When less stuff is being bought, sold and shipped around the country with each passing month, how in the world can the U.S. economy be in “good shape”? Unlike official government statistics which are often based largely on projections, assumptions and numbers seemingly made up out of thin air, the Cass Freight index is based on real transactions conducted by real shipping companies. And what the Cass Freight Index is telling us about the state of the U.S. economy in 2016 lines up perfectly with all of the other statistics that are clearly indicating that we have now shifted into recession mode.
Since 1995, the Cass Freight Index™ has been a trusted measure of North American freight volumes and expenditures. Our monthly Cass Freight Index Report provides valuable insight into freight trends as they relate to other economic and supply chain indicators and the overall economy.
Data within the Index includes all domestic freight modes and is derived from $25 billion in freight transactions processed by Cass annually on behalf of its client base of hundreds of large shippers. These companies represent a broad sampling of industries including consumer packaged goods, food, automotive, chemical, OEM, retail and heavy equipment. Annual freight volume per organization ranges from $1 million to over $1 billion. The diversity of shippers and aggregate volume provide a statistically valid representation of North American shipping activity.
When they say “all domestic freight modes”, that includes air, rail, truck, etc. As you are about to see, the total amount of stuff that is being bought, sold and shipped around the country by all these various methods has now been declining for 15 months in a row.
If it was just one or two months you could say that it was just an anomaly, but how in the world can anyone explain away 15 consecutive months?
Not only that, but the brand new number that just came out for May 2016 is the lowest number that we have seen for the month of May in 6 years.
Of course the number for April was the lowest number that we have seen for that month in 6 years too, and the number for March was also the lowest number that we have seen for that month in 6 years.
The Index is not seasonally or otherwise adjusted, so it shows strong seasonal patterns. In the chart below, the red line with black markers is for 2016. The colorful spaghetti above that line represents the years 2011 through 2015. The only month this year that was not the worst month since 2010 was February; only February 2011 was worse. That’s how bad it has gotten in the Freight sector:
“Truck tonnage continues to slide for both linehaul and spot markets,” according to the report. And railroads are also singing the blues.
To me, these numbers are absolutely staggering. How anyone can look at them and then attempt to claim that the U.S. economy is heading for good times is a mystery to me.
And this is especially true considering all of the other news that is pouring in. Just today, we learned that new home sales have fallen by the most in 8 months. If you are trying to sell your home, hopefully you will get that done very quickly, because this latest property bubble is starting to burst in a major way.
Today, I also came across a stunning IMF report that was just released that criticized the U.S. for our shrinking middle class and our rising levels of poverty…
A rising share of the U.S. labor force is shifting into retirement, basic infrastructure is crumbling, productivity gains are scanty, and labor markets and businesses appear less adept at reallocating human and physical capital. These growing headwinds are overlaid by pernicious secular trends in income: labor’s share of income is around 5 percent lower today than it was 15 years ago, the middle class has shrunk to its smallest size in the last 30 years, the income and wealth distribution are increasingly polarized, and poverty has risen.
If you follow my work on a regular basis, you already know that everything that the IMF said in that paragraph is true.
A little bit later in the report, the IMF shared some absolutely startling facts about the growth of poverty in this country…
There is an urgent need to tackle poverty. In the latest data, 1 in 7 Americans is living in poverty, including 1 in 5 children and 1 in 3 female-headed households. Around 40 percent of those in poverty are working.
This distressing growth in our poverty numbers has taken place during Barack Obama’s so-called “economic recovery”.
So how bad are things ultimately going to get for America’s poor now that a new economic crisis has begun?
Before I wrap up this article, I have to mention the early returns from the Brexit vote. All day on Thursday, global news sources were reporting that the latest polls had “Remain” comfortably in the lead, and global financial markets soared on that news.
But now that the actual votes are being reported, it looks like it is going to be much, much closer than anticipated. In fact, as I write this article “Leave” is ahead by a 54.16 percent to 45.84 percent margin. Only a relatively small fraction of the votes have been counted so far, but global financial markets are already being spooked by these results.
If “Leave” does actually win, that is going to have enormous implications for the markets and for the future of Europe. So let’s keep a close eye on what is happening. If “Leave” does prove to be victorious, that will be one of the biggest things to hit Europe in decades, and I am sure that I will be posting an article about it tomorrow.
We live at a time when global events are beginning to accelerate, and there is much uncertainty in the air. If you do not have a solid foundation on which to stand, the events of the coming months will likely shake you greatly. I encourage everyone to start focusing on the things that really matter, because a lot of the other things that we obsess over will soon become quite insignificant.
UPDATE: It is official – the United Kingdom has voted to leave the European Union. They are to be greatly congratulated for declaring their independence, but without a doubt this vote is going to cause some very serious short-term economic and financial pain. Already we have witnessed the greatest one day crash in the history of the British pound, and stock markets all over the world are crashing. For much more, please see our latest video update…
If you think that Donald Trump already has the Republican nomination locked up, then you don’t understand what is going on behind the scenes. It has long been my contention that the elite will move heaven and earth in order to keep Trump from ever setting foot in the Oval Office. One way that they could try to do this is by attempting to deny him the nomination at the Republican convention next month. Over the past couple of days, the Washington Post, CNN and a whole host of other mainstream news outlets have been reporting on a new “last-ditch effort” that has been launched by Republican operatives to get the Republican convention Rules Committee to unbind all of the delegates and allow them to vote however they want. As you will see below, they can do this, and if they get enough votes they will do it.
This current effort is different from what we have seen so far during this campaign season, because it is actually being organized by the delegates themselves. The following comes from the Washington Post…
Dozens of Republican convention delegates are hatching a new plan to block Donald Trump at this summer’s party meetings, in what has become the most organized effort so far to stop the businessman from becoming the GOP presidential nominee.
The moves come amid declining poll numbers for Trump and growing concern among Republicans that he is squandering his chance to defeat Democrat Hillary Clinton. Several controversies — including his racial attacks on a federal judge, his renewed call to temporarily ban Muslims from entering the United States and his support for changing the nation’s gun laws — have raised fears among Republicans that Trump is not really a conservative and is too reckless to run a successful race.
This movement is being spearheaded by a delegate from Colorado named Kendal Unruh. She is actually a key member of the Republican convention Rules Committee, and this is very important for reasons that I will explain below.
“This literally is an ‘Anybody but Trump’ movement,” said Kendal Unruh, a Republican delegate from Colorado who is leading the campaign. “Nobody has any idea who is going to step in and be the nominee, but we’re not worried about that. We’re just doing that job to make sure that he’s not the face of our party.”
So what will it take for Unruh and her allies to be successful?
To prevail, Unruh needs a majority of the 112 members of the convention rules committee, which has two delegates from each state and territory. Then, a majority of the full convention’s 2,472 delegates would have to approve.
There’s a Plan B. If Unruh can win over one-fourth support from the rules committee — just 29 delegates — the full convention must vote on her proposal. So far she’s got around 10 supporters though some prefer delaying the rule’s impact until the 2020 convention, she said.
On Thursday night, Unruh was on a conference call that included at least 30 delegates from 15 different states, and the Washington Post says that regional coordinators for this effort have been recruited “in Arizona, Iowa, Louisiana, Washington and other states.”
One individual that took part in this conference call on Thursday night told CNN that calls are pouring in from people all over the country that want to be part of this movement…
“I will tell you, about every two hours people contact me about how to join this effort,” Lonegan said. “This has never been done before, so there’s no textbook on how to do it. So we’re building an organic effort, state by state, to convince members of the Rules Committee to sign onto a rule that unbinds the delegates to vote their moral conscience.”
So could the Republican convention Rules Committee actually do this?
Could they actually unbind all of the delegates and allow them to vote however they wished?
Well, yes they actually could do this. As Time Magazine has explained, the Republican convention Rules Committee essentially has the power to make up any rules that they want…
It has the power to review and amend all of the rules of the Republican Party, pending ratification by the full convention. If it wanted to, it could insert a rule that says only candidates with blue hair could be the party’s nominee. It’s that powerful. In a contested scenario, the Rules Committee would be ground zero for fights over who and how candidates are nominated on the floor, as well as how the convention itself is conducted.
And thanks to political wrangling by the Cruz campaign, we do know that the rules committee is dominated by delegates that are loyal to Cruz…
The convention rules committee is made up of one man and one woman from each of the 50 states, U.S. territories, and the District of Columbia. Dominated by party insiders and loyalists to Texas Sen. Ted Cruz—who aggressively worked state conventions to secure slots on the committee—it remains to be seen what the committee’s appetite would be for such a dramatic break from the existing rules.
If I was Donald Trump, I would be taking this very, very seriously.
“I have tremendous support and get the biggest crowds by far and any such move would not only be totally illegal but also a rebuke of the millions of people who feel so strongly about what I am saying,” Trump said in a statement. “People that I defeated soundly in the primaries will do anything to get a second shot — but there is no mechanism for it to happen.”
Right at this moment we still have about a month left before the convention.
So that gives those involved in the anti-Trump movement quite a bit of time to rally their forces.
The rule change that would unbind all of the delegates and free them up to “vote their consciences” has already been drafted. Here is the text of the proposed rule change…
Preserving Delegates’ Ability to Vote Their Individual Conscience
The secretary of the national convention shall receive and faithfully announce and record each delegate’s vote in accordance with these rules. If any such delegate notifies the secretary of his or her intent to cast a vote of conscience, whether personal or religious, each such delegate shall be unbound and unconstrained by these rules on any given vote, including the first ballot for the selection of the Republican nominee for President of the United States, without the risk of challenge, sanction, or retribution by the Republican National Committee. Allowable personal reasons shall include the public disclosure of one or more grievous acts of personal conduct by a nominee candidate, including but not limited to, criminally actionable acts, acts of moral turpitude or extreme prejudice, and/or notorious public statements of support for positions that clearly oppose or contradict the policies embodied in the Republican Party’s platform as established at the national convention.
In my new book, I warn about the great political shaking that is coming to this nation, and if this rule change is even attempted at the Republican convention it would create seismic shifts in the U.S. political landscape.
Of course there is still one huge question that I have not even addressed in this article yet.
If Trump has the nomination taken away from him, who would the Republican nominee be?
Some are convinced that it would be Paul Ryan, but I believe that it would be somebody else.
Mitt Romney has certainly not hidden his disdain for Donald Trump, and right now he is quietly waiting in the wings. If the anti-Trump forces get their way, I believe that he would be the man that ultimately walks away with the prize.
*About the author: Michael Snyder is the founder and publisher of The Economic Collapse Blog. Michael’s controversial new book about Bible prophecy entitled “The Rapture Verdict” is available in paperback and for the Kindle on Amazon.com.*
You are about to see undeniable evidence that the U.S. economy has been slowing down for quite some time. And it is vital that we focus on the facts, because all over the Internet you are going to find lots and lots of people that have opinions about what is going on with the economy. And of course the mainstream media is always trying to spin things to make Barack Obama and Hillary Clinton look good, because those that work in the mainstream media are far more liberal than the American population as a whole. It is true that I also have my own opinions, but as an attorney I learned that opinions are not any good unless you have facts to back them up. So please allow me a few moments to share with you evidence that clearly demonstrates that we have already entered a major economic slowdown. The following are 15 facts about the imploding U.S. economy that the mainstream media doesn’t want you to see…
1. Industrial production has now declined for nine months in a row. We have never seen this happen outside of a recession in all of U.S. history.
2. U.S. commercial bankruptcies have risen on a year over year basis for seven months in a row and are now up 51 percent since September.
3. The delinquency rate on commercial and industrial loans has been rising since January 2015.
4. Total business sales in the United States have been steadily dropping since the middle of 2014. No, I did not say 2015. Total business sales have been in decline for nearly two years now, and we just found out that they dropped again…
Total business sales in the US did in April what they’ve been doing since July 2014: they dropped: -2.9% from a year ago, to $1.28 trillion (not adjusted for seasonal differences and price changes), the Censuses Bureau reported on Tuesday. That’s where sales had been in April 2013!
15. The number of temporary workers in the United States peaked and started falling precipitously before the recession of 2001 even started. The exact same thing happened just prior to the beginning of the 2008 recession. So would it surprise you to learn that the number of temporary workers in the United States peaked in December and has fallen dramatically since then?
Earlier today, we learned that two of our biggest corporations will be laying off even more workers. Bank of America, which is holding more of our money than any other bank in the country, has announced that it is going to be cutting about 8,000 more workers…
Bank of America is expected to reduce staffing in its consumer banking division by as many as 8,000 more jobs.
The nation’s largest retail bank by deposits has already reduced the staffing in its consumer division from more than 100,000 in 2009 to about 68,400 as of the end of the first quarter of 2016, said Thong Nguyen, Bank of America’s president of retail banking and co-head of consumer banking at the Morgan Stanley Financials Conference Tuesday.
Walmart is going to cut some back-office accounting jobs at about 500 stores in a bid to become more efficient.
The job cuts will occur mostly at stores mostly in the West and involve accounting and invoicing workers, says spokesman Kory Lundberg. Instead, bookkeeping functions will be switched to Walmart’s home office in Bentonville, Ark. Cash at the stores will be counted by machine.
Day after day we are hearing about more layoffs like this. So why would this be happening if the U.S. economy truly was in “recovery mode”?
Even with how manipulated the GDP numbers are these days, Barack Obama is on course to be the only president in all of U.S. history to never have a single year when the economy grew by at least 3 percent. The truth is that our economy has been stuck in the mud ever since the end of the last recession, and now a major new downturn has clearly already begun.
Foreign investors sold a record amount of U.S. Treasury bonds and notes for the month of April, according to U.S. Treasury Department data on Wednesday, as investors priced in a few more rate increases by the Federal Reserve this year.
Foreigners sold $74.6 billion in U.S. Treasury debt in the month, after purchases of $23.6 billion in March. April’s outflow was the largest since the U.S. Treasury Department started recording Treasury debt transactions in January 1978.
Absent a major “black swan event” of some sort, we won’t see that happening in the United States for at least a while yet, but without a doubt we are steamrolling toward a major economic depression.
Unfortunately for all of us, there isn’t anything that any of our politicians are going to be able to do to stop it.
*About the author: Michael Snyder is the founder and publisher of The Economic Collapse Blog. Michael’s controversial new book about Bible prophecy entitled “The Rapture Verdict” is available in paperback and for the Kindle on Amazon.com.*
Chaos and violence threaten to spiral out of control in America’s third largest city, and nobody seems to have any idea how to solve the problem. After decades of control by the radical left, many parts of the “Windy City” have become rotting, decaying, gang-infested hellholes. Just like Detroit, the city of Chicago is rapidly becoming a joke to the rest of the world, but a horribly corrupt political culture likely stands in the way of any type of major reform any time soon. And just like much of the rest of the nation, a spirit of violence and civil unrest is rising in Chicago. So far this year, the number of shootings in Chicago is up 50 percent compared to the same time period last year, and that was before we even got to Memorial Day weekend. As of Sunday morning, at least 40 people had already been shot, and authorities were bracing for even more violence as the holiday weekend stretched on…
A string of nearly two dozen shootings on the West Side has pushed the number of people shot during the Memorial Day weekend to at least 40, with two more days to go.
As of early Sunday morning, the toll stood at four dead and 36 wounded across the city, including a 15-year-girl shot to death as she rode in a Jeep on Lake Shore Drive near Fullerton Avenue, police said.
The cries to fix what is wrong with Chicago are becoming increasingly desperate, but at this point the city is drowning in debt and is pretty much flat broke.
So the options for doing anything about this growing crisis are quite limited.
But that isn’t stopping prominent city leaders from speaking out. According to the New York Times, Rev. Corey Brooks believes that “we could be looking at a blood bath” this summer if nothing changes…
“If something doesn’t change, if we don’t get jobs for these kids, if we don’t change the economic situation, I’m worried that we could be looking at a blood bath,” said the Rev. Corey Brooks, a pastor on the city’s South Side, a mostly African-American area where some of the shootings have been concentrated. “If something doesn’t happen, I fear that we’re potentially looking at one of the worst summers we’ve ever had.”
As of Friday morning, homicides in Chicago were up 52 percent in 2016, compared with the same period a year ago, and shootings had increased by 50 percent, though the pace of violence had slowed in recent weeks, the police said.
I believe that Rev. Brooks is correct, but he isn’t identifying the core of the problem.
Thanks in large part to unchecked illegal immigration, gang membership has been surging in Chicago. Back in 2012, the Chicago Crime Commission estimated that there were 150,000 gang members living in the city, but of course by now that number is likely far higher.
No city in the United States has a higher population of gang members than Chicago does, and hundreds of factions are constantly battling for turf. The police in Chicago insist that they have the situation under control, but everyone can see that they do not.
And how could they? There are only 13,318 law enforcement officers of all types in the city of Chicago. They are outnumbered by the gangs by much more than a 10 to 1 margin. There is no way in the world that they are ever going to be able to stop the gang violence. All they can do is hope to contain it.
Sadly, they are fighting a losing battle, because with each passing month thousands more gang members cross our southern border illegally and head directly for our major cities where they are warmly received by their gang brothers.
When society breaks down, people become very desperate, and crime spirals out of control. The mafia and the gangs are having a field day at the moment, and the police are so overwhelmed that they can’t do much to stop them.
The Luis Razetti Hospital in the portal city of Barcelona looks like a war zone.
Patients can be seen balancing themselves on half-broken beds with days-old blood on their bodies.
They’re the lucky ones; most are curled up on the floor, blood streaming, limbs blackening.
Children lie among dirty cardboard boxes in the hallways without food, water or medication.
Without electricity or functioning machines, medics have had to create their own solutions. Two men who had surgery on their legs have their limbs elevated by makeshift slings made out of water bottles.
Most Americans would scoff at the suggestion that we could ever see scenes like that in the United States, but just a few years ago most Venezuelans would have probably said the exact same thing.
For so long, watchmen all over America have been endlessly warning people to get prepared.
But at some point, time runs out.
In fact, down in Venezuela time has already run out. Store shelves all over the country are empty, there are chronic shortages of basic supplies, some people are hunting dogs and cats for food, and there has been an almost total breakdown of public services.
I wish that I could say that these kinds of conditions are only going to be limited to Venezuela. But I cannot say that. Great suffering is going to eventually spread all over the world, and that is going to include our own nation.
I hope that you are using this short period of relative stability wisely, because it will be gone way too soon.
It was only a matter of time before our deeply divided nation was going to start coming apart at the seams. Waves of anger, frustration, violence and civil unrest are starting to sweep across the United States, and political rallies for Republican presidential candidate Donald Trump have become a focal point for releasing some of that energy. The angry mob that threw rocks, bottles and burning T-shirts at police and Donald Trump supporters on Tuesday night wanted to get the attention of the national media, and they got it in droves. Now that the election is less than five months away, this kind of scene is going to be repeated over and over, and this is something that I warned about back in March. Millions upon millions of our young people have fully embraced the radical left, and they have already made it exceedingly clear that they are not afraid to use violence to advance their cause.
Never before in my lifetime have I seen America so divided. Our politicians and the mainstream media have been endlessly pitting various groups against one another for years, and wherever you look hearts are growing very cold.
I have said it before, and I will say it again. I believe that this is going to be the most chaotic election season that we have ever experienced, and the chaos and violence that are going to be unleashed over the next five months are going to shock the entire world.
On Tuesday night, the angry mob that gathered outside of the Albuquerque Convention Center didn’t seem to care who they hurt as they unleashed their anger. According to Fox News, some of the protesters even tried to set police horses on fire…
The rampaging gang was made up of anti-Trump goons — waving the Mexican flag and burning a Trump banner.
“Viva Mexico,” protesters shouted, according to the Albuquerque Journal.
The rioters even targeted police horses — knocking one down – and throwing burning T-shirts at others. Who tries to burn down a horse?
How sick and twisted do you have to be to try to set a horse on fire?
But this is what happens when a spirit of violence descends on a group of people. The consequences can quickly spiral out of control in unexpected ways.
Here is how CNS News described the chaotic scene outside of the Albuquerque Convention Center…
In one of the presidential campaign year’s more grisly spectacles, protesters in New Mexico opposing Donald Trump’s candidacy threw burning T-shirts, plastic bottles and other items at police officers, injuring several, and toppled trash cans and barricades.
Police responded by firing pepper spray and smoke grenades into the crowd outside the Albuquerque Convention Center.
According to at least one report, rocks thrown by some of the rioters were actually flying through the convention center windows, and a number of innocent people got hurt.
What would make people act like that? This isn’t what America is supposed to look like. But when fundamental institutions such as the family and the church start to crumble, this is how people start to behave. You can see a clip that includes footage of protesters jumping on police cars last night in Albuquerque right here…
And of course the spirit of violence and civil unrest that is rising in America is not limited to Donald Trump rallies.
This past weekend in Chicago saw another five killed and 40 wounded in shootings, slightly down from Mother’s day weekend when eight people were killed and 42 wounded. The two weekends are indicative of what’s taking place in the homicide riddled city, in which the number of people shot so far this year is running an astonishing 50% above this time last year – what’s worse, summer is not even here yet, which is traditionally the city’s most violent period.
Other big cities are seeing similar spikes in violent crime. The following is an excerpt from a recent article in the New York Times…
Experts cannot agree on what to call a recent rise in homicides, much less its cause, but new data on Friday that showed a sharp spike in homicide rates in more than 20 cities rekindled debate over whether it was time for alarm.
The data showed particularly significant increases in homicides in six cities in the first three months of the year compared with the same period last year — Chicago, Dallas, Jacksonville, Fla., Las Vegas, Los Angeles and Memphis.
If this is happening now, with the stock market soaring and unemployment a bit lower than it was during the depths of the last recession, what is going to happen when things start getting really bad in this country?
Desperate people do desperate things, and if people are willing to hurl rocks and set horses on fire because they are upset at a political candidate, what are they going to do when there is no food for their families?
Just look at what is happening down in Venezuela. People are hunting down dogs and cats because they don’t have anything to eat. There have been at least 107 mass looting events so far in 2016 alone, and crime is completely and utterly out of control.
What is happening down there is eventually coming to America too, and the chaos and violence that we will see during the coming months will be a small preview of that.
The funny thing is that none of these political protests are going to matter anyway. It remains my contention that the elite will move heaven and earth to do whatever is necessary to keep Donald Trump out of the White House. They have already spent tens of millions of dollars against him and they have continuously had their media outlets put out “hit pieces” in an attempt to destroy him.
But their bag of tricks goes a lot deeper than that, and this is not a game to them.
I know that a lot of people out there have some very high hopes for Donald Trump, and we should be praying for him and for his family.
However, the time when the people determined the direction of this nation is long past, and the elite guard their monopoly over the political process very zealously.
Have you noticed that our planet has begun to shake, rattle and roll? Over the past few days we have seen major volcanic eruptions in Costa Rica and Indonesia, and according to Volcano Discovery 40 volcanoes around the planet are erupting right now as you read this article. Meanwhile, earthquakes continue to shake the globe with alarming regularity. Just last week, Ecuador was hit by a magnitude 6.7 earthquake and a magnitude 6.8 earthquake in rapid succession. Overall, there have been more than 3,000 earthquakes of magnitude 1.5 or greater within the past month globally. So yes, I write constantly about the rapidly accelerating deterioration of our financial system, but the coming “collapse” is not just about money. I am convinced that we are entering a “perfect storm” in which a confluence of factors will absolutely cripple society and bring about changes that most of us would not even dare to imagine right now.
Let’s talk about the volcanic eruptions that we have seen in recent days. The eruption down in Costa Rica took authorities completely by surprise, and a thick layer of dust and ash is coating vehicles and buildings 30 miles away in the capital city of San Jose…
A volcano has erupted in central Costa Rica, belching smoke and ash up to 3,000m (9,840ft) into the air.
Hundreds of people have gone to hospital, complaining of breathing difficulties and skin problems.
Some schools were shut and some flights into the country cancelled or diverted.
People in the capital San Jose, about 45km (30 miles) west of the Turrialba volcano, said layers of ash had coated buildings and cars and there was a fierce smell of sulphur.
Leading up to this eruption, there were “swarms of small earthquakes” in the vicinity of the volcano, but scientists assured the public that these earthquake swarms were “not signs of an imminent eruption.”
Keep that in mind, because later in the article I am going to show you something.
The death toll from a volcanic eruption in western Indonesia has climbed to six, an official said Sunday, with fears more could have been trapped by the hot ash.
Three people also remain in a critical condition after Mount Sinabung, a highly-active volcano on Sumatra island, unleashed a series of fresh eruptions on Saturday afternoon, disaster agency spokesman Sutopo Purwo Nugroho said.
“Nine people were struck by the hot clouds. Six died, and three others remain critical with burns,” he said, adding the injured had been taken to hospital.
According to one report, “torrents of lava” are pouring out of the volcano, and this is just one example of how volcanoes that were once considered to be “inactive” are coming to life all over the world. In fact, prior to 2010 Mount Sinabung had been dormant for about 400 years.
Meanwhile, there is “unprecedented” activity at Iceland’s very dangerous Baroabunga volcano. This one is not erupting quite yet, but we definitely want to keep an eye on it, because a major eruption there would have serious implications for Europe.
To finish this article, I would like to provide an update to a piece that I posted last week on End of the American Dream. Just prior to the eruption of the Turrialba volcano in Costa Rica, there were significant earthquake swarms in the vicinity of the volcano. Well, the exact same thing is happening at three major volcanoes in the United States right now.
I would like to share three images with you that come from Google Earth via the Pacific Northwest Seismic Network. This first image shows the earthquake activity that has taken place in the area around Mt. St. Helens in recent days. Over the past month there have been 95 earthquakes in the region, and most of them have been centered right along the core of the volcano…
This next image shows what has been happening at Mt. Rainier. Those that follow my work closely already know that I consider it to be the most dangerous mountain in America and that I believe that a major eruption of the volcano is coming in the not too distant future. There have been 36 earthquakes at Mt. Rainier over the past month, and once again most of them have occurred right along the core of the volcano…
Mt. Hood is also a very dangerous volcano. There have been 126 earthquakes in the vicinity of Mt. Hood in recent days, and in this image you can see that the earthquakes have been centered very tightly on a spot on the south face of the mountain. This is alarming because it was also the south side of Mt. St. Helens that violently erupted back in 1980…
When there are major volcanic eruptions or major earthquakes in other parts of the globe, many Americans don’t seem to care too much because they don’t think that this rise in global seismic activity is any sort of a threat to them personally.
But the truth is that the entire west coast of the United States lies along the Ring of Fire, and virtually every other section of the Ring of Fire is roaring to life these days.
At some point, there will be historic earthquakes on the west coast.
At some point, there will be historic volcanic eruptions on the west coast.
Scientists assure us that these things are inevitable.
So let us certainly hope for the best, but putting our heads in the sand and pretending that these dangers do not exist is not going to help matters one bit.
*About the author: Michael Snyder is the founder and publisher of The Economic Collapse Blog. Michael’s controversial new book about Bible prophecy entitled “The Rapture Verdict” is available in paperback and for the Kindle on Amazon.com.*
You are about to see a chart that is undeniable evidence that we have already entered a major economic slowdown. In the “real economy”, stuff is bought and sold and shipped around the country by trucks, railroads and planes. When more stuff is being bought and sold and shipped around the country, the “real economy” is growing, and when less stuff is being bought and sold and shipped around the country, the “real economy” is shrinking. I know that might sound really basic, but I want everyone to be on the same page as we proceed in this article. Just because stock prices are artificially high right now does not mean that the U.S. economy is in good shape. In fact, there was a stock rally at this exact time of the year in 2008 even though the underlying economic fundamentals were rapidly deteriorating. We all remember what happened later that year, so we should not exactly be rejoicing that precisely the same pattern that we witnessed in 2008 is happening again right in front of our eyes.
During the month of April, the Cass Transportation Index was down 4.9 percent on a year over year basis. What this means is that a lot less stuff was bought and sold and shipped around the country in April 2016 when compared to April 2015. The following comes from Wolf Richter…
Freight shipments by truck and rail in the US fell 4.9% in April from the beaten-down levels of April 2015, according to the Cass Transportation Index, released on Friday. It was the worst April since 2010, which followed the worst March since 2010. In fact, shipment volume over the four months this year was the worst since 2010.
This is no longer statistical “noise” that can easily be brushed off.
Of course this was not just a one month fluke. The reality is that we have now seen the Cass Shipping Index decline on a year over year basis for 14 consecutive months. Here is more commentary and a chart from Wolf Richter…
The Cass Freight Index is not seasonally adjusted. Hence the strong seasonal patterns in the chart. Note the beaten-down first four months of 2016 (red line):
This is undeniable evidence that the “real economy” has been slowing down for more than a year. In 2007-2008 we saw a similar thing happen, but the Federal Reserve and most of the “experts” boldly assured us that there was not going to be a recession.
Of course then we immediately proceeded to plunge into the worst economic downturn since the Great Depression of the 1930s.
Traditionally, railroad activity has been a key indicator of where the U.S. economy is heading next. Just a few days ago, I wrote about how U.S. rail traffic was down more than 11 percent from a year ago during the month of April, and I included a photo that showed 292 Union Pacific engines sitting in the middle of the Arizona desert doing absolutely nothing.
Well, just yesterday one of my readers sent me a photograph of a news article from North Dakota about how a similar thing is happening up there. Hundreds of rail workers are being laid off, and engines are just sitting idle on the tracks because there is literally nothing for them to do…
Intuitively, does it seem like this should be happening in a “healthy” economy?
Of course not.
The reason why this is happening is because businesses have been selling less stuff. Total business sales have now been declining for almost two years, and they are now close to 15 percent lower than they were in late 2014.
Because sales are way down, unsold inventories are really starting to pile up. The inventory to sales ratio is now close to the level it was at during the worst moments of the last recession, and many analysts expect it to continue to keep going up.
Why can’t people understand what is happening? So far this year, job cut announcements are up 24 percent and the number of commercial bankruptcies is shooting through the roof. Signs that we are in the early chapters of a new economic downturn are all around us, and yet denial is everywhere.
Treasury yields are behaving as if they are signaling a recession, but strategists say this time it’s more likely a sign of something else.
The market has been buzzing about the flattening yield curve, or the fact that yields on longer duration Treasurys are getting closer to yields on shorter duration securities.
In the case of 10-year notes and two-year notes, that spread was the flattest Friday than it has been on a closing basis since late 2007. The yield curve had turned negative in 2006 and stayed there for months in 2007 before turning higher ahead of the Great Recession. The spread was at 95 at Friday’s curve but widened Monday to more than 96.
Treasury yields are very, very clearly telling us that a new recession is here, but because the “experts” don’t want to believe it they are telling us that the signal is “broken”.
For many Americans, all that seems to matter is that the stock market has recovered from the horrible crashes last August and earlier this year. But in the end, I am convinced that those crashes will simply be regarded as “foreshocks” of a much greater crash in our not too distant future.
But if you don’t want to believe me, perhaps you will listen to Goldman Sachs. They just came out with six reasons why stocks are about to tumble.
Or perhaps you will believe Bank of America. They just came out with nine reasons why a big stock market decline is on the horizon.
To me, one of the big developments has been the fact that stock buybacks are really starting to dry up. In fact, announced stock buybacks have declined 38 percent so far this year…
After snapping up trillions of dollars of their own stock in a five-year shopping binge that dwarfed every other buyer, U.S. companies from Apple Inc. to IBM Corp. just put on the brakes. Announced repurchases dropped 38 percent to $244 billion in the last four months, the biggest decline since 2009, data compiled by Birinyi Associates and Bloomberg show. “If the only meaningful source of demand in the market is companies buying their own shares back, then what happens if that goes away?” asked Brad McMillan, CIO of Commonwealth “We should be concerned.”
Stock buybacks have been one of the key factors keeping stock prices at artificially inflated levels even though underlying economic conditions have been deteriorating. Now that stock buybacks are drying up, it is going to be difficult for stocks to stay disconnected from economic reality.
A lot of people have been asking me recently when the next crisis is going to arrive.
I always tell them that it is already here.
Just like in early 2008, economic conditions are rapidly deteriorating, but the stock market has not gotten the memo quite yet.
And just like in 2008, when the financial markets do finally start catching up with reality it will likely happen very quickly.
So don’t take your eyes off of the deteriorating economic fundamentals, because it is inevitable that the financial markets will follow eventually.
We have seen this story before, and it never ends well. From mid-March until early May 2008, a vigorous stock market rally convinced many investors that the market turmoil of late 2007 and early 2008 was over and that happy days were ahead for the U.S. economy. But of course we all know what happened. It turned out that the market downturns of late 2007 and early 2008 were just “foreshocks” of a much greater crash in late 2008. The market surge in the spring of 2008 was just a mirage, and it masked rapidly declining economic fundamentals. Well, the exact same thing is happening right now. The Dow rose another 222 points on Tuesday, but meanwhile virtually every number that we are getting is just screaming that the overall U.S. economy is steadily falling apart. So don’t be fooled by a rising stock market. Just like in the spring of 2008, all of the signs are pointing to an avalanche of bad economic news in the months ahead. The following are 11 signs that the U.S. economy is rapidly deteriorating…
#1 Total business sales have been declining for nearly two years, and they are now about 15 percent lower than they were in late 2014.
#2 The inventory to sales ratio is now back to near where it was during the depths of the last recession. This means that there is lots and lots of unsold stuff just sitting around out there, and that is a sign of a very unhealthy economy.
#4 Profits for companies listed on the S&P 500 were down 7.1 percent during the first quarter of 2016 when compared to the same time period a year ago.
#5 In April, commercial bankruptcies were up 32 percent on a year over year basis, and Chapter 11 filings were up 67 percent on a year over year basis. This is exactly the kind of spike that we witnessed during the initial stages of the last major financial crisis as well.
#7 The U.S. economy has lost an astounding 191,000 mining jobs since September 2014. For areas of the country that are heavily dependent on mining, this has been absolutely devastating.
#8 According to Challenger, Gray & Christmas, U.S. firms announced 35 percent more job cuts during April than they did in March. This indicates that our employment problems are accelerating.
#9 So far this year, job cut announcements are running 24 percent above the exact same period in 2015.
#10 U.S. GDP grew at just a 0.5 percent annual rate during the first quarter of 2016. This was the third time in a row that the GDP number has declined compared to the previous quarter, and let us not forget that the formula for calculating GDP was changed last year specifically to make the first quarter of each year look better. Without that “adjustment”, it is quite possible that we would have had a negative number for the first quarter.
But you never hear Obama talk about that statistic, do you?
And the mainstream media loves to point the blame at just about anyone else. In fact, the Washington Post just came out with an article that is claiming that the big problem with the economy is the fact that U.S. consumers are saving too much money…
The surge in saving is the real drag on the economy. It has many causes. “People got a cruel lesson about [the dangers] of debt,” says economist Matthew Shapiro of the University of Michigan. Households also save more to replace the losses suffered on homes and stocks. But much saving is precautionary: Having once assumed that a financial crisis of the 2008-2009 variety could never happen, people now save to protect themselves against the unknown. Research by economist Mark Zandi of Moody’s Analytics finds higher saving at all income levels.
So even though half the country is flat broke, I guess we are all supposed to do our patriotic duty by going out and running up huge balances on our credit cards.
What a joke.
Of course the U.S. economy is actually doing significantly better at the moment than almost everywhere else on the planet. Many areas of South America have already plunged into an economic depression, major banks all over Europe are in the process of completely melting down, Japanese GDP has gone negative again despite all of their emergency measures, and Chinese stocks are down more than 40 percent since the peak of the market.
This is a global economic slowdown, and just like in 2008 it is only a matter of time before the financial markets catch up with reality. I really like how Andrew Lapthorne put it recently…
On the more bearish slant is Andrew Lapthorne, head of quantitative strategy at Societe Generale. To him this profit downturn is a sign that stocks are far too overvalued and the economy is weaker than you think.
“MSCI World EPS is now declining at the fastest pace since 2009, losing 4% in the last couple of months alone (this despite stronger oil prices),” wrote Lapthorne in a note. For the S&P 500 specifically, the year on year drop in profit drop was the most since third quarter of 2009.
“Global earnings are now 14% off the peak set in August 2014 and back to where they stood five years ago. Equity prices on the other hand are 25% higher. Gravity beckons!”
I couldn’t have said it better myself.
Look, this is not a game.
So far in 2016, three members of my own extended family have lost their jobs. Businesses are going under at a pace that we haven’t seen since 2008, and this means that more mass layoffs are on the way.
We can certainly be happy that U.S. stocks are doing okay for the moment. May it stay that way for as long as possible. But anyone that believes that this state of affairs can last indefinitely is just being delusional.
Gravity beckons, and the crash that is to come is going to be a great sight to behold.
Should we be alarmed that the number of job cuts announced by large U.S. companies was 35 percent higher in April than it was in March? This is definitely a case where the trend is not our friend. According to Challenger, Gray & Christmas, U.S. firms announced 65,141 job cuts during April, which represented a massive 35 percent increase over the previous month. And so far this year overall, job cut announcements are running 24 percent higher than for the exact same period in 2015. Meanwhile, on Thursday we learned that initial claims for unemployment benefits shot up dramatically last week. In fact, the jump of 17,000 was the largest increase that we have seen in over a year. Of course the U.S. economy has been slowing down for quite a while now, and many have been wondering when we would begin to see that slowdown reflected in the employment numbers. Well, that day has now arrived.
At this point, U.S. firms are laying off people at a rate that we have not seen since the last financial crisis. Here is what Zero Hedge had to say about these latest numbers…
While one can debate the veracity of the BLS’ seasonally adjusted data, one thing is certain: when a company announces it will layoff thousands, it will. So for all those who suggest that all is well with the US jobs picture based on initial claims reports, here is the latest report from Challenger according to which the pace of downsizing increased in April jumped by 35% to 65,141 during the month of April, from the 48,207 layoff announcements in March.
Looking further back, in the first four months of 2016, employers have announced a total of 250,061 planned job cuts, up 24% from the 201,796 job cuts tracked during the same period a year ago. This represents the highest January-April total since 2009, when the opening four months of the year saw 695,100 job cuts in the aftermath of the biggest financial crisis in modern history.
So what is causing this?
Why are firms laying off so many people all of a sudden?
My readers are very well aware of the pain that the energy industry is experiencing at the moment, but surprisingly it was not the energy industry that announced the most job cuts in April…
Computer firms announced 16,923 job cuts during the month; the highest total among all industries. That total includes 12,000 from chipmaker Intel, which is shifting away from the traditional desktop and laptop market and toward the mobile market. To date, computer firms have announced 33,925 job cuts, up 262 percent from a year ago, when job cuts in the sector totaled just 9,368 through the first four months of the year.
Yes, the U.S. energy industry has lost well over 100,000 good paying jobs since the beginning of last year, but the downturn is so much broader than that. All over America corporate earnings are down, and when earnings fall it is inevitable that layoffs will follow.
As I have written about previously, earnings for companies listed on the S&P 500 have fallen a total of 18.5 percent from their peak in late 2014, and it was being projected that corporate earnings overall would be down 8.5 percent for the first quarter of 2016 compared to the same period a year ago.
And in the chart that I have posted below, you can see that corporate profits after tax have been falling precipitously since peaking in mid-2015…
As this new economic downturn intensifies, the layoffs will accelerate.
In plain English, that means that a whole lot more people will be losing their jobs.
Unfortunately, a very large percentage of Americans didn’t learn anything from the last crisis and are living on the financial edge. In fact, the Federal Reserve says that 47 percent of all Americans cannot even pay an unexpected $400 emergency room bill without borrowing the money or selling something.
So just like back in 2008, we are going to see huge numbers of people unable to pay their bills when they lose their jobs. Foreclosures are going to skyrocket, and lots and lots of families are going to be put out into the street.
This is why I have been preaching the importance of having an emergency fund for years. It is absolutely imperative to have an emergency fund that can cover your bills for at least six months in the event that there is a job loss or some other sort of major disaster strikes.
If you have not done this already, you are probably already too late.
The cold, hard reality of the matter is that it would take most families quite a while to save up a six month emergency fund if they are starting from zero.
So if you are in this position and you lose your job, you may have to move in with family or friends when your money runs out.
I don’t mean to be cold, but this is the situation that we are facing. The next employment crisis is already here, and it is going to get much, much worse. No matter who becomes “the next president”, job cuts are going to accelerate and good jobs are going to become exceedingly difficult to find.
I am certainly not advocating that anyone give up. If you still have a good job for the moment, tighten your belt and use this time to feverishly prepare the very best that you can.
Sadly, tens of millions of Americans believed that this bubble of false prosperity would keep on rolling, and so they wasted immense amounts of precious time and resources. Now the day of reckoning is here, and vast numbers of our fellow citizens are going to discover the horror of being unprepared.