Although many declared the deceleration in the economy in December to be a “soft patch” that we’ve somehow recovered from, others aren’t so sure. The rest of the global economy is slowing down and sinking at a fairly rapid rate, and the U.S. economy will likely go with it.
According to a report by Forbes, there is no “economic immunity” for the United States once the global economy is in tatters. The report points to many problems in the global marketplace that could signal a major downturn for the economy pushing the U.S. ever closer to an unavoidable recession.
When the U.S. consumer goes on strike (quits buying things for any reason), the odds of a recession skyrocket. So, it would behoove market watchers to stop ignoring the growing potential for a significant economic slowdown.
The U.S. did not fare well when it came to auto sales either. New car sales in February were at an 18-month low. Part of the problem is that new and used car prices are now at record highs, and bank credit has tightened making getting into a brand new vehicle simply too expensive for many. A report earlier in February also indicated that auto loan delinquencies are now at highs seen right before the Great Recession.
Just on the heels of the United States government’s debt surpassing $2 trillion comes the news that there are now a record number of Americans who are behind on their record high car payments. According to CNBC, more than 7 million Americans are at least 90 days behind on their auto loans, according to the New York Fed. This is a major concern, considering the average car payment in the U.S. is now $523. –SHTFPlan
Forbes states that it may be too soon to come to the conclusion that the U.S. has made it through the “soft patch,” or December of 2018’s market downturn.
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-tenthof 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.
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?
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…
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.
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