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Economic Slowdown Confirmed: Here Are 14 Very Alarming Numbers That Reveal The Current State Of The Economy

April 3, 2019April 3, 2019 by Michael

The economic numbers just continue to get worse and worse, and at this point it has become exceedingly clear that an economic slowdown is happening. In fact, even the chair of the Federal Reserve is using the term “slowdown” to describe what is taking place. But of course many are still hoping that the U.S. economy can pull out of this slump and avoid the sort of crippling recession that we experienced in 2008. Unfortunately, that may be really tough because the entire global economy is slowing down right now. Our world is more interconnected than ever before, and what happens on one side of the planet is invariably going to affect the other side of the planet. Some parts of the globe are already mired in deep economic problems, and the U.S. appears to be following down the same path.

If you still think that the economy is in “good shape”, please read over the following list very carefully.

The following are 14 very alarming numbers that reveal the true state of the economy…

#1 Continuing jobless claims are rising at the fastest pace in 10 years.

#2 U.S. businesses are adding jobs at the slowest pace in 18 months.

#3 General Motors, Ford, Nissan and Fiat Chrysler all reported sales declines of at least 5 percent on a year over year basis in March.

#4 Tesla vehicle deliveries were down a whopping 31 percent during the first quarter of 2019.

#5 U.S. consumer confidence fell more than 7 points in March.

#6 Manhattan real estate sales have now fallen for six straight quarters. That is the longest losing streak in 30 years.

#7 London real estate sales just dropped by the most we have seen in 10 years.

#8 The owner of Kay, Zales and Jared jewelers just announced that they will be closing 150 stores.

#9 Retail layoffs are 92 percent higher than they were at this time last year.

#10 U.S. freight shipment volume has fallen for three months in a row.

#11 The inventory to sales ratio in the United States has risen sharply for five months in a row.

#12 At this point, almost half of all renters in America spend more than 30 percent of their incomes on rent.

#13 The real median net income for Minnesota farmers was only $26,055 in 2018, and that was before many of them were absolutely devastated by the recent flooding.

#14 Overall, U.S. economic numbers are off to their worst start for a year since 2008.

We didn’t see economic numbers like this last year.

But now things have clearly changed. It is starting to feel more like 2008 with each passing day, and this is a point that Mac Slavo made in his most recent article…

The signs of yet another economic recession are everywhere. In fact, it seems hard to find any positive economic news anymore, even though a mere few months ago, it was difficult to find a report signaling the United States might be headed for some turmoil.

These days, many people get offended at the thought that the U.S. economy is heading for trouble. But the truth is that we have been heading for trouble for a very long time.

Our economy is built on a foundation of sand. More specifically, we have borrowed our way into “prosperity”.

The other day, I wrote an article about our $22,000,000,000,000 national debt. It is the biggest single debt in the history of the world, and we continue to add to it at a rate that is absolutely insane. In fact, our 234 billion dollar deficit in February broke the all-time record for a single month. If we continue to do this, there is no way that our story ends well.

But that 22 trillion dollar debt is only a fraction of our overall debt.

When you add up all forms of debt in the United States, it comes to a grand total of more than 72 trillion dollars. And that doesn’t even include a single dollar of our unfunded liabilities on the federal, state and local level.

When Ronald Reagan took office, the total amount of debt in the U.S. was less than 5 trillion dollars.

When historians look back on this time in history, they will not be surprised that our society ultimately collapsed. What will surprise them is that it took so long for it to do so.

Sometimes I get criticized for urging people to get prepared. But those that really deserve the criticism are those that are assuring everyone that everything is going to be just fine. If we got the smartest minds in the entire country together and treated this like a major national emergency, perhaps we could find a way to engineer some sort of a soft landing when this debt bubble bursts.

But as it stands, there is no plan and our long-term problems get worse with each passing day. Our economy is headed for a crash of epic proportions, and it isn’t going to matter who is in power in Washington when it happens.

And at the rate that our economy is currently slowing down, America may become an economic horror show a lot sooner than many people had anticipated.

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.

Wall Street Red Flag: A Bond Market Indicator That Has Predicted Every Recession In The Last 50 Years Just Got Triggered

March 25, 2019 by Michael

If the bond market is correct, the U.S. economy is definitely heading into a recession. Over the past 50 years, there have been six previous occasions when the yield on three-month Treasury bonds has risen above the yield on ten-year Treasury bonds, and in each of those instances a recession has followed. Now it has happened again, and this comes at a time when a whole host of other economic indicators are screaming that a recession is coming. Of course we have seen recession indicators triggered at other times in recent years, and the Federal Reserve was able to intervene and successfully extend this cycle on multiple occasions. But now that the global economy is clearly the weakest it has been since the last recession, have we finally reached a breaking point?

Many on Wall Street are taking what happened at the end of last week extremely seriously. According to CNBC, we have not seen a yield curve inversion of this nature in 3,009 trading days…

Short-term government fixed income yields are now ahead of the longer part of the curve, delivering a strong recession indication that hasn’t happened since 2007.

The spread, or yield curve, between the 3-month and 10-year Treasury notes just broke the longest streak ever of being above 10 basis points, or 0.1 percentage point. The two maturities were last below that level in September 2007, a run of 3,009 trading days, according to Bespoke Investment Group.

3,009 trading days is a very, very long time.

And now we will see how inverted the curve becomes, because as Zero Hedge has aptly pointed out, the more inverted the curve become the “higher the odds of a recession”…

Why is the inversion of the 3 Month-10 Year curve – the first since 2007 – such a momentous occasion? Because not only is said inversion the most accurate recession leading indicator, having correctly “predicted” the last 6 recessions with no false positives, most recently inverting in 1989, in 2000 and in 2006, with recessions prompting starting in 1990, 2001 and 2008….

… it also feeds directly into every Wall Street recession model: the more inverted it is, the higher the odds of a recession.

To get an idea of what the models are currently showing, just check out this chart. At this moment, the odds of another recession are the highest they have been since the last one.

Many investors were hoping that the bond market would have better news for us on Monday, but instead things got even worse…

On Friday, markets were spooked when the yield curve inverted, a reliable recession signal though usually not an immediate one. That means the rate on a lower duration instrument rose above a longer duration security’s yield. In this case, it was the yield on the 3-month bill, at 2.44 percent Monday, moving above the 10-year yield, which sank as low as 2.38 percent, a more than 2-year low.

I know that just about everybody in America is writing about the Mueller Report right now, and I just posted an article about it too, but the outcome of that investigation is not going to change the trajectory of the global economy. It has been slowing down for quite some time, and that is the primary reason why we have seen an inversion of the yield curve…

“Yield curves are responding to what they see, to what I believe is a global economic slowdown,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “You don’t see this kind of move in curves, not just here but everywhere, unless you get one.”

Global central banks are already jumping into action, and I expect a tremendous amount of intervention as global economic conditions continue to deteriorate.

But there is only so much that they can do, and even though they have pulled a few rabbits out of the hat in recent years, at some point they are going to completely lose control.

Already, we are starting to see things happen that are very reminiscent of the last recession. For example, we are on pace for the worst year for store closings in all of U.S. history, and another major retailer just announced that they will be closing all their stores…

LifeWay Christian Resources announced Wednesday that it will be closing all remaining 170 stores this year and focusing on online sales. Carol Pipes, director of corporate communications for LifeWay, posted the announcement on the company’s website, explaining that it was “a strategic shift of resources to a dynamic digital strategy.”

Communities all over America, especially the more economically-depressed ones, are going to start looking really bleak as the number of empty buildings continues to rise. This is something that I have warned about for a long time, and now it is happening on a massive scale.

As I end this article, I once again want to mention a factor that is going to have an enormous impact on our economy throughout the rest of this year. The flooding in the middle portion of the nation has destroyed thousands of farms, and the National Weather Service is warning that the flooding that we have seen so far is just “a preview of what we expect throughout the rest of the spring”. This is already the worst flooding disaster for U.S. farmers in modern American history, and it is going to get much, much worse.

We are going to see another huge surge in farm bankruptcies, thousands of farmers will not be able to plant crops at all this year, food prices are going to rise dramatically, and a lot of families all over America are going to have a real problem making their food budgets stretch far enough.

There are so many factors hammering our economy right now. If the Federal Reserve is able to pull another rabbit out of the hat this time, it will be nothing short of a major miracle.

We are literally at a critical tipping point, and it is not going to be easy to pull us back from the brink this time.

The Chair Of The Federal Reserve Just Used The Term “Slowdown” To Describe What Is Happening To The U.S. Economy

March 20, 2019March 20, 2019 by Michael

Now even the Federal Reserve is publicly admitting that the U.S. economy is slowing down. And that is quite remarkable, because usually the Federal Reserve is extremely hesitant to say that an economic slowdown is taking place. As I pointed out the other day, in 2008 former Fed Chair Ben Bernanke kept insisting that a recession was not coming, but we found out later that a recession had already begun when he was making those statements. Normally the Federal Reserve tries very hard to paint a rosy picture of our economic future, and one of the big reasons for that is because they want us to believe that they are doing a good job and that they have everything under control. So it was quite stunning to hear Fed Chair Jerome Powell use the term “slowdown” to describe what is coming for the U.S. economy on Wednesday…

Citing a more modest outlook for the economy, the Federal Reserve on Wednesday held interest rates steady and signaled it did not plan to raise rates at all this year and would bump them up just once in 2020, providing a road map for a sustained period of easy-money policy.

“The U.S. economy is in a good place,” Fed Chairman Jerome Powell said at a news conference, adding policymakers foresee “a modest slowdown, with overall conditions remaining favorable. We see no need to rush to judgment (by lifting or cutting rates).”

Admittedly, he did only say that it would be a “modest slowdown”, and so to most people that won’t sound that bad.

But this is the very first time that Powell has talked like this, and the truth is that the Atlanta Fed’s GDPNow model is currently forecasting that U.S. growth in the first quarter will be less than half a percent. Fed officials are hoping that growth will be better in the second quarter, but there is also a very strong possibility that the economy will continue to decelerate.

Because the economy is entering a “slowdown”, the Federal Reserve announced on Wednesday that it does not anticipate any more interest rate hikes for the rest of the year.

Normally Wall Street would experience a huge surge of euphoria upon hearing such news, but stocks were actually down on Wednesday…

The Dow Jones Industrial Average and S&P 500 closed lower on Wednesday after the Federal Reserve’s latest monetary-policy announcement dragged Treasury yields lower, pushing bank shares down.

Goldman Sachs led the 30-stock Dow to end the day down 141.71 points at 25,745.67. The S&P 500 closed 0.3 percent lower at 2,824.23. The Nasdaq Composite eked out a gain, closing 0.1 percent higher at 7,728.97.

This certainly could not have been the reaction that the Federal Reserve was hoping for.

Could it be possible that bad news for the U.S. economy is no longer good news for Wall Street?

Without a doubt, we are witnessing a huge wave of pessimism in the business community right now. Yesterday, I noted that Federal Express is talking as if a global recession had already started, and other corporate leaders are making similar statements.

For example, just consider what the CEO of banking giant UBS just said…

The head of UBS was among the latest to blame the world’s backdrop for weaker-than-expected results. CEO Ermotti told a conference in London on Wednesday that it “one of the worst first-quarter environments in recent history,” Reuters reported. The Swiss bank slashed another $300 million from 2019 costs after revenue at its investment bank plunged. Investment banking conditions are among the toughest seen in years, especially outside the U.S., he said.

And the CFO of BMW told investors on Wednesday that BMW’s earnings may be exposed to “additional risks” from the global economy in the months ahead…

“Depending on how conditions develop, our guidance may be subject to additional risks; in particular, the risk of a no-deal Brexit and ongoing developments in international trade policy,” CFO Nicolas Peter said in BMW’s quarterly earnings report Wednesday.

Last, but certainly not least, the co-CEO of Samsung just said that his company is anticipating “slowing growth in major economies” for the remainder of 2019…

“We are expecting many difficulties this year such as slowing growth in major economies and risks over global trade conflicts,” Samsung Co-Chief Executive Kinam Kim said.

Here in the United States, whoever is in the White House at the time usually gets most of the credit or most of the blame for how the economy is performing.

But the truth is that President Trump did not create the financial bubble that caused the boom on Wall Street.

The Federal Reserve did.

And President Trump is not going to be responsible when that bubble bursts either.

The Federal Reserve has far, far more control over the performance of the U.S. economy than either the president or Congress does. And since the Federal Reserve was initially created in 1913, there have been 18 distinct recessions and/or depressions, and now we are heading into the 19th one.

If we want to finally get off this economic roller coaster ride permanently, we need to abolish the Federal Reserve. But this isn’t even part of the national political discussion at this point.

However, that could soon change. In the aftermath of the financial crisis of 2008, we witnessed a huge backlash against the Federal Reserve system. Eventually that backlash subsided, but now that we are entering a new crisis, perhaps it is time to start dusting off all of those old “End the Fed” signs.

FedEx Is Talking As If A Global Recession Has Already Begun – And The Numbers Back That Up

March 19, 2019March 19, 2019 by Michael

“Slowing international macroeconomic conditions” is just a fancy way to say that the global economy is in big trouble. For months, I have been warning that economic conditions are deteriorating, and we just keep getting more confirmation that we are facing the worst global downturn since the last financial crisis. For the second time in three months, FedEx has slashed its revenue forecast for this year. In an attempt to explain why revenue is declining, FedEx’s chief financial officer placed the blame squarely on the faltering global economy. The following comes from CNBC…

The multinational package delivery service reported declining international revenue as a result of unfavorable exchange rates and the negative effects of trade battles.

“Slowing international macroeconomic conditions and weaker global trade growth trends continue, as seen in the year-over-year decline in our FedEx Express international revenue,” Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer, said in statement.

The use of the word “trends” implies something that has been going on for an extended period of time, and obviously FedEx doesn’t expect things to get better any time soon if they have cut profit projections twice in just the last three months.

And FedEx certainly has a lot of company when it comes to having a gloomy outlook for the global economy. In one recent article, Bloomberg boldly declared that the global economy is in the worst shape it has been “since the financial crisis a decade ago”…

The global economy’s in its weakest shape since the financial crisis a decade ago, Bloomberg Economics analysis shows. And the reminders are all around: China got more affirming evidence of its big slowdown, with industrial output and retail sales softening and a jump in unemployment. The question now is how big that slowdown will be, and what China’s stimulus — and the U.S.-China negotiations — will do to put a floor under it. The Chinese premier pledged Friday that they wouldn’t use quantitative easing or massive deficit spending to ease the pain. Japan got more bad news on manufacturing sentiment and in the hard investment data. Germany, Europe’s growth driver, can’t hide from the daunting external risks. And Turkey just entered its first recession in a decade.

In recent weeks I have been sharing lots of numbers that back up the claim that global economic conditions are getting worse, and over the past few days we got a few more…

-U.S. freight volume has dropped for three months in a row.

-In February, orders for Class-8 freight trucks were down 58 percent from a year ago.

-U.S. manufacturing output was down for a second straight month in the month of February.

-U.S. residential construction spending just plunged for the sixth month in a row.

-Industrial production on a year-over-year basis in Europe has fallen for three months in a row.

When we see numbers like those, normally everyone is screaming “recession” by now.

And retailers continue to shut down at a staggering pace here in 2019. Sadly, we just learned that Shopko is officially heading for bankruptcy and liquidation…

Shopko will liquidate its assets and close all of its remaining locations by mid-June.

The company was unable to find a buyer for the retail business and will begin winding down its operations beginning this week, the company said in statement released Monday. The decision to liquidate will bring an end to the brick-and-mortar business that began in 1962 with one location in Green Bay, Wisconsin.

There is a Shopko about 20 minutes from where I live, and it will definitely be missed.

Meanwhile, things just continue to get even harder for farmers in the middle part of the country. I wrote about the devastating impact that this historic flooding is having on Midwest farmers a few days ago, and now Fox Business is reporting that all of this flood damage is likely to make our rapidly growing farm bankruptcy crisis even worse…

The number of farms filing for bankruptcy already spiked, following low prices for corn, soybeans, milk and beef, according to analysis from the Federal Reserve Bank of Minneapolis. In the 12-month period ending in June, 84 farms filed for bankruptcy in Wisconsin, Minnesota, North Dakota, South Dakota and Montana — double the number over the same period in 2013 and 2014.

Now, some of these farmers have lost their livestock as a result of the devastating flooding. Some farmers, the Times reported, said they’ve been separated from their animals by walls of water, while others are unable to get into town for food and other supplies for the livestock.

We can see so many elements of “the perfect storm” starting to come together, and many believe that events are going to start greatly accelerating in the months ahead.

And as the global economy continues to deteriorate, we could quickly have a giant mess on our hands, because the global financial system is far more vulnerable today than it was in 2008. Just consider these numbers…

Global debt levels have become “higher and riskier” than that of a decade ago, meaning that “another credit downturn may be inevitable”, S&P Global Ratings has warned.

In a report entitled Next Debt Crisis: Will Liquidity Hold?, published on Tuesday (12 March), S&P found global debt has surged by around 50% since the 2008 Global Financial Crisis, led by major-economy governments and Chinese non-financial corporates, while global debt-to-GDP ratios have risen to more than 231%, compared with 208% in June 2008.

Shipping companies often feel the effects of an economic slowdown earlier than just about anyone else. When a lot less stuff is being moved around by truck, rail and air, that should be a clear indication for the rest of us that economic activity is really starting to slow down significantly.

So the fact that FedEx has such a bleak outlook for our immediate economic future is a very ominous sign.

Tough times are ahead, and considering how tense things already are in our country, an economic downturn at this time could ultimately set off a very disturbing chain of events.

New Numbers Confirm That The Global Economy And The U.S. Economy Are The Weakest They Have Been Since The Last Recession

March 11, 2019March 11, 2019 by Michael

Even mainstream economists are admitting that economic activity is slowing down. And at this point that fact would be very difficult to deny, because the numbers are very clear. We haven’t faced anything like this in a decade, and many are deeply concerned about what is coming next. Will it be just another recession, or will it be an even greater crisis than we faced in 2008? According to Bloomberg Economics, the global economy experienced a “sharp loss of speed” over the course of 2008 and global economic conditions are now “the weakest since the global financial crisis”…

The global economy’s sharp loss of speed through 2018 has left the pace of expansion the weakest since the global financial crisis a decade ago, according to Bloomberg Economics.

Its new GDP tracker puts world growth at 2.1 percent on a quarter-on-quarter annualized basis, down from about 4 percent in the middle of last year. While there’s a chance that the economy may find a foothold and arrest the slowdown, “the risk is that downward momentum will be self-sustaining,” say economists Dan Hanson and Tom Orlik.

This is definitely the worst condition that the global economy has been in since I started The Economic Collapse Blog, and I am personally very alarmed about where things are heading. The tremendous economic optimism of early 2018 has given way to a tremendous wave of pessimism, and the speed at which the economic environment is changing has stunned a lot of the experts.

In fact, Bloomberg economists Dan Hanson and Tom Orlik openly admit that they are “surprised” by how quickly the global economy has shifted…

“The cyclical upswing that took hold of the global economy in mid-2017 was never going to last. Even so, the extent of the slowdown since late last year has surprised many economists, including us.”

Of course the U.S. has not been immune from the changes. The U.S. economy is rapidly slowing down as well, and this is something that I have been heavily documenting on my website.

And now we have just received more confirmation that the economy is decelerating. The Atlanta Fed has just updated their GDPNow model yet again, and with this new revision they are now projecting that the U.S. economy will grow at a rate of just 0.2 percent during the first quarter of 2019…

Moments ago we got another confirmation of this, when following the latest retail sales report which saw a dramatic cut to December retail sales even as January surprised modestly to the upside, the Atlanta Fed slashed its Q1 GDP nowcast, and after rebounding modestly from 0.3% to 0.5% a week ago, it has once again slumped, and is now at the lowest recorded level, and just 0.2% away from economic contraction.

This is how the AtlantaFed justified its latest Q1 GDP cut, which as of March 11 was just 0.2 percent, down from 0.5 percent on March 8: “After this morning’s retail sales report from the U.S. Census Bureau, the nowcast of first-quarter real personal consumption expenditures growth declined from 1.5 percent to 1.0 percent.”

In other words, we are just a razor thin margin away from entering an economic contraction.

Last week, we learned that U.S. job cut announcements were up 117 percent in February when compared to last year. All of the economic momentum is in a negative direction right now, and it is going to be exceedingly difficult to avert a recession at this point.

And of course a lot of analysts believe that what is coming will be a whole lot worse than just a recession. The greatest debt bubble in the entire history of our planet is in the process of bursting, and the consequences are going to be absolutely horrific. I really like how financial expert Egon von Greyerz recently made this point…

People must understand that the world has never faced risk of this magnitude. We are now in the final seconds of the global mega bubble, the likes of which the world has never seen before. What will happen next will be worse than the fall of the Roman Empire, much worse than the South Sea and Mississippi Bubbles, and will create a disaster that will dwarf the Great Depression of the 1930s.

The problem is simple to define and is all based around debts and liabilities. At the beginning of this century, global debt was $80 trillion. When the Great Financial Crisis started in 2006, global debt had gone up by 56% to $125 trillion. Today it is $250 trillion.

There is no way that a 250 trillion dollar bubble is going to burst in an orderly fashion. Essentially, we are looking at the sort of apocalyptic financial scenario that I have been warning about for a long time, and most people have no idea that it is coming.

And if people only listened to the financial authorities, it would be easy to get the impression that everything is going to be just fine.

For example, Fed Chair Jay Powell just told 60 Minutes that the outlook for the U.S. economy “is a favorable one”. The following comes from Fox Business…

Jay Powell, the head of the Federal Reserve, says he does not see a recession hitting the U.S. economy anytime soon.

“The outlook for our economy, in my view, is a favorable one,” Powell said Sunday in an interview with CBS’s Scott Pelley for “60 Minutes.”

If you are tempted to believe Powell, let me remind you of what former Fed Chair Ben Bernanke told Congress in early 2008…

“The U.S. economy remains extraordinarily resilient,” the U.S. central bank chief said in answering questions after testifying before the House of Representatives Budget Committee.

Bernanke added that growth will be worse this year. “We currently see the economy as continuing to grow, but growing at a relatively slow pace, particularly in the first half of this year,” he said.

Of course we all remember what happened next. The U.S. economy plunged into the worst economic downturn since the Great Depression of the 1930s, and we are still dealing with the aftermath of that crisis to this day.

Nobody is going to ring a bell when the next recession starts. It is just going to happen, and just like last time, most Americans are going to be blindsided by it.

As The Economy Teeters On The Brink Of A Recession, U.S. Debt Levels Are Absolutely Exploding

March 5, 2019March 5, 2019 by Michael

We now have official confirmation that the U.S. economy has dramatically slowed down. In recent days I have shared a whole bunch of numbers with my readers that clearly demonstrate that a new economic downturn has begun. And even though stock prices have been rising, the numbers for the “real economy” have been depressingly bad lately. But what we didn’t have was official confirmation from the Federal Reserve that the economy is really slowing down, but now we do. According to the Atlanta Fed’s GDPNow model, the economy is growing “at a 0.3 percent annualized rate in the first quarter”…

The U.S. economy is growing at a 0.3 percent annualized rate in the first quarter, based on data on domestic construction spending in December released on Monday, the Atlanta Federal Reserve’s GDPNow forecast model showed.

For years, the goal has been to get U.S. growth above the key 3 percent threshold, but what this forecast is telling us is that economic growth is currently at one-tenth of that level.

That is just barely above recession territory.

So when I say that we are teetering on the brink of a recession, I am not exaggerating.

We also just got some really bad news about construction spending…

Construction spending fell 0.6% in December from November, based on a seasonally adjusted annual rate, released today by the Commerce Department. Compared to December a year earlier, total construction spending inched up only 0.8% (not seasonally adjusted), the lowest growth rate since Oct 2011, coming out of the great recession.

Now we can add that to the list of all the other numbers that are telling us that very rough times are ahead.

Meanwhile, debt levels in the U.S. just continue to explode.

According to the latest report, Americans now have 480 million credit cards. That is about 100 million more than during the last recession.

In other words, there are about 1.5 credit cards for every man, woman and child in the entire country.

The total amount of credit card debt in the United States has now reached a whopping $870,000,000,000. That number has never been higher in the history of our nation.

And when you total up all forms of individual debt, U.S. consumers are now 13.5 trillion dollars in the hole.

Corporate debt levels are exploding as well, and this is something that Dallas Fed President Robert Kaplan warned about on Tuesday…

U.S. nonfinancial corporate debt consists mostly of bonds and loans. This category of debt, as a percentage of gross domestic product, is now higher than in the prior peak reached at the end of 2008, Kaplan said.

A number of studies have concluded this level of credit could “potentially amplify the severity of a recession,” he noted.

The lowest level of investment-grade debt, BBB bonds, has grown from $800 million to $2.7 trillion by year-end 2018. High-yield debt has grown from $700 million to $1.1 trillion over the same period. This trend has been accompanied by more relaxed bond and loan covenants, he added.

Overall, corporate debt has more than doubled since the last financial crisis, and that is just one of the reasons why our financial system is far more vulnerable today than it was just before the last financial crisis.

This week we also learned that the federal budget deficit is exploding as well. The following comes from Business Insider…

According to a report from the Treasury Department released Tuesday, the budget deficit — that is the difference between what the federal government takes in and what it spends — hit $310 billion in the first four months of fiscal year 2019.

Fiscal years for the federal government run October through September, so the data reflects the shortfall from October 2018 through January 2019. Based on the data, the deficit increased by 77% compared to the same period the prior year.

A 77 percent increase in one year?

I don’t even have the words to describe how foolish this is.

We are on pace to add way over a trillion dollars to the national debt this year, and one of the big things fueling this horrific debt binge is our rapidly expanding interest payments…

Finally, and perhaps most concerning, is that for the first four months of this fiscal year, interest payments on the U.S. national debt hit $192 billion, $17 billion, or 10% more than in the same four-month period last year and the most interest ever paid in the first third of the fiscal year. As Reuters’ Jeoff Hall points out, annualizing the $192BN interest expense means that the interest on U.S. public debt is on track to reach a record $575 billion this fiscal year, more than the entire budget deficit in FY 2014 ($483 BN) or FY 2015 ($439 BN), and equates to 2.7% of estimated GDP, the highest percentage since 2011.

But according to the proponents of modern monetary theory (MMT), we can spend as much money as we want because “deficits almost never matter”…

Because MMT holds that government spending isn’t funded by taxes, the Green New Deal doesn’t include any measures to finance the very large, open-ended fiscal commitments it would undertake. According to MMT economists, the only possible danger from the resultant government debt would be inflation, which can usually be controlled with tools other than raising taxes. In other words, deficits almost never matter. So confident are they of their theory’s universal applicability that MMT proponents often respond to their critics with scorn.

If you can believe it, there are actually members of Congress that believe this stuff. Of course the truth is that our national debt is an existential threat to the continued existence of our nation, and this is a point that I have made repeatedly.

The U.S. economy was in far better shape just prior to the financial crisis of 2008 than it is now, and today we are drowning in far more debt than we were at that time.

The stage is set for the most terrifying economic horror show in American history, and the clock is ticking away with each passing day.

Investors Brace For Impact As The Cancer That Is Ravaging “The Real Economy” Starts To Spread

March 3, 2019March 3, 2019 by Michael

2019 sure has been a weird year so far. On Wall Street, everything has been coming up roses for investors up to this point. Stock prices have risen more than 10 percent year-to-date, and the horrible crashes of late last year are quickly fading from memory. Meanwhile, the real economy is literally falling to pieces right in front of our eyes. Debt delinquencies are at unprecedented levels, bankruptcies are soaring, retail stores are closing at a record pace, this is the worst economy for farmers since the early 1980s, exports are plummeting and a brand new real estate crisis has now begun. Economic cancer is rapidly spreading throughout our country, and the U.S. economy is deteriorating at the fastest pace that we have seen since the last recession. So how long will it be before Wall Street catches up with economic reality?

The retail industry is being hit particularly hard. At the end of last week, major retailers announced 465 store closings in a single 48 hour period…

The ‘retail apocalypse’ is alive and well this week with major chains such as Gap, JCPenney, Victoria’s Secret and Foot Locker all announcing massive closures, totalling the death of more than 465 stores over the last 48 hours.

And those closings already bring the grand total for 2019 to “a whopping 4,309 store closures”…

That builds on recent store closure announcements by Gymboree, Payless ShoeSource, Charlotte Russe and Ann Taylor parent company Ascena Retail, to name a few. A whopping 4,309 store closures were announced by retailers just in the first two months of this year, Coresight Research said in a research note on Friday. That’s well ahead of the number of announcements the market research firm was tracking this same time a year ago, it said.

The term “retail apocalypse” is being thrown around so frequently these days that it has almost lost its meaning, but the worst is yet to come.

Meanwhile, layoffs are starting to come fast and furious now. For example, I was recently made aware of major job cuts that just happened in North Carolina…

Duke Energy Corp. eliminated 1,900 positions in its latest round of job reductions, largely through voluntary buyouts but with some involuntary layoffs included.

For the first time since the last recession, I think that it is time to start visiting sites like Daily Job Cuts on a regular basis once again. Millions of Americans lost their jobs in 2008 and 2009, and a lot of you can still remember how painful that was.

In the middle of the country, the big news is “the farm apocalypse”. Last week, we learned that farm debt has now jumped 30 percent since 2013…

“Farm debt has been rising more rapidly over the last five years, increasing by 30% since 2013 – up from $315 billion to $409 billion, according to USDA data, and up from $385 billion in just the last year – to levels seen in the 1980s,” Perdue said in his testimony to the House Agriculture Committee.

As a result of this giant mountain of debt, a ton of small and mid-size farms are going under. As I noted the other day, farm debt delinquencies have now reached the highest level that we have witnessed in 9 years.

I really, really don’t understand the people that are telling us that everything is going to be okay.

Everything is not okay, and things are getting worse with each passing day. ISM’s manufacturing survey just hit the lowest level in 26 months, and for a whole bunch more extremely ominous economic numbers please see my previous article entitled “18 Really Big Numbers That Show That The U.S. Economy Is Starting To Fall Apart Very Rapidly”.

Of course it isn’t just the U.S. that is hurting. Up north, Canada is literally teetering on the brink of recession…

The Canadian government shocked the professional financial and economic media with their latest fourth quarter GDP release showing the economy has essentially come to a grinding halt at 0.1% growth.

And over in Europe, things are arguably even worse. Germany is supposed to have the strongest economy in the entire region, but they are also right on the brink of recession…

The country’s economy just escaped entering recession territory last month, with GDP growing at just zero percent following a 0.4 percent contraction in the previous three-month period. But Germany could be just weeks away from a recession-threatening double whammy as a potential no-deal Brexit and Donald Trump’s warning to hike car tariffs by up to 25 percent could send the economy tumbling. Chancellor Angela Merkel’s ministers have entered into a frantic plan to avert an economic catastrophe which could end Europe’s biggest economy’s golden growth for a decade.

This is a global economic slowdown, and many believe that it will be even worse than what we experienced in 2008.

But as I have previously warned, we aren’t just heading toward an economic storm. Everything that can be shaken will be shaken, and that includes our governmental institutions.

On Sunday, we learned that the House Judiciary Committee is opening an investigation into obstruction of justice by President Trump. The following comes from Reuters…

The House Judiciary Committee will seek documents from more than 60 people and organizations as it begins investigations into possible obstruction of justice and abuse of power by President Donald Trump, the panel’s chairman said on Sunday.

Committee Chairman Jerrold Nadler told ABC’s “This Week” the panel wanted documents from the Department of Justice, the president’s son Donald Trump Jr. and Trump Organization chief financial officer Allen Weisselberg, among others.

This is going to be a year of great governmental shaking. And no matter which side emerges victorious from the legal struggles and from the election of 2020, the truth is that our governmental institutions will never be the same again.

From 2016 through 2018, America experienced a time of relative peace and prosperity, and a lot of people out there were convinced that this bubble of unsustainable false prosperity could continue indefinitely.

Now it is becoming very clear what is ahead of us, and a lot of people are starting to freak out.

18 Really Big Numbers That Show That The U.S. Economy Is Starting To Fall Apart Very Rapidly

February 28, 2019February 28, 2019 by Michael

Virtually every piece of hard economic data is telling us that the U.S. economy is slowing down dramatically. Many of the pundits have been warning that we could officially enter recession territory later this year or next year, but these numbers seem to indicate that it could happen a whole lot sooner than that. But the stock market has been surging over the last two months, and at this point stocks are off to their best start to a year since 1987, and as long as stock prices are rising a lot of people are simply not going to pay much attention to the economic alarm bells that are ringing. But everyone should be paying attention, because things are really starting to get bad out there. The following are 18 really big numbers that show that the U.S. economy is starting to fall apart very rapidly…

#1 Farm loan delinquencies just hit the highest level that we have seen in 9 years.

#2 We just learned that U.S. exports declined by 4 billion dollars during the month of December.

#3 J.C. Penney just announced that they will be closing another 24 stores.

#4 Victoria’s Secret has just announced plans to close 53 stores.

#5 On Thursday, Gap announced that it will be closing 230 stores over the next two years.

#6 Payless ShoeSource has declared bankruptcy and is closing all 2,100 stores.

#7 Tesla is also closing all of their physical sales locations and will now only sell vehicles online.

#8 PepsiCo has started laying off workers and has committed to “millions of dollars in severance pay”.

#9 The Baltic Dry Index has dropped to the lowest level in more than two years.

#10 This is the worst slump for core U.S. factory orders in three years.

#11 We just witnessed the largest decline in the Philly Fed Business Index in more than 7 years.

#12 In January, sales of existing homes fell 8.9 percent from a year earlier. That was the third month in a row that we have seen a decline of at least 8 percent. This is an absolutely catastrophic trend for the real estate industry.

#13 U.S. housing starts were down 11.2 percent in December compared to the previous month.

#14 Compared to a year earlier, home sales in southern California were down 17 percent in January.

#15 In December, home sales in Sacramento County fell a whopping 22.5 percent compared to a year earlier.

#16 Pending home sales in the United States have now fallen on a year over year basis for 13 months in a row.

#17 More than 166 billion dollars in student loan debt is now “seriously delinquent”. That is an all-time record.

#18 More than 7 million Americans are behind on their auto loan payments. That is also a new all-time record, and it is far higher than anything that we witnessed during the last recession.

It appears that “the recovery” has finally come to an end. After seeing all of those numbers, there is no way that anyone can possibly claim that economic conditions are “getting better”.

And even though the official government numbers are highly manipulated, we never even had one “boom year” throughout the entire “recovery”.

The final numbers for 2018 are now in, and last year was the 13th year in a row when U.S. GDP growth was below 3 percent.

The last time we had a “boom year” when economic growth was above 3 percent was all the way back in 2005. That was in the middle of the Bush administration.

We have never seen a bad streak like this before in modern American history. The following comes from CNS News…

But prior to the current 13-year period when real GDP has failed to grow by 3.0 percent in any year, there has been no stretch (in the years since 1930) when the United States went as long as five straight years with real GDP failing to grow by at least 3 percent.

Even though the Federal Reserve pumped trillions of dollars into the financial system over the last decade, and even though we added nearly 12 trillion dollars to the national debt, the best that the authorities have been able to do is to stabilize the system for a while. Now it is starting to sputter once again, and many believe that the next crisis will be far worse than the last one.

By contrast, the Great Depression of the 1930s featured some really bad years, but following those bad years the U.S. experienced a tremendous economic boom…

By contrast, after the stock market crash in 1929, the United States saw four years of negative annual GDP—1930 (-8.5), 1931 (-6.4), 1932 (-12.9) and 1933 (-1.2). But then in the nine full years from 1934 through 1942, real GDP grew by an average of 9.75 percent.

We should have had some boom years too, but we didn’t, and now things are going to get bad again.

The Democrats are going to blame the Republicans and the Republicans are going to blame the Democrats, but all of that arguing isn’t going to solve anything.

What is coming next has been a central focus of my work for a very long time. The last recession was very painful, but it did not fundamentally alter life in America.

This next crisis will.

The “Everything Bubble” is bursting, the “Perfect Storm” is coming, and all of our lives will never be the same again.

But that doesn’t mean that there isn’t hope. In fact, once things really start getting crazy hope is going to be one of the major themes in my work because people are really going to need it.

There will be great challenges, and life will be very different, but that doesn’t mean that life is over.

America is about to experience the consequences of decades of exceedingly foolish decisions, and the pain will be extreme. But difficult times also offer an opportunity for dramatic change, and that is something that we will need to embrace.

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