Since the election of President Trump many have been pointing to the stock market numbers saying, ‘The economy is better than ever! We are having record highs!’ While the soft data has been looking better than ever, ‘there is a disconnect between consumer confidence and the actual hard numbers.’ This was from a Zerohedge article last Friday. While the stock market is painting a lovely picture, encouraging people to get out there and spend, the real unchanged numbers say something completely different, something much darker. Here is some of what my research found.
Banks have been collapsing, needing bail outs to stay afloat. However bailouts just dig the hole deeper, and really don’t keep the bank itself viable. Greece has been going through this for years, not just with their banks, but the country itself keeps getting bailed out, only to be in the same predicament a few months later.
In Canada, The Mortgage Bank has been bailed out, they had a high interest rate for their savings account balance, that fell thirty six percent. The bank remained insolvent, so the bailout was worthless. This was when the panic set in among the patrons, as many over the weekend were rushing to the ATMs to pull their funds out. This has been a common sight all over Europe for many months, but now it’s reached our shores. Of course it was only a matter of time, the banks each in this chain effect pull down others when they fall. This is a first sign or indicator that the economy is far from being what the stock market numbers claim it is. Reminiscent of the Bear Sterns days in 2008, this is not a good indicator, and gives us all a good idea of where the banking market is right now.
Next, onto the housing market, which is has had record highs as far as home prices go. However, no one is buying these homes besides hedge funds, and foreign investors. While the average home owner figure falls month after month because the families who owned the homes can no longer afford to keep them. Another dark indicator since these numbers haven’t been this bad since 2008. The generation of people thirty five and under, the Millennials, are completely unable to buy homes period, citing low wages as the main reason. The numbers here dropped from 34.7% down to 34.3%. This may not seem like much, only a few percentage points, but this is the lowest number of new home buyers in twenty-five years. Other countries around the world are following the same pattern.
The GDP is at an all time low, and this is a manipulated number. John Williams of Shadostats.com has shown that when honest numbers are being used then the GDP growth is consistently going backward since 2005. Obama was the only president in history to not have economy growth exceed at least three percent. This is the fourth time in six quarters that GDP and consumer spending was the lowest ever according to CBS news. It increased at a seasonally adjusted rate of .7%. The Commerce Department said on Friday below the tepid 2.1% pace clocked both in the fourth quarter and as an average throughout the nearly eight year recovery.
Who ever heard of an eight year recovery?
Economists expected a 1% increase in output according to a Bloomberg survey. These are more doctored numbers, but even still this follows a year when the United States economy grew at a rate of just 1.6%. These numbers were provided by Zerohedge.
First the economists blamed the weather, it was always to cold or too hot to get the consumers to spend. Then it was late IRS refunds, due to an identity theft crisis. They even went so far as to blame the auto industry and restaurant service sector. But all these checks were accounted for and given out to their respective owners by late February. Still no change in sales however in the month of March.
Three fourths of Americans are struggling to make all of their basic living expenses. Jobs contracted again in the month of March since we were only able to add 98,000 new jobs, about half of what most analysts were expecting. Also this was the first time there has been no commercial or personal growth in six months.
Many are referring to the slowed activities in the stores as a ‘retail apocalypse’. This phrase has been thrown around since the number of stores set to close in the first quarter of 2017 far exceeds the number of stores that closed in all of 2016. Many say that the brick and mortar stores are closing due to online sales. But the numbers don’t tell us this. The highest percentage I could find was from digitalcommerce360.com. There the percentage of online purchases from retail stores was 15.6%. The lowest I could find was 8.3 percent according to the Economic Federal Reserve Bank of St. Louis. The average number that was found the most was around 11.7%. These are the total of online retail sales. Another reason we know that all retail isn’t moving online the way they say it is, is because if all the sales had moved to online, these retail operations would be expanding, not contracting. Stores are projected to close and default at a record pace in 2017.
The auto-industry is another big bubble ripe for the popping. Car sales haven’t been this low since the last recession. Seven out of eight dealers are not clearing a profit. Used car prices are projected to fall up to fifty percent over the next few years.
Consumer debt and bankruptcy are the only numbers that aren’t contracting. Student debt is collapsing in on itself with twenty percent of those loans in default. Everything is contracting at the same time which is a rare occurrence. We’ve had recessions in the past where only a couple of these buckled in, but not all at the same time. This crash when- not if- but when it happens, will be unprecedented.
Goldman Saks is warning about the gap between consumer confidence- the soft data- and the hard realities that were just listed by the Atlanta Fed. This will make for a bigger fall when the investors do figure it out. The Fed just pumped money into all of these holes in the economy, trying to find a way to stop the hemorrhaging. This increased stimulus helped for a few years, just like the bailed out bank we discussed in the beginning. But after a few years we are right back where we started, only worse off with a substantially bigger debt. Soon there will be no cash left, only digital money, capitol control. Credit will freeze, because our government is broke.
Effectively, the rollover has already begun, and like the passengers on the highest rollercoaster ever, climbing that first highest hill, we are all at the very top, looking down at the tiny world below us. Very shortly we will pick up unbelievable speed, things are already accelerating.