A new recession is coming, and Donald Trump needs it to begin sooner rather than later. As I explained last week, most American voters tend to care about their pocketbooks more than anything else. If the next recession were to officially start during the first quarter of 2017, it would be very easy for Trump to blame it on Obama, and then he could portray himself as the one that pulled the U.S. economy out of recession in time for the 2020 election. But if the next recession does not begin until 2018 or 2019, everybody is going to blame it on Trump even if it is not his fault. In politics, who gets the blame for whatever goes wrong is often the most important thing, and if Trump wants to avoid blame for the next recession he needs for it to start as quickly as possible.
For most of 2016, the mainstream media was warning that a new recession was probably coming no matter who won the election. For one example, just check out this Bloomberg article.
And for once, the mainstream media was precisely correct. Barack Obama left us with an enormous economic mess, and it would take an economic miracle of unprecedented proportions to keep the U.S. economy from going into a recession at this point.
During the Obama years, the U.S. went on a debt binge unlike anything we have ever seen before.
The U.S. national debt almost doubled. During Obama’s time in the White House, it increased from 10.6 trillion dollars to nearly 20 trillion dollars, and that means that over 9 trillion dollars of future consumption was brought into the present. That incredible boost to spending would have shot U.S. economic growth into the stratosphere during normal times, but because we were struggling so much all we got out of it was eight years of economic stagnation.
In fact, Barack Obama was the only president in modern American history never to have a single year when the U.S. economy grew by at least 3 percent, and he had two terms to try to accomplish that goal.
And remember, Obama also had the benefit of doctored economic numbers. John Williams of shadowstats.com tracks what the figures would look like if honest numbers were being used, and according to his calculations the U.S. economy has actually continually been in a recession since 2005.
In addition to government debt, other forms of debt are way out of control as well. The total amount of consumer debt in the United States has now hit 12 trillion dollars, and corporate debt has approximately doubled since the last recession.
When levels of debt grow much, much faster than the overall economy, it is inevitable that a crash will come.
If you look back throughout history, I don’t know if you can find a single example where debt has grown this quickly and a crash has not happened afterwards.
By some miracle if we are able to avoid a major economic downturn this time, we will literally be defying the laws of economics.
The employment crisis also threatens to get a lot worse in the months ahead. The mainstream media keeps trying to tell us that we are almost at “full employment”, but the truth is that more than 100 million Americans do not have a job right now.
Yes, there are a few areas of the country where jobs appear to be plentiful, but there are many more areas where they are not.
For example, you will never, ever be able to convince 23-year-old Tyler Moore that the job market is good…
Tyler Moore’s late-December drive to Louisville, Ky., was one of desperation. He was headed four hours west on Interstate 64 to interview for a job. Even if he landed the position, filling his gas tank had left him with $8 to his name. He would have to sleep at a friend’s place until he could earn enough to pay rent.
The 23-year-old had run out of options. He’d applied for dozens of jobs within an hour and a half of his hometown of Lovely, once a coal-mining stronghold. Instead of opportunities, he had found waiting lists.
“Minimum-wage jobs, fast-food restaurants, Wal-Mart, anything like that, a lot of them has already been took,” he says in an Appalachian drawl, explaining that the backlog just to interview was as long as a year. “There are no jobs.”
If the U.S. economy is in “good shape”, then why can’t people like Moore find a job?
Yes, there is a tremendous amount of optimism in the financial markets right now and the stock market has been soaring.
But the exact same things were true in 2007, and we remember how that turned out.
There is no possible way that the S&P 500 can continue to generate an 18% annual return without corresponding economic growth. The following comes from David Stockman…
Altogether the S&P 500 now stands at 3.4X its post-crisis low, having generated an 18% annual return (including dividends) for nearly eight years running.
To be sure, in an honest free market that very fact would be a flashing red light, warning that exceptionally high gains over an extended period necessitate a regression to the mean in the period ahead.
A lot of people get caught up in trying to predict exactly when the stock market will crash, but what everybody should be able to agree on is that it will crash.
There is no possible way that stocks can stay at such ridiculously overpriced levels indefinitely.
Throughout history, stocks have always moved back in the direction of the long-term averages, and this time will be no exception.
And just like last time, the beginning of a new recession will likely be accompanied by a major financial correction.
In recent articles, I have been highlighting some of the reasons why it appears that a new recession is imminent…
-Federal tax receipts have gone negative for the first time since the last recession.
-Job growth at S&P 500 companies has gone negative for the very first time since the last recession.
-The U.S. trade deficit in 2016 was the largest in four years.
-Lending standards have tightened up for medium and large sized firms for six quarters in a row.
-Lending standard are also tightening up for consumers.
-We just saw the largest percentage decline in average weekly hours since the recession of 2008.
-Gross private domestic investment is down.
-Consumer bankruptcies are rising.
-Commercial bankruptcies are rising.
All of this is not necessarily bad news for Trump.
A horrible recession started during the early years of Ronald Reagan’s presidency, but the U.S. economy turned around later in his first term and that momentum helped propel him to an easy victory in 1984.
Similarly, Trump could actually take advantage of the coming economic downturn as long as he is able to pin all of the blame for it on the previous administration.
If there is one thing that is true about U.S. voters, it is the fact that they tend to care about their own economic well-being more than anything else.
If you doubt this, just check out the results of a recent Fox News poll…
The latest Fox News Poll also asks, what defines the American Dream today? At the top, according to the national survey released Wednesday, is “retiring comfortably.” Some 88 percent feel that is extremely or very important to realizing the dream.
Next, 76 percent say “having a successful career” is important. That’s followed by “raising a family” (74 percent) and “making a valuable contribution” to their community (74 percent).
“Owning a home” is seen as a big part of achieving the dream for nearly 7 in 10 (69 percent). About 6 in 10 say “graduating college” (61 percent) and “being better off” than their parents (57 percent).
To most Americans, being “successful in life” comes down to how much money they have.
That should not be true, but it is.
And this is ultimately what Trump will be judged on.
If the economy is improving by 2020, voters will tend to evaluate him favorably. But if the economy is faltering during the next election season, it will be more difficult for him to get a second term.
So what Trump and all those that support Trump should want is for the coming recession to begin and end as quickly as possible.
However, there is also the possibility that the next recession may be a particularly bad one. Because we are in the midst of the biggest debt bubble in human history, any major downturn could ultimately spiral completely out of control. In other words, we may be facing the kind of crisis from which we never quite recover.
One expert that is warning about such a scenario is legendary investor Jim Rogers…
…get prepared because we’re going to have the worst economic problems we’ve had in your lifetime or my lifetime and when that happens a lot of people are going to disappear.
In 2008 Bear Stearns disappeared, Bear Stearns had been around over 90 years. Lehman Brothers disappeared. Lehman Brothers had been around over 150 years. A long, long time, a long glorious history they’ve been through wars, depression, civil war they’ve been through everything and yet they disappear.
So the next time around it’s going to be worse than anything we’ve seen and a lot of institutions, people, companies even countries, certainly governments and maybe even countries are going to disappear. I hope you get very worried.
when you start having bear markets as you I’m sure well know one bad thing happens and another bad thing happens and these things snowball just like in bull markets good news comes out then more good news comes out the next thing you know you’re five or six or seven years into a bull market.
Well bear markets do the same thing and so we have a lot of bad news on the horizon. I haven’t even gotten to war. I haven’t even gotten to trade war or anything like that but you know things do go wrong.
If it is as bad as Rogers is suggesting, it wouldn’t be too long before conditions in America would begin to resemble those portrayed in my novel.
Let’s hope that does not turn out to be the case.
Let’s hope that the next recession begins and ends as quickly as possible and that the U.S. economy is on a solid upswing by 2020.
And if you are a Trump supporter, don’t be too dismayed if the U.S. economy takes a major downturn in 2017. As I discussed above, it could actually be just the thing that Trump needs to set the stage for another election victory in 2020.
Is the U.S. economy about to get slammed by a major recession? According to Gallup, U.S. economic confidence has soared to the highest level ever recorded, but meanwhile a whole host of key economic indicators are absolutely screaming that a new recession is beginning. And if the U.S. economy does officially enter recession territory in 2017, it certainly won’t be a shock, because the truth is that we are well overdue for one. Donald Trump has inherited quite an economic mess from Barack Obama, and it was probably inevitable that we were headed for a significant economic downturn no matter who won the election.
One of the key indicators to watch is average weekly hours. When the economy shifts into recession mode, employers tend to start cutting back hours, and that is happening right now. In fact, as Graham Summers has pointed out, we just witnessed the largest percentage decline in average weekly hours since the recession of 2008…
In addition to the decline in hours, Summers has suggested that there are a number of other reasons to believe that a new recession is here…
The fact is that the GDP growth of 4%-5% is not just around the corner. The US most likely slid into recession in the last three months. GDP growth collapsed in 4Q16, with a large portion of the “growth” coming from accounting gimmicks.
Consider the following:
- Tax receipts indicate the US is in recession.
- Gross private domestic investment indicates were are in a recession.
- Retailers are showing that the US consumer is tapped out (see AMZN’s recent miss).
- UPS, another economic bellweather, dramatically lowered 2017 forecasts.
To me, even more alarming is the tightening of lending standards. In our debt-based economy, the flow of credit is absolutely critical to economic growth, and when credit starts to get tight that almost always leads to a recession.
So the fact that lending standards have now tightened for medium and large sized firms for six quarters in a row is very bad news. The following comes from Business Insider…
“Although modest over the past couple of quarters, it is still worth noting that this is now the sixth quarter in succession that standards have tightened for large and medium sized firms,” Deutsche Bank economist Jim Reid wrote in a research note to clients.
“This usually only happens in recessions.”
Reid is 100 percent correct on this point. This is precisely the kind of thing that we would expect to see if a new recession was beginning, and if this trend continues it is hard to imagine that the U.S. economy will be able to continue to grow.
And it is interesting to note that job growth at S&P 500 companies has gone negative for the first time since the last recession, and so large firms are definitely starting to feel the pressure.
Simultaneously, lending standards are also tightening up for consumers…
“The most notable tightening in standards though was in consumer loans,” the Fed said. “During the quarter, banks reported an 8.3% net tightening in credit standards for credit cards and 11.6% net tightening for auto loans.”
US consumer spending accounts for more than two-thirds of economic activity and is thus a key driver of growth in the world’s largest economy.
Those numbers for credit cards and auto loans are major red flags.
It is very simple. Tighter credit means less economic activity which means slower economic growth. The U.S. economy grew at a dismal 1.9 percent annual rate during the 4th quarter of 2016, and it would be absolutely no surprise if we end up with a negative number for the first quarter of 2017.
One of the big reasons why lending standards are tightening is because bankruptcies are rising.
As I reported the other day, consumer bankruptcies just rose on a year-over-year basis in back to back months for the first time in almost seven years. Commercial bankruptcies had already been rising on a year-over-year basis throughout 2016, and so the fact that consumer bankruptcies have now joined the party is a very bad sign.
And we have also just learned that real median household income declined in 2016…
Its official! The spectacular Obama/Fed “recovery” produced no increase in real medin household income in 2016 (the last year of Obama’s reign of [economic] error). In fact, real median annual household income in December 2016 ($57,827) was 0.9 percent lower than in December 2015 ($58,356).
Yes, I understand that there is a tremendous amount of optimism out there right now because of Donald Trump.
But the truth is that it is literally going to take some sort of an economic miracle to avoid a recession.
And if a recession is going to happen anyway, the Trump administration should want it to occur as quickly as possible.
You see, if a recession starts a year from now, it will be much more difficult for Trump to blame it on Obama. But if a recession starts right now, he will definitely be able to argue that it happened because of the mess that he inherited from the last administration.
In addition, the sooner the next recession ends the sooner the next recovery can begin. If a recession is still going on during the 2020 campaign, that would be really bad for Trump, but if a recovery is well underway by then that would be really good for his chances.
If you doubt this, just go back and look at the 1984 campaign. After a very difficult recession, the U.S. economy bounced back strongly and Ronald Reagan was able to ride that momentum to an easy victory.
So this may sound very strange to many of you, but the truth is that if a new recession is coming Trump supporters should want it to happen as rapidly as possible.
Unfortunately, once a new recession begins it may not play out like recessions normally do. The U.S. government is 20 trillion dollars in debt, we are in the midst of one of the biggest stock market bubbles in history, and our planet is becoming more unstable with each passing day. So even though Trump is in the White House and Obama is gone, let there be no doubt that a catastrophic economic crisis could literally erupt at any moment. I continue to encourage my readers to do all that they can to get prepared, because those that are prepared in advance will have the best chance of successfully getting through what is coming.
Unfortunately, a lot of people out there seem to believe that all of our problems have somehow evaporated just because Donald Trump is now living in the White House.
That is simply not true, and we all need to be praying for guidance and wisdom for Trump and his team as they prepare to deal with the great challenges that are ahead for our nation.
Since Donald Trump’s victory on election night we have seen the worst bond crash in 15 years. Global bond investors have seen trillions of dollars of wealth wiped out since November 8th, and analysts are warning of another tough week ahead. The general consensus in the investing community is that a Trump administration will mean much higher inflation, and as a result investors are already starting to demand higher interest rates. Unfortunately for all of us, history has shown that higher interest rates always cause an economic slowdown. And this makes perfect sense, because economic activity naturally slows down when it becomes more expensive to borrow money. The Obama administration had already set up the next president for a major recession anyway, but now this bond crash threatens to bring it on sooner rather than later.
For those that are not familiar with the bond market, when yields go up bond prices go down. And when bond prices go down, that is bad news for economic growth.
So we generally don’t want yields to go up.
Unfortunately, yields have been absolutely soaring over the past couple of weeks, and the yield on 10 year Treasury notes has now jumped “one full percentage point since July”…
The 10-year Treasury yield jumped to 2.36% in late trading on Friday, the highest since December 2015, up 66 basis point since the election, and up one full percentage point since July!
The 10-year yield is at a critical juncture. In terms of reality, the first thing that might happen is a rate increase by the Fed in December, after a year of flip-flopping. A slew of post-election pronouncements by Fed heads – including Yellen’s “relatively soon” – have pushed the odds of a rate hike to 98%.
As I noted the other day, so many things in our financial system are tied to yields on U.S. Treasury notes. Just look at what is happening to mortgages. As Wolf Richter has noted, the average rate on 30 year mortgages is shooting into the stratosphere…
The carnage in bonds has consequences. The average interest rate of the a conforming 30-year fixed mortgage as of Friday was quoted at 4.125% for top credit scores. That’s up about 0.5 percentage point from just before the election, according to Mortgage News Daily. It put the month “on a short list of 4 worst months in more than a decade.”
If mortgage rates continue to shoot higher, there will be another housing crash.
Rates on auto loans, credit cards and student loans will also be affected. Throughout our economic system it will become much more costly to borrow money, and that will inevitably slow the overall economy down.
Why bond investors are so on edge these days is because of statements such as this one from Steve Bannon…
In a nascent administration that seems, at best, random in its beliefs, Bannon can seem to be not just a focused voice, but almost a messianic one:
“Like [Andrew] Jackson’s populism, we’re going to build an entirely new political movement,” he says. “It’s everything related to jobs. The conservatives are going to go crazy. I’m the guy pushing a trillion-dollar infrastructure plan. With negative interest rates throughout the world, it’s the greatest opportunity to rebuild everything. Ship yards, iron works, get them all jacked up. We’re just going to throw it up against the wall and see if it sticks. It will be as exciting as the 1930s, greater than the Reagan revolution — conservatives, plus populists, in an economic nationalist movement.”
Steve Bannon is going to be one of the most influential voices in the new Trump administration, and he is absolutely determined to get this “trillion dollar infrastructure plan” through Congress.
And that is going to mean a lot more borrowing and a lot more spending for a government that is already on pace to add 2.4 trillion dollars to the national debt this fiscal year.
Sadly, all of this comes at a time when the U.S. economy is already starting to show significant signs of slowing down. It is being projected that we will see a sixth straight decline in year-over-year earnings for the S&P 500, and industrial production has now contracted for 14 months in a row.
The truth is that the economy has been barely treading water for quite some time now, and it isn’t going to take much to push us over the edge. The following comes from Lance Roberts…
With an economy running at below 2%, consumers already heavily indebted, wage growth weak for the bulk of American’s, there is not a lot of wiggle room for policy mistakes.
Combine weak economics with higher interest rates, which negatively impacts consumption, and a stronger dollar, which weighs on exports, and you have a real potential of a recession occurring sooner rather than later.
Yes, the stock market soared immediately following Trump’s election, but it wasn’t because economic conditions actually improved.
If you look at history, a stock market crash almost always follows a major bond crash. So if bond prices keep declining rapidly that is going to be a very ominous sign for stock traders.
And history has also shown us that no bull market can survive a major recession. If the economy suffers a major downturn early in the Trump administration, it is inevitable that stock prices will follow.
The waning days of the Obama administration have set us up perfectly for higher interest rates, a major recession and a giant stock market crash.
Of course any problems that occur after January 20th, 2017 will be blamed on Trump, but the truth is that Obama will be far more responsible for what happens than Trump will be.
Right now so many people have been lulled into a sense of complacency because Donald Trump won the election.
That is an enormous mistake.
A shaking has already begun in the financial world, and this shaking could easily become an avalanche.
Now is not a time to party. Rather, it is time to batten down the hatches and to prepare for very rough seas ahead.
All of the things that so many experts warned were coming may have been delayed slightly, but without a doubt they are still on the way.
So get prepared while you still can, because time is running out.
It would be a grave mistake to understate the amount of damage that has been done to the U.S. economy over the past eight years. In this article, I am going to share some economic numbers with you that are extremely sobering. Anyone that takes a cold, hard, honest look at the numbers should be able to see that our economy is in terrible shape. Unfortunately, the way that we see things is often clouded by our political views. Up until the election, Democrats were far more likely then Republicans to believe that the economy was improving, but now that is in the process of completely reversing. According to Gallup, only 16 percent of Republicans believed that the economy was getting better before the election, but that number has suddenly jumped to 49 percent after Trump’s election victory. And the percentage of Democrats that believe that the economy is getting better fell from 61 percent to 46 percent after the election. Here are some additional details from Gallup…
After Trump won last week’s election, Republicans and Republican-leaning independents now have a much more optimistic view of the U.S. economy’s outlook than they did before the election. Just 16% of Republicans said the economy was getting better in the week before the election, while 81% said it was getting worse. Since the election, 49% say it is getting better and 44% worse.
Conversely, Democrats and Democratic-leaning independents’ confidence in the economy plummeted after the election. Before the election, 61% of Democrats said the economy was getting better and 35% worse. Now, Democrats are evenly divided, with 46% saying it is getting better and 47% saying it is getting worse.
The truth, of course, is that the result of the election did not somehow magically alter the outlook for the U.S. economy.
We still have a giant mess on our hands, and the following are 11 very depressing economic realities that Donald Trump will inherit from Barack Obama…
#1 Nearly 7 out of every 10 Americans have less than $1,000 in savings. That means that about two-thirds of the country is essentially living paycheck to paycheck at this moment.
#2 Reuters is reporting that U.S. mall investors are poised to lose “billions” of dollars as the “retail apocalypse” in this nation deepens.
#3 Credit card delinquencies have hit the highest level that we have seen since 2012.
#4 Approximately 35 percent of all Americans have a debt that is at least 180 days past due.
#5 The rate of homeownership has fallen for eight years in a row and is now hovering near a 50 year low.
#6 The total number of government employees now outnumbers the total number of manufacturing employees in this country by almost 10 million.
#7 The number of homeless people in New York City (where Donald Trump is from) has hit a brand new record high.
#8 About 20 percent of all young adults are currently living with their parents.
#9 Total household debt in the United States has now reached a grand total of 12.3 trillion dollars.
#10 The total amount of corporate debt in the U.S. has nearly doubled since the end of 2007.
#11 When Barack Obama entered the White House, the U.S. government was 10.6 trillion dollars in debt. Today, the U.S. national debt is currently sitting at a staggering total of $19,842,173,949,869.58.
Despite nearly doubling the national debt during his eight years in the White House, Barack Obama is going to be the only president in United States history to never have a single year when U.S. GDP grew by at least three percent.
So will Donald Trump waltz in and suddenly turn everything around?
Just like when George W. Bush was elected, there is a lot of optimism about the future right now among Republicans.
And in 2017, Republicans are going to have control of the Senate and the House in addition to being in control of the White House.
But does that mean that they will actually get anything done?
For a moment, let’s review what didn’t happen the last time the Republicans were in this position. The following is an extended excerpt from an article by author Devvy Kidd…
The Republicans had control of both houses of Congress part of the time during Bush, Jr.’s two terms. Did they lock down our borders? NO.
Did they pass legislation to stop ALL funding for illegals which would self-deport millions of liars, cheats and thieves? NO. (READ, please: How to Self-Deport Millions of Illegals)
Did they stop trillions in unconstitutional spending? NO.
Did they get rid of any of Clinton’s unconstitutional Executive Orders? One or two but otherwise let Comrade Bill Clinton crap in our faces.
Did they get rid of one unconstitutional cabinet like HHS, Department of Education and EPA? NO.
Did they stop the unconstitutional foreign aid? NO.
Did they stop unconstitutional spending for Planned Parenthood? NO. Congress just continues to use borrowed money to spend more debt.
Did they stop unconstitutional spending for the gigantic hoax called global warming or climate change? NO. Trump: The Left Just Lost The War On Climate Change
Did Bush, Jr., get us out of all the destructive trade treaties killing American jobs? NO.
Did they crack down on visas bringing in tens of thousands of foreign workers when American workers who want to work are left in the unemployment line? NO.
Did they stop more and more federal regulations strangling America’s businesses? NO.
Did they impeach one single activist judge destroying our freedom and liberty? NO.
A Republican controlled Congress with a Republican in the White House and they did virtually NOTHING to restore America to a constitutional republic and constitutional spending.
So will things be any different under a Trump administration?
We shall see.
There will be tremendous pressure to maintain the status quo in many instances, because the process of fixing things would undoubtedly make conditions worse in the short-term.
A great example of this is the national debt. As I discussed yesterday, the only reason why we are able to enjoy such a massively inflated standard of living in this country is because we have been able to borrow trillions upon trillions of dollars from the rest of the world at ultra-low interest rates.
If the federal government started spending only the money that it brought in through taxes, our ridiculous debt-fueled standard of living would begin collapsing immediately.
We consume far more wealth than we produce, and the only way that we are able to do this is by borrowing insane amounts of money.
Either Donald Trump will continue to borrow money recklessly, or we will go into a major league economic downturn.
It really is that simple.
But when our politicians borrow money, they are literally destroying the future of this country. So the choice is pain in the short-term or greater pain in the long-term.
There is a way out, and that would involve shutting down the Federal Reserve and going to a completely debt-free form of money, but that is a topic for another article.
And unfortunately that is not something that is even on Donald Trump’s radar at this point.
No matter who won the election, the next president was going to be faced with some very harsh economic realities.
There are many out there that have faith that Donald Trump can pull off an unprecedented economic miracle, but there are others that are deeply skeptical.
Let us hope for the best, but let us also keep preparing for the worst.
Did you know that almost 70 percent of the U.S. population is essentially living paycheck to paycheck? As you will see below, a brand new survey has found that 69 percent of all Americans have less than $1,000 in savings. Of course one of the primary reasons for this is that most of us are absolutely drowning in debt. In fact, the total amount of household debt in the United States now exceeds 12 trillion dollars. So many Americans are so busy just trying to pay off their existing debts that they can’t even think about saving anything for the future. If economic conditions remain relatively stable, the fact that so many of us are living on the edge probably won’t kill us. But the moment the economy plunges into another 2008-style crisis (or worse), we could be facing a situation where two-thirds of the country is in imminent danger of running out of cash.
If you are living paycheck to paycheck, you live under the constant threat of your life being totally turned upside down if that paycheck ever goes away. During the last crisis, millions of Americans lost their jobs very rapidly, and because so many of them were living paycheck to paycheck all of a sudden large numbers of people couldn’t pay their mortgages. As a result, multitudes of American families went through the extremely painful process of foreclosure.
Unfortunately, it appears that we have not learned anything from the last go around. According to the brand new survey that I mentioned above, 69 percent of all Americans have less than $1,000 in savings…
Last year, GoBankingRates surveyed more than 5,000 Americans only to uncover that 62% of them had less than $1,000 in savings. Last month GoBankingRates again posed the question to Americans of how much they had in their savings account, only this time it asked 7,052 people. The result? Nearly seven in 10 Americans (69%) had less than $1,000 in their savings account.
Breaking the survey data down a bit further, we find that 34% of Americans don’t have a dime in their savings account, while another 35% have less than $1,000. Of the remaining survey-takers, 11% have between $1,000 and $4,999, 4% have between $5,000 and $9,999, and 15% have more than $10,000.
Perhaps the most alarming fact from this survey is that 62 percent of all Americans had less than $1,000 in savings last year. So that means that this number has gotten 7 percent worse over the last 12 months.
How did that happen? I thought the mainstream media was telling us that the economy was getting better…
Look, if you don’t have an emergency fund you are in danger of losing everything. This is a point that I have been making over and over again for years, and in an article about this new survey USA Today made this point very strongly as well…
This data is particularly worrisome since the recommendation is for Americans to have six months in expenses saved in case of an emergency, such as a large medical expense, car repair bill, or losing your job. Without this emergency fund to fall back on, millions of Americans could be risking financial disaster.
As the publisher of The Economic Collapse Blog, people are constantly asking me what they should do to get prepared for what is coming.
The number one thing that I always suggest is to build up an emergency fund.
In a chaotic situation it is always hard to anticipate accurately what is going to happen, but without a doubt we are all going to need to continue to pay our bills and to buy things for our families during the next crisis.
Yes, someday the U.S. dollar will become rather worthless, but until that happens you are going to need to continue to put a roof over the heads of your family and to put food on the table.
And you are going to need money to do those things.
Some time ago, the Federal Reserve also found that a large percentage of Americans are living on the edge of financial disaster. They discovered that 47 percent of all Americans could not even come up with $400 to pay for an unexpected emergency room visit without borrowing the money or selling something that they own.
If you can’t even come up with $400 you are really hurting, but that is the status of about half the country these days.
We are continually being told that the economy is strong, but that is simply not the truth.
In fact, it turns out that the period from 2005 to 2015 was the worst period for per capita real GDP growth in modern American history. The following comes from Zero Hedge…
- Growth was unusually strong in the 1960s and early 1970s. In every year from 1966 through 1973, per-capita income was up between 30 percent and 40 percent from a decade earlier. Thus, it’s not surprising that many Americans recall this as a great period for the nation’s economy.
- In every year from 1984 to 2007 — a period that economists call the Great Moderation, because of the way both growth and interest rates stabilized — per-person income was up between 20 percent and 30 percent from a decade earlier. That’s ample reason for Americans to view this as a good period for the economy.
- Cumulative per-person growth from 2005 to 2015 was lower than in any prior decade in the sample. That certainly helps explain why many Americans are unhappy with the nation’s recent economic performance.
And as I repeat over and over, Barack Obama is on track to be the one and only president in all of American history to never have a single year when the economy grew by at least 3 percent, and he has had eight years to try to accomplish that feat.
Why doesn’t Donald Trump ever bring up that amazing fact? I would think that he could get a lot of mileage out of that number.
At this point, nobody can deny that the middle class is shrinking. 61 percent of all Americans lived in middle class households in 1971, but now the middle class makes up a minority of the population for the very first time in our history.
Back in 1970, the middle class brought home approximately 62 percent of all income, but today that figure has plummeted to just 43 percent.
Those that are still doing well often dismiss those that are struggling by barking out such phrases as “get a job”, but the truth is that getting a good job is not so easy these days.
The most recent statistics show that there are 7.9 million Americans that are considered to be officially unemployed. When you add that number to the 94.1 million working age Americans that are considered to be “not in the labor force”, you get a grand total of 102 million working age Americans that do not have a job right now.
And just because you do have a job does not mean that everything is okay. As I have discussed previously, 51 percent of all U.S. workers make less than $30,000 a year according to the Social Security Administration.
Everywhere you look things seem to be getting worse and not better. Not too long ago I documented the explosion of tent cities all over the country as poverty continues to rise, and I discussed how one study found that some young women in our impoverished inner cities are so desperate that they are actually trading sex for food.
Sadly, it isn’t just a few hard cases that we are talking about. Even in areas of the country that are supposed to be “doing well” we are seeing record-setting poverty numbers. For example, it was recently reported that the number of New Yorkers sleeping in homeless shelters just set a brand new all-time high, and the number of New York families permanently living in homeless shelters is up 60 percent over the past five years.
If things are this bad during an “economic recovery”, what are they going to look like once the economy really starts imploding?
And considering the fact that almost 70 percent of the population has virtually no savings, could our nation handle an extended economic downturn that may be even worse than what we experienced in 2008 and 2009?
As a nation we truly are living on the edge, and it isn’t going to take very much at all to push us into oblivion.
Just like during the last economic crisis, homeless encampments are popping up all over the nation as poverty grows at a very alarming rate. According to the Department of Housing and Urban Development, more than half a million people are homeless in America right now, but that figure is increasing by the day. And it isn’t just adults that we are talking about. It has been reported that that the number of homeless children in this country has risen by 60 percent since the last recession, and Poverty USA says that a total of 1.6 million children slept either in a homeless shelter or in some other form of emergency housing at some point last year. Yes, the stock market may have been experiencing a temporary boom for the last couple of years, but for those on the low end of the economic scale things have just continued to deteriorate.
Tonight, countless numbers of homeless people will try to make it through another chilly night in large tent cities that have been established in the heart of major cities such as Seattle, Washington, D.C. and St. Louis. Homelessness has gotten so bad in California that the L.A. City Council has formally asked Governor Jerry Brown to officially declare a state of emergency. And in Portland the city has extended their “homeless emergency” for yet another year, and city officials are really struggling with how to deal with the booming tent cities that have sprung up…
There have always been homeless people in Portland, but last summer Michelle Cardinal noticed a change outside her office doors.
Almost overnight, it seemed, tents popped up in the park that runs like a green carpet past the offices of her national advertising business. She saw assaults, drug deals and prostitution. Every morning, she said, she cleaned human feces off the doorstep and picked up used needles.
“It started in June and by July it was full-blown. The park was mobbed,” she said. “We’ve got a problem here and the question is how we’re going to deal with it.”
But of course it isn’t just Portland that is experiencing this. The following list of major tent cities that have become so well-known and established that they have been given names comes from Wikipedia…
- Camp Hope, Las Cruces, New Mexico 
- Camp Quixote, Olympia, Washington State
- Camp Take Notice, Ann Arbor, Michigan
- Dignity Village, Portland, Oregon
- Opportunity Village, Eugene, Oregon
- Maricopa County Sheriff’s Tent City, Phoenix, Arizona
- New Jack City and Little Tijuana, Fresno, California
- Nickelsville, located in Seattle
- Right 2 Dream Too, Portland, Oregon
- River Haven, Ventura County, California
- Safe Ground, Sacramento, California
- The Jungle, San Jose, California
- Temporary Homeless Service Area (THSA), Ontario, California
- Tent City (100+ residents) of Lakewood, New Jersey
- Tent City, Avenue A and 13th Street, Lubbock, Texas
- Tent City, New Jersey forest
- Tent City, Bernalillo County, New Mexico
- Tent City, banks of the American River, Sacramento, California
- Tent City 3, Seattle
- Tent City, Chicago, Illinois 
- Tent City 4, eastern King County outside of Seattle
- The Point, where the Gunnison River and Colorado River meet
- The Village of Hope and Community of Hope, Fresno, California
- Transition Park, Camden, New Jersey
- Tent City, Fayette County, Tennessee, 
- Camp Unity Eastside, Woodinville, WA 
- China Hat Road, Bend, Oregon
Most of the time, those that establish tent cities do not want to be discovered because local authorities have a nasty habit of shutting them down and forcing homeless people out of the area. For example, check out what just happened in Elkhart, Indiana…
A group of homeless people in Elkhart has been asked to leave the place they call home. For the last time, residents of ‘Tent City’ packed up camp.
City officials gave residents just over a month to vacate the wooded area; Wednesday being the last day to do so.
The property has been on Mayor Tim Neese’s radar since he took office in January, calling it both a safety and health hazard to its residents and nearby pedestrian traffic.
“This has been their home but you can’t live on public property,” said Mayor Tim Neese, Elkhart.
If they can’t live on “public property”, where are they supposed to go?
They certainly can’t live on somebody’s “private property”.
This is the problem – people don’t want to deal with the human feces, the needles, the crime and the other problems that homeless people often bring with them. So the instinct is often to kick them out and send them away.
Unfortunately, that doesn’t fix the problem. It just passes it on to someone else.
As this new economic downturn continues to accelerate, our homelessness boom is going to spiral out of control. Pretty soon, there will be tent cities in virtually every community in America.
In fact, there are people that are living comfortable middle class lifestyles right at this moment that will end up in tents. We saw this during the last economic crisis, and it will be even worse as this next one unfolds.
Just like last time around, the signs that the middle class is really struggling can be subtle at first, but when you learn to take note of them you will notice that they are all around you. The following comes from an excellent article in the New York Post…
Do you see grocery stores closing? Do you see other retailers, like clothing stores and department stores, going out of business?
Are there shuttered storefronts along your Main Street shopping district, where you bought a tool from the hardware store or dropped off your dry cleaning or bought fruits and vegetables?
Are you making as much money annually as you did 10 years ago?
Do you see homes in neighborhoods becoming run down as the residents either were foreclosed upon, or the owner lost his or her job so he or she can’t afford to cut the grass or paint the house?
Did that same house where the Joneses once lived now become a rental property, where new people come to live every few months?
Do you know one or two people who are looking for work? Maybe professionals, who you thought were safe in their jobs?
Don’t look down on those that are living in tents, because the truth is that many “middle class Americans” will ultimately end up joining them.
The correct response to those that are hurting is love and compassion. We all need help at some point in our lives, and I know that I am certainly grateful to those that have given me a helping hand at various points along my journey.
Sadly, hearts are growing cold all over the nation, and the weather is only going to get colder over the months ahead. Let us pray for health and safety for the hundreds of thousands of Americans that will be sleeping in tents and on the streets this winter.