I
have so many bad economic numbers to share with you that I don’t even know
where to start. I had anticipated that the U.S. economic slowdown would
accelerate during the fourth quarter of 2019, and that is precisely what has
happened. The Federal Reserve is trying to do all that it
can to keep us from officially slipping into a recession, and
the federal government is literally spending money as
if tomorrow will never come, but all of that intervention has not
been enough to reverse our economic momentum. We are really starting to see
conditions begin to deteriorate very rapidly now, and 2020 is already shaping
up to be the most pivotal year for the U.S. economy since 2008.
Let me start my analysis by discussing how U.S. consumers are
doing right now. According to CBS News,
a major new study that was just released found that 70 percent of all Americans
are struggling financially…
Many Americans remain in
precarious financial shape even as the economy continues to grow, with 7 of 10
saying they struggling with at least one aspect of financial stability, such as
paying bills or saving money.
The findings come from a
survey of more than 5,400 Americans from the Financial Health Network, a
nonprofit financial services consultancy. The project, which started a year
ago, is aimed at assessing people’s financial health by asking about debt,
savings, bills and wages, among other issues.
That sure doesn’t sound like a “booming economy”, does it?
And
even though things are already really tough for millions upon millions of American families,
it appears that things are rapidly getting worse. In fact, we just witnessed
the largest decline for the Bloomberg Consumer Comfort Index since 2008…
Despite
stocks soaring to record highs, The Bloomberg Consumer Comfort index fell last
week to 58.0 from 59.1 a week earlier, and has now plunged 5.4 points in three
weeks, the biggest
such drop since 2008…
Yes, the employment situation in this country is still
relatively stable for the moment, but the truth is that most of the “jobs” that
have been “created” in recent years actually pay very little. If you can
believe it, 58 million jobs in the United States currently pay less than $793 a week…
There
are now roughly 105 million production
and nonsupervisory jobs in the U.S. That’s 83 percent of all private sector
jobs. And more than half of them — 58 million — pay less than the average
weekly U.S. wage of $793. Many of these jobs don’t offer health care or other
benefits.
These are the best jobs that
many Americans can find and the most hours they can get.
And I discussed in a previous article, 50 percent of all U.S.
workers currently make less
than $33,000 a year.
In recent years, many families have increasingly turned to debt
in order to maintain their “middle class lifestyles”, but now a lot of those debts
are starting to go bad.
In fact, the New York Fed just announced that serious auto loan
delinquencies in the United States have hit a brand new record high. The
following comes from Wolf Richter…
Serious
auto-loan delinquencies – auto loans that are 90 days or more past due – in the
third quarter of 2019, after an amazing trajectory, reached a historic high of
$62 billion, according to data from the New York Fed today
Do you remember the subprime mortgage meltdown of 2008?
Well, a very similar thing is happening right now with auto
loans.
Meanwhile, the bad economic numbers just keep rolling in. Here
are a few new data points that we have gotten since my last article…
-We just witnessed the worst decline for U.S. industrial
production since 2009.
-The Cass Freight Index has just fallen for the
11th month in a row.
-Sears has announced that they will be laying off hundreds
of workers as they continue to close stores at a very rapid
pace.
At this point, it is going to be a real challenge to keep U.S.
GDP growth above zero for the fourth quarter. If you can believe it, the latest
forecast from
the Atlanta Fed is projecting a fourth quarter growth rate of
just 0.3 percent…
The
GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in
the fourth quarter of 2019 is 0.3
percent on November 15, down from 1.0 percent on November
8. After this morning’s retail trade releases from the U.S. Census Bureau, and
this morning’s industrial production report from the Federal Reserve Board of
Governors, the nowcasts of fourth-quarter real personal consumption
expenditures growth and fourth-quarter real gross private domestic investment
growth decreased from 2.1 percent and -2.3 percent, respectively, to 1.7
percent and -4.4 percent, respectively.
That is terrible.
We aren’t talking about 3 percent. They are projecting growth of
“0.3 percent”, and if we slip below zero we could actually be in the beginning
of a recession right now without even realizing it yet.
The Federal Reserve has been attempting to bolster the economy
by cutting interest rates and by pumping massive amounts of money into the
financial system. They are telling us that this new round of money creation is
“not QE”, but from the very beginning I have been pointing out that it really
is more quantitative easing, and many in the financial world are starting to acknowledge this reality…
After
a month of constant verbal gymnastics (and diarrhea from financial pundit
sycophants who can’t think creatively or originally and merely parrot their
echo chamber in hopes of likes/retweets) by the Fed that the recent launch of
$60 billion in T-Bill purchases is anything but QE (whatever you do, don’t call
it “QE 4”, just call it “NOT QE” please), one bank finally had the guts to say
what was so obvious to anyone who isn’t challenged by simple logic: the Fed’s “NOT QE” is really
“QE.”
In a
note warning that the Fed’s latest purchase program – whether one calls it QE
or NOT QE – will have big, potentially catastrophic costs, Bank of America’s
Ralph Axel writes that in the aftermath of the Fed’s new program of T-bill
purchases to increase the amount of reserves in the banking system, the Fed
made an effort to repeatedly inform
markets that this is not a new round of quantitative easing, and yet as the
BofA strategist notes, “in important ways it is similar.”
But as I discussed earlier, all of the Fed’s efforts are not
working.
No matter how hard they try, they have not been able to reverse
our economic momentum.
And many people believe that what we have seen so far is just
the tip of the iceberg. In fact, trends forecaster Gerald Celente is convinced
that we are heading for “the
Greatest Depression”…
You think you have a crisis in a country near you now? You haven’t
seen anything. When the Greatest Depression hits, people are going to be
escaping violence, poverty, corruption — civil wars are happening in front of
everybody’s eyes. And you think you’ve got a homeless problem in a city near
you? You haven’t seen anything. You are going to see homeless everywhere. This
is out of control and it’s going to only get worse as the global economy slows
down…
And you know what?
He’s right.
What is coming is going to make 2008 look like a Sunday picnic,
and our society is completely and utterly unprepared for what is about to
happen.
Reprinted with permission from The Most
Important News.
