The last fifteen years has
seen the American population aggressively leveraged up for several years which
is about as long as such an enterprise might last. After that we have been reintroduced to the
joys of deleveraging in which a third of our population was irretrievably
damaged with few if any viable options of serious recovery.
This naturally brings about
a contraction in consumer spending and then what spending occurs becomes frugal
spending. Add in the regaming of the
medical system in which a monopoly reached for way too much and now discover
they will have problems collecting. This
by the by was a direct tax grab aimed at the weakest in terms of economic
contribution. It is profoundly
regressive as formulated.
The result is a tepid
recovery if you want to call it that. I
call it a slow moving depression in which a disproportionate part of the
population is losing ground and unable to contribute seriously to the USA
economy. The present administration is
utterly clueless and prefers to read their press releases. Worse I see a complete lack of understanding
anywhere.
27 Huge Red Flags For The U.S. Economy
If you believe that the U.S. economy is heading in the right
direction, you really need to read this article. As we look toward the
second half of 2014, there are economic red flags all over the place.
Industrial production is down. Home sales are way down. Retail
stores are closing at the fastest pace since the collapse of Lehman
Brothers. U.S. household debt is up substantially, and in 20 percent of
all U.S. families everyone is unemployed. In so many
ways, what we are witnessing right now is so similar to what we experienced during the build up to the last
great financial crisis. We are making so many of the very same mistakes
that we made the last time, and yet our “leaders” seem completely oblivious to
what is happening. But the warning signs are very clear. All you
have to do is open your eyes and look at them. The following are 27 huge
red flags for the U.S. economy…
#1 Despite endless
assurances from the Obama administration that we are in an “economic recovery”,
the number one concern for U.S. voters is “Unemployment/Jobs” according to
a recent Gallup survey.
#2 Historically, sales
for construction equipment manufacturer Caterpillar have been a pretty good indicator of
where the global economy is heading next. Unfortunately, sales were
down 13 percent last month and have now experienced year over year
declines for 17 months in a row.
#4 Foot traffic at
Wal-Mart stores fell by 1.4 percent during the first quarter of 2014. Analysts seem
puzzled as to why Wal-Mart is “underperforming“. Perhaps it is
because the U.S. middle class is being steadily
destroyed and U.S. consumers
are tapped out at this point.
#5 It is being
projected that Sears will soon close hundreds more
stores and will eventually
go out of business altogether…
The
company said this week that it may sell its 51% stake in Sears Canada, which
operates nearly 20% of the company’s stores worldwide. It has quietly closed
nearly 100 U.S. stores in the last year. Next week, it’s expected to announce
dismal fiscal first quarter results and possibly yet more store closings.
“They have too many stores and they’re losing a lot of money, burning cash,” said John Kernan, an analyst with Cowen.
Kernan expects the company to close 500 of its 1,980 U.S. stores in a few years and, ultimately, to go out of business.
“The lights are going off at Sears and Kmart,” he said. “There are tumbleweeds blowing through the parking lots at Kmart. They’re basically completely irrelevant.”
The “retail apocalypse” just continues to roll on, but the mainstream media is treating this like it is not really a big deal.
#6 The labor force
participation rate for Americans from the age of 25 to the age of 29 has
fallen to an all-time record low.
#7 According to
official government numbers, everyone is unemployed in 20 percent of all American families.
#8 As families
struggle to pay their bills, many of them are increasingly turning to debt in
order to make ends meet. Earlier this month we learned that total U.S.
household debt has increased for three quarters in a
row. And as I noted in one recent article, total consumer credit in the United States has increased
by 22 percent over the past three years, and 56 percent of all Americans have “subprime credit” at this point.
As of
July 1, federal student loan rates will edge up. Rates overall will be up 0.8%
compared to current rates.
Federal Stafford Loans for undergraduate students will be 4.66% — up from 3.86%. Federal Stafford Loans for graduate students will be 6.21% — up from 5.41%.
Federal Grad PLUS and Federal Parent PLUS Loans will be at 7.21% — up from 6.41%.
Federal Stafford Loans for undergraduate students will be 4.66% — up from 3.86%. Federal Stafford Loans for graduate students will be 6.21% — up from 5.41%.
Federal Grad PLUS and Federal Parent PLUS Loans will be at 7.21% — up from 6.41%.
#10 U.S. industrial
production fell by 0.6 percent in April. This should not be happening if the economy truly was
“recovering”.
#12 Existing home sales
have fallen for seven of the last
eight months and seem to be
repeating a pattern that we witnessed back in 2007 prior to the last financial crash.
#13 In the real estate
bubble market of Phoenix, sales in April were down 12 percent year over year, and active inventory was up 49 percent year over year. In other words, there are tons of
homes on the market, but sales are going down.
Late
Friday, it was JPMorgan who said trading revenues will be down 20 percent this
quarter. Now Barclays says trading revenues in the first three months were down
41 percent. The company cited “challenging trading conditions resulting in
subdued client activity.” Like JPMorgan, Barclays also warned they were seeing
no improvement in trading in the second quarter.
#16 Jan Loeys,
JPMorgan’s head of global asset allocation, is warning that the Federal Reserve
is creating a huge financial bubble which could “push us into a credit
crisis“…
Where
do we go from here? To this analyst, still very subdued economic growth, both
at the US and global level, implies continued easy monetary policy. The risk is
that bond yields rise no faster than the forwards. Financial overheating (asset
inflation) proceeds much faster than economic overheating (CPI inflation).
Before CPI inflation has a chance to emerge, and before monetary policy is
truly above neutral, a financial bubble will have popped up somewhere and will
have corrected, pushing the economy down. That is what has happened in the past
25 years. The behavior of central banks gives us no confidence that this time
will be different: Central banks talk about financial instability, but appear
to define this mostly in term of bank leverage. Each successive boom and bust
is always in another place. A bubble can emerge without leverage. It is not
possible to project exactly where this boom and bust cycle will take place as
knowing where it will be would induce evasive actions that should prevent it
from occurring. One possible ending, among many, is that ultra-easy rates
having induced credit markets to grow much faster than equity markets, combines
with reduced market making by banks (many of whom have become like brokers) to
create a liquidity crisis when the Fed starts the first set of rate
hikes. This could then be bad enough to close primary markets, and thus
push us into a credit crisis.
#17 Peter Boockvar, the
chief market analyst at the Lindsey Group, is warning that the U.S. stock market
could experience a 20 percent decline once quantitative easing completely ends.
#18 A lot of other big
names are telling CNBC that they expect a significant stock market “correction”
very soon as well…
A bevy
of high-profile names have warned lately that the market is on the doorstep of
a major move lower. From long-term market bulls such as Piper Jaffray to
short-term traders such as Dennis Gartman, expectations are high that the major
averages are poised for a big dip, with calls varying from 10 percent or so all
the way up to 25 percent.
#19 The number of
Americans enrolled in the Social Security disability program exceeds the entire
population of the nation of Greece and has just hit another brand new record
high.
#20 Poverty
continues to grow all over the country, and right now there are 49 million Americans that are dealing with food insecurity.
#21 According to Pew
Charitable Trusts, tax revenue in 26 U.S. states is still lower than it was back in 2008 even though tax rates have gone up in many areas since
then.
The EPA
is about to impose a new regulation that will reduce carbon emissions from
existing power plants starting June 2 and will become permanent in 2015. The
new regulation, according to Politico, is the “most dramatic anti-pollution
regulation in a generation.” Because the new regulation will further cripple
the coal industry, as coal-burning plants will be severely affected, American
power will become more dependent on natural gas, solar and wind.
#23 Climatologists are
now saying that the state of Texas is going through the worst period of drought
that it has experienced in 500 years.
#24 It is being
reported that “dozens of Texas
communities” are less than 90 days
away from being completely out of water.
#25 It is being
projected that the drought in California will cost the agricultural
industry 1.7 billion dollars and that approximately 14,500 agricultural workers will
lose their jobs.
#26 Due in part to the
drought, the price of meat rose at the fastest pace in more than 10 years last month.
#27 According to recent surveys, only about a quarter of all Americans believe that the country
is heading in the right direction.
This article first
appeared here at the Economic
Collapse Blog. Michael Snyder is a writer, speaker and activist who
writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.
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