If The Federal Reserve Cuts Interest Rates Now, It Will Be An Admission That A Recession Is Coming

So there is a lot of buzz that the Federal Reserve is about to cut interest rates – and it might actually happen.  We’ll see.  But if it does happen, it will directly contradict the carefully crafted narrative about the economy that the Federal Reserve has been perpetuating all this time.  Fed Chair Jerome Powell has repeatedly insisted that the U.S. economy is in great shape even when there has been a tremendous amount of evidence indicating otherwise.  And of course President Trump has been repeatedly telling us that this is “the greatest economy in the history of our country”, but now he is loudly calling for the Federal Reserve to cut interest rates as well.  Something doesn’t seem to add up here.  If the U.S. economy really was “booming”, there is no way that the Fed should cut interest rates.  Right now interest rates are already low by historical standards, and theoretically it is during the “boom” times that interest rates should be normalized.  But if the U.S. economy is actually slowing down and heading into a recession, then a rate cut would make perfect sense.  And if that is the reality of what we are facing, then the economic optimists have been proven dead wrong, and people like me that have been warning of an economic slowdown have been proven right.

If the talking heads on television are correct, we’ll probably see a rate cut.  In fact, apparently there are some people that are even pushing “for a 50 basis point cut”

Most Fed watchers believe that the central bank will cut its funds rate, now hovering between 2.25% and 2.5%, by a quarter point, also known as 25 basis points. A small group — including President Donald Trump’s latest nominee for Fed governor — are pounding the table for a 50 basis point cut, which would take the rate below 2%. A rate cut of any size would be the first since the 2008 financial crisis.

A 50 basis point cut is something that would normally only be done during an economic emergency.

Have we already reached such a point?

That wouldn’t seem to be the case.  Stock prices are still at record highs, and at least according to the government’s highly manipulated figures, U.S. GDP is still growing

The nation’s gross domestic product – the value of all goods and services produced in the U.S. – increased at a seasonally adjusted annual rate of 2.1% in the April-June period, following a 3.1% gain in the first quarter, the Commerce Department said Friday. Economists expected a 1.8% increase in output.

The report comes amid mounting worries that the sluggish global economy and President Trump’s trade war with China could lead to a recession by next year.

Yes, there are tons of other indicators that are clearly telling us that an economic slowdown has already begun, and I am not going to repeat everything that I have been saying for the past 6 months in this article.

But even though things are definitely moving in the wrong direction, I would definitely not call what we are currently experiencing “an economic emergency” just yet.

After all, things can’t be too bad if a 16-year-old kid just won 3 million dollars playing video games

A teenager from Pennsylvania won $3 million and took home the top prize at the 2019 Fortnite World Cup on Sunday. Kyle “Bugha” Giersdorf scored 26 more points than runner-up “psalm” to win the eSports tournament held at Arthur Ashe Stadium in Queens.

“Words can’t even explain it. I’m just so happy,” the 16-year-old said in an interview posted to Twitter by organizers. “Everything I’ve done, the grind, it’s all paid off. It’s just insane.”

Good for that kid.  I wish that I was talented enough to be a world champion at something.

Unfortunately, when things get really bad in this country money is going to start getting really tight, and we simply are not there yet.

So could it be possible that there is another reason for the sudden push to get the Fed to reduce rates?

Well, CNBC’s Steve Liesman seems to think that there could be a political motivation

“Think about what happens when a person gets up at a rally and starts railing against The Federal Reserve, and starts to create what could lead to Congressional pressure on The Fed, then you could imagine that their could be support for a different system.”

“I think they think there’s a lot of political downside risk to getting this wrong.”

If the Federal Reserve doesn’t cut rates and the U.S. economy really starts going off the rails, they will be President Trump’s number one economic target during the 2020 campaign.

And it has already gotten to the point where Trump is regularly attacking them on social media.  For example, he posted the following just a little while ago

The Fed “raised” way too early and way too much. Their quantitative tightening was another big mistake. While our Country is doing very well, the potential wealth creation that was missed, especially when measured against our debt, is staggering.

If a wave of anti-Fed sentiment helps get Trump re-elected, that could potentially be a nightmare scenario for the folks over at the Federal Reserve.  With a full second term and a Republican majority in Congress, President Trump could decide to dramatically reform or completely get rid of the Federal Reserve system altogether.  Of course those that follow my work regularly know that I would be thrilled by this, because I have been advocating for the elimination of the Federal Reserve system for many years.

The sort of political scenario that I just outlined probably won’t happen, but even if there is a small chance that it could happen the people running the Federal Reserve have got to account for that possibility.

So cutting rates would be a way to “play it safe” by appeasing President Trump and his supporters.  If President Trump senses that the Fed is on his team, then he probably won’t be inclined to make a big move against them.

In any event, a small rate cut is definitely not going to do much to alter our overall economic trajectory.

Because the truth is that an economic slowdown has already begun, and many experts are anticipating that it will greatly accelerate during the second half of this year.

About the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

An “Earnings Recession” Is Here – Big Companies All Over America Are Reporting Disastrous Financial Results

If the U.S. economy really was “booming”, then corporate earnings would be rising.  But that isn’t happening.  In fact, we haven’t seen corporate earnings fall like this since the last recession.  They fell during the first quarter of this year, and based on the results we have so far, it appears that corporate earnings will be down substantially once again in the second quarter.  When corporate earnings drop for two quarters in a row, that is officially considered to be an “earnings recession”, and that normally occurs just before the overall economy plunges into recession territory.  As things get tighter for our corporate giants, we should expect a lot more layoffs in the months ahead, and the unemployment rate should rise quite briskly.  In other words, it looks like our economic problems are about to accelerate substantially.

This week, some of the largest companies in the entire country reported results for the second quarter, and we witnessed disappointment after disappointment.

Let’s start with Boeing

The 737 Max is already more than four months into an unprecedented global grounding, which authorities ordered after two fatal crashes. The manufacturer provided hints of the strain on its resources, starting with a US$1.01 billion burn of free cash flow in the second quarter — a US$5 billion swing from last year’s gain during the same period.

Of course Boeing made a bad plane, and so their disastrous results could certainly be blamed on that.

But what about Netflix?  Once one of the darlings of Wall Street, Netflix has been absolutely monkeyhammered in recent days…

Netflix’s disappointing quarter reported last Wednesday has caused the streaming darling of Wall Street to shed more than $24 billion in value in six days as the stock has sunk 15 percent.

Shares of Netflix have now fallen each of the last nine trading days, as the stock began its downfall even before it released its quarterly financial report, which indicated it lost subscribers in the U.S. for the first time since launching its streaming service nearly a decade ago.

Yes, Netflix could be considered a special case because they are facing a lot of new competition.  Last December I wrote an entire article predicting that this would happen, and this is just the beginning of the company’s problems.

On the other hand, the future was supposed to be exceedingly bright for Tesla, but the firm is hemorrhaging money like crazy and over the past 24 hours the stock price has crashed hard

Even after delivering a record number of cars in its second quarter, Tesla (TSLA) is still bleeding money. Tesla said Wednesday that it lost $408 million during the three months ending in June, far worse than Wall Street had expected. Shares of Tesla fell more than 10% in after hours trading following the earnings report.

The loss was slightly less painful than the previous quarter, in which Tesla lost $702 million.

But Elon Musk has a gift for getting investors to hand over giant piles of money, and so Tesla is going to survive for now.

Meanwhile, the rest of the auto industry is really struggling as well.  In fact, Ford just reported very disappointing results and reduced the forecast for the remainder of 2019 significantly

Ford shares plunged Wednesday after the automaker reported second-quarter earnings that were short of expectations and issued a disappointing forecast for the year.

Ford, which has slashed thousands of jobs this year, is also investing $11 billion by 2022 in electric and hybrid vehicles to try to keep pace in a changing industry.

Are you starting to see a pattern?

Even Paypal is falling short of expectations.  The following comes from CNBC

Shares of PayPal fell as much as 6% in after-hours trading after the payments giant missed Wall Street’s estimates for second-quarter revenue and lowered its full-year guidance.

Everything that I have just shared with you makes complete and total sense if the U.S. economy is in the process of plunging into a new recession.

And other economic numbers continue to tell us the exact same thing.  For example, we just got the worst U.S. manufacturing PMI number in 118 months.  That is absolutely terrible news, but Europe’s manufacturing sector is doing even worse.

Manufacturing activity is slowing down all over the globe, and a big reason for that is because global trade is shrinking at the fastest pace that we have seen since the last financial crisis.

Meanwhile, we just learned that existing home sales in the United States have now fallen on a year over year basis for sixteen months in a row.

After something happens 16 times in a row, you would think that the experts would be able to spot a “trend” by now, but so many of them continue to be optimistic about the real estate industry.

In addition, store closing announcements just continue to roll in at a stunning rate.  This week, we learned that GNC is planning to close up to 900 stores by the end of 2020.

We were already on pace to absolutely shatter the all-time record for store closings in a single year even before that announcement, and the phrase “retail apocalypse” almost doesn’t seem strong enough to describe what we are witnessing any longer.

Just as I have warned, America’s landscape is being littered by boarded up stores and abandoned malls, and this is particularly true in our poorest areas.

Unprecedented money printing by the Federal Reserve and an unprecedented debt binge by the federal government may have bought us a very brief reprieve, but none of the fundamental economic problems that were identified during the last recession were ever fixed.

Now a new crisis has arrived, and we are just in the very early chapters of it.

About the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

As Wall Street Celebrates Rising Stock Prices, Companies Are Literally Shutting Down All Over America

How long can the stock market possibly stay completely disconnected from economic reality?  On Monday, the Dow Jones Industrial Average rose just 27 points, but that was good enough to push it to yet another new all-time record high.  Investors have been absolutely thrilled by the extremely impressive bull run that we have witnessed so far in 2019, but there is no way that this is sustainable.  Wall Street may be celebrating for the moment, but meanwhile all of the hard economic numbers are telling us that we have now entered a new economic slowdown.  Just like in 2008, it appears to be inevitable that the party on Wall Street is about to hit a brick wall, but nobody should be surprised when it happens.  Everywhere around us there are signs of economic trouble, and right now companies are literally shutting down all over America.

For example, just take a look at what is happening to the trucking industry.  I recently warned about the trucking “bloodbath” that was unfolding, and over the past week it has greatly accelerated.

On the 12th of July, we learned that trucking giant LME had abruptly shut down.  The following comes from Zero Hedge

Less-than-truckload carrier LME has reportedly “suddenly and abruptly” shut down its operations, according to FreightWaves.

The company is a regional carrier based in Minnesota that operated throughout the Midwest. The company had terminals in 30 locations across the U.S. and through interline agreements services all of North America. It also worked with major companies like 3M, John Deere and Toro.

The company reportedly included “over 600 men and women” and has been listed as having 382 power units and 1,228 trailers, with 424 truck drivers.

Then today we learned that Timmerman Starlite Trucking suddenly shut down without any notice

40 year old California trucking outlet Timmerman Starlite Trucking, Inc. is the latest victim in the “trucking apocalypse” and announced that it would be shutting down effective immediately, according to FreightWaves.

30 employees are expected to lose their jobs as a result. The company is based in a mid sized city about 100 miles east of San Francisco and had a fleet of 30 trucks, 150 trailers and 28 drivers.

The company’s owner cited “a tough freight market and environmental regulations” as reasons for the shut down. The company announced the shutdown on its Facebook page.

Of course those two trucking companies are definitely not the only victims of this “bloodbath”.  According to Business Insider, ALA Trucking, Williams Trucking, Falcon Transport and New England Motor Freight have also completely ceased operations in 2019.

If the U.S. economy really was “booming”, this would not be happening.

Meanwhile, major retailers continue to fall like dominoes.  Charming Charlie is headed for bankruptcy and will be closing all of their stores

Fashion accessory retailer Charming Charlie will close all its stores after going bankrupt for the second time in less than two years. More than 3,000 full- and part-time employees could lose their jobs.

Charming Charlie Holdings Inc. filed for Chapter 11 protection in Delaware with plans for going-out-of-business sales at about 261 stores, according to court documents. The chain expects the liquidation to take about two months.

In addition, we just learned that Fred’s will be shuttering another 129 stores as it desperately attempts to stay alive…

Troubled discount merchandiser Fred’s has announced another round of store closures.

The chain will shutter 129 stores, leaving it with about 80 locations, USA Today reported. Going-out-of business sales have already begun.

Not too long ago, I went to a going out of business sale at a local store that was closing down, and it was definitely depressing.  At one time the shelves had been packed full of products, but by the time I got there people were clawing through the small handfuls of deeply discounted merchandise that still remained.

Sadly, such scenes are being repeated over and over again all around the country.  In fact, things are already so bad that even Manhattan retailing legend Barneys is likely headed for bankruptcy

Barneys may be on the cusp of filing for bankruptcy protection as the luxury Manhattan retailer contends with high rents and shoppers going online, according to two media reports.

Reuters, citing unnamed sources, reported Saturday that Barneys has tapped law firm Kirkland & Ellis LLP and is weighing a potential bankruptcy filing among other options that could occur in the coming weeks.

The all-time record for store closings in a single year was set in 2017 when 8,139 stores shut down.

According to a brand new report that was just released, we are on pace to absolutely shatter that old record.

In fact, Coresight says that the number of store closings in the U.S. could hit 12,000 by the end of this year…

The “going-out-of-business” sales and liquidation of other brands is expected to continue. Coresight estimates closures could reach 12,000 by the end of the year, the report said.

In The Beginning Of The End, I painted a picture of a future in which America’s communities would be littered by boarded up stores that had been abandoned by major retailers.

Now it is happening right in front of our eyes.

Everything that is taking place in the “real economy” makes perfect sense, and unfortunately our economic problems are likely to accelerate significantly in the months ahead.

What doesn’t make sense is what we are witnessing on Wall Street.

There is no way that stock prices should be rising like this, but financial bubbles don’t typically follow rational patterns.

Instead, they usually just keep going until something comes along to end them.

And considering everything that is going on in the world right now, that “something” could definitely arrive sooner rather than later.

About the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

The Pain Of This New Economic Downturn Is Starting To Show Up All Over The Country

It is going to take a miracle for the U.S. economy to pull out of this tailspin, because the economic numbers are really starting to deteriorate very rapidly now.  On Tuesday we got some more new numbers, and they were just as bad as we thought they might be.  But even before today’s numbers all of the data were telling us the exact same thing.  The New York Fed’s Empire State manufacturing index just suffered the worst one month decline in U.S. history, Morgan Stanley’s Business Conditions Index just suffered the largest one month decline that we have ever seen, global trade numbers are the worst they have been since the last recession, and just last week I detailed the complete and utter “bloodbath” that we are witnessing in the U.S. trucking industry right now.  So considering what we already knew, it shouldn’t have been a surprise that new home sales in the U.S. were down a whopping 7.8 percent during the month of May…

Sales of new U.S. homes slumped 7.8% in May, as sales plunged in the pricier Northeastern and Western markets.

The Commerce Department said Tuesday that new homes sold at a seasonally adjusted annual rate of 626,000 in May, down from 679,000 in April. During the first five months of the year, purchases of new homes have fallen 3.7% compared to the same period in 2018.

Those are absolutely horrible numbers, and this is precisely what a recession looks like.

On Tuesday we also learned that U.S. consumer confidence is rapidly declining

Consumer confidence is on the decline.

The Conference Board’s Consumer Confidence Index tumbled to 121.5 in June, dropping from a downwardly revised reading of 131.3 in May and snapping three consecutive months of improvements.

June’s results missed consensus expectations for a reading of 131.0, according to Bloomberg-compiled data, and marked the lowest level in nearly two years.

Once again, this is precisely what we would expect to see during a recession.

And yet I continue to see some clueless mainstream media reports that insist that the U.S. economy is doing well.  Apparently FedEx didn’t get that memo, because they lost nearly 2 billion dollars in the quarter ending May 31st…

In the fiscal fourth quarter, which ended May 31, FedEx reported a loss of $1.97 billion, compared with profit of $1.13 billion a year earlier.

FedEx blamed this horrible number on the ongoing global economic slowdown, and unfortunately things are not likely to get any better for them any time soon.

Many in the mainstream media continue to speak of “the next recession” as some future event, but when we get the final economic numbers many months from now we may discover that it had already started by now.  In fact, one prominent economist recently stated that he believes that “we’re probably already in a recession”

Gary Shilling, an economist and financial analyst who is credited with predicting several recessions over the past 40 years, thinks the U.S. is in a relatively mild slump.

“I think we’re probably already in a recession but I think it will probably be a run-of-the-mill affair, which means real GDP would decline 1.5% to 2%, not the 3.5% to 4% you had in the very serious recessions,” Shilling, president of economic and financial research firm A. Shilling & Co., said in a recent interview broadcast this week by Real Vision.

And even Federal Reserve Chair Jerome Powell is now admitting that our economic outlook has become “cloudier”.  The following comes from ABC News

Federal Reserve Chairman Jerome Powell said Tuesday the economic outlook has become cloudier since early May, with rising uncertainties over trade and global growth causing the central bank to reassess its next move on interest rates.

Speaking to the Council on Foreign Relations in New York, Powell said the Fed is now grappling with the question of whether those uncertainties will continue to weigh on the outlook and require action.

I find it very interesting that Powell chose the Council on Foreign Relations as the venue for this address.  I think that tells us a lot about where Powell’s true loyalties are.  The Council on Foreign Relations has dominated the political landscape in Washington for a long time, and this has been true no matter which political party has been in power.

Meanwhile, the global trade war continues to intensify, and over 300 companies are literally begging the Trump administration to find a way to end it

More than 300 companies are talking to government officials in Washington this month about how detrimental the trade war between the U.S. and China has been and will be to their business.

Testifying in front of the Office of the U.S. Trade Representative, major U.S. companies including Best Buy, HP and Hallmark Cards are voicing concerns about how the additional tariffs that President Donald Trump threatened to slap on China would impact their businesses and cause them to lose business to foreign competitors.

Sadly, it isn’t likely that the trade war will end any time soon.

In fact, it is probably much more likely that a shooting war will start in the Middle East instead.  And if that happens, our current economic problems will dramatically escalate.

The wheels are starting to come off, and the U.S. economy is beginning to spin out of control.  Perhaps the Federal Reserve will be able to pull another rabbit out of the hat and pull off a miracle once again, but I doubt it.  We haven’t seen conditions like this since the great financial crisis of 2008, and the remainder of 2019 threatens to be extremely “interesting” indeed.

About the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

U.S. Steel Plants Are Going Idle, But The Fed Continues To Perpetuate The Myth That Everything Is Just Fine

Even though there is a tremendous amount of evidence to the contrary, the Federal Reserve continues to insist that the U.S. economy is in good shape.  On Wednesday, Federal Reserve Chair Jerome Powell told the nation that “the economy has performed relatively well” in 2019 and he insisted that “the baseline outlook is a good one.”  Of course he didn’t say anything about our collapsing manufacturing numbers, the worst global trade numbers since the last recession or the “bloodbath” in the U.S. trucking industry.  Powell did concede that “the risk of less favorable outcomes has risen”, but other than vague statements like that he really didn’t acknowledge our growing economic problems at all.  Considering the fact that Powell has more power over the U.S. economy than anyone else in the entire country, this should deeply concern all of us.  To me, Powell’s performance on Wednesday was quite reminiscent of the moment in 2008 when Fed Chair Ben Bernanke told us that the Federal Reserve was not “currently forecasting a recession” after a recession had already begun.

As I have been documenting for weeks, evidence that another major economic downturn has already started can be clearly seen all around us.

For example, we got some very alarming news from the steel industry on Wednesday.  When the Trump administration slapped a 25 percent tariff on steel imports last year, that was supposed to greatly help the U.S. steel industry.  But instead, a dramatic drop in demand due to this new economic downturn is forcing steel companies to take dramatic measures.  According to CNN, U.S. Steel just announced that it will be shutting down a blast furnace in Gary, Indiana and another one that is located just outside of Detroit…

Pain has returned to the US steel industry despite the tariffs put on imported steel last year that were designed to help.

Late Tuesday US Steel announced it will idle two of the blast furnaces where it makes steel, one in its flagship mill in Gary, Indiana, near Chicago, the other in Ecorse, Michigan, near Detroit. The idled furnaces will cut production by about 200,000 tons of steel or more a month, the company said.

“We will resume blast furnace production at one or both idled blast furnaces when market conditions improve,” said the company.

But when will market conditions improve?

In 2020?

After this new economic downturn is over?

Never?

Of course U.S. Steel is not the only steel producer that is hurting right now.  In fact, Nucor and Steel Dynamics have both cut profit forecasts

US Steel’s action follows similar warnings Monday from Nucor, the nation’s largest steelmaker, and Steel Dynamics. Both are now forecasting lower profits. Nucor pointed to weaker demand from the US auto industry.

Sadly, the truth is that major industry after major industry is deeply suffering at this moment…

-Our ongoing “retail apocalypse” is absolutely brutalizing the retail industry, and we are on pace to have the worst year for store closings in our entire history.

-Auto industry sales have been absolutely abysmal, and auto loan delinquencies have shot up to alarmingly high levels.

-The agriculture industry is going to have the worst year it has seen in at least several decades.

-Our 800 billion dollar trucking industry is already in the midst of a “bloodbath”.

-The real estate industry is poised for the worst downturn that we have seen since the subprime mortgage meltdown during the last financial crisis.

-The manufacturing industry has not seen numbers this bad since the last recession, and things are rapidly getting worse.

But yeah, let’s tell the American people that the economy is “booming” and see if they will buy it.

Really?

Let’s get real.  The U.S. economy is mired in the worst slump in a decade, and economic conditions continue to deteriorate rapidly.  The Federal Reserve could have given us a short-term boost by cutting interest rates on Wednesday, but they decided not to do that

A divided Federal Reserve held the line on interest rates Wednesday and indicated formally that no cuts are coming in 2019. The decision came amid divisions over what is ahead and still leaves open the possibility that policy loosening could happen before the end of the year depending on how conditions unfold.

The central bank predicts one or two rate cuts in its set of economic predictions, but not until 2020. Despite cautious wording in the post-meeting statement Wednesday, markets are still betting the Fed cuts, as soon as July.

Perhaps they want to save their very limited ammunition for when the recession officially starts, and I can understand that.

But this latest move by the Fed is definitely not going to please President Trump, and it will likely prompt more speculation that Trump would like to demote Powell

The action sets up a possible confrontation between Fed Chairman Jerome Powell and President Donald Trump, who has been pressuring the Fed to cut rates. Just Tuesday, Trump said “let’s see what he does” at the Fed meeting when asked if he still wants to demote Powell.

At the post-statement news conference, Powell was asked about his future as chairman. “I think the law is clear that I have a four year term, and I fully intend to serve it,” he said.

Trump needs the U.S. economy to be as strong as possible as he heads into an election year.

The stronger the U.S. economy is, the more likely it is that he will be re-elected.

And actually the Federal Reserve may be doing Trump a favor by trying to perpetuate the myth that everything is just fine.  Because if the Fed had cut rates on Wednesday, it would have essentially been an admission that a new recession is on our doorstep.  As John P. Hussman has aptly pointed out, almost every initial rate cut in history “has been associated with an oncoming or ongoing recession”…

With the exception of 1967 and 1996, every initial Fed rate cut has been associated with an oncoming or ongoing recession. Be careful what you wish for.

So for now, the Fed seems to have adopted a “fake it until you make it” approach, and sometimes that can work.

Unfortunately, I don’t think it is going to work this time.  And meanwhile millions upon millions of Americans have been lulled into a false sense of security, and they are not getting prepared for the exceedingly hard times that are coming.

One of my readers recently left a comment in which he stated that what we are facing “is not a drill”, and I believe that he is quite correct.

We haven’t seen economic conditions anything like this since the last recession, and the outlook is getting worse with each passing day.

About the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

This Wasn’t Supposed To Happen: U.S. Employment Growth Just Plunged To The Lowest Level In 9 Years

If the U.S. economy was heading into a recession, we would expect to see a slowdown in the employment numbers, and that is precisely what is happening.  According to payroll processing firm ADP, the U.S. economy only added 27,000 new jobs in May, and that is way below the number that is needed just to keep up with population growth.  Of course some in the mainstream media are attempting to put a positive spin on this, but there really is no denying that this is a truly awful number.  In fact, we have not seen a number this bad in more than 9 years

Job creation skidded to a near-halt in May in another sign that the U.S. economic momentum is slowing.

Companies added just 27,000 new positions during the month, according to a report Wednesday from payroll processing firm ADP and Moody’s Analytics that was well below Dow Jones estimates of 173,000.

The reading was the worst since around the time the economic expansion began and the jobs market bottomed in March 2010 with a loss of 113,000.

9 years is a very long time, but this terrible employment number is perfectly consistent with all of the other horrible economic numbers that have been rolling in lately.

Time after time in recent weeks I have been using phrases such as “since the last recession” to describe what we are witnessing.  The U.S. economy has not been in such rough shape in nearly a decade, and things just keep getting worse.

So how did Wall Street respond to the latest employment news?

Actually, stock prices surged, because investors are super excited about the prospect that the Federal Reserve could soon lower interest rates

Stocks added to strong week-to-date performance on Wednesday as investors grew even more confident that the Federal Reserve will lower interest rates this year to reignite an economy wounded by trade battles.

The Dow Jones Industrial Average rose 207.39 points to 25,539.57, while the S&P 500 advanced 0.8% to 2,826.15. The Nasdaq Composite closed 0.6% higher at 7,575.48.

Pushing interest rates all the way to the floor certainly helped the stock market recover after the last recession, but this time around there is a major twist.

The U.S. is currently engaged in a major trade war with China, and the normal tools that the Fed utilizes may not be powerful enough to overcome the negative effects of such a conflict.

And to make things worse, now the U.S. is also starting a trade war with Mexico.  On Wednesday, President Trump made it clear that “not nearly enough” progress had been achieved during negotiations with Mexican officials…

President Donald Trump said “not nearly enough” progress was made in talks with Mexico to mitigate the flow of undocumented migrants and illegal drugs, raising the likelihood that the U.S. will follow through with tariffs next week.

So tariffs will be slapped on Mexican goods starting on Monday, and President Trump seems quite excited about this

“If no agreement is reached, Tariffs at the 5% level will begin on Monday, with monthly increases as per schedule,” Trump tweeted Wednesday. “The higher the Tariffs go, the higher the number of companies that will move back to the USA!”

Of course the Mexicans will almost certainly retaliate, and both countries will start seeing higher prices and significant job losses.

In fact, one study has concluded that the U.S. economy could lose more than 400,000 jobs as a result of these tariffs on Mexico.  The following comes from CNN

If the 5% US tariff on all goods from Mexico takes effect and is maintained, more than 400,000 jobs in the United States could be lost, an analysis released this week found.

The tariffs on Mexico, set to go in effect on Monday, would cost Texas alone more than 117,000 jobs, according to the analysis by The Perryman Group, an economic consulting firm. Texas is Mexico’s largest export market, making the two economies closely intertwined.

And the truth is that those numbers could actually be on the low side.

According to Marc Thiessen, a trade war with Mexico would literally put millions of U.S. jobs at risk…

Indeed, Mexican tariffs could be even more devastating for Americans than those imposed on China. Deutsche Bank estimates the tariffs could raise the average price of automobiles sold in the United States by $1,300. Indeed, U.S. and Mexican auto-supply chains are so deeply integrated that many parts cross the border multiple times before they end up in a finished vehicle — which means they would be hit by tariffs multiple times, compounding costs. Ten million U.S. workers’ jobs depend on this supply chain; tariffs would put those jobs at risk, including those of the “forgotten Americans” in the industrial Midwest whose jobs Trump vowed to protect.

We shall see what happens, but the outlook for the U.S. economy for the rest of this year is not good at all, and beyond that things look exceedingly grim.

Hopefully I am wrong, but it certainly appears that a major economic downturn is developing just in time for the 2020 presidential election.

There is one more thing that I would like to mention before I wrap up this article.  This week, a Russian news source reported that Russia and China “will sign an agreement” regarding the use of their own national currencies in bilateral trade with one another…

Russia and China will sign an agreement on possible payments in national currencies. A decree of the Russian government on signing of a relevant agreement with the Chinese side was released on the official portal of legal information on Wednesday.

According to the draft decree approved through that government document, “settlements and payments for goods, service and direct investments between economic entities of the Russian Federation and the People’s Republic of China are made in accordance with the international practice and the legislation of the sides’ states with the use of foreign currency, the Russian currency (rubles) and the Chinese currency (yuan).”

In other words, they are dumping the dollar in favor of their own national currencies when trading with each other.  This is a direct threat to the international dominance of the U.S. dollar, and other countries have been discussing similar moves.

For decades, the U.S. dollar has essentially been a global currency.  More dollars are actually used outside of the United States than within this country, and most Americans don’t realize that.

This has given us some enormous advantages in the global marketplace, and it could be just a matter of time before those advantages begin to disappear.

Things that used to take months or years to happen are now happening in a matter of days.  The pace of change is really picking up, and right now the momentum of events is heading in a direction that is definitely not favorable to the United States.

Get Prepared NowAbout the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

Economic Chaos Erupts! – Global Manufacturing Plunges, The Trade War Expands And The Nasdaq Enters Correction Territory

The global economic slowdown is really starting to accelerate.  Just within the past few days, we have gotten more really awful global manufacturing numbers, the trade war has expanded to more nations, and the Nasdaq has officially entered correction territory.  We have not witnessed this sort of global economic environment since the Great Recession, and if the economic chaos continues to escalate it won’t take too much to spark a brand new financial crisis.  Of course the global financial system is far more vulnerable than it was back in 2008, and so if we stay on the path that we are currently on we could be facing a nightmare scenario very rapidly.

Let’s talk about the manufacturing numbers first.  The numbers coming out of Germany are already at a crisis level, and manufacturing is also now contracting in Japan, South Korea and China as well.

Overall, global manufacturing as a whole has now fallen into contraction territory for the first time in seven years

Global manufacturing was the weakest since 2012 last month, a victim of mounting trade tensions and further reason to worry that the world economy is weakening.

With softness in Germany, Japan, the U.K. — as well as the lowest U.S. result in a decade — IHS Markit’s global Purchasing Managers Index fell to 49.8 in May, below the 50 level that divides expansion from contraction.

The reports underscore the growing threat posed by the escalating U.S.-China trade war, and they coincided with a fresh warning from Wall Street about recession risks.

The reason why so many people are freaking out about these numbers is because this is exactly what we would expect to see if we were entering a global recession.

Meanwhile, global financial markets are looking increasingly shaky.  On Monday, the Nasdaq fell another 120 points and it has now officially entered correction territory

Stocks ended mostly lower Monday, June’s first day of trading, amid reports that the U.S. government is planning to target a host of big tech companies with antitrust and business practice probes. Shares of Alphabet, Amazon, Facebook and Apple all weighed on the market during Monday’s session.

The Nasdaq dropped 1.6% to enter correction territory, closing more than 10% below its record high set in late April.

The term “correction territory” might not mean a lot to many of you, so let me put what is happening in terms you may understand.

On Monday alone, America’s most prominent tech stocks lost approximately 150 billion dollars in value.  It looks like the Trump administration is getting ready to go to war with the big tech companies, and that is really, really bad news for tech investors.  The following comes from Breitbart

The Masters of the Universe got hit hard by investors on Monday. Like $150 billion hard.

Shares of the top tech giants fell sharply on Monday after reports that U.S. antitrust regulators had divided up oversight of the sector, with the Department of Justice assuming responsibility for Alphabet and Apple and the Federal Trade Commission taking on Facebook and Amazon. This triggered fears that the government could mount challenges to the business models of the companies.

Shares of Alphabet dived 6.1 percent on Monday after the Wall Street Journal reported that the Justice Department is in the early stage of preparing an antitrust probe of the company. Reuters reported that the Department of Justice is also looking into Apple’s business for possible antitrust violations.

Speaking of war, our trade conflict with China continues to escalate.  The mainstream media hasn’t been talking much about it, but apparently the Chinese have decided to put purchases of U.S. soybeans “on hold” until a trade agreement is reached…

China, the world’s largest soybean buyer, has put purchases of American supplies on hold after the trade war between Washington and Beijing escalated, according to people familiar with the matter.

State-grain buyers haven’t received any further orders to continue with the so-called goodwill buying and don’t expect that to happen given the lack of agreement in trade negotiations, said the people, who asked not to be named because the information is private.

U.S. soybean farmers have been sitting on unprecedented amounts of soybeans in hopes that an end to the trade war would raise prices.

But instead, demand for U.S. soybeans is going to go through the floor, and this could potentially force thousands of soybean farmers into bankruptcy.

And in addition to our trade war with China, the Trump administration has apparently decided that now is a good time to start a trade war with Mexico

From produce to cars, a wide variety of Mexican goods could become more expensive if Trump follows through on his threat to hit Mexican imports with tariffs that soon could climb to 25%. Trump wants to pressure Mexico into doing more to halt the flow of Central American migrants to the U.S. via the Mexican border.

The tariffs, set to begin June 10, would gradually climb to 25% on Oct. 1 if Mexico doesn’t take steps “to dramatically reduce or eliminate” the number of migrants, Trump said Thursday. Such a strategy would hurt American shoppers, the economy and stocks, experts say, just as U.S. growth is slowing and the threat of more tariffs on Chinese imports looms larger.

At least in this case the U.S. and Mexico are still talking, and so perhaps some kind of resolution can be reached.

On top of everything else, the Trump administration has also just decided to add India to the trade war as well

Mr. Trump on Friday said India would be removed from the U.S.’s privileged-trading program called the Generalized System of Preferences on Wednesday. Under the decadeslong program meant for some developing economies, the U.S. had allowed India to avoid tariffs on certain exports to the U.S. in the interest of promoting tighter trade ties and development.

India, the U.S.’s ninth-largest trading partner, is a top beneficiary of the GSP program. Mr. Trump’s move will add tariffs of as much as 7% on Indian exports of goods like chemicals, auto parts and tableware to the U.S., which in 2018 accounted for more than 11%, or $6.3 billion, of India’s total exports of goods valued at $54.4 billion, according to the Congressional Research Service, a research agency for the U.S. Congress.

A global trade war is going to be incredibly painful for everyone, and this is all happening at a time when the global economy was already starting to slow down substantially.

Here in the United States, a lot of businesses are really starting to notice a big decline in economic activity.  Here is just one example that was published on Zero Hedge earlier today…

Down here, in Texas, I am seeing a big drop in economic activity over the last 6 months. Our healthcare businesses’ volume over this period is at 629, down from 770, year-on-year, almost a 20% decline, and the worst six month decline in our 15 year history. We have been pulling out all of the stops for business development, cutting overhead, and running all the QC traps to determine if it is something within our business, within our local market, within our industry, or having to do with the economy in general.

In this period, we have seen seven competitors go out of business in our city. We have recently confirmed similar experiences with colleagues in Kentucky, Colorado, and elsewhere in Texas. One of them asked me, “If this is not temporary, what would the strategy be?” My response was, “Hunker in the bunker and wait for everyone else to die.”

This is what we have all been preparing for, and things are going to get progressively tougher in the months ahead.

Unfortunately, most Americans are completely and totally clueless about what is ahead.  Today, 59 percent of all Americans are living paycheck to paycheck, and the truth is that the vast majority of us are entirely unprepared to go through another recession.

And of course many believe that what we are facing is going to be much worse than just a “recession”.  A perfect storm is rapidly coming together, and the chaos that we have seen so far is nothing compared to what is rapidly approaching.

Get Prepared NowAbout the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

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