought-after cuts.

As I discussed yesterday, President Trump has decided to order meat processing facilities that were closed down because of COVID-19 to reopen, and many are hoping that this move will put a quick end to the shortages.

But on Wednesday the mainstream media was full of stories about how meat processing workers may decide to defy President Trump and refuse to go back to work…

Meat-processing plant workers are concerned about President Donald Trump’s executive order that compels plants to remain open during the coronavirus pandemic. Meat plant employees are among America’s most vulnerable workers, and some say they expect staff will refuse to come to work.

“All I know is, this is crazy to me, because I can’t see all these people going back into work,” said Donald, who works at Tyson’s Waterloo, Iowa, facility. “I don’t think people are going to go back in there.”

If fear of COVID-19 keeps a substantial percentage of workers from returning to their jobs, that could cause the emerging meat shortages to get even worse in the weeks ahead.

Of course fear of the coronavirus is paralyzing many sectors of our economy right now, and that is not going to end any time soon.

So we should expect really dismal economic numbers for the foreseeable future, and it appears exceedingly unlikely that there will be any sort of a turnaround before the election in November.

America’s next economic depression has begun, and it is going to be really, really painful.

About the Author: I am a voice crying out for change in a society that generally seems content to stay asleep. My name is Michael Snyder and I am the publisher of The Economic Collapse BlogEnd Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe. I have written four books that are available on Amazon.com including The Beginning Of The EndGet Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned) By purchasing those books you help to support my work. I always freely and happily allow others to republish my articles on their own websites, but due to government regulations I need those that republish my articles to include this “About the Author” section with each article. In order to comply with those government regulations, I need to tell you that the controversial opinions in this article are mine alone and do not necessarily reflect the views of the websites where my work is republished. The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions. Those responding to this article by making comments are solely responsible for their viewpoints, and those viewpoints do not necessarily represent the viewpoints of Michael Snyder or the operators of the websites where my work is republished. I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.  During these very challenging times, people will need hope more than ever before, and it is our goal to share the gospel of Jesus Christ with all many people as we possibly can.

Worse Than 2008: We Are Being Warned That The Coronavirus Shutdown “Could Collapse The Mortgage Market”

The cascading failures that have been set into motion by this “coronavirus shutdown” are going to make the financial crisis of 2008 look like a Sunday picnic.  As you will see below, it is being estimated that unemployment in the U.S. is already higher than it was at any point during the last recession.  That means that millions of American workers no longer have paychecks coming in and won’t be able to pay their mortgages.  On top of that, the CARES Act actually requires all financial institutions to allow borrowers with government-backed mortgages to defer payments for an extended period of time.  Of course this is a recipe for disaster for mortgage lenders, and industry insiders are warning that we are literally on the verge of a “collapse” of the mortgage market.

Never before in our history have we seen a jump in unemployment like we just witnessed.  If you doubt this, just check out this incredible chart.

Millions upon millions of American workers are now facing a future with virtually no job prospects for the foreseeable future, and former Fed Chair Janet Yellen believes that the unemployment rate in the U.S. is already up to about 13 percent

Former Federal Reserve Chair Janet Yellen told CNBC on Monday the economy is in the throes of an “absolutely shocking” downturn that is not reflected yet in the current data.

If it were, she said, the unemployment rate probably would be as high as 13% while the overall economic contraction would be about 30%.

If Yellen’s estimate is accurate, that means that unemployment in this country is already significantly worse than it was at any point during the last recession.

And young adults are being hit particularly hard during this downturn…

As measures to slow the pandemic decimate jobs and threaten to plunge the economy into a deep recession, young adults such as Romero are disproportionately affected. An Axios-Harris survey conducted through March 30 showed that 31 percent of respondents ages 18 to 34 had either been laid off or put on temporary leave because of the outbreak, compared with 22 percent of those 35 to 49 and 15 percent of those 50 to 64.

As I have documented repeatedly over the past several years, most Americans were living paycheck to paycheck even during “the good times”, and so now that disaster has struck there will be millions upon millions of people that will not be able to pay their mortgages.

It is being projected that up to 30 percent of all mortgages could eventually default, and when you add the fact that millions upon millions of Americans will be deferring payments thanks to the CARES Act, it all adds up to big trouble for the mortgage industry

A broad coalition of mortgage and finance industry leaders on Saturday sent a plea to federal regulators, asking for desperately needed cash to keep the mortgage system running, as requests from borrowers for the federal mortgage forbearance program are pouring in at an alarming rate.

The Cares Act mandates that all borrowers with government-backed mortgages—about 62% of all first lien mortgages according to Urban Institute—be allowed to delay at least 90 days of monthly payments and possibly up to a year’s worth.

Needless to say, many in the mortgage industry are absolutely furious with the federal government for putting them into such a precarious position, and one industry insider is warning that we could soon see the “collapse” of the mortgage market

“Throwing this out there without showing evidence of hardship was an outrageous move, outrageous,” said David Stevens, who headed the Federal Housing Administration during the subprime mortgage crisis and is a former CEO of the Mortgage Bankers Association. “The administration made a huge mistake bringing moral hazard in and thrust extraordinary risk into the private sector that could collapse the mortgage market.”

Of course a lot of other industries are heading for immense pain as well.

At this point, even JPMorgan Chase CEO Jamie Dimon is admitting that the U.S. economy as a whole is plunging into a “bad recession”

Jamie Dimon said the U.S. economy is headed for a “bad recession” in the wake of the coronavirus pandemic, but this time around his company is not going to need a bailout. Instead, JPMorgan Chase is ready to lend a hand to struggling consumers and small businesses.

“At a minimum, we assume that it will include a bad recession combined with some kind of financial stress similar to the global financial crisis of 2008,” Dimon, the CEO of JPMorgan Chase, said Monday in his annual letter to shareholders.

And the longer this coronavirus shutdown persists, the worse things will get for our economy.

In fact, economist Stephen Moore is actually predicting that we will be “facing a potential Great Depression scenario” if normal economic activity does not resume in a few weeks…

Sunday on New York AM 970 radio’s “The Cats Roundtable,” economist Stephen Moore weighed in on the potential impact of the coronavirus to the United States economy.

Moore warned the nation could be “facing a potential Great Depression scenario” if the United States stays on lockdown much past the beginning of May, as well as an additional amount of deaths caused by the raised unemployment rate.

The good news is that the “shelter-in-place” orders all over the globe appear to be “flattening the curve” at least to a certain extent.

The bad news is that we could see another huge explosion of cases and deaths once all of the restrictions are lifted.

And the really bad news is that what we have experienced so far is nothing compared to what is coming.

But in the short-term we should be very thankful that the numbers around the world are starting to level off a bit.

Of course that is only happening because most people are staying home, but having people stay home is absolutely killing the economy.

And if people stay home long enough, a lot of them will no longer be able to pay the mortgages on those homes.

Our leaders are being forced to make choices between saving lives and saving the economy, and those choices are only going to become more painful the longer this crisis persists.

Let us pray that they will have wisdom to make the correct choices, because the stakes are exceedingly high.

About the Author: I am a voice crying out for change in a society that generally seems content to stay asleep. My name is Michael Snyder and I am the publisher of The Economic Collapse BlogEnd Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe. I have written four books that are available on Amazon.com including The Beginning Of The EndGet Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned) By purchasing those books you help to support my work. I always freely and happily allow others to republish my articles on their own websites, but due to government regulations I need those that republish my articles to include this “About the Author” section with each article. In order to comply with those government regulations, I need to tell you that the controversial opinions in this article are mine alone and do not necessarily reflect the views of the websites where my work is republished. The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions. Those responding to this article by making comments are solely responsible for their viewpoints, and those viewpoints do not necessarily represent the viewpoints of Michael Snyder or the operators of the websites where my work is republished. I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.  During these very challenging times, people will need hope more than ever before, and it is our goal to share the gospel of Jesus Christ with all many people as we possibly can.

Much Worse Than Expected: Experts Shocked As New Home Sales Plunge 8.9 Percent

The U.S. economy is definitely deviating from the script, and we just got more evidence that “Housing Bubble 2” is bursting.  Experts were expecting that new home sales in the U.S. would rise in October, but instead they plunged 8.9 percent.  That number is far worse than anyone was projecting, and many in the real estate industry are really starting to freak out.  And to be honest, things look like they are going to get even worse in 2019.  One survey found that the percentage of Americans that plan to buy a home over the next 12 months has fallen by about half during the past year.  Mortgage rates have steadily risen as the Federal Reserve has been hiking interest rates, and at this point most average Americans have been completely priced out of the market.  Home prices are going to have to come way down from where they are right now, and just as we witnessed in 2008, rapidly falling home prices can put an extraordinary amount of stress on the financial system.

It is hard for me to put into words just how bad this latest number is.  Even though I write about our growing economic problems on a daily basis, even I didn’t expect to see a number anywhere near this bad.  Sometimes a really bad number from one part of the U.S. can drag down the overall number, but that wasn’t the case this time.  According to Reuters, there were “sharp declines in all four regions”…

Sales of new U.S. single-family homes tumbled to a more than 2-1/2-year low in October amid sharp declines in all four regions, further evidence that higher mortgage rates were hurting the housing market.

The Commerce Department said on Wednesday new home sales dropped 8.9 percent to a seasonally adjusted annual rate of 544,000 units last month. That was the lowest level since March 2016. The percent drop was the biggest since December 2017.

But of course it isn’t as if this latest report is coming out of nowhere.  The truth is that new home sales have fallen in four of the last six months, and so a very clear trend is now developing.

Sadly, most mainstream economists still don’t seem to be understanding what is happening.  According to Reuters, the consensus estimate was that we would see new home sales rise 3.7 percent in October, and so an 8.9 percent plunge came as a real shock.

New home sales have now missed expectations for seven months in a row, and the similarities to 2008 are starting to become undeniable.

Sales of previously owned homes have been falling as well.  In fact, in October we witnessed the largest drop for previously owned home sales in four years

Sales of previously owned U.S. homes posted their largest annual decline since 2014 in October, as the housing market continues to sputter due to higher mortgage rates that are reducing home affordability.

If you want to blame someone for this mess, blame the Federal Reserve.

They created a “boom” in the housing market by pushing interest rates all the way to the floor during the Obama years, and now they are creating a “bust” by aggressively jacking up interest rates at a pace that our economy simply cannot handle.

If we had allowed the free market to be setting interest rates all this time, we would not be on such a roller coaster ride.

Just like during “Housing Bubble 1”, millions of Americans have been buying houses that they cannot afford, and that could mean another massive wave of mortgage defaults as this new economic downturn intensifies.  At this point, the debt to income ratio for mortgages insured by the FHA is at an all-time record high

One worrying indicator: The average debt-to-income ratio for mortgages insured by the Federal Housing Administration, which makes up about 22% of the housing market, is now at its highest level ever.

This is yet another indication that we are even more vulnerable than we were just prior to the subprime mortgage meltdown during the last financial crisis.

Let me try to shed some light on what is coming next.  Even if economic conditions remained stable, housing prices would need to start falling dramatically in order to attract buyers.  In fact, we are already starting to see this happen in southern California and other markets that were once extremely “hot”.  As housing prices fall, millions of Americans will suddenly find themselves “underwater” on their mortgages.  In other words, they will owe more on their homes than their homes are worth.  During the last recession, many “underwater” homeowners ultimately decided to walk away rather than continue to service ridiculously bloated mortgages.

But the truth is that economic conditions are not likely to remain stable.  In fact, many are projecting that the approaching downturn will be even worse than 2008.

In such a scenario, millions of Americans will lose their jobs, and that means that millions of Americans will suddenly not be able to make their mortgage payments.  As a result, mortgage defaults will skyrocket and home prices will drop like a rock.  Just like last time around, there could be people that wake up one day and realize that they owe two or three times as much money on their mortgages as their homes are currently worth, and the stampede of people walking away from “underwater” mortgages could become an avalanche.

Needless to say, millions of mortgages suddenly going bad is a scenario that our financial system is not equipped to handle.  What happened in 2008 was absolutely catastrophic for our large financial institutions, and what is coming is going to be even worse.

Of course the big financial institutions will want the federal government to bail them out, but there may not be much of an appetite for more corporate bailouts this time around.

And considering the fact that we are already 22 trillion dollars in debt, we can’t exactly afford to be throwing money around.

The Federal Reserve has set the stage for a giant mess, and it is going to shake the housing industry to the core.

We should have learned from the mistakes that we made in 2008, but we didn’t, and so now we are going to pay a very great price for our negligence.

About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

 

In California, Home Sales Are Plunging Like It Is 2008 All Over Again

What goes up must eventually come down.  For years, the California housing market was on the cutting edge of “Housing Bubble 2” as we witnessed home prices in the state soar to absolutely absurd levels.  In fact, it got so bad that a burned down house in Silicon Valley sold for $900,000 earlier this year, and a condemned home in Fremont sold for $1.2 million.  But now things have changed in a major way.  The hottest real estate markets in the entire country led the way down during the collapse of “Housing Bubble 1”, and now it looks like the same thing is going to be true for the sequel.

According to CNBC, the number of new and existing homes sold in southern California was down 18 percent in September compared to a year ago…

The number of new and existing houses and condominiums sold during the month plummeted nearly 18 percent compared with September 2017, according to CoreLogic. That was the slowest September pace since 2007, when the national housing and mortgage crisis was hitting.

Sales have been falling on an annual basis for much of this year, but this was the biggest annual drop for any month in almost eight years. It was also more than twice the annual drop seen in August.

Those numbers are staggering.

And it is interesting to note that sales of new homes are being hit even harder than sales of existing homes…

Sales of newly built homes are suffering more than sales of existing homes, likely because fewer are being built compared with historical production levels. Newly built homes also come at a price premium. Sales of newly built homes were 47 percent below the September average dating back to 1988, while sales of existing homes were 22 percent below their long-term average.

At one time, San Diego County was a blazing hot real estate market, but now the market has turned completely around.

In fact, the county just registered the fewest number of home sales in a month since the last financial crisis

A combination of rapid mortgage rate increases and decreased affordability, San Diego County home sales collapsed 17.5% to the lowest level in 11 years last month, in the first meaningful sign that one of the country’s hottest real estate markets could be at a turning point, real estate tracker CoreLogic reported Tuesday.

In September, 2,942 homes were sold in the county, down from 3,568 sales last year. This was the lowest number of sales for the month since the start of the financial crisis when 2,152 sold in September 2007.

And it can be argued that things are plunging even more rapidly in northern California.

In the San Francisco Bay area, sales of new and existing homes were down 19 percent in September on a year over year basis…

Home sales in the San Francisco Bay area have been falling for months, but in September buyers pulled back in an even bigger way.

Sales of both new and existing homes plunged nearly 19 percent compared with September 2017, according to CoreLogic. It marked the slowest September sales pace since 2007 and twice the annual drop seen in August.

If a new real estate crisis is really happening, these are precisely the kinds of numbers that we would expect to see.  If you still need some more convincing, here are even more distressing numbers from the California real estate market that Mish Shedlock recently shared

  • The California housing market posted its largest year-over-year sales decline since March 2014 and remained below the 400,000-level sales benchmark for the second consecutive month in September, indicating that the market is slowing as many potential buyers put their homeownership plans on hold.
  • Existing, single-family home sales totaled 382,550 in September on a seasonally adjusted annualized rate, down 4.3 percent from August and down 12.4 percent from September 2017.
  • September’s statewide median home price was $578,850, down 2.9 percent from August but up 4.2 percent from September 2017.
  • Statewide active listings rose for the sixth consecutive month, increasing 20.4 percent from the previous year.
  • Inventory reached the highest level in 31 months, with the Unsold Inventory Index reaching 4.2 months in September.
  • September year-to-date sales were down 3.3 percent.

Of course a similar thing is happening on the east coast as well.  At this point, things have cooled off so much in New York City that it is being called “a buyer’s market”

New York City’s pricey real estate has become a “buyers market,” new data suggests, characterized by lowball offers and a rise in the number of properties staying on the market for longer.

The latest figures from Warburg Realty show that among higher-priced homes, New York City is in the throes of a “major shift” that reflects a cooling market, the likes of which hasn’t been seen in almost a decade.

“Offers 20 percent and 25 percent below asking prices began to flow in, a phenomenon last seen in 2009,” wrote Warburg Realty founder and CEO Frederick W. Peters in the report, which surveys real estate conditions around the city.

In the final analysis, it is no mystery how we got to this point.

During the Obama era, the Federal Reserve pushed interest rates all the way to the floor for years, and this caused “Housing Bubble 2” to become even larger than the original housing bubble.

Now the Federal Reserve has been aggressively raising interest rates, and this is now busting the bubble that they created in the first place.

So if you want to blame someone for this mess, blame the Federal Reserve.  The Federal Reserve has created huge “booms” and “busts” ever since it was created in 1913, and hopefully the American people will be outraged enough following this next “bust” to start calling for real change.

I have been calling for the abolition of the Federal Reserve for years, and there are many others out there that also want to return to a free market financial system.

History has shown that free markets work exceedingly well once you take the shackles off, and as a nation we desperately need to return to the values and principles that this nation was founded upon.

About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

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