The downtrend in some global economies is becoming contagious as weakness in the manufacturing sector begins to spread, according to Morgan Stanley, which warned clients that “the wheels for a slowdown are in motion.”

“Even as we have been revising our growth projections lower, we continue to highlight that the risks remain decidedly skewed to the downside,” Chetan Ahya, the bank’s chief economist, warned in a note published Tuesday. “We expect that if trade tensions escalate further … we will enter into a global recession (i.e., global growth below 2.5%Y) in three quarters.”

When “too big to fail” banks throw in the towel and start warning of “a global recession”, that is a really bad sign.

But let’s give Morgan Stanley some credit for at least trying to be honest.  The economic numbers have progressively gotten worse, and we just learned that domestic shipments of RVs are down a whopping 20 percent so far in 2019.  The following comes from Zero Hedge…

To elaborate more on our July report titled “Trade War Chaos: Trump’s Tariffs Crash American RV Industry,” it seems the RV industry continues to flash a recessionary warning light.

The Wall Street Journal reports that Elkhart, Indiana, is the industrial hub of American RV manufacturing, has been used by analysts and economist as a leading indicator of consumer demand for luxury items.

Domestic shipments of RVs to dealers have plummeted 20% so far this year, compared to the same period last year, after dropping 4% in 2018, according to the Recreational Vehicle Industry Association.

The RV industry is considered to be “a great bellwether of the economy”, and right now it is screaming that a recession is coming.

Meanwhile, more bad news continues to come out of the real estate sector, and it turns out that even wealthy people are now “pulling back” from buying homes…

Wealthy buyers are pulling back from some of the most expensive housing markets in the U.S., the latest sign that sky-high prices and fears of a recession are weighing on a key sector of the economy.

Toll Brothers Inc., the nation’s largest publicly traded luxury-home builder, said late Tuesday that purchase agreements fell 3% from a year earlier, worse than a decline of less than 1% that was expected by a Bloomberg survey of six analysts. The company’s orders in California, home to some of the priciest markets in the country, tumbled 36% from a year earlier.

Of course whenever I start bringing up numbers like these, some skeptics point to the employment statistics as “proof” that things really aren’t so bad.

Well, it turns out that those employment numbers were wildly inaccurate.

In fact, the Labor Department just admitted that the U.S. actually has 501,000 less jobs than they previously thought…

The labor market seemed to defy gravity last year, generating more than 200,000 jobs a month despite a historically low unemployment rate that made it harder for employers to find workers.

Turns out job growth wasn’t as robust as it appeared.

The Labor Department revised down total job gains from April 2018 to March 2019 by 501,000, the agency said Wednesday, the largest downward revision in a decade.

An error of more than half a million jobs is colossal, and it is going to make it more difficult for us to have faith in the “official numbers” that they give us in the future.

In the end, it turns out that all of those glowing headlines about U.S. employment in 2018 were grossly overstated.  If these revised numbers are accurate, then job growth was just barely keeping up with population growth in 2018, and of course we have started to see the employment numbers begin to deteriorate in recent months.

But if you listen to some of the pundits, you would be tempted to think that the only thing we have to fear is fear itself.  For example, consider what Brian Moynihan just told CNBC…

“I’d love to say that the optimistic universe is most likely to prevail, but the talking heads talk endlessly about how a recession is inevitable,” he said. “This kind of talk sows fear, which erodes confidence, and without confidence business pauses its new hires and its investments, which then leads to a downturn in consumer spending, which then leads to a recession.”

And CNBC’s Jim Cramer insists that everything will be just fine if the “angry rhetoric” is toned down…

“If the president were to simply calm down the rhetoric on China, rather than taking them on like some kind of trash-talking wide receiver, the bears would lose their biggest crutch,” said the “Mad Money” host, who blamed fears about the bond market on “angry rhetoric and frightening jeremiads from supposed experts” who should listen to conference calls.

No, sticking our heads in the sand and pretending that everything is going to be just fine is not going to solve anything.

The U.S. economy has defied the laws of economics for an extended period of time, but now all of our mistakes are catching up with us, and the crisis that is ahead is going to be very painful.

Unfortunately, a lot of the so-called “experts” will continue to deny the obvious even when it is staring them in the face, and this is going to result in a tremendous amount of confusion among ordinary Americans as our nation spirals into a terrifying economic nightmare.

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

The post One Of The Largest “Too Big To Fail” Banks In America Boldly Declares That “The Wheels For A Slowdown Are In Motion” appeared first on The Economic Collapse.

And even though I write about this stuff every day, I was stunned by how rapidly inventory levels have been rising recently.  The following numbers come from Peter Schiff’s website…

This comes on the heels of the largest gain in wholesale inventories in more than five years in December.

Inventories rose 7.7% from a year ago in January. Meanwhile, sales only rose by 2.7%. Overall, total inventories were $669.9 billion at the end of January, up 1.2% from the revised December level.

The increase in durable goods inventories at the wholesale level was even starker. These inventories were up 11.7% from January a year ago, and are up 17% from January two years ago, hitting $415 billion, the highest ever.

Businesses don’t like to have excess inventory, because carrying excess inventory is expensive and cuts into profits.  So they try very hard to manage their inventories efficiently, but if the economy slows down unexpectedly that can catch them off guard…

There are few indications of economic slowing that are more convincing than an unwanted build in inventories — and that apparently is what’s underway in the wholesale sector.

When inventory levels get too high, businesses often start reducing the amount of stuff they are ordering from manufacturers.

So we would expect the numbers to indicate that manufacturing output is down, and that is precisely what we have witnessed over the last couple of months…

U.S. manufacturing output fell for a second straight month in February and factory activity in New York state hit nearly a two-year low this month, offering further evidence of a sharp slowdown in economic growth early in the first quarter.

If manufacturers are making and sending less stuff to businesses, and if businesses are selling less stuff to their customers, then we would expect to see less stuff moved around the U.S. by truck, rail and air.

And wouldn’t you know it, the numbers also tell us that this has been happening too.  The following comes from Wolf Richter…

Now it’s the third month in a row, and the red flag is getting more visible and a little harder to ignore about the goods-based economy: Freight shipment volume in the US across all modes of transportation – truck, rail, air, and barge – in February fell 2.1% from February a year ago, according to the Cass Freight Index, released today. The three months in a row of year-over-year declines are the first such declines since the transportation recession of 2015 and 2016.

So there you have it.  Anyone that tries to tell you that the U.S. economy is “booming” is simply not being accurate.

And when you throw in the fact that we just witnessed one of the worst disasters for U.S. agriculture in all of U.S. history, it is easy to understand why the economic outlook for the remainder of 2019 is rather bleak.  One agribusiness company just announced that it will have “a negative pretax operating profit impact of $50 million to $60 million for the first quarter” as a result of all the flooding…

Already suffering from low crop prices and the U.S.-China trade war, Mother Nature has delivered yet another blow to the beleaguered American farmer. Growers in the heartland this year have seen arctic cold blasts, been blanketed by snow and just in the last week were inundated by floods. Archer-Daniels-Midland Co., one of the world’s biggest agribusinesses, said Monday that it expects weather disruptions to have a negative pretax operating profit impact of $50 million to $60 million for the first quarter.

Korth said he fears the worst for local farmers, citing a friend who lost 85 cows to flooding and another who sells seeds and has already seen order cancellations.

“It’s going to put a lot of people out of business,” Korth said. “It’s just a terrible deal.”

Unfortunately, the flooding in the middle portion of the country is just getting started.  According to the National Weather Service, we are going to see more catastrophic flooding for the next two months.

As you can see, the elements for a “perfect storm” are definitely coming together, and I encourage everyone to get prepared for rough times ahead.

But many people are not that concerned about a new crisis, because they remember that global central banks were able to pull us out of the fire last time around.

Unfortunately, they may not be able to do it this time.  Just consider the words of the deputy director of the IMF…

Major financial institutions may be powerless to prevent the next global economic downturn from tuning into a full-blow recession, the International Monetary Fund has warned.

In a speech on the future of the eurozone, the IMF’s deputy director David Lipton, warned of the depleted power of central banks and governments to combat another sharp economic shock.

“The bottom line is this: the tools used to confront the global financial crisis may not be available or may not be as potent next time” he said.

But I am sure that global central banks will try to patch the system back together again, and at certain moments it may even look like they are having some success.

In the end, however, they will not be able to stop the “Bubble To End All Bubbles” from completely bursting.

It has taken decades of exceedingly foolish decisions to get us to this point, and there is simply no way that we can avoid the day of reckoning that is coming.

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

The post Just Before The Great Recession, Mountains Of Unsold Goods Piled Up In U.S. Warehouses – And Now It Is Happening Again appeared first on The Economic Collapse.

According to the latest estimates released by Edmunds, new vehicle sales for September are expected to collapse both on a monthly basis and year-over-year basis. The company predicted that 1,392,434 new cars and trucks will be sold in the U.S. in September, which makes for a estimated seasonally adjusted annual rate (SAAR) of 17 million. This will be a 5.4% decrease from last month and an 8.3% drop from September of last year.

Those are absolutely terrible numbers.

And this news comes after all of the major automakers had already revised earnings guidance lower.  The following comes from Zero Hedge…

The drop in sales capped another rough month for the auto industry during which Detroit’s carmakers all revised their earnings guidance lower and Ford embarked on a five-year restructuring plan. Earlier this week, we reported that Ford’s CEO claimed that President Trump’s auto tariffs had cost the company $1 billion in profits.

Sadly, this may just be the very beginning of the auto industry’s troubles.

It is now being projected that if this trade war with China continues, U.S. automakers could see total sales fall “by 2 million vehicles per year”…

Retaliation by China to tariffs already in place have made some American auto exports uncompetitive, and could collapse US auto sales by 2 million vehicles per year, resulting in the loss of up to 715,000 American jobs and a devastating hit of as much as $62 billion to the US GDP.

As per NBC News, the Center for Automotive Research (CAR) warns that the auto industry could receive a devastating blow if Section 232 declares foreign-made cars and car parts a threat to national security.

Kristin Dziczek, a vice president and senior economist at CAR, said if Section 232 is enacted, it could trigger a “downward cycle” in the auto industry – not seen since the last great recession.

And needless to say, the thousands of companies that do business with those large automakers would also lose sales and jobs.

Once these downturns get rolling, the domino effect can be absolutely devastating.

On Thursday, we also learned that pending home sales “plunged in August”…

Pending home sales plunged in August, dropping 1.8% MoM (almost four times worse than expected) to its lowest since Oct 2014 (and fell 2.5% YoY) – the fourth month of annual declines in a row…

If the U.S. economy truly is “strong”, then why have we seen four monthly declines in a row?

And it isn’t just one part of the nation that is experiencing a downturn.  According to Bloomberg, all four major regions of the country showed a decline…

As Bloomberg notes, the decline, which was broad-based across all four regions, shows that higher mortgage rates, rising prices and a shortage of affordable homes continue to squeeze buyers. Existing-home sales in August matched the lowest in more than two years, while revisions to new-home sales showed a slower market than thought, according to previously released figures.

Homes are not selling like they once were.  There is a reason why one out of every four home sellers in America slashed their prices in August.  Demand is way down, and that strongly indicates that an economic slowdown is here.

When it looks like the economy is headed for a major downturn, a lot of people go out and stock up on gold, and it turns out that is precisely what global central banks have been doing…

Central banks have emerged as some of the biggest buyers of gold this year, buying a total of 264 metric tons this year to reach the highest level in six years, according to analysts at Macquarie.

Of course the Federal Reserve and other central banks are trying to assure us that everything is going to be okay, but meanwhile their actions are telling us a different story.

Much of the world is already in the midst of a crippling economic crisis, and every indicator seems to be pointing to the fact that the U.S. is headed down the same path.

Even without any extenuating circumstances, the truth is that we are way overdue for a recession.  But when you throw in political chaos, exploding debt levels, an emerging market currency crisis and a trade war between the two largest economies on the entire planet, you definitely have a recipe for a perfect storm.

If you do not believe that this trade war is a big deal, you should consider the words of former Reagan administration official David Stockman…

Folks, it’s not a “skirmish”. On the scale of trade warfare we are now at DEFCON 2.

At this very moment, the US is taxing $250 billion of Chinese imports or nearly half the total flow; and China is taxing $110 billion of its imports from the US or 85% of the flow.

And it’s soon going full monte. The Donald has repeatedly threatened to tariff the remaining $267 billion of Chinese imports if Beijing retaliates against his $200 billion, but, self-evidently, they already have.

The U.S. economy has found a way to muddle through for the past couple of years, and we should all hope that the economy can find a way to navigate through these current problems.

But the storm clouds are growing more ominous with each passing day, and at some point time will run out.

About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

The Last Days Warrior Summit is the premier online event of 2018 for Christians, Conservatives and Patriots.  It is a premium-members only international event that will empower and equip you with the knowledge and tools that you need as global events begin to escalate dramatically.  The speaker list includes Michael Snyder, Mike Adams, Dave Daubenmire, Ray Gano, Dr. Daniel Daves, Gary Kah, Justus Knight, Doug Krieger, Lyn Leahz, Laura Maxwell and many more. Full summit access will begin on October 25th, and if you would like to register for this unprecedented event you can do so right here.

The post New Vehicle Sales “Collapse” And Pending Home Sales “Plunge” As America’s Economic Slowdown Accelerates appeared first on The Economic Collapse.

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!

5. U.S. factory orders have been dropping for 18 months in a row.

6. The Cass Shipping Index has been falling on a year over year basis for 14 consecutive months.

7. U.S. coal production has dropped to the lowest level in 35 years.

8. Goldman Sachs has its own internal tracker of the U.S. economy, and it has fallen to the lowest level since the last recession.

9. JPMorgan’s “recession indicators” have risen to the highest level that we have seen since the last recession.

10. Federal tax receipts and state tax receipts usually both start to fall as we enter a new recession, and that is precisely what is taking place right now.

11. The Federal Reserve’s Labor Market Conditions Index has been falling for five months in a row.

12. The employment numbers that the government released for last month were the worst that we have seen in six years.

13. According to Challenger, Gray & Christmas, layoff announcements at major firms are running 24 percent higher this year than they were at this time last year.

14. Online job postings on the business networking site LinkedIn have been declining steadily since February after 73 months in a row of growth.

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.

And Wal-Mart has announced that it is going to be eliminating “back-office accounting jobs” at approximately 500 locations…

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.

And you want to know who else realizes this?

Foreign investors do.

Last month, foreign investors dumped U.S. debt at the fastest pace ever recorded…

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.

There is no debate any longer – the next economic crisis is already here.  This is so abundantly obvious at this point that even George Soros has been feverishly dumping stocks and buying gold.

We can argue about whether the U.S. economy started turning down in late 2015, early 2015 or late 2014, and it is good to have those debates.

But at the end of the day, what is far more important is what is ahead.  Fortunately, our downturn has been fairly gradual so far, and let us hope that it stays that way for as long as possible.

In much of the rest of the world, things are already in full-blown panic mode.  For instance, Venezuela was once the wealthiest nation in South America, but now people are literally hunting cats and dogs for food.

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.*

The post 15 Facts About The Imploding U.S. Economy That The Mainstream Media Doesn’t Want You To See appeared first on The Economic Collapse.

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.

The post The Next Employment Crisis Is Here: Job Cuts At U.S. Companies Jump 35 Percent In April appeared first on The Economic Collapse.

Of course many of the “experts” being quoted by the mainstream media are saying that this is just a temporary blip and that good times for the U.S. economy are right around the corner.  For instance, check out this quote from Reuters…

“The economy essentially stalled in the first quarter, but that doesn’t mean it is faltering,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “Some of the restraints to growth are dissipating. Growth is likely to accelerate going forward.”

We have been told this same story for years, but the “acceleration” has never materialized.  In fact, Barack Obama is poised to become the only president in U.S. history to never have a single year when the economy grew by more than 3 percent during his presidency.

That is a statistic that is hard to believe, but it is true.

In addition, Louis Woodhill has pointed out that the average rate of U.S. economic growth during the Obama years will be the fourth worst in recorded history…

Assuming 2.67% RGDP growth for 2016, Obama will leave office having produced an average of 1.55% growth. This would place his presidency fourth from the bottom of the list of 39*, above only those of Herbert Hoover (-5.65%), Andrew Johnson (-0.70%) and Theodore Roosevelt (1.41%)

So does anyone out there still believe that there has been an “Obama recovery”?

We also need to add another layer to our analysis.  By now, everyone should realize that the official GDP number is highly manipulated, and the way that GDP is calculated has been changed many, many times over the years.

For example, here is Peter Schiff commenting on changes that were made in 2013…

The latest example of this was revealed earlier this week when the Bureau of Economic Analysis (BEA) announced new methods of calculating Gross Domestic Product (GDP) that will immediately make the economy “bigger’ than it used to be. The changes focus heavily on how money spent on research and development (R&D) and the production of “intangible” assets like movies, music, and television programs will be accounted for. Declaring such expenditures to be “investments” will immediately increase U.S. GDP by about three percent. Such an upgrade would immediately increase the theoretic size of the U.S economy and may well lead to the perception of faster growth. In reality these smoke and mirror alterations are no different from changes made to the inflation and unemployment yardsticks that for years have convinced Americans that the economy is better than it actually is.

And the following originally comes from a Bloomberg article which discussed changes that were made in 2015…

One of the changes that was made last year was intended to artificially boost GDP growth numbers for the first quarter of each year.

So without that artificial boost, what would the real number for the first quarter of 2016 look like?

John Williams of shadowstats.com tracks what the official government numbers would be if honest numbers were actually being used, and according to him U.S. GDP growth has been continuously negative since 2005.

But we certainly can’t have the press report those sorts of things.  If that were the case, then everyone would be talking about the “economic depression” that never seems to end.

Unfortunately, the truth is that we are in the midst of a long-term economic decline, and we can see evidence of this all around us.  For example, on Thursday we also learned that the rate of homeownership in the United States has fallen once again, and it is now hovering just 0.1 percent above the lowest level ever recorded in American history…

After gains in the second half of 2015, the homeownership rate fell to just 63.6 percent, seasonally adjusted, in the first quarter of this year, according to the U.S. Census Bureau. Homeownership hit a high of 69.4 percent in 2004, during one of the biggest housing booms in history. That was also when mortgage lending was arguably at its loosest level in history. The homeownership rate is now just one-tenth of 1 basis point higher than its all-time low in the second quarter of 2015.

For many more numbers that show that the U.S. economy has continued to decline, please see the following articles that I authored earlier this month…

#1 “Economy In Decline: Apple Reports Massive Revenue Decline As iPhone Sales Plummet Dramatically”

#2 “In 1 Out Of Every 5 American Families, Nobody Has A Job”

#3 “Stories Of Despair From The Forgotten People That The U.S. Economy Has Left Behind”

#4 “47 Percent Of Americans Cannot Even Come Up With $400 To Cover An Emergency Room Visit”

#5 “Corporations Are Defaulting On Their Debts Like It’s 2008 All Over Again”

Now that U.S. GDP growth has been steadily dropping for three quarters in a row, hopefully people will wake up and begin to realize what is happening.

We are entering very hard times, so now is not the time to go out and buy fancy new toys or to go into lots of debt.

Rather, this is a time to tighten our belts, batten down the hatches and prepare for rough seas ahead.

Sadly, most people continue to have blind faith that our politicians and the central bankers will be able to perform some kind of miracle to save us from what is coming.

*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.*

The post The U.S. Economy Officially Joins The Global Economic Slowdown – 1st Quarter GDP Comes In At 0.5% appeared first on The Economic Collapse.

Let’s start with Brazil.  It has the 7th largest economy on the entire planet, and it is already enduring its worst recession in 25 years.  In fact, at the end of last year Goldman Sachs said that what was going on down there was actually a “depression“.

But now the crisis in Brazil has escalated significantly.

I want to share with you an excerpt from a recent article entitled “Brazil: Economic collapse worse than feared“.  I know, that title sounds like it comes directly from The Economic Collapse Blog, but I didn’t write it.

It actually comes from CNN…

Amid political chaos, Brazil’s economic collapse is worse than its government once believed.

In the midst of rising calls to impeach President Dilma Rousseff, Brazil’s central bank announced Thursday that it now expects the country’s economy to shrink 3.5% this year.

That’s worse than the central bank’s previous estimate for a 1.9% contraction. The darker forecast matches what the International Monetary Fund projected for Brazil — Latin America’s largest country — and what many independent economists have suspected.

It is one thing for Michael Snyder to tell you that Brazil is in the midst of “economic collapse”, but it is another thing entirely for CNN to say it.

And of course I have been warning about the crisis down in Brazil for quite some time now.  For much more on this, please see my previous article entitled “The Economic Collapse Of South America Is Well Underway“.

Meanwhile, things are actually much worse in Venezuela than they are in Brazil.  Food and basic supplies are in short supply, the inflation rate has hit 720 percent, and crime is completely out of control.

The following is from an article in the Independent entitled “Venezuela is on the brink of complete economic collapse“…

The only question now is whether Venezuela’s government or economy will completely collapse first.

The key word there is “completely.” Both are well into their death throes. Indeed, Venezuela’s ruling party just lost congressional elections that gave the opposition a veto-proof majority, and it’s hard to see that getting any better for them any time soon — or ever.

Incumbents, after all, don’t tend to do too well when, according to the International Monetary Fund, their economy shrinks 10 percent one year, an additional 6 percent the next, and inflation explodes to 720 percent. It’s no wonder, then, that markets expect Venezuela to default on its debt in the very near future. The country is basically bankrupt.

Once again we see a very respected mainstream publication using the phrase “economic collapse” to describe what is happening in South America.

You can find some stunning video of the “economic Armageddon” that is taking place in Venezuela right here.  I would encourage you to watch that video, because what is happening down there will eventually be happening here.

Meanwhile, over in Europe the collapse of the Italian banking system has entered a disturbing new chapter.  Italy’s finance minister has called a meeting in Rome for Monday that will be focusing on a “last resort” bailout plan for the troubled banks…

Finance minister Pier Carlo Padoan has called a meeting in Rome on Monday with executives from Italy’s largest financial institutions to agree final details of a “last resort” bailout plan.

Yet on the eve of that gathering, concerns remain as to whether the plan will be sufficient to ringfence the weakest of Italy’s large banks, Monte dei Paschi di Siena, from contagion, according to people involved in the talks.

Italian bank shares have lost almost half their value so far this year amid investor worries over a €360bn pile of non-performing loans — equivalent to about a fifth of GDP. Lenders’ profitability has been hit by a crippling three-year recession.

As Italy descends into financial chaos, the rest of the continent better be paying attention.

Do you remember how hard it was for the rest of Europe to rescue Greece?

Well, Greece has the 44th largest economy on the planet.

Italy has the 8th.

It would be hard to overstate the seriousness of what is going on over in Europe, and it is not just Italy we are talking about.  All over the continent major banks are in deep trouble, and the chairman of France’s second largest  retail bank recently told reporters that “I am much more worried than I was in 2009“.

And there is very good reason for concern.  On Sunday, we learned that a major “bail-in” had just been announced for one of Austria’s most prominent banks.  The following comes from Zero Hedge…

And then today, following a decision by the Austrian Banking Regulator, the Finanzmarktaufsicht or Financial Market Authority, Austria officially became the first European country to use a new law under the framework imposed by Bank the European Recovery and Resolution Directive to share losses of a failed bank with senior creditors as it slashed the value of debt owed by Heta Asset Resolution AG.

The highlights from the announcement:

Today, the Austrian Financial Market Authority (FMA) in its function as the resolution authority pursuant to the Bank Recovery and Resolution Act (BaSAG – Bundesgesetz über die Sanierung und Abwicklung von Banken) has issued the key features for the further steps for the resolution of HETA ASSET RESOLUTION AG. The most significant measures are:

• a 100% bail-in for all subordinated liabilities,
• a 53.98% bail-in, resulting in a 46.02% quota, for all eligible preferential liabilities,
• the cancellation of all interest payments from 01.03.2015, when HETA was placed into resolution pursuant to BaSAG,
• as well as a harmonisation of the maturities of all eligible liabilities to 31.12.2023.

According to the current resolution plan for HETA, the wind-down process should be concluded by 2020, although the repayment of all claims as well as the legally binding conclusion of all currently outstanding legal disputes will realistically only be concluded by the end of 2023. Only at that point will it be possible to finally distribute the assets and to liquidate the company.

The dominoes are starting to fall in Europe, and I would expect even bigger announcements in the weeks and months to come.

Over in Asia, economic chaos is beginning to prevail as well.

In China, the stock market is already down more than 40 percent from the peak, Chinese exports were down 25.4 percent on a year over year basis in February, and Chinese economic numbers overall have not been this poor since the depths of the last global recession.

At the same time, the Japanese economy is really struggling right now.  As I wrote about the other day, Japanese GDP has shrunk for two out of the last three quarters, we just saw Japanese industrial production experience the biggest one month decline that we have witnessed since the tsunami of 2011, and business sentiment has fallen to a three year low.  The Nikkei has dropped by about 5,000 points from where it was last summer, and some analysts believe that Japanese markets “are being destroyed” due to massive intervention by the Bank of Japan.

Here in the United States, we haven’t been hit quite as hard as the rest of the world just yet, but there are lots of very disturbing warning signs all around us.

At the end of last week, we learned that it is being projected that U.S. GDP will have grown by just 0.1 or 0.2 percent during the first quarter of 2016.  And on Monday corporate earnings reporting season begins, and it is expected to be a very, very bad one.  The following comes from Business Insider…

We are about to get confirmation that earnings growth for America’s biggest companies was negative in the first quarter, compared to the same period a year ago.

When aluminum giant Alcoa releases its results on Monday, it will mark the unofficial start of the heaviest reporting season for S&P 500 companies.

The final scoreboard is expected to show a 9.1% earnings drop for the quarter, according to FactSet senior earnings analyst John Butters.

If these projections turn out to be accurate, it will be the fourth quarter in a row of earnings declines.  This is something that we never see outside of a recession.

And for a whole bunch more numbers which indicate that the U.S. economy is in very serious trouble, please see my previous article entitled “19 Facts That Prove Things In America Are Worse Than They Were Six Months Ago“.

Of course I am just another voice in the crowd when it comes to predicting that the U.S. economy is headed for rough times.  For example, just check out what Societe Generale economist Albert Edwards is saying…

A tidal wave is coming to the US economy, according to Albert Edwards, and when it crashes it’s going to throw the economy into recession.

…the profit recession facing American corporations is going to lead to a collapse in corporate credit.

“Despite risk assets enjoying a few weeks in the sun our fail-safe recession indicator has stopped flashing amber and turned to red”

…

He continued:

Whole economy profits never normally fall this deeply without a recession unfolding. And with the US corporate sector up to its eyes in debt, the one asset class to be avoided — even more so than the ridiculously overvalued equity market — is US corporate debt. The economy will surely be swept away by a tidal wave of corporate default.

As you can see, it isn’t just one nation or one region of the world that we need to be concerned about.

Economic chaos is erupting literally all over the planet, and global leaders are starting to panic.

Unfortunately, they have had seven years to try to fix things since the last global recession, and they didn’t get the job done.  Anyone that believes that by some miracle they will be able to pull us out of the fire this time and that everything will somehow be okay is simply engaged in wishful thinking.

*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.*

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The other night, Barack Obama got up in front of the American people and proclaimed that anyone that was saying that the economy was not recovering was peddling fiction.  Well, if the U.S. economy is doing so great, then why in the world has Wal-Mart decided to shut down 269 stores?…

Walmart (WMT) will close 269 stores around the world in a strategic move to focus more on its supercenters and e-commerce business, the company said Friday.

The closures include 154 U.S. locations, encompassing Walmart’s entire fleet of 102 ‘Express’ format stores, its smallest stores that have been in pilot testing since 2011. Some supercenters, Sam’s Club locations and Neighborhood Markets will also close, plus 115 stores in Latin American markets. The closures were decided based on financial performance and how well the locations fit with Walmart’s broader strategy, says Greg Hitt, a company spokesman.

We have grown accustomed to other major retailers shutting down stores, but this is Wal-Mart.

Wal-Mart doesn’t retreat.  For decades, Wal-Mart has been on a relentless march forward.  They have been an unstoppable juggernaut that has expanded extremely aggressively and that has ruthlessly crushed the competition.

I was absolutely stunned when I saw that they were going to close down 269 stores.  If you want to know if your local store is in danger, you can view the full list right here.

Overall, 10,000 Wal-Mart employees will be affected.  I could understand closing down a few underperforming stores, but if the U.S. economy truly is in great shape then it wouldn’t make any sense at all to shut down hundreds of stores.

What in the name of Sam Walton is going on out there?

The truth, of course, is that the U.S. economy is in great danger.  We have now entered the next great crisis, but most communities around the country never even recovered from the last one.  In fact, the Wall Street Journal is reporting that a whopping 93 percent of all counties in the United States “have failed to fully recover” from the last recession…

More than six years after the economic expansion began, 93% of counties in the U.S. have failed to fully recover from the blow they suffered during the recession.

Nationwide, 214 counties, or 7% of 3,069, had recovered last year to prerecession levels on four indicators: total employment, the unemployment rate, size of the economy and home values, a study from the National Association of Counties released Tuesday found.

The next few weeks are going to be very interesting to watch.  The economic fundamentals continue to deteriorate, and the financial markets are finally starting to catch up with economic reality.

As the collapse on Wall Street accelerates, we are going to increasingly see panic selling and forced liquidations.  In the past, it was mostly humans that had their hands on the controls during market crashes, but today the machines are making more of the decisions than ever before.  The following comes from CNBC…

The new market age is decidedly different: Rather than that seething cacophony, aggressive corrections like the current ones are directed by a faceless metronome of computer-generated orders, triggering irresistible momentum and trillions in losses.

Amid it all, market veterans are left to ponder when the script will flip and market direction will turn not by newfound optimism among traders in the pits, but rather by algorithms that generate “buy” rather than “sell” signals.

“It feels like sell program after sell program,” said Michael Cohn, chief market strategist at Atlantis Asset Management, a boutique firm in New York. “It seems to happen first thing in the morning, and then however the market transpires during the day is how they close it. If it looks like it’s coming back, they’ll take it at the end. If if looks like it’s heading lower, they’ll slam it at the end of the day.”

Earlier today, an article authored by Michael Pento entitled “A recession worse than 2008 is coming” was posted on CNBC.  Here is a short excerpt…

But a recession has occurred in the U.S. about every five years, on average, since the end of WWII; and it has been seven years since the last one — we are overdue.

Most importantly, the average market drop during the peak to trough of the last 6 recessions has been 37 percent. That would take the S&P 500 down to 1,300; if this next recession were to be just of the average variety.

But this one will be worse.

If stocks do drop a total of 37 percent, that would just bring them back to levels that would be considered “normal” or “average” by historical standards.  There is certainly the possibility that they could fall much farther than that.

And of course the markets are so incredibly fragile at this point that any sort of a “trigger event” could cause a collapse of epic proportions.

All it is going to take is a major disaster or emergency of some sort.

Do you have a feeling that something really bad is about to happen?  This is something that I have been hearing from people that I respect, and I would like to know if it is a phenomenon that is more widespread.  If you have been feeling something like this, please feel free to share it with us by posting a comment below…

The post Welcome To The New Normal: The Dow Crashes Another 390 Points And Wal-Mart Closes 269 Stores appeared first on The Economic Collapse.

Throughout 2015, the U.S. dollar has been getting stronger.  That sounds like good news, but the truth is that it is not.  When the last financial crisis ended, emerging markets went on a debt binge unlike anything we have ever seen before.  But much of that debt was denominated in U.S. dollars, and now this is creating a massive problem.  As the U.S. dollar has risen, the prices that many of these emerging markets are getting for the commodities that they export have been declining.  Meanwhile, it is taking much more of their own local currencies to pay back and service all of the debts that they have accumulated.  Similar conditions contributed to the Latin American debt crisis of the 1980s, the Asian currency crisis of the 1990s and the global financial crisis of 2008 and 2009.

Many Americans may be wondering when “the next economic crisis” will arrive, but nobody in Brazil is asking that question.  Thanks to the rising U.S. dollar, Brazil has already plunged into a very deep recession…

As Brazilian president Dilma Rousseff combats a slumping economy and corruption accusations, the country’s inflation surged above 10 percent while unemployment jumped to 7.9 percent, according to the latest official data. The dour state of affairs has Barclays forecasting a 4 percent economic contraction this year, followed by 3.3 percent shrinkage next year, the investment bank said in a research note last week.

The political and economic turmoil has recently driven the real, Brazil’s currency, to multiyear lows, a factor helping to stoke price pressures.

And as I mentioned above, Brazil is far from alone.  This is something that is happening all over the planet, and the process appears to be accelerating.  One of the places where this often first shows up is in the trade numbers.  The following comes from an article that was just posted by Zero Hedge…

“This market is looking like a disaster and the rates are a reflection of that,” warns one of the world’s largest shipbrokers, but while The Baltic Dry Freight Index gets all the headlines – having collapsed to all-time record lows this week – it is the spefics below that headline that are truly terrifying. At a time of typical seasonal strength for freight and thus global trade around the world, Reuters reports that spot rates for transporting containers from Asia to Northern Europe have crashed a stunning 70% in the last 3 weeks alone. This almost unprecedented divergence from seasonality has only occurred at this scale once before… 2008! “It is looking scary for the market and it doesn’t look like there is going to be any life in the market in the near term.”

Many “experts” seem mystified by all of this, but the explanation is very simple.

For years, global economic growth was fueled by cheap U.S. dollars.  But since the end of QE, the U.S. dollar has been surging, and according to Bloomberg it just hit a 12 year high…

The dollar traded near a seven-month high against the euro before the release of minutes of the Federal Reserve’s October meeting, when policy makers signaled the potential for an interest-rate increase this year.

A trade-weighted gauge of the greenback is at the highest in 12 years as Fed Chair Janet Yellen and other policy makers have made numerous pronouncements in the past month that it may be appropriate to boost rates from near zero at its Dec. 15-16 gathering. The probability the central bank will act next month has risen to 66 percent from 50 percent odds at the end of October.

But even though the wonks at the Federal Reserve supposedly know the damage that a strong dollar is already doing to the global economy, they seem poised to make things even worse by raising interest rates in December…

Most Federal Reserve policymakers agreed last month that the economy “could well” be strong enough in December to withstand the Fed’s first Interest rate hike in nearly a decade, according to minutes of its meeting Oct. 27-28.

The officials said global troubles had eased and a delay could increase market uncertainty and undermine confidence in the economy.

The meeting summary provides the clearest evidence yet that a majority of Fed policymakers are leaning toward raising the central bank’s benchmark rate next month, assuming the economy continues to progress.

Considering the tremendous amount of damage that has already been done to the global economy, this is one of the stupidest things that they could possibly do.

But it looks like they are going to do it anyway.

It has been said that those that refuse to learn from history are doomed to repeat it.

And right now so many of the exact same patterns that we saw just before the great financial crisis of 2008 are playing out once again right in front of our eyes.

A lot of people out there seem to assume that once we got past the September/October time frame that we were officially out of “the danger zone”.

But that is not true at all.

The truth is that we have already entered a new global economic downturn that is rapidly accelerating, and the financial shaking that we witnessed in August was just a foreshock of what is coming next.

Let us hope that common sense prevails and the Fed chooses not to raise interest rates at their next meeting.

Because if they do, it will just make the global crisis that is now emerging much, much worse.

The post The U.S. Dollar Has Already Caused A Global Recession And Now The Fed Is Going To Make It Worse appeared first on The Economic Collapse.

Copper is referred to as “Dr. Copper” because it does such an excellent job of indicating where economic conditions are heading next.  We saw this in 2008, when the price of copper started crashing big time in the months leading up to the stock market implosion.

Well, now copper is crashing again.  Just check out this chart.  The price of copper plunged again on Wednesday, and it is now the lowest that it has been since the last financial crisis.  Unfortunately, the forecast for the months ahead is not good.  The following is what Goldman Sachs is saying about copper…

“Though we have been bearish on copper on a 12-mo forward basis for the past two and a half years, we have maintained a more bullish medium to long-term stance on the assumption of Chinese copper demand growth of 4% per annum and a major slowing in supply growth around 2017/2018 … we substantially lower our short, medium, and long-term copper price forecasts, on the back of lower Chinese copper demand growth forecasts (we have been highlighting that the risk has been skewed to the downside for some time), increased conviction in copper supply growth over the next three years, and increased conviction in the outlook for mining cost deflation in dollar terms.”

It is funny that Goldman mentioned China so prominently.  Even though China’s fake GDP figures say that everything is fine over there, other numbers are painting a very dismal picture.

For instance, Chinese electrical consumption in June grew at the slowest pace that we have seen in 30 years, and capital outflows from China have reached a level that is “frightening”…

Robin Brooks at Goldman Sachs estimates that capital outflows topped $224bn in the second quarter, a level “beyond anything seen historically”.

The Chinese central bank (PBOC) is being forced to run down the country’s foreign reserves to defend the yuan. This intervention is becoming chronic. The volume is rising. Mr Brooks calculates that the authorities sold $48bn of bonds between March and June.

Charles Dumas at Lombard Street Research says capital outflows – when will we start calling it capital flight? – have reached $800bn over the past year. These are frighteningly large sums of money.

Just last month, the Chinese stock market started to crash, but the crash was interrupted when the Chinese government essentially declared a form of financial martial law.

And I don’t think that “financial martial law” is too strong of a term to use in this case.  Just consider the following excerpt from a recent article in the Telegraph…

Half the shares traded in Shanghai and Shenzhen were suspended. New floats were halted. Some 300 corporate bosses were strong-armed into buying back their own shares. Police state tactics were used hunt down short sellers.

We know from a vivid account in Caixin magazine that China’s top brokers were shut in a room and ordered to hand over money for an orchestrated buying blitz. A target of 4,500 was set for the Shanghai Composite by Communist Party officials.

So a stock market crash was halted, but in doing so Chinese officials have essentially destroyed the second largest stock market in the world.  China’s financial markets have lost all legitimacy, and foreigners are going to be extremely hesitant to put any money into Chinese stocks from now on.

Meanwhile, there is no hiding the fact that trade activity in China and in most of the rest of the planet is slowing down.  In fact, world trade volume has now dropped by the most that we have seen since the last global recession.  The following comes from Zero Hedge…

As goes the world, so goes America (according to 30 years of historical data), and so when world trade volumes drop over 2% (the biggest drop since 2009) in the last six months to the weakest since June 2014, the “US recession imminent” canary in the coalmine is drawing her last breath…

As Wolf Street’s Wolf Richter adds, this isn’t stagnation or sluggish growth. This is the steepest and longest decline in world trade since the Financial Crisis. Unless a miracle happened in June, and miracles are becoming exceedingly scarce in this sector, world trade will have experienced its first back-to-back quarterly contraction since 2009.

As you probably noted in the chart above, a decline in world trade is almost always associated with a recession.

That was certainly the case back in 2008 and 2009.

Another similarity between the last crisis and what is happening now is a crash in the price of oil.

According to Business Insider, we have just officially entered a brand new bear market for oil…

Oil is officially in a bear market.

On Thursday, West Texas Intermediate crude oil futures fell more than 1% to settle near $48.55 per barrel in New York.

A bear market is roughly defined as a 20% drop from highs. Crude has now fallen by about 20% in the last six weeks.

So what does all of this mean?

All of these signs are indicating that another great economic crisis is here, and that a global financial implosion is just around the corner.

At this point, even many of the “bulls” are sounding the alarm.  For example, just consider what Henry Blodget of Business Insider is saying…

As regular readers know, for the past ~21 months I have been worrying out loud about US stock prices. Specifically, I have suggested that a decline of 30% to 50% would not be a surprise.

I haven’t predicted a crash. But I have said clearly that I think stocks will deliver returns that are way below average for the next seven to 10 years. And I certainly won’t be surprised to see stocks crash. So don’t say no one warned you!

For those that don’t know, Henry Blodget is definitely not a bear.  In fact, he is one of Wall Street’s biggest cheerleaders.

So for Blodget to suggest that we could see the stock market drop by half is a really big deal.

The closer that we get to this next crisis, the clearer that everything is becoming.

Where are things going to go from here?  Please feel free to add to the discussion by posting a comment below…

The post Copper, China And World Trade Are All Screaming That The Next Economic Crisis Is Here appeared first on The Economic Collapse.