Since the election there has been this perception among the American public that the economy is improving, but that has not been the case at all. U.S. GDP growth for the first quarter was just revised up to 1.2 percent, but that is even lower than the average growth of just 1.33 percent that we saw over the previous ten years. But when you look even deeper into the numbers a much more alarming picture emerges. Commercial and industrial loan growth is declining, auto loan defaults are rising, bankruptcies are absolutely surging and we are on pace to break the all-time record for most store closings in a single year in the United States by more than 20 percent. All of these are points that I have covered before, but today I have 12 new facts to share with you. The following are 12 signs that the economic slowdown that the experts have been warning about is now here…
#1 According to Challenger, the number of job cuts in May was 71 percent higher than it was in May 2016.
#2 We just witnessed the third worst drop in U.S. construction spending in the last six years.
#3 U.S. manufacturing PMI fell to an 8 month low in May.
#4 Financial stocks have lost all of their gains for the year, and some analysts are saying that this is “a terrible sign”.
#5 One new survey has found that 39 percent of all millionaires “plan to avoid investing in the coming month”. That is the highest that figure has been since December 2013.
#6 Jobless claims just shot up to a five week high of 248,000.
#7 General Motors just reported another sales decline in May, and it is being reported that the company may be preparing for “more job cuts at its American factories”.
#8 After an initial bump after Donald Trump’s surprise election victory, U.S. consumer confidence is starting to fall.
#9 Since Memorial Day, Radio Shack has officially shut down more than 1,000 stores.
#10 Payless has just increased the number of stores that it plans to close to about 800.
#11 According to the Los Angeles Times, it is being projected that 25 percent of all shopping malls in the United States may close within the next five years.
#12 Over the past 12 months, the number of homeless people living in Los Angeles County has risen by a staggering 23 percent.
And in case those numbers have not persuaded you that the U.S. economy is heading for rough times, I would encourage you to go check out my previous article entitled “11 Facts That Prove That The U.S. Economy In 2017 Is In Far Worse Shape Than It Was In 2016” for even more eye-popping statistics.
During a bubble, it can feel like the good times are just going to keep rolling forever.
But that never actually happens in reality.
The truth is that we are in the terminal phase of the greatest debt bubble of all time, and the evidence is starting to mount that this debt bubble has just about run its course. The following comes from Zero Hedge…
A recurring theme on this website has been to periodically highlight the tremendous build up in US corporate debt, most recently in April when we showed that “Corporate Debt To EBITDA Hits All Time High.” The relentless debt build up is something which even the IMF recently noted, when in April it released a special report on financial stability, according to which 20% of US corporations were at risk of default should rates rise. It is also the topic of the latest piece by SocGen’s strategist Andrew Lapthorne who uses even more colorful adjectives to describe what has happened since the financial crisis, noting that “the debt build-up during this cycle has been incredible, particularly when compared to the stagnant progression of EBITDA.”
Lapthorne calculates that S&P1500 ex financial net debt has risen by almost $2 trillion in five years, a 150% increase, but this mild in comparison to the tripling of the debt pile in the Russell 2000 in six years. He also notes, as shown he previously, that as a result of this debt surge, interest payments cost the smallest 50% of stocks in the US fully 30% of their EBIT compared with just 10% of profits for the largest 10% and states that “clearly the sensitivity to higher interest rates is then going to be with this smallest 50%, while the dominance and financial strength of the largest 10% disguises this problem in the aggregate index measures.”
The same report noted that net debt growth in the U.S. is quickly headed toward negative territory, and the last time that happened was during the last recession.
We see similar things when we look at the 2nd largest economy on the entire planet. According to Jim Rickards, China “has multiple bubbles, and they’re all getting ready to burst”…
China is in the greatest financial bubble in history. Yet, calling China a bubble does not do justice to the situation. This story has been touched on periodically over the last year.
China has multiple bubbles, and they’re all getting ready to burst. If you make the right moves now, you could be well positioned even as Chinese credit and currency crash and burn.
The first and most obvious bubble is credit. The combined Chinese government and corporate debt-to-equity ratio is over 300-to-1 after hidden liabilities, such as provincial guarantees and shadow banking system liabilities, are taken into account.
We just got the worst Chinese manufacturing number in about a year, and it looks like economic conditions over there are really starting to slow down as well.
Just like 2008, the coming crisis is going to be truly global in scope.
It is funny how our perspective colors our reality. Just like in 2007, many are mocking those that are warning that a crisis is coming, but just like in 2009, after the crisis strikes many will be complaining that nobody warned them in advance about what was ahead.
And at this moment it may seem like we have all the time in the world to get prepared for the approaching storm, but once it is here people will be talking about how it seemed to hit us so quickly.
My hope is that many Americans will finally be fed up with our fundamentally flawed financial system once they realize that we are facing another horrendous economic crisis, and that in the aftermath they will finally be ready for the dramatic solutions that are necessary in order to permanently fix things.
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
Bush Jr.: 10.8
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.
Even though I write about our ongoing long-term economic collapse every day, I didn’t realize that things were this bad. In this article, I am going to show you that the average rate of growth for the U.S. economy over the past 10 years is exactly equal to the average rate that the U.S. economy grew during the 1930s. Perhaps this fact shouldn’t be that surprising, because we already knew that Barack Obama was the only president in the entire history of the United States not to have a single year when the economy grew by at least 3 percent. Of course the mainstream media continues to push the perception that the U.S. economy is in “recovery mode”, but the truth is that this current era has far more in common with the Great Depression than it does with times of great economic prosperity.
Earlier today I came across an article about President Trump’s new budget from Fox News, and in this article the author makes a startling claim…
The hard fact is that the past decade’s $10 trillion in deficit spending has produced the worst economic growth as measured by Gross Domestic Product in our nation’s history. You read that right, in the past decade our nation’s economy grew slower than even during the Great Depression. This stagnant, new normal, low-growth economy is leaving millions of working age people behind who have given up even trying to participate, and has led to a malaise where many doubt that the American dream is attainable.
When I first read that, I thought that this claim could not possibly be true. But I was curious, and so I looked up the numbers for myself.
What I found was absolutely astounding.
The following are U.S. GDP growth rates for every year during the 1930s…
When you average all of those years together, you get an average rate of economic growth of 1.33 percent.
That is really bad, but it is the kind of number that one would expect from “the Great Depression”.
So then I looked up the numbers for the last ten years…
When you average these years together, you get an average rate of economic growth of 1.33 percent.
I thought that was a really strange coincidence, and so I pulled up my calculator and ran all of the numbers again and I got the exact same results.
The 1930s certainly had more big ups and downs, but the average rate of economic growth during that decade was exactly the same as we have seen over the past 10 years.
And of course the early 1940s turned out to be a boom time for the U.S. economy, while it appears that our rate of economic growth is actually slowing down. As I noted yesterday, U.S. GDP growth during the first quarter of 2017 was just 0.7 percent.
But you don’t hear any talk like this on the mainstream news, do you?
Instead, they tell us that everything is just peachy.
I often wonder what things would be like right now if Barack Obama and his minions in Congress had not added more than 9 trillion dollars to the national debt. By stealing all of that money from future generations of Americans and spending it now, Obama was able to artificially prop up the U.S. economy. If we were able to go back and remove 9 trillion dollars of government spending from the economy over the past 8 years, we would be in a rip-roaring economic depression right now. For an extended analysis of this, please see my previous article entitled “The Shocking Truth About How Barack Obama Was Able To Prop Up The U.S. Economy”…
But even though we have been adding more than a trillion dollars to the national debt each year, and even though the Federal Reserve pushed interest rates all the way to the floor during the Obama era, the U.S. economy has not grown by three percent or more on an annual basis since 2005.
When you take an honest look at the numbers, there is no way that anyone can possibly claim that the U.S. economy is doing well. The best that you can say is that we have been staving off a complete economic meltdown and another Great Depression, but of course the measures that our leaders have been taking to do this have just been making our long-term problems even worse.
I feel bad for President Trump, because he has inherited the biggest economic mess in U.S. history. When we finally reach the point when it is impossible to artificially prop up the U.S. economy any longer, he is going to get most of the blame, but he won’t deserve it.
It is not going to be possible for Trump or anyone else to fix our system, because it was fundamentally flawed from the very beginning. The Federal Reserve was designed to create an endless spiral of government debt, and since the day it was created the U.S. national debt has gotten more than 5000 times larger and the value of the U.S. dollar has declined by about 98 percent.
If we truly want to fix the economy, the Federal Reserve must be abolished. If I was President Trump, I would look to start issuing debt-free U.S. currency just like President Kennedy did in 1963 as soon as possible.
In addition, we need to push tax rates as low as possible. Personally, I would like to see the day when the personal income tax is completely eliminated and the IRS is shut down. The greatest period of economic growth in all of U.S. history was when there was no income tax and no Federal Reserve. America once thrived in such an environment, and I believe that we can do it again.
Of course we need to also dramatically reduce the size and scope of the federal government. Our founders intended to create a very limited federal government, but instead the left has just kept pushing to make it larger and larger.
Businesses all over America are being strangled to death by mountains of federal regulations, and if we could just get the government off of their backs the business community could start thriving again. There are quite a few government agencies that could be shut down entirely, and I think that the EPA would be a good place to start.
Once upon a time the United States showed the world the power of free markets and capitalism, and if we want to make America great again, we should go back and do the things that made America great in the first place.
But would the American people be willing to go down that path?
The evidence that the middle class in America is dying continues to mount. As you will see below, nearly half the country would be unable “to cover an unexpected $400 expense”, and about two-thirds of the population lives paycheck to paycheck at least part of the time. Of course the economy has not been doing that well overall in recent years. Barack Obama was the only president in all of U.S. history not to have a single year when the economy grew by at least 3 percent, and U.S. GDP growth during the first quarter of 2017 was an anemic 0.7 percent. During the Obama era, it is true that wealthy enclaves in New York, northern California and Washington D.C. did thrive, but meanwhile most of the rest of the country has been left behind.
Today, there are approximately 205 million working age Americans, and close to half of them have no financial cushion whatsoever. In fact, a new survey conducted by the Federal Reserve has found that 44 percent of Americans do not even have enough money “to cover an unexpected $400 expense”…
Nearly eight years into an economic recovery, nearly half of Americans didn’t have enough cash available to cover a $400 emergency. Specifically, the survey found that, in line with what the Fed had disclosed in previous years, 44% of respondents said they wouldn’t be able to cover an unexpected $400 expense like a car repair or medical bill, or would have to borrow money or sell something to meet it.
Not only that, the same survey discovered that 23 percent of U.S. adults will not be able to pay their bills this month…
Just as concerning were other findings from the study: just under one-fourth of adults, or 23%, are not able to pay all of their current month’s bills in full while 25% reported skipping medical treatments due to cost in the prior year. Additionally, 28% of adults who haven’t retired yet reported to being grossly unprepared, indicating they had no retirement savings or pension whatsoever.
But just because you can pay your bills does not mean that you are doing well. Tens of millions of Americans barely scrape by from paycheck to paycheck each and every month.
In fact, a survey by CareerBuilder discovered that 75 percent of all Americans live paycheck to paycheck at least some of the time…
Three-quarters of Americans (75 percent) are living paycheck-to-paycheck to make ends meet, according to a survey from CareerBuilder. Thirty-eight percent of employees said they sometimes live paycheck-to-paycheck, 15 percent said they usually do and 23 percent said they always do. While making ends meet is a struggle for many post-recession, those with minimum wage jobs continue to be hit the hardest. Of workers who currently have a minimum wage job or have held one in the past, 66 percent said they couldn’t make ends meet and 50 percent said they had to work more than one job to make it work.
So please don’t be fooled into thinking that the U.S. economy is doing well because the stock market has been hitting new record highs.
The stock market was soaring just before the financial crisis of 2008 too, and we remember how that turned out.
The truth is that the long-term trends that have been eating away at the foundations of the U.S. economy continue to accelerate, and the real economy is in substantially worse shape this year than it was last year.
Just about everywhere you look, businesses are struggling and stores are shutting down. Yes, there are a few wealthy enclaves where everything seems wonderful for the moment, but for most of the country it seems like the last recession never ended.
In a desperate attempt to stay afloat, a lot of families have been turning to debt to make ends meet. U.S. household debt has just hit a brand new all-time record high of 12.7 trillion dollars, but we are starting to see an alarming rise in auto loan defaults and consumer bankruptcies. This is precisely what we would expect to see if the U.S. economy was moving into another major recession.
In fact, we are seeing all sorts of signs that point to a major economic slowdown right now. Just check out the following from Wolf Richter’s latest article…
Over the past five decades, each time commercial and industrial loan balances at US banks shrank or stalled as companies cut back or as banks tightened their lending standards in reaction to the economy they found themselves in, a recession was either already in progress or would start soon. There has been no exception since the 1960s. Last time this happened was during the Financial Crisis.
Now it’s happening again – with a 1990/91 recession twist.
Commercial and industrial loans outstanding fell to $2.095 trillion on May 10, according to the Fed’s Board of Governors weekly report on Friday. That’s down 4.5% from the peak on November 16, 2016. It’s below the level of outstanding C&I loans on October 19. And it marks the 30th week in a row of no growth in C&I loans.
Perhaps we will be very fortunate and break this pattern that has held up all the way back to the 1960s.
But I wouldn’t count on it. Here is what Zero Hedge has to say about this alarming contraction in commercial and industrial loans…
Here’s the bottom line: unless there is a sharp rebound in loan growth in the next 3-6 months – whether due to greater demand or easier supply – this most accurate of leading economic indicators guarantees that a recession is now inevitable.
We are way overdue for a recession, the hard economic numbers are screaming that one is coming, and the financial markets are absolutely primed for a major crash.
As Americans, we tend to have such short memories. Every time a new financial bubble starts forming, a lot of people out there start behaving as if it can last indefinitely.
But of course no financial bubble is going to last forever. They all burst eventually, and now the biggest one in U.S. history is about to end in spectacular fashion.
Trump will get a lot of the blame since he is the current occupant of the White House, but the truth is that the conditions for the next crisis have been building up for many years, and the horrors that the U.S. economy is heading for were entirely predictable.
If a former Reagan administration official is correct, we are likely to see the next major financial collapse by the end of 2017. According to Wikipedia, David Stockman “is an author, former businessman and U.S. politician who served as a Republican U.S. Representative from the state of Michigan (1977–1981) and as the Director of the Office of Management and Budget (1981–1985) under President Ronald Reagan.” He has been frequently interviewed by mainstream news outlets such as CNBC, Bloomberg and PBS, and he is a highly respected voice in the financial community. Like other analysts, Stockman believes that the U.S. economy is in dire shape, and he told Greg Hunter during a recent interview that he is convinced that the S&P 500 could soon crash “by 40% or even more”…
The market is pricing itself for perfection for all of eternity. This is crazy. . . . I think the market could easily drop to 1,600 or 1,300. It could drop by 40% or even more once the fantasy ends. When the government shows its true colors, that it’s headed for a fiscal blood bath when this crazy notion that there is going to be some Trump fiscal stimulus is put to rest once and for all. I mean it’s not going to happen. They can’t pass a tax cut that big without a budget resolution that incorporated $10 trillion or $15 trillion in debt over the next decade. It’s just not going to pass Congress. . . . I think this is the greatest sucker’s rally we have ever seen.”
But even more alarming is what Stockman had to say about the potential timing of such a financial crash. According to Stockman, if he were to pick a time for the next major stock market plunge he would “target sometime between August and November”…
The S&P 500 is going to drop by hundreds and hundreds of points sometime over the next few months as we drift into this unexpected crisis. . . . I would target sometime between August and November because that’s when the rubber is going to meet the road on a debt ceiling increase when they are out of cash. Washington is going to end up in vicious political conflict over what to do about the debt ceiling. . . . It is going to be one giant fiscal bloodbath the likes of which we have never seen.
That really got my attention, because those are the exact months during which the events that I portrayed in The Beginning Of The End play out.
Without a doubt, the U.S. financial system is living on borrowed time, and we cannot keep going into so much debt indefinitely. In 2017, interest on the national debt will be more than half a trillion dollars for the first time ever, and it will be even higher next year because we are likely to add at least another trillion dollars to the debt during this fiscal year.
Meanwhile, the financial markets just keep becoming more absurd with each passing day.
Just look at Tesla. This is a company that somehow managed to lose 620 million dollars during the first quarter of 2017, and it has been consistently losing hundreds of millions of dollars quarter after quarter.
And yet somehow the market values Tesla at a staggering 48 billion dollars.
It is almost as if we are living in an “opposite world” where the more money you lose the more valuable investors think that you are. Companies like Tesla, Netflix and Twitter are burning through gigantic mountains of investor cash without ever making a profit, and nobody seems to care.
Commercial mortgage-backed securities are another red flag that is starting to get a lot of attention…
The percentage of commercial mortgage-backed security (MBS) loans in special servicing hit 6.6% to close April, Commercial Mortgage Alert reported, citing Trepp data. The five basis point move higher from March came as the past-due rate on Fitch-rated commercial mortgage-backed securities (CMBS) climbed by nine basis points to end April at to 3.5%.
Both MBS and CMBS rates hit their highest levels since 2015.
During the crisis of 2008, regular mortgage-backed securities played a major role, and this time around it looks like securities that are backed by commercial mortgages could cause quite a bit of havoc.
One of the reasons for this is because mall owners are having such tremendous difficulties. The number of retail store closings in 2017 is on pace to shatter the all-time record by more than 20 percent, and Bloomberg is projecting that about a billion square feet of retail space will eventually close or be used for another purpose.
So needless to say this is putting an enormous amount of strain on those that are trying to rent space to retailers, and a lot of their debts are starting to go bad.
In 2007 and early 2008, a lot of the analysts that were loudly warning about mortgage-backed securities, a major stock market crash and an imminent recession were being mocked. People kept asking them when “the crisis” was finally going to arrive, and leaders such as Federal Reserve Chairman Ben Bernanke confidently assured the public that the U.S. economy was not going to experience a recession.
But of course then we got to the fall of 2008 and all hell broke loose. Investors suddenly lost trillions of dollars, millions of jobs were lost, and the U.S. economy plunged into the worst recession since the Great Depression of the 1930s.
Now we stand poised on the brink of an even worse disaster. The U.S. national debt has almost doubled since the last crisis, corporate debt has more than doubled, and all of our long-term economic fundamentals have continued to deteriorate.
The only thing that has saved us is our ability to go into enormous amounts of debt, and once that debt bubble finally bursts it will be the biggest standard of living adjustment that Americans have ever seen.
So I don’t know if Stockman’s timing will be 100% accurate or not, but that is not what is important.
What is important is that decades of exceedingly foolish decisions have made the greatest economic crisis in American history inevitable, and when it fully erupts the pain is going to be absolutely off the charts.
Those that were predicting that the U.S. economy would be flying high by now have been proven wrong. U.S. GDP grew at the worst rate in three years during the first quarter of 2017, and many are wondering if this is the beginning of a major economic slowdown. Of course when we are dealing with the official numbers that the federal government puts out, it is important to acknowledge that they are highly manipulated. There are many that have correctly pointed out to me that if the numbers were not being doctored that they would show that we are still in a recession. In fact, John Williams of shadowstats.com has shown that if honest numbers were being used that U.S. GDP growth would have been consistently negative going all the way back to 2005. So I definitely don’t have any argument with those that claim that we are actually in a recession right now. But even if we take the official numbers that the federal government puts out at face value, they are definitely very ugly…
Economic growth slowed in the first quarter to its slowest pace in three years as sluggish consumer spending and business stockpiling offset solid business investment. Many economists write off the weak performance as a byproduct of temporary blips and expect healthy growth in 2017.
The nation’s gross domestic product — the value of all goods and services produced in the USA — increased at a seasonally adjusted annual rate of 0.7%, the Commerce Department said Friday, below the tepid 2.1% pace clocked both in the fourth quarter and as an average throughout the nearly 8-year-old recovery. Economists expected a 1% increase in output, according to a Bloomberg survey.
Even if you want to assume that it is a legitimate number, 0.7 percent economic growth is essentially stall speed, and this follows a year when the U.S. economy grew at a rate of just 1.6 percent.
So why is this happening?
Of course the “experts” in the mainstream media are blaming all sorts of temporary factors…
Economists blamed the weather. It was too warm this time around, rather than too cold, which is the usual explanation for Q1 debacles.
And they blamed the IRS refund checks that had been delayed due to last year’s spectacular identity theft problem. Everyone blamed everything on these delayed refund checks, including the auto industry and the restaurant industry. But by mid-February, a veritable tsunami of checks went out, and by the end of February, the IRS was pretty much caught up. So March should have been awash in consumer spending. But no. So we’ll patiently wait for that miracle to happen in second quarter.
They always want us to think that “boom times” for the U.S. economy are right around the corner, but those “boom times” have never materialized since the end of the last financial crisis.
Instead, we have had year after year of economic malaise and stagnation, and it looks like 2017 is going to continue that trend. The following are 11 reasons why U.S. economic growth is the worst that it has been in 3 years…
#1 The weak economic growth in the first quarter was the continuation of a long-term trend. Barack Obama was the only president in history not to have a single year when the U.S. economy grew by at least 3 percent, and this is now the fourth time in the last six quarters when economic growth has been less than 2 percent on an annualized basis. So essentially this latest number signals that our long-term economic decline is continuing.
#2 Consumer spending drives the U.S. economy more than anything else, and at this point most U.S. consumers are tapped out. In fact, CBS News has reported that three-fourths of all U.S. consumers have to “scramble to cover their living costs” each month.
#3 The job market appears to be slowing. The U.S. economy only added about 98,000 jobs in March, and that was approximately half of what most analysts were expecting.
#4 The flow of credit appears to be slowing as well. In fact, this is the first time since the last recession when there has been no growth for commercial and industrial lending for at least six months.
#5 Last month, U.S. factory output dropped at the fastest pace that we have witnessed in more than two years.
#6 We are in the midst of the worst “retail apocalypse” in U.S. history. The number of retailers that has filed for bankruptcy has already surpassed the total for the entire year of 2016, and at the current rate we will smash the previous all-time record for store closings in a year by nearly 2,000.
#7 The auto industry is also experiencing a great deal of stress. This has been the worst year for U.S. automakers since the last recession, and seven out of the eight largest fell short of their sales projections in March.
#8 Used vehicle prices are falling “dramatically”, and Morgan Stanley is now projecting that used vehicle prices “could crash by up to 50%” over the next several years.
#9 Commercial bankruptcies are rising at the fastest pace since the last recession.
#10 Consumer bankruptcies are rising at the fastest pace since the last recession.
#11 The student loan bubble is starting to burst. It is being reported that 27 percent of all student loans are already in default, and some analysts expect that number to go much higher.
And of course some areas of the country are being harder hit than others. The following comes from CNBC…
Four states have not yet fully recovered from the Great Recession. As of the third quarter of last year, the latest data available, the economies of Louisiana, Wyoming, Connecticut and Alaska were still smaller than when the recession ended in June 2009.
Other states that have recovered have seen their economic recoveries stall out. Those include Minnesota, North Dakota, New Mexico, Oklahoma, South Dakota and West Virginia.
We should be thankful that we are not experiencing a full-blown economic meltdown just yet, but it is undeniable that our long-term economic decline continues to roll along.
And without a doubt the storm clouds are building on the horizon, and many believe that the next major economic downturn will begin in the not too distant future.
There is much debate about where the U.S. economy is ultimately heading, but what everybody should be able to agree on is that economic conditions are significantly worse this year than they were last year. It is being projected that U.S. economic growth for the first quarter will be close to zero, thousands of retail stores are closing, factory output is falling, and restaurants and automakers have both fallen on very hard times. As economic activity has slowed down, commercial and consumer bankruptcies are both rising at rates that we have not seen since the last financial crisis. Everywhere you look there are echoes of 2008, and yet most people still seem to be in denial about what is happening. The following are 11 facts that prove that the U.S. economy in 2017 is in far worse shape than it was in 2016…
#1 It is being projected that there will be more than 8,000 retail store closings in the United States in 2017, and that will far surpass the former peak of 6,163 store closings that we witnessed in 2008.
#2 The number of retailers that have filed for bankruptcy so far in 2017 has already surpassed the total for the entire year of 2016.
#3 So far in 2017, an astounding 49 million square feet of retail space has closed down in the United States. At this pace, approximately 147 million square feet will be shut down by the end of the year, and that would absolutely shatter the all-time record of 115 million square feet that was shut down in 2001.
#4 The Atlanta Fed’s GDP Now model is projecting that U.S. economic growth for the first quarter of 2017 will come in at just 0.5 percent. If that pace continues for the rest of the year, it will be the worst year for U.S. economic growth since the last recession.
#5 Restaurants are experiencing their toughest stretch since the last recession, and in March things continued to get even worse…
Foot traffic at chain restaurants in March dropped 3.4% from a year ago. Menu prices couldn’t be increased enough to make up for it, and same-store sales fell 1.1%. The least bad region was the Western US, where sales inched up 1.2% year-over-year and traffic fell only 1.7%, according to TDn2K’s Restaurant Industry Snapshot. The worst was the NY-NJ Region, where sales plunged 4.6% and foot traffic 6.3%.
This comes after a dismal February, when foot traffic had dropped 5% year-over-year, and same-store sales 3.7%.
#6 In March, U.S. factory output declined at the fastest pace in more than two years.
#7 According to the Bureau of Labor Statistics, not a single person is employed in nearly one out of every five U.S. families.
#8 U.S. government revenues just suffered their biggest drop since the last recession.
#9 Nearly all of the big automakers reported disappointing sales in March, and dealer inventories have now risen to the highest level that we have seen since the last recession.
#10 Used vehicle prices are absolutely crashing, and subprime auto loan losses have shot up to the highest level that we have seen since the last recession.
#11 At this point, most U.S. consumers are completely tapped out. According to CNN, almost six out of every ten Americans do not have enough money saved to even cover a $500 emergency expense.
Just like in 2008, debts are going bad at a very alarming pace. In fact, things have already gotten so bad that the IMF has issued a major warning about it…
In America alone, bad debt held by companies could reach $4 trillion, “or almost a quarter of corporate assets considered,” according to the IMF. That debt “could undermine financial stability” if mishandled, the IMF says.
The percentage of “weak,” “vulnerable” or “challenged” debt held as assets by US firms has almost arrived at the same level it was right before the 2008 crisis.
We are seeing so many parallels to the last financial crisis, and many are hoping that our politicians in Washington can fix things before it is too late.
On Monday, the most critical week of Trump’s young presidency begins. The administration will continue working on tax reform and a replacement for Obamacare, but of even greater importance is the fact that if a spending agreement is not passed by Friday a government shutdown will begin at the end of the week…
Trump has indicated that he wants to tackle the repeal and replacement of Obamacare and introduce his “massive” tax plan in the next week, all while a shutdown of parts of federal government looms Friday.
By attempting three massive political undertakings in one week, investors will have a sense of whether or not Trump will be able to deliver on pro-growth policies that would be beneficial for markets.
If Trump can pull off the trifecta, it could restore faith that policy proposals like tax cuts and infrastructure spending are on the way. If not, look out.
Members of Congress are returning from their extended two week spring vacation, and now they will only have four working days to get something done.
And I don’t believe that they will be able to rush something through in just four days. The Republicans in Congress, the Democrats in Congress, and the Trump administration all want different things, and ironing out all of those differences is not going to be easy.
For example, the Trump administration is insisting on funding for a border wall, and the Democrats are saying no way. The following comes from the Washington Post…
President Trump and his top aides applied new pressure Sunday on lawmakers to include money for a wall on the U.S.-Mexico border in a must-pass government funding bill, raising the possibility of a federal government shutdown this week.
In a pair of tweets, Trump attacked Democrats for opposing the wall and insisted that Mexico would pay for it “at a later date,” despite his repeated campaign promises not including that qualifier. And top administration officials appeared on Sunday morning news shows to press for wall funding, including White House budget director Mick Mulvaney, who said Trump might refuse to sign a spending bill that does not include any.
And of course the border wall is just one of a whole host of controversial issues that are standing in the way of an agreement. Those that are suggesting that all of these issues will be resolved in less than 100 hours are being completely unrealistic. And even though the Trump administration is putting on a brave face, the truth is that quiet preparations for a government shutdown have already begun.
The stage is being set for the kind of nightmare crisis that I portrayed in The Beginning Of The End. The stock market bubble is showing signs of being ready to burst, and an extended government shutdown would be more than enough to push things over the edge.
Let us hope that this government shutdown is only for a limited period of time, because an extended shutdown could potentially be catastrophic. In the end, either the Trump administration or the Democrats are going to have to give in on issues such as funding for Obamacare, the border wall, Planned Parenthood, defense spending increases, etc.
It will be a test of the wills, and it will be absolutely fascinating to see who buckles under the pressure first.
After 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.
Is the U.S. economy about to get slammed by a major recession? According to Gallup, U.S. economic confidence has soared to the highest level ever recorded, but meanwhile a whole host of key economic indicators are absolutely screaming that a new recession is beginning. And if the U.S. economy does officially enter recession territory in 2017, it certainly won’t be a shock, because the truth is that we are well overdue for one. Donald Trump has inherited quite an economic mess from Barack Obama, and it was probably inevitable that we were headed for a significant economic downturn no matter who won the election.
One of the key indicators to watch is average weekly hours. When the economy shifts into recession mode, employers tend to start cutting back hours, and that is happening right now. In fact, as Graham Summers has pointed out, we just witnessed the largest percentage decline in average weekly hours since the recession of 2008…
In addition to the decline in hours, Summers has suggested that there are a number of other reasons to believe that a new recession is here…
The fact is that the GDP growth of 4%-5% is not just around the corner. The US most likely slid into recession in the last three months. GDP growth collapsed in 4Q16, with a large portion of the “growth” coming from accounting gimmicks.
Consider the following:
- Tax receipts indicate the US is in recession.
- Gross private domestic investment indicates were are in a recession.
- Retailers are showing that the US consumer is tapped out (see AMZN’s recent miss).
- UPS, another economic bellweather, dramatically lowered 2017 forecasts.
To me, even more alarming is the tightening of lending standards. In our debt-based economy, the flow of credit is absolutely critical to economic growth, and when credit starts to get tight that almost always leads to a recession.
So the fact that lending standards have now tightened for medium and large sized firms for six quarters in a row is very bad news. The following comes from Business Insider…
“Although modest over the past couple of quarters, it is still worth noting that this is now the sixth quarter in succession that standards have tightened for large and medium sized firms,” Deutsche Bank economist Jim Reid wrote in a research note to clients.
“This usually only happens in recessions.”
Reid is 100 percent correct on this point. This is precisely the kind of thing that we would expect to see if a new recession was beginning, and if this trend continues it is hard to imagine that the U.S. economy will be able to continue to grow.
And it is interesting to note that job growth at S&P 500 companies has gone negative for the first time since the last recession, and so large firms are definitely starting to feel the pressure.
Simultaneously, lending standards are also tightening up for consumers…
“The most notable tightening in standards though was in consumer loans,” the Fed said. “During the quarter, banks reported an 8.3% net tightening in credit standards for credit cards and 11.6% net tightening for auto loans.”
US consumer spending accounts for more than two-thirds of economic activity and is thus a key driver of growth in the world’s largest economy.
Those numbers for credit cards and auto loans are major red flags.
It is very simple. Tighter credit means less economic activity which means slower economic growth. The U.S. economy grew at a dismal 1.9 percent annual rate during the 4th quarter of 2016, and it would be absolutely no surprise if we end up with a negative number for the first quarter of 2017.
One of the big reasons why lending standards are tightening is because bankruptcies are rising.
As I reported the other day, consumer bankruptcies just rose on a year-over-year basis in back to back months for the first time in almost seven years. Commercial bankruptcies had already been rising on a year-over-year basis throughout 2016, and so the fact that consumer bankruptcies have now joined the party is a very bad sign.
And we have also just learned that real median household income declined in 2016…
Its official! The spectacular Obama/Fed “recovery” produced no increase in real medin household income in 2016 (the last year of Obama’s reign of [economic] error). In fact, real median annual household income in December 2016 ($57,827) was 0.9 percent lower than in December 2015 ($58,356).
Yes, I understand that there is a tremendous amount of optimism out there right now because of Donald Trump.
But the truth is that it is literally going to take some sort of an economic miracle to avoid a recession.
And if a recession is going to happen anyway, the Trump administration should want it to occur as quickly as possible.
You see, if a recession starts a year from now, it will be much more difficult for Trump to blame it on Obama. But if a recession starts right now, he will definitely be able to argue that it happened because of the mess that he inherited from the last administration.
In addition, the sooner the next recession ends the sooner the next recovery can begin. If a recession is still going on during the 2020 campaign, that would be really bad for Trump, but if a recovery is well underway by then that would be really good for his chances.
If you doubt this, just go back and look at the 1984 campaign. After a very difficult recession, the U.S. economy bounced back strongly and Ronald Reagan was able to ride that momentum to an easy victory.
So this may sound very strange to many of you, but the truth is that if a new recession is coming Trump supporters should want it to happen as rapidly as possible.
Unfortunately, once a new recession begins it may not play out like recessions normally do. The U.S. government is 20 trillion dollars in debt, we are in the midst of one of the biggest stock market bubbles in history, and our planet is becoming more unstable with each passing day. So even though Trump is in the White House and Obama is gone, let there be no doubt that a catastrophic economic crisis could literally erupt at any moment. I continue to encourage my readers to do all that they can to get prepared, because those that are prepared in advance will have the best chance of successfully getting through what is coming.
Unfortunately, a lot of people out there seem to believe that all of our problems have somehow evaporated just because Donald Trump is now living in the White House.
That is simply not true, and we all need to be praying for guidance and wisdom for Trump and his team as they prepare to deal with the great challenges that are ahead for our nation.