Rapture verdict ad 1
The Beginning Of The End Ad
Gold Buying Guide: Golden Eagle Coins
Lear Capital: The Best Source for Buying Gold & Precious Metal Investing

Recent Posts

The Preppers Blueprint Economic Collapse Blog Get Prepared Now Ad

Enter your email to subscribe to The Economic Collapse Blog:

Delivered by FeedBurner

They Are Killing Small Business: The Number Of Self-Employed Americans Is Lower Than It Was In 1990

After eight long, bitter years under Obama, will things go better for entrepreneurs and small businesses now that Donald Trump is in the White House?  Once upon a time, America was the best place in the world for those that wanted to work for themselves.  Our free market capitalist system created an environment in which entrepreneurs and small businesses greatly thrived, but today they are being absolutely eviscerated by the control freak bureaucrats that dominate our political system.  Year after year, leftist politicians just keep piling on more rules, more regulations, more red tape and more taxes.  As a result, the number of self-employed Americans is now lower than it was in 1990

In April 1990, 8.7 million Americans were self-employed, but today only 8.4 million Americans are self-employed.

Of course our population has grown much, much larger since that time.  In 1990, there were 249 million people living in the United States, but today there are 321 million people living in this country.

What this means is that the percentage of the population that is self-employed is way down.

In fact, one study found that the percentage of Americans that are self-employed fell by more than 20 percent between 1991 and 2010.

And if you go back even farther, the numbers are even more depressing.  It may be hard to believe, but the percentage of “new entrepreneurs and business owners” declined by a staggering 53 percent between 1977 and 2010.

Sometimes I like to watch a television show called Shark Tank, and on that show they make it seem like entrepreneurship in America is thriving.

But the exact opposite is actually the case.  In a previous article, I discussed how the number of new businesses being created in the United States has been steadily falling over the years.  According to economist Tim Kane, the number of startup jobs per one thousand Americans has been declining for several consecutive presidential administrations

Bush Sr.: 11.3

Clinton: 11.2

Bush Jr.: 10.8

Obama: 7.8

So why is this happening?

As I mentioned at the top of this article, self-employed Americans are being absolutely strangled by oppressive rules, regulations and taxes.

To illustrate this point, I would like to share with you some quotes from an open letter that was authored by a small business owner named Don Chernoff…

#1 I work for myself and have to pay my own medical expenses. Before the “affordable care act” I was paying about $200 per month for a high deductible policy. It was far from perfect but it got so much worse under the “Affordable” care act.

I now pay over $400 a month, my deductible went from $5,000 to over $6,000 and my out of pocket costs for care have skyrocketed.

#2 I have to spend dozens of hours and thousands of dollars for a tax accountant each spring to prepare my taxes because I cannot possibly understand how to do it myself, and I have a master’s degree in engineering.

#3 Many years ago when I quit a perfectly good job to start my own small business, I was shocked to learn that I had to pay both my share and what had been my employer’s share of Social Security.

#4 Between state, federal and local taxes you’ve probably paid 50% or more of your income in taxes, but that’s not enough for politicians.

If you’ve been lucky enough to have created a business you can sell, now you’ll get to enjoy paying another tax on the capital gain from the sale.

This is another reason why we need a conservative revolution in Washington.  We should demand that our members of Congress lower tax rates dramatically, completely eliminate the self-employment tax, greatly simplify the tax code and get rid of as many regulations on small business owners as possible.

In fact, if it was up to me I would abolish a number of federal agencies completely.

What we are doing right now is not working.  Small businesses have traditionally been one of the main engines of economic growth in this country, but thanks to the left they are unable to play that role at the moment.

It isn’t an accident that over the last ten years the U.S. economy has grown at exactly the same rate as it did during the 1930s.

If we want our economy to be great again, we need to go back and start doing the things that made it great in the first place.  If we continue to suffocate our economy, we will continue to get the same results.

And with each passing day, we get more signs that the economy is heading into another major downturn.  For instance, we just learned that Sears is closing 30 more stores on top of the 150 that had already been announced…

Sears Holdings, which wasn’t shy when it announced at the start of the year that it is closing 150 underperforming stores, has quietly added at least 30 more to the list.

Another 12 Sears stores and 18 Kmarts are among the locations that are closing, from Carson, Calif., to Hialeah, Fla., with most scheduled to shut their doors in July, based on calls to the stores, malls and confirmation in local media.

At the start of the year, the retailer pinpointed the 150 stores it said it would close. But it declined this week to provide a list of additional locations that are slated to shut since then, saying that it update store counts each quarter.

In addition, we just learned that new home sales in April were 11.4 percent lower than they were in March

If you’re surprised by the collapse in new home sales in April, then you’re not paying attention.

The 11.4% MoM plunge in new home sales in April was 5 standard deviations below expectations and the biggest since March 2015.

Yes, the stock market is holding up for the moment, but for most Americans the “real economy” just continues to deteriorate.  Just because we are at the end of a giant financial bubble does not mean that everything is going to be okay.

The numbers that I brought up in this article are just another example of our long-term economic decline.  In a healthy economy, entrepreneurs and small businesses would be thriving.  But instead, they are being systematically strangled out of existence by a political system that is wildly out of control.

11 Quotes From Trump’s Speech To Congress That Show That The U.S. Economy Is In A State Of Collapse

Donald Trump's Speech To A Joint Session Of Congress - Public DomainAfter Tuesday night, nobody should have any more doubt that the U.S. economy has been in the process of collapsing.  Donald Trump’s speech to a joint session of Congress is being hailed as his best speech ever.  Even CNN’s Van Jones praised Trump, which shocked many observers.  Jones said that when Trump honored the widow of slain Navy Seal Ryan Owens that it “was one of the most extraordinary moments you have ever seen in American politics”, and Jones believes that Trump “became President of the United States in that moment”.  But Trump’s speech is not just being praised for that one moment.  He detailed many of the most important problems that our nation is facing, and he explained his prescription for addressing those problems.

Hopefully Trump’s words helped people to understand that our problems did not get fixed just because he got elected.  It is going to take extraordinary action to fix those problems, because our problems run very deep.  In particular, Trump made an exceedingly strong case that the U.S. economy has been badly deteriorating for a very long period of time.  The following are 11 quotes from Trump’s speech to Congress that show that the U.S. economy is in a state of collapse…

#1 “Ninety-four million Americans are out of the labor force”

#2 “Over 43 million people are now living in poverty”

#3 “Over 43 million Americans are on food stamps”

#4 “More than one in five people in their prime working years are not working”

#5 “We have the worst financial recovery in 65 years”

#6 “In the last eight years, the past administration has put on more new debt than nearly all of the other Presidents combined”

#7 “We’ve lost more than one-fourth of our manufacturing jobs since NAFTA was approved”

#8 “We’ve lost 60,000 factories since China joined the World Trade Organization in 2001”

#9 “Our trade deficit in goods with the world last year was nearly 800 billion dollars”

#10 “Obamacare premiums nationwide have increased by double and triple digits. As an example, Arizona went up 116 percent last year alone.”

#11  “We’ve spent trillions and trillions of dollars overseas, while our infrastructure at home has so badly crumbled”

All of these quotes come from the transcript of the speech that was posted on the official White House website.

So many of the economic themes that Trump touched on are things that I have been writing about recently.  For example, I recently published an article entitled “11 Deeply Alarming Facts About America’s Crumbling Infrastructure” in which I discussed the horrific state of our roads, bridges, ports, dams, water systems and airports.  I greatly applaud Trump for wanting to do something about this growing national crisis, but I just don’t know where the money is going to come from.

Just over a week ago I also wrote a major article about Obamacare.  We have zero hope of turning our economy in a positive direction until we do something to fix our dramatically failing healthcare system, but at the moment Republicans in Congress seem extremely hesitant to take action.  Instead, many Republican leaders are now talking about trying to “fix Obamacare“, and that simply is not going to work.

You can’t “fix” a steaming pile of garbage.

All of the other facts that Trump listed about the economy were right on point too.  I have been screaming for seven years about our nightmarish trade deficit and the fact that tens of thousands of businesses and millions of good paying jobs were leaving the country.  It is refreshing to finally have a president that understands how badly America has been hurt by imbalanced trade agreements, and my hope is that he will start to take constructive action in this regard.

So much damage to the economy has already been done, and there are all kinds of indications that we are about to officially slide into yet another recession.  Yesterday we learned that the number of “distressed retailers” in this country is the highest that it has been since the last recession, and in recent weeks major retailers across the nation have announced the closing of hundreds of stores.  Lending standards are tightening, bankruptcies are rising, and employment growth at companies listed on the S&P 500 has gone negative for the first time since the last recession.

It is being projected that GDP growth for the first quarter of 2017 will be barely above zero, but it wouldn’t surprise me at all if we actually had a negative reading.

If we indeed are heading into a new recession, Trump and his supporters need it to happen as soon as possible so that they can blame it on Obama.  If a recession begins a year from now, everyone will blame it on Trump even if it is not his fault.  But if a recession begins now, Trump and his supporters can pin responsibility for it on Obama and then take credit if and when a recovery occurs.

Trump’s speech on Tuesday night was very optimistic, and he seemed quite confident that every issue that we are facing as a nation can be fixed

Everything that is broken in our country can be fixed. Every problem can be solved. And every hurting family can find healing and hope.

I hope that Trump is right, but I also know that the federal government is already 20 trillion dollars in debt, U.S. consumers are already more than 12 trillion dollars in debt, and corporate debt has approximately doubled since the last financial crisis.

You can’t squeeze blood out of an apple, and you can’t get out of a debt bubble by going into a lot more debt.

I understand that there are so many people out there right now that are deeply optimistic about the future, but the truth is that we have no hope of a positive future unless we fundamentally change our ways as a nation.  I wish that someone could show me evidence that this is happening, because I would be very glad to see it.  As it stands, we continue to steamroll toward the kind of apocalyptic future for this country that I have been warning about for a very long time.

It will take a lot more than words to fix America, and I think that Donald Trump understands this.

Hopefully many of his followers will start to get the message as well.

Here Come The Robots – And They Are Going To Take Almost All Of Our Jobs

Robot Human Hand - Public DomainWhat is going to happen to society when robots are able to do just about everything better, faster and cheaper than human workers can?  We live at a time when technology is increasing at an exponential pace.  Incredible advancements in robotics, computer science and artificial intelligence are certainly making our lives more comfortable, but they are also bringing fundamental changes to the workplace.  For employers, there are a lot of advantages to replacing human workers with robots.  Robots don’t surf around on Facebook when they are supposed to be working. Robots don’t need Obamacare, lunch breaks or vacation days. Robots never steal from the company and they never complain.  Up until fairly recently, human workers could generally perform many tasks more cheaply than robots could, but now that is rapidly changing.

For example, a coffee shop has just opened up in San Francisco that is manned by a robot instead of a human…

Tired of your barista misspelling your name on your morning cup of joe? Perhaps a robot could do better. On Monday, Cafe X opened its very first robotic cafe in San Francisco’s Metreon shopping center. Promising “precision crafted specialty coffee in seconds, the way the roaster intended,” Cafe X thinks that anything a human can do, its machines can do better.

Specifically, one very special machine. Nicknamed Gordon, after a Cafe X employee, this robot mans, or robots, two standard professional coffee machines in order to serve up espressos and lattes. In the San Francisco location, customers can grab a cup of coffee with beans from AKA Coffee, Verve Coffee Roasters, or Peet’s. While the coffee itself may not make Cafe X stand out from the competition, the startup hopes that the robot’s efficiency will.

If that coffee shop demonstrates that it can be much more profitable than a coffee shop with human employees, it is just a matter of time before human baristas start to be phased out all over the nation.

A similar thing is happening in many supermarkets.  Personally, I hate the “self-checkout lines”, but you are starting to see them everywhere these days.

And according to the Sun, Amazon is playing around with a concept that would employ hardly any human workers at all…

In the case of Amazon’s automated retail prototype, a half-dozen workers could staff an average location. A manager’s duties would include signing up customers for the “Amazon Fresh” grocery service. Another worker would restock shelves, and still another two would be stationed at “drive-thru” windows for customers picking up their groceries, fast-food style.

The last pair would work upstairs, helping the robots bag groceries to be sent down to customers on “dumbwaiter”-like conveyors, a source said.

With the bare-bones payroll, the boost to profits could be huge. Indeed, the prototype being discussed calls for operating profit margins north of 20 percent. That compares with an industry average of just 1.7 percent, according to the Food Marketing Institute.

During the recent presidential campaign, much was made of the fact that we have shipped millions of good paying jobs overseas over the past several decades.

We can certainly try to make some laws that would keep American workers from losing jobs to foreign workers, but pretty soon workers all over the world are going to be losing millions of jobs to technology, and it is going to be just about impossible to make laws to prevent that from happening.

Just check out what is happening in China.  Many big firms had moved manufacturing to China because labor was much cheaper over there, but now a lot of those cheap Chinese workers are being replaced by robots

Apple’s iPhone manufacturer, Foxconn, in fact, has already begun automating certain work that was previously done by hand. A Chinese government official told a Hong Kong newspaper in May that Foxconn had replaced 60,000 workers with robots at one factory there. And the company is receiving incentives north of Shanghai in the eastern-central Jiangsu Province to accelerate investments in robotics to replace human labor, according to Chinese state media organization Xinhua.

Sadly, this is just the beginning.  According to one study, 49 percent of all activities currently performed by human workers could already “be turned over to some sort of machine or robot”…

About 49% of worker activities can be turned over to some sort of machine or robot, increasingly helped along by artificial-intelligence software, according to consultancy McKinsey.

About 58% of CEOs plan to cut jobs over the next five years because of robotics, while 16% say they plan to hire more people because of robotics, according to a PricewaterhouseCoopers survey.

And Carl Frey of Oxford University has determined that some professions have more than a 90 percent chance of becoming automated in the coming years

The revelations that dependable office jobs such as insurance workers and real estate agents have a more than 97% chance of becoming computerised could now spark fears among the middle class workforce.

‘While low-skilled jobs are most exposed to automation over the forthcoming decades, a substantial number of middle-income jobs are equally at risk.’ Frey told The Times.

Other jobs that feature high on the ‘risk list’ are credit analysts who have a 97% chance of losing their jobs to robots, postal service workers at 95% and lab technicians who have an 89% chance of seeing their role become automated.

So what in the world are we going to do with billions of human workers around the globe that are no longer needed when technology takes virtually all of our jobs?

Some have suggested that the idea of “work” will become a thing of the past, and that society will evolve into a socialist utopia where everything we need is provided for by the government.  In fact, the concept of a “universal basic income” is already being promoted in Europe and elsewhere.

But others see a dystopian future where the gap between the “haves” and the “have nots” grows greater than ever before.  Humanity has always been plagued by poverty and greed, and everyone agrees that the gap between the very wealthy and the rest of us has been growing very rapidly in recent years.

Where there is nearly universal agreement is on the fact that big changes are coming.  Workers are going to be displaced by technology at an accelerating rate in the years ahead, and this will present a tremendous challenge for us all.

Employment Boom: 10 Companies That Have Promised To Add Jobs In The United States Since Trump Was Elected

Hiring - Public DomainOne of the primary things that Trump’s presidency will be judged upon is his ability to encourage the creation of good paying jobs for American workers, and so far the results have been quite promising.  Since Trump’s surprise election victory in November, a whole bunch of companies have either promised to bring jobs back into the country or have pledged to create new ones.  Ultimately time will tell if those jobs actually materialize, but for the moment there is a tremendous amount of optimism in the air.  In fact, I don’t know if we have ever seen anything quite like this at the beginning of a new presidency.  The following are 10 companies that have promised to add jobs in the United States since the election of Donald Trump…

#1 Kroger says that it intends to fill 10,000 permanent positions in the United States this year.

#2 IBM has announced that it will be hiring an additional 25,000 workers in the United States over the next four years.

#3 Foxconn is considering setting up a 7 billion dollar plant in the United States that would create between 30,000 and 50,000 jobs.

#4 Amazon.com has pledged to add 100,000 full-time jobs in the United States by mid-2018.

#5 Wal-Mart has announced that it plans to add approximately 10,000 retail jobs in the United States in 2017.

#6 Sprint has announced that 5,000 jobs will be brought back to the United States instead of going overseas.

#7 After meeting with Trump, the CEO of SoftBank stated his intention to create 50,000 new jobs in the United States.

#8 After a phone call from Trump, industrial manufacturing giant Carrier promised to keep hundreds of jobs in the United States instead of moving them out of the country.

#9 Hyundai has promised to spend 3.1 billion dollars supporting their current factories in Georgia and Alabama, and they have said that they are now considering adding an additional factory in the United States as well.

#10 GM has pledged to invest a billion dollars in U.S. factories and to add or keep 7,000 jobs in the United States.

Unlike most politicians, so far Donald Trump seems determined to actually keep many of the promises that he made during the campaign.  And on Monday he kept a very important promise by pulling the U.S. out of the Trans-Pacific Partnership.  If you are not familiar with the Trans-Pacific Partnership, the following is a pretty good summary  from USA Today

The TPP is a comprehensive trade agreement among 12 Pacific Rim countries, not including China, that was signed last year by President Obama after seven years of negotiation. But the Senate had not yet ratified it. The 30-chapter pact, which also needed to be ratified by other countries before Trump’s order Monday, primarily aims to boost exports, remove tariffs and non-tariff  barriers, open access to more markets and usher in transparency in trade rules.

The 12 nations that were to be included in the Trans-Pacific Partnership collectively account for approximately 40 percent of global GDP.  So it was going to be a very big deal, and it is something that Barack Obama had been working on for many years.

But with one stroke of a pen it is over, and as I will explain below that is a very good thing.

Trump is also promising to keep his pledge to renegotiate NAFTA

On Nafta, Trump said Sunday that he’ll meet with Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto to begin discussing the deal, which he has routinely blamed for the loss of U.S. jobs although there was little change to employment in the U.S. in several years after it went into effect. Trump signaled that he’s willing to work with the U.S.’s closest neighbors.

“We’re going to start renegotiating on Nafta, on immigration, and on security at the border,” Trump said at the start of a swearing-in ceremony for top White House staff. “I think we’re going to have a very good result for Mexico, for the United States, for everybody involved. It’s really very important.”

Nobody is suggesting that we shouldn’t trade with the rest of the world, but what Donald Trump understands that so many other politicians do not is that many of these “free trade deals” have been extremely destructive to the U.S. economy.

For years, we have been buying far, far more from the rest of the world than they have been buying from us.  As a result of our massive trade deficits, there has been a continual flow of cash, jobs and businesses leaving the country.

Over the past several decades, formerly great manufacturing cities such as Detroit have been reduced to urban hellholes.  Meanwhile, China has become exceedingly wealthy and gleaming new factories have sprouted like mushrooms in their major cities.

This didn’t happen by accident.

Bad decisions lead to bad results.  And if we had kept on doing the same things, we would have continued to systematically impoverish our nation.

For more than seven years, I have been hammering home the message that our trade policies have been absolutely killing us.  So I am quite thankful that we finally have a president that understands these things.

Of course there is much more to fixing our economy than just addressing our trade deals.  As I discussed yesterday, our rapidly growing debt is becoming a major crisis, and that is going to present quite a challenge for Trump.

But for the moment, we should definitely celebrate the fact that Trump has gotten us out of the TPP and that he plans to renegotiate NAFTA.

Donald Trump understands business, and it is going to be fascinating to watch how a businessman handles the position of the presidency.  It has only been a few days, but already some of his former critics seem to be coming around a little bit.  For instance, just consider what Mark Cuban is saying

The Dallas Mavericks owner and entrepreneur is “playing it by ear” when it comes to the effect President Donald Trump’s policies will have on the stock market. But he thinks there’s possible upside.

“I think the discussed economic programs are potentially a big plus for public companies and the overall economy,” Mr. Cuban said in an e-mail Monday morning.

The potential policies Mr. Cuban is optimistic about: corporate tax cuts; getting rid of the “friction” for small businesses; and reducing and simplifying administrative activities.

Considering our current trajectory and the immense amount of long-term damage that was done during the Obama years, it is hard to be optimistic about the future of the U.S. economy.

However, I am certainly willing to give Donald Trump a chance to show what he can do.

At least he is doing things differently than his predecessors did, and that is to be greatly applauded because the road that we were on clearly would have ended in economic oblivion.

We may very well end up there anyway, but there is certainly nothing wrong with being hopeful that Trump can somehow turn things around.

The Percentage Of Working Age Men That Do Not Have A Job Is Similar To The Great Depression

Great DepressionWhy are so many men in their prime working years unemployed?  The Obama administration would have us believe that unemployment is low in this country, but that is not true at all.  In fact, one author quoted by NPR says that “it’s kind of worse than it was in the depression in 1940”.  Most Americans don’t realize this, but more men from ages 25 to 54 are “inactive” right now than was the case during the last recession.  We have millions upon millions of strong young men just sitting around doing nothing.  They aren’t employed and they aren’t considered to be looking for employment either, and so they don’t show up in the official unemployment numbers.  But they don’t have jobs, and nothing the Obama administration does can eliminate that fact.

According to NPR, “nearly 100 percent of men between the ages of 25 and 54 worked” in the 1960s.

In those days, just about any dependable, hard working American man could get hired almost immediately.  The economy was growing and the demand for labor was seemingly insatiable.

But today, one out of every six men in their prime working years does not have a job

In a recent report, President Obama’s Council of Economic Advisers said 83 percent of men in the prime working ages of 25-54 who were not in the labor force had not worked in the previous year. So, essentially, 10 million men are missing from the workforce.

One in six prime-age guys has no job; it’s kind of worse than it was in the depression in 1940,” says Nicholas Eberstadt, an economic and demographic researcher at American Enterprise Institute who wrote the book Men Without Work: America’s Invisible Crisis. He says these men aren’t even counted among the jobless, because they aren’t seeking work.

So why is this happening?

If you look at the inactivity rate for men in the 25 to 54 age bracket, it was sitting at just 8.1 percent in January 2000.

In January 2008, right at the beginning of the last recession, it was sitting at 9.2 percent, and by the end of the recession it had risen to 10.3 percent.

Today, it is sitting at 11.5 percent.

Remember, these are men that don’t even count toward the official unemployment rate.  They are not working, but they are not considered to be “looking for work” either.

So what are these men doing?

You may be tempted to think that many of them have decided to stay home and raise the kids as their wives go off to work.  But according to NPR, that is not what is happening

What the missing men aren’t doing in large numbers is staying home to take care of family. Forty percent of nonworking women are primary caregivers; that’s true of only 5 percent of men out of the workforce.

We do have the largest prison population in the entire world by far, and without a doubt that does play a role in these numbers.  However, a far bigger factor is the millions of men that have become content being dependents of the federal government.  More than 100 million Americans receive money from the government each month, and a lot of people (both men and women) have found that it is just easier to sit back and collect government checks than it is to go out and try to work hard for a living.

But of course the number one factor is the lack of jobs available.  I personally know people that have been looking for work in their fields for years and have not been able to get hired.  We have a major employment crisis in this nation, and it is only going to get worse in the years ahead as we continue to lose jobs to technology and millions more good jobs get shipped overseas.

And a lot of the “jobs” that have been created during the Obama administration have been very low quality jobs.  Since December 2014, we have gained about half a million jobs for waiters and bartenders, but meanwhile we have actually lost good paying manufacturing jobs.  If we continue down this road, the middle class will continue to shrink.

In addition to everything that I have just shared, here are some other facts that are pertinent to this discussion…

-Right at this moment, there are approximately 102 million working age Americans that do not have a job.

-Nearly one out of every five young adults are currently living with their parents.

-The Wall Street Journal recently declared that this is the weakest “economic recovery” since 1949.

-Barack Obama is on track to be the only president in U.S. history to never have a single year when the U.S. economy grew by at least 3 percent.

The economy is far weaker than you are being told, the employment crisis is far worse than you are being told, and as I mentioned yesterday, the stage is clearly set for a new financial crisis of epic proportions.

And if we are going to see markets crash, this time of the year is a good time for it.  In fact, CNBC says that history tells us that this is the “worst period of the year for stocks”…

The worst period of the year for stocks has just begun — at least based on market history.

Over the entire 120-year history of the Dow Jones industrial average, Sept. 6 to Oct. 29 tends to be the worst period for the market. And more specifically, the last few weeks of September have been an especially bad time.

Someday when people look back at this time in history, they will not be surprised by how horrific the coming collapse will be.  The truth is that anyone with a lick of common sense can see that the greatest debt bubble in the history of the world is going to end badly.

No, what is going to amaze them is that the system was able to hold together as long as it did.  It truly is incredible that the debt-based, fiat currency Ponzi scheme that the central banks of the world have been desperately trying to prop up has been able to keep chugging along all the way to the middle of 2016.

How much longer can they keep the magic going?

I don’t know, but history tells us that time is not on their side…

Why The Jobs Report Is Not Nearly As Strong As You Are Being Told

Jobs Unemployment Main Street - Public DomainHappy days are here again? On Friday, the mainstream media was buzzing with the news that the U.S. economy had added 255,000 jobs during the month of July. But as you will see below, the U.S. economy did not add 255,000 jobs during the month of July. In fact, without an extremely generous “seasonal adjustment”, the number of jobs added during the month of July would not have even kept up with population growth. But the pretend number sounds so much better than the real number, and so the pretend number is what is being promoted for public consumption.

Why doesn’t the government ever just tell us the plain facts? Unfortunately, we live at a time when “spin” is everything, and just about everyone in the mainstream media seemed quite pleased with the “good jobs report” on Friday. However, as Zero Hedge has pointed out, the truth is that the “unadjusted” numbers tell a very different story…

As Mitsubishi UFJ strategist John Herrmann wrote in a note shortly after the report, the “jobs headline overstates” strength of payrolls. He adds that the unadjusted data show a “middling report” that’s “nowhere as strong as the headline” and adds that private payrolls unadjusted +85k in July vs seasonally adjusted +217k.

In Herrmann’s view, the government applied a “very benign seasonal adjustment factor upon private payrolls to transform a soft private payroll gain into a strong gain.”

He did not provide a reason why the government would do that.

Every month, the U.S. economy must create at least 150,000 new jobs just to keep up with population growth. According to the unadjusted numbers, we did not hit that threshold, and so the employment situation in this country actually got worse last month.

In America today, there are 7.8 million Americans that are considered to be officially unemployed, and another 94.3 million working age Americans that are considered to be “not in the labor force”.

When you add those two numbers together, you get a grand total of 102 million working age Americans that do not have a job right now.

Rather than focusing on the headline “unemployment” figure, we get a much fairer look at the employment crisis in the United States when we examine the employment-population ratio. The following chart comes directly from the Bureau of Labor Statistics, and it shows that the percentage of Americans that are employed has never even come close to getting back to where it was just prior to the last recession…

Employment-Population Ratio 2016

Over the past couple of years we have seen a slight bump in this number, and that is good, but normally after a recession ends the employment-population ratio goes back to at least as high as it was before.  Unfortunately, this has not happened after the last two recessions.  The following comes from Wolf Richter

The ratio always drops during recessions, but before 2001, it always climbed to higher highs during the recoveries. The 2001 recession and subsequent recovery changed this. For the first time, the ratio never fully recovered, never got even close to fully recovering. That was a new phenomenon: employment growth could no longer keep up with population growth.

When the Great Recession hit, the ratio plunged from its lower starting point at the fastest pace on record (going back to 1948). The Fed’s efforts were all focused exclusively on bailing out bondholders, re-inflating the stock market, re-inflating the housing market, and generally creating what had become the official Fed policy at the time, the Wealth Effect (here’s Bernanke himself explaining it). This has re-inflated asset prices – many of them way beyond their prior bubble peaks.

But the Fed’s astounding focus on capital accelerated the already changing dynamics of the economy, at the expense of labor.

Even the Wall Street Journal admits that we are in the weakest “economic recovery” since 1949, and now there are lots of signs that we have entered a brand new economic downturn.  Here are just a few examples from Chad Shoop

  • Ford, GM and Chrysler — three of the U.S.’ largest auto companies — reported sales for July that missed estimates: down 3%, 1.9% and up 0.3%, respectively.
  • Delta Airlines, one of the largest airlines in the world, said revenue fell 7% in July as part of its monthly performance update.
  • Macy’s, the biggest department store company, reported a decline in sales for July, leading to more aggressive markdowns and an industry-wide sell-off.

And lots of ominous signs continue to pop up on Wall Street as well.  For one thing, the Libor rate has surged to the highest level since the last financial crisis.  If you are not familiar with Libor, here is a pretty good explanation of it from Business Insider

The Libor, or London Interbank Offered Rate, measures the interest rate at which banks lend to each other at different durations, and its sharp jump was a harbinger of the financial crisis.

And according to that same article, the Libor rate is now the highest that we have seen since early 2009

In the past month, the Libor rate has spiked to rates not seen since the first quarter of 2009, the heart of the banking meltdown.

Not to mention, the spread between the Libor and the Overnight Index Swap rate, which tracks the lending rate from the Federal Reserve, has widened, another potentially worrying sign.

But of course I have been quoting facts and figures like this for months, and yet U.S. financial markets continue to hold it together.

There are literally dozens of parallels between the global financial crisis of 2008 and what is happening in 2016, but Wall Street continues to defy the laws of economics.

Of course it won’t last forever, but it certainly has been a sight to behold.

And I am certainly not alone in my analysis.  As I noted the other day, DoubleLine Capital CEO Jeffrey Gundlach is entirely convinced that stocks “should be down massively”…

“The artist Christopher Wool has a word painting, ‘Sell the house, sell the car, sell the kids.’ That’s exactly how I feel – sell everything. Nothing here looks good,” Gundlach said in a telephone interview. “The stock markets should be down massively but investors seem to have been hypnotized that nothing can go wrong.”

For the moment, investors continue to pay extremely irrational prices for stocks, and the mainstream media is just giddy about the state of the economy.

So let us enjoy this very strange period of stability for however much longer it lasts, but let us also protect ourselves from the horrible crash that will inevitably follow.

The U.S. Has Lost 195,000 Good Paying Energy Industry Jobs

Layoffs - Public DomainNot all jobs are created equal.  There is a world of difference between a $100,000 a year energy industry job and a $10 an hour job running a cash register at Wal-Mart.  You can comfortably support a middle class family on $100,000 a year, but there is no way in the world that you can run a middle class household on a part-time job that pays just $10 an hour.  The quality of our jobs matters, and if current long-term trends continue unabated, eventually we are not going to have much of a middle class left.  At this point the middle class has already become a minority in America, and according to the Social Security Administration 51 percent of all American workers make less than $30,000 a year right now.  We have a desperate need for more higher paying jobs, and that is why what is happening in the energy industry is so deeply alarming.

Just today we got some more disturbing news.  According to Challenger, Gray & Christmas, the U.S. has lost 195,000 good paying energy jobs since the middle of 2014…

Cheap oil has fueled a massive wave of job cuts that may not be over yet.

Since oil prices began to fall in mid-2014, cheap crude has been blamed for 195,000 job cuts in the U.S., according to a report published on Thursday by outplacement firm Challenger, Gray & Christmas.

It’s an enormous toll that is especially painful because these tend to be well-paying jobs. The average pay in the oil and gas industry is 84% higher than the national average, according to Goldman Sachs.

Those are good paying jobs that are not easy to replace, and unfortunately the jobs losses appear to be accelerating.  In their new report, Challenger, Gray & Christmas went on to say that 95,000 of those job cuts have come in 2016, and 17,725 of them were in July alone.

We also got some other bad news for the U.S. economy on Thursday.

Factory orders are down again, and at this point U.S. factory orders have now been down on a year over year basis for 20 months in a row.  That is the longest streak in all of U.S. history.

Needless to say, we have never seen such a thing happen outside of a recession.

In addition, it is being reported that U.S. banks have been tightening lending standards for four quarters in a row.

Once again, this is something that has never happened outside of a recession.

On top of all that, tax receipts continue to plummet.  This is a very bad sign for the economy, because falling tax receipts are usually a sign that we are headed into a recession.  The following comes from Zero Hedge

July “Withheld” receipts – those tax and withholding payments that come straight from wage earner pay stubs – are down 1.0% year over year. 

This data series can be choppy, and looking at the three month trailing average yields a 3.1%.  That’s a touch slower than the 2016 YTD comp of 3.3%, and tells us to not expect too much from Friday’s number.

Also worth noting: YTD non-withheld tax receipts (such as those that come from “Gig economy” workers) are down 6.5%, and July’s comp is 15% lower than a year ago.

Last, corporate tax receipts are down 11% YTD, and if the current pace of these payments holds it will be the first negative comp since 2011. Bottom line: if the tax man isn’t as busy, can the U.S. economy really be expanding?

Are you starting to see a pattern here?

And let’s review what else we have learned over the past couple of weeks…

-U.S. GDP growth came in at an extremely disappointing 1.2 percent for the second quarter of 2016, and the first quarter was revised down to 0.8 percent.

-The rate of homeownership in the United States has fallen to the lowest level ever.

-The Wall Street Journal says that this is the weakest “economic recovery” since 1949.

-Barack Obama is on track to be the only president in U.S. history to never have a single year of 3 percent GDP growth.

Meanwhile, things continue to get worse around the rest of the planet as well.  For example, the economic depression in Brazil continues to deepen and it is being reported that the Brazilian economy has now been shrinking for five quarters in a row

Brazil’s economy, the world’s ninth largest, contracted by 0.3 percent in the first quarter, marking the fifth straight quarter it shrank. Last year, Brazil’s gross domestic product fell to its lowest level since 2009.

Inflation has also shot higher recently, rising 9 percent in 2015, from 6.3 percent in 2014, according to data from the World Bank. Energy as a percentage of exports, meanwhile, fell to 7 percent in 2015, from 9 percent in the previous year.

And of course Brazil is hosting the Olympics this summer, and that is turning out to be a major debacle.  Many of the international athletes will actually be rowing, sailing and swimming in open waters that are highly contaminated by raw sewage, and Brazilian police have been welcoming tourists to Rio with a big sign that says “Welcome To Hell“.  And let us not forget that right next door in Venezuela the economic collapse has gotten so bad that people are killing and eating zoo animals.

As the global economy continues to deteriorate, what should we do?

Legendary investor Bill Gross shared some of his thoughts on the matter in his latest Investment Outlook

“Negative returns and principal losses in many asset categories are increasingly possible unless nominal growth rates reach acceptable levels,” Gross said in his latest Investment Outlook note published Wednesday.

“I don’t like bonds; I don’t like most stocks; I don’t like private equity. Real assets such as land, gold, and tangible plant and equipment at a discount are favored asset categories.”

I tend to agree with Gross.  Bonds are in a tremendous bubble right now, and the stock market bubble has grown to ridiculous proportions.  In the end, the only wealth that you are going to be able to fully rely on is wealth that you can physically have in your possession.

As you have seen in this article, signs of economic decline are all around us.

And yet, many people out there are still convinced that good times are right around the corner.

What is it going to take to convince them that they are wrong?

Something Big That Always Happens Right Before The Official Start Of A Recession Has Just Happened

Temporary Help ServicesWhat you are about to see is major confirmation that a new economic downturn has already begun.  Last Friday, the government released the worst jobs report in six years, and that has a lot of people really freaked out.  But when you really start digging into those numbers, you quickly find that things are even worse than most analysts are suggesting.  In particular, the number of temporary jobs in the United States has started to decline significantly after peaking last December.  Why this is so important is because the number of temporary jobs started to decline precipitously right before the last two recessions as well.

You see, when economic conditions start to change, temporary workers are often affected before anyone else is.  Temporary workers are easier to hire than other types of workers, and they are also easier to fire.

In this chart, you can see that the number of temporary workers peaked and started to decline rapidly before we even got to the recession of 2001.  And you will notice that the number of temporary workers also peaked and started to decline rapidly before we even got to the recession of 2008.  This shows why the temporary workforce is considered to be a “leading indicator” for the U.S. economy as a whole.  When the number of temporary workers peaks and then starts to fall steadily, that is a major red flag.  And that is why it is so incredibly alarming that the number of temporary workers peaked in December 2015 and has fallen quite a bit since then…

Temporary Help Services

In May, the U.S. economy lost another 21,000 temporary jobs, and overall we have lost almost 64,000 since December.

If a new economic downturn had already started, this is precisely what we would expect to see.  The following is some commentary from Wolf Richter

Staffing agencies are cutting back because companies no longer need that many workers. Total business sales in the US have been declining since mid-2014. Productivity has been crummy and getting worse. Earnings are down for the fourth quarter in a row. Companies see that demand for their products is faltering, so the expense-cutting has started. The first to go are the hapless temporary workers.

Another indicator which is pointing to big trouble for American workers is the Fed Labor Market Conditions Index.  Just check out this chart from Zero Hedge, which shows that this index has now been falling on a month over month basis for five months in a row.  Not since the last recession have we seen that happen…

Fed Labor Market Conditions MoM

Of course I have been warning about this new economic downturn since the middle of last year.  U.S. factory orders have now been falling for 18 months in a row, job cut announcements at major companies are running 24 percent higher up to this point in 2016 than they were during the same time period in 2015, and just recently Microsoft said that they were going to be cutting 1,850 jobs as the market for smartphones continues to slow down.

As I have been warning for months, the exact same patterns that we witnessed just prior to the last major economic crisis are playing out once again right in front of our eyes.

Perhaps you have blind faith in Barack Obama, the Federal Reserve and our other “leaders”, and perhaps you are convinced that everything will turn out okay somehow, but there are others that are doing what they can to get prepared in advance.

It may surprise you to learn that George Soros is one of them.

According to recent media reports, George Soros has been selling off investments like crazy and has poured tremendous amounts of money into gold and gold stocks

Maybe the best argument in favor of gold is that American legendary investor and billionaire George Soros has recently sold 37% of his stock and bought a lot more gold and gold stocks.

George Soros, who once called gold ‘the ultimate bubble,’ has resumed buying the precious metal after a three-year hiatus. On Monday, the billionaire investor disclosed that in the first quarter he bought 1.05 million shares in SPDR Gold Trust, the world’s biggest gold exchanged-traded fund, valued at about $123.5 million,” Fortune and Reuters reported Tuesday.

George Soros didn’t make his fortune by being a dummy.

Obviously he can see that something big is coming, and so he is making the moves that he feels are appropriate.

If you are waiting for some type of big announcement from the government that a recession has started, you are likely going to be waiting for quite a while.

How it usually works is that we are not told that we are in a recession until one has already been happening for an extended period of time.

For instance, back in mid-2008 Federal Reserve Chairman Ben Bernanke insisted that the U.S. economy was not heading into a recession even though we found out later that we were already in one at the moment Bernanke made that now infamous statement.

On my website, I have been documenting all of the red flags that are screaming that a new recession is here for months.

You can be like Ben Bernanke in 2008 and stick your head in the sand and pretend that nothing is happening, or you can honestly assess the situation at hand and adjust your strategies accordingly like George Soros is doing.

Of course I am not a fan of George Soros at all.  The shady things that he has done to promote the radical left around the globe are well documented.  But they don’t call people like him “the smart money” for no reason.

Down in Venezuela, the economic collapse has already gotten so bad that people are hunting dogs and cats for food.  For most of the rest of the world, things are not nearly that bad, and they won’t be that bad for a while yet.  But without a doubt, the global economy is moving in a very negative direction, and the pace of change is accelerating.

Those that are wise have already been getting prepared, and those that are convinced that everything is going to be just fine somehow have not been getting prepared.

In the end, most people end up believing exactly what they want to believe, and we are not too far away from the time when those choices are going to have very severe consequences.

*About the author: Michael Snyder is the founder and publisher of The Economic Collapse Blog. Michael’s controversial new book about Bible prophecy entitled “The Rapture Verdict” is available in paperback and for the Kindle on Amazon.com.*

Worst Jobs Report In Nearly 6 Years – 102 Million Working Age Americans Do Not Have Jobs

You Are Fired - Public DomainThis is exactly what we have been expecting to happen.  On Friday, the Bureau of Labor Statistics announced that the U.S. economy only added 38,000 jobs in May.  This was way below the 158,000 jobs that analysts were projecting, and it is also way below what is needed just to keep up with population growth.  In addition, the number of jobs created in April was revised down by 37,000 and the number of jobs created in March was revised down by 22,000.  This was the worst jobs report in almost six years, and the consensus on Wall Street is that it was an unmitigated disaster.

The funny thing is that the Obama administration says that the unemployment rate actually went down last month.  Almost every month since Obama has been in the White House, large numbers of Americans that have been unemployed for a very long time are shifted from the “unemployment” category to the “not in the labor force” category.  This has resulted in a steadily falling “unemployment rate” even though the percentage of the population that is actually working has not changed very much at all since the depths of the last recession.

The Bureau of Labor Statistics claims that the number of Americans “not in the labor force” increased by 664,000 from April to May.  If you believe that, I have a giant bridge on the west coast that I would like to sell you.  The labor force participation rate is now down to 62.6, and it is hovering just above a 38 year low.

When you add the number of working age Americans that are “officially unemployed” (7.4 million) to the number of working age Americans that are considered to be “not in the labor force” (an all-time record high of 94.7 million), you get a grand total of 102.1 million working age Americans that do not have a job right now.

This is not a game.

So far in 2016, three members of my own extended family have lost their jobs.

According to Challenger, Gray & Christmas, layoffs at major firms are running 24 percent higher up to this point in 2016 than they were during the same time period in 2015.

It was only a matter of time before those layoffs started showing up in the official employment numbers, and I fully expect that this trend will accelerate in the months ahead.

And here are some other brand new numbers for you to consider…

-Since Barack Obama entered the White House, 14,179,000 Americans have “left the labor force” according to the Bureau of Labor Statistics.

-The quality of our jobs continues to deteriorate.  In May, 59,000 full-time jobs were lost, but 118,000 part-time jobs were gained.

-Since September 2014, 207,000 mining jobs have been lost.

-We just learned that U.S. factory orders have declined once again.  This marks the 18th month in a row that this has taken place, and we have never seen such an extended decline outside of a major recession.

-JPMorgan’s “recession indicators” have just soared to the highest level that we have seen since the last recession.

Needless to say, the financial community is pretty horrified by all of this news.  They were expecting a much better jobs report, and many of them are not hiding their disappointment.  Here is one example from the Wall Street Journal

This was an unqualified dud of a jobs report,” said Curt Long, chief economist at the National Association of Federal Credit Unions, noting “the unemployment rate fell, but for the wrong reason as labor force participation declined for the second consecutive month.”

And here is another example that comes from David Donabedian, the chief investment officer at Atlantic Trust Wealth Management…

We can’t find a positive nugget in today’s job report. If we were looking for signs of strength in this report, there is nothing to hang onto here.”

But of course the mainstream media is doing their best to put a positive spin on these numbers.  For instance, CNN just published a laughable article entitled “America’s economy is stronger than weak jobs report“.

And the White House insists that this new employment report really isn’t that big of a deal

The White House doesn’t get “too disappointed” over the number of unemployed and underemployed Americans.

“I’ve been reacting to jobs numbers here at the White House for more than seven years, and what is true today has been true in the past, which is, we don’t get too excited when jobs numbers are better than expected and we don’t get too disappointed when jobs numbers one-month are lower than expected,” White House Press Secretary Josh Earnest told CNBC.

But of course the truth is that it is a really big deal.  We just received major confirmation that the U.S. economy has slipped into recession mode.

For months, I have been writing about how virtually every other indicator has been screaming that a new economic crisis had already begun.

But the employment numbers had remained fairly decent up until now.  Employment is typically considered to be a “lagging indicator”, which means that it isn’t one of the first places we would expect to see signs of a recession show up.  However, it is inevitable that the official unemployment numbers will reflect an economic downturn eventually, and that is what we are starting to see now.

What this means is that you probably have even less time to get prepared for what is ahead than you may have originally thought.

The U.S. economy has already entered the early chapters of the next great economic crisis, and most of the population is going to be caught totally off guard and will suffer tremendously.

If our leaders had made better decisions since the last crisis, things could have turned out differently.  But instead, they continued to conduct business as usual, and now we will reap what they have sown.

*About the author: Michael Snyder is the founder and publisher of The Economic Collapse Blog. Michael’s controversial new book about Bible prophecy entitled “The Rapture Verdict” is available in paperback and for the Kindle on Amazon.com.*

Ready Made Resources 2015
Finca Bayano

Silver.com

Panama Relocation Tours
The 1 Must Own Gold Stock
180x350
Credible Warning
ProphecyHour
Facebook Twitter More...