Retail Sales: When The Government “Goal-Seeks” Economic Reports

The headline retail sales report, released today by the Census Bureau, showed a rather unexpectedly large 0.8% jump from October.  The Wall Street brain trust was expecting a 0.3% increase.   Of course, 99% of stock market investors and 100% of the financial media never looks at the details below the headline reports.   To do this, one has make an effort to scroll down to page four of the report.  There you will find this table (excerpt):

You’ll note that I highlighted this “(*)” in yellow. From the footnotes to the report, this “(*)” means this: “Advance estimates are not available for this kind of business.” For purposes of the advance estimate, the Census Bureau “imputes” the data. In other words, the CB fills in a guesstimate. According to the CB propaganda, over 30% of the data used in the monthly estimate is a guess “imputed.”  The beauty of this is that the CB has leeway to report a fictitious number for the advance estimate and then revise the original estimate when it reworks its numbers in the annual “benchmark revision” of the data,.  By then no one bothers to look or even cares the degree to which the original advance estimated was flawed.  The market only cares about the headline number when it’s reported.  I would bet a roll of American Silver Eagles that CNBC’s Steve Liesman has no clue about this aspect of the retail sales report.

My point here is that the headline report is a fairytale.  Furthermore, the headline report is based on nominal numbers.  In this case, gasoline sales – for which data for the advance estimate is available – were responsible for one-third of the 0.8% headline increase from October.  This increase is largely attributable to gasoline price inflation.  In truth, the actual “unit” volume of sales in November vs. October is largely a mystery.  Yes, online sales have been strong, but online sales represent less than 10% of total retail sales.

Interestingly, the stock market agrees with my analysis of the retail sales situation.  The XRT retail ETF was down nearly 2% today (Thursday).  The RTH retail ETF was down 0.6%.  RTH was down despite the fact that AMZN, which represents 18% of RTH’s assets, was up nearly 0.9%.

Government economic reports are notoriously manipulated and thus a highly unreliable indicator of economic activity. The reports have become little more than propaganda tools used to “goal-seek” the political agenda of both the Government and the economic agenda of the Federal Reserve.

As the publisher of a newsletter that is based on shorting stocks – the Short Seller’s Journal – I have featured several retail stock short ideas this year, some of which have been the best-performing shorts.  As a market bear, I love to see contrarian like this:

The graph shows the jump in investor dollars (largely retail investors) tossed at the retail sector (XRT) in November (top panel). The bottom panel shows the short-interest in XRT, which is at its lowest since mid-2015. Short interest dropped 22% over the last month in XRT and is down to 1% of total shares outstanding. Investors are exceedingly bullish on retail stocks and I believe this exuberance is absent fundamental justification (December 3rd, Short Seller’s Journal).

The next issue will of the Short Seller’s Journal will continue to introduce short ideas from the retail stock sector.  Click here for more information about this unique newsletter:  Short Seller’s Journal subscription information.

Investment Research Dynamics




Zero Hour: The Greatest Political and Economic Revolution Since Democracy Itself

A look into Harry Dent’s brand new book, Zero Hour: Turn the Greatest Political and Financial Upheaval in Modern History to Your Advantage

I’ve written 10 books since 1989. Zero Hour, now available on Amazon and in book stores, is one of my most innovative, groundbreaking works yet.

The Great Boom Ahead put me on the map with breakthrough demographic indicators and forecasts that tagged the whole decade of the 1990s.

The Roaring 2000s sold over 800,000 copies and introduced its own breakthrough concept: the “network corporation,” characterized by bottom-up, not top down, management.

Zero Hour brings together all of the breakthroughs I’ve had over the years, and then adds to them with, among other things, the discovery of a rare convergence of three-long term cycles that point to a revolution. A true revolution, like the Industrial and American Revolutions that brought together the twin breakthrough concepts of democracy and free-market capitalism.

It was a discovery only possible with extensive collaboration with my co-author Andrew Pancholi – the only other guy in the world who knows as much about cycles as I do.

Chart: Megatrend #1: The Three Harbingers of Revolution
Today, we’re seeing the greatest political polarization since the Civil War, a debt and financial asset bubble that makes the Roaring 20s look like child’s play, and income inequality greater than that experienced in 1929.

But most important, we’re seeing breakthrough technologies, like the internet, and blockchain to come, that will change business and politics as we know them. Biotech and related technologies promise to greatly extend life spans and finally reverse the never-ending demographic decline the world is now facing.

No mainstream economists saw the greatest boom in history before it struck, nor the dramatic collapse of Japan.

None have seen this sweeping revolution, which will go down in history as the one that literally reshaped the world map, politics, economies, stock markets, and lives!

Trump and Brexit are only the first signs of much more to come – and this revolution will not end like it starts – trust me on this.

And as if that weren’t enough, look at this megatrend that’s about to descend on the global economy. The second great surge in globalization has peaked and will see a major retrenchment for decades (not just years) ahead.

Chart: Megatrend #2: The Second Explosion in Globalization Has Peaked
The first surge occurred with steamships and then railroads before colliding with World War I, the Great Depression, and World War II… all major political and economic events that no one saw coming!

Global trade retrenched 60% over 33 years – that’s a big deal!

The technological and network revolution ahead driven the internet and blockchain technologies will finally create the breakthroughs for the third and final great globalization surge that will take the world to 90% urban and middle class.

That’s the economy your kids and grandkids will live in. And it will be dominated by the emerging countries.

You may retire while this revolution unfolds, and at Dent Research we’re here to help you preserve and expand your wealth through it all. To retire well!

But your kids are going to be the ones that become part of this great shift and the potential recipients of the massive opportunities to follow. There’s a caveat though.

There’ll be money to make during the next stock market crash, but the global boom that follows will be nothing like what we experienced between 1983 and 2017.

Everything will not boom largely together as it occurred since World War II. Rather, you’ll need to understand our unique demographic and globalization forecasting tools to know where to set your sites for the groundbreaking opportunities. And I detail those in Zero Hour.

Watch this 90-second trailer in which Andy and I talk about the unprecedented impacts of this revolution.

Then order your copy of Zero Hour now.

It could well change your life and financial future.

Harry
Follow me on Twitter @harrydentjr

The post Zero Hour: The Greatest Political and Economic Revolution Since Democracy Itself appeared first on Economy and Markets.

Harry Dent – Economy and Markets ()




Economic Slowdown Confirmed: The U.S. Economy Lost Jobs Last Month For The First Time In 7 Years

Don’t worry – even though the employment numbers are terrible the mainstream media insists that everything is going to be wonderful for the U.S. economy in the months ahead.  According to the Bureau of Labor Statistics, the U.S. economy lost 33,000 jobs during September.  That was the first monthly decline in seven years, and as you will see below, overall 2017 is on pace for the slowest employment growth in at least five years.  But the Bureau of Labor Statistics insists that the downturn in September was due to the chaos caused by Hurricane Harvey and Hurricane Irma, and they are assuring us that happier times are right around the corner.

Economists were projecting that we would see an increase of around 80,000 jobs last month, and we need to add at least 150,000 jobs each month just to keep up with population growth.  So the -33,000 number was a huge disappointment.

But even though we lost 33,000 jobs last month, the Bureau of Labor Statistics says that the unemployment rate fell from 4.4 percent to 4.2 percent.

Yes, I know that doesn’t make any sense at all, but that is what they are telling us.

Perhaps if several volcanoes go off inside this country, terrorists detonate a dirty bomb in one of our major cities and Godzilla invades the west coast next month the unemployment rate will drop all the way to zero.

Of course I am being facetious, but I just want to point out the absurdity of what we are being told.  There is no way in the world that the official unemployment rate should be at “a new 16-year low”.

In the end, perhaps September will end up being a bit of an anomaly.  But as I mentioned above, we have been witnessing a broader trend build for months.  According to CNBC, we are on pace for “the slowest jobs growth in at least five years”…

In addition to September’s rough month, the July number was revised lower from 189,000 to 138,000 though August got a bump higher from 156,000. In all, though, 2017 thus far has seen the slowest jobs growth in at least five years.

Let that sink in for a moment.

Employment is not booming.  In fact, things haven’t been this slow “in at least five years”.  An economic slowdown is here, and yet most people are totally oblivious to what is happening.

And let me share something else with you.  The following chart shows the average duration of unemployment since the late 1940s…

This chart shows that workers remain unemployed far longer than they did in the “good old days”, but I want you to pay special attention to the very end of the chart.

The duration of unemployment is really starting to spike up again quite dramatically, and that is a very, very troubling sign for the U.S. economy overall, because spikes in this number almost always correspond with recessions.

But the Bureau of Labor Statistics says that we don’t have anything to be concerned about.  In fact, they are blaming all of the bad numbers from last month on Harvey and Irma

Our analysis suggests that the net effect of these hurricanes was to reduce the estimate of total nonfarm payroll employment for September. There was no discernible effect on the national unemployment rate. No changes were made to either the establishment or household survey estimation procedures for the September figures. For both surveys, collection rates generally were within normal ranges, both nationally and in the affected states. In the establishment survey, employees who are not paid for the pay period that includes the 12th of the month are not counted as employed. In the household survey, persons with a job are counted as employed even if they miss work for the entire survey reference week (the week including the 12th of the month), regardless of whether or not they are paid. For both surveys, national estimates do not include Puerto Rico or the U.S. Virgin Islands.

And the “experts” that are being quoted by the mainstream media are assuring us that “the labor market remains in good shape”

“Despite the decline (in job gains), it’s really clear that the labor market remains in good shape,” says Joel Naroff of Naroff Economic Advisors.

The unemployment rate, which is calculated from a different survey than the headline job totals, edged lower. That’s because gains in the number of people employed outpaced an increase in the labor force, which includes people working and looking for jobs. In that survey of households, workers are counted as employed even if they were temporarily idled by the storms.

Hopefully they are right.

Hopefully happy times are here again and an economic boom is right around the corner.

Unfortunately, the longer term trends tell an entirely different story.  Our economic infrastructure has been gutted, we have shipped millions of good paying jobs overseas, the middle class is slowly being eradicated, and we are living in the terminal phase of the greatest debt bubble in human history.

We have been able to maintain our ridiculously inflated standard of living for an extended period of time by borrowing absolutely colossal mountains of money year after year.  But no debt bubble lasts forever, and this one will not either.

The debt-fueled “prosperity” that we see all around us today is an enormous temporary illusion, and when the illusion collapses the economic pain is going to be greater than anything we have ever seen before in modern American history.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

The Economic Collapse




Michael Pento Exclusive: Gold Sniffing Out Central Bank Failure; Fed Tightens into Economic Weakness

Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

Coming up we’ll hear from Michael Pento of Pento Portfolio Strategies on how the broken window fallacy is now becoming a part of the narrative surrounding the terrible tragedy in the Houston area and also talks about an exciting setup he sees in the gold market and what will be the tipping point. Don’t miss another wonderful interview with Austrian economist and money manager Michael Pento, coming up after this week’s market update.

Precious metals markets enter trading for the month of September with strong upside momentum on the heels of a late summer rally.

On Monday, gold prices broke out above the $ 1,300 resistance level to new highs for the year. As of this Friday recording gold trades at $ 1,323 an ounce, up 2.4% on the week. Gold’s gains are being confirmed by the gold mining stocks, which are now putting in their biggest weekly up moves of the summer.

Turning to the white metals, silver shows a weekly gain of 3.3% to bring spot prices to $ 17.69 an ounce. Platinum poked back above the $ 1,000 level on Thursday and currently trades at $ 1,007 an ounce on the heels of this week’s 2.9% advance. Its sister metal palladium is up 3.9% to $ 966.

Metals markets responded to the carnage inflicted by Hurricane Harvey and the inflationary implications for U.S. fiscal policy.

Lawmakers return to Capitol Hill next Tuesday. They will take up a Harvey aid bill expected to cost tens of billions of dollars. Whether it’s a clean bill or is tied to unrelated pork barrel spending or an increase in the debt limit remains to be seen.

The Treasury Department had said that the debt ceiling must be raised by September 29th. Officials now say that the deadline may move forward by a couple days because of disaster relief spending. These developments will make it more difficult for Freedom Caucus members of Congress to win any spending concessions.

President Donald Trump still intends to push for tax reform. Senate Republicans will be under tremendous pressure to deliver something on that front after they failed spectacularly on Obamacare repeal. Here’s what Trump had to say in a speech earlier this year:

Donald Trump: We need a tax code that is simple, fair, and easy to understand. That means getting rid of the loopholes and complexity that primarily benefit the wealthiest Americans and special interests. Our last major tax re-write was 31 years ago. And I am fully committed to working with Congress to get this job done, and I don’t want to be disappointed by Congress.

The President did get some good news on the economy this week. U.S. GDP growth got revised upward to a better than expected 3%.

Good news is often interpreted by markets as bad news for metals markets. A stronger economy makes the Federal Reserve more likely to tighten monetary policy. But this week, good news was good for stocks, commodities, and precious metals.

The bad news out of Texas may have something to do with that. Given the tremendous financial stresses on millions of families who have either been impacted or flooded out of their homes, the Fed is likely to hold off on any new rate hikes or quantitative tightening for a while. Central bankers don’t want to be perceived as villains for causing rates on mortgages and home improvement loans to rise.

Yet in keeping rates artificially low, central bankers are complicit in inflating asset bubbles to dangerous proportions. The stock market certainly wouldn’t be trading where it is today without Fed stimulus. The sky high costs of health insurance and college tuitions wouldn’t be where they are now, either.

In order to help qualified students pay for the ever-rising costs of higher education, Money Metals Exchange has teamed up with the Sound Money Defense League for a scholarship fund. It is the first gold-backed scholarship of the modern era. We’re setting aside 100 ounces of physical gold for scholarships to outstanding undergraduate and graduate students who display deep understanding of economics and monetary policy.

For 2017, we will be awarding this scholarship to two incoming or current undergraduate students and to two graduate students. First place winners will receive $ 2,000 each, with runner ups getting $ 1,000.

Applicants must submit an essay that answers a specific question about free markets and sound money. Essays will be reviewed by a blue ribbon committee of professors, economists, and executives of Money Metals Exchange and the Sound Money Defense League. The application and essay must be submitted by September 30, 2017.

If you have a college student in your family who is interested in free market economics and sound monetary policies, be sure to let him or her know about this scholarship opportunity. For more information or to apply, please visit moneymetals.com/scholarship.

Well now, without further delay, let’s get right to this week’s exclusive interview.

Michael Pento

Mike Gleason: It is my privilege to welcome in Michael Pento, President and founder of Pento Portfolio Strategies, and author of the book, The Coming Bond Market Collapse: How to Survive the Demise of the U.S. Debt Market. Michael is a well-known and successful money manager, and has been a regular guest on CNBC, Bloomberg, Fox Business News, and also the Money Medals Podcast, and shares his astute insights on markets and geopolitics from the perspective of an Austrian school economist viewpoint.

It’s always a real pleasure to have him on with us. Michael, welcome back and how are you?

Michael Pento: I’m doing fine and thank you for having me back on Mike.

Mike Gleason: Well Michael, let’s start out here with the topic that is dominating the news. Hurricane Harvey has laid waste to Houston, and the Texas Gulf coast. But Wall Street doesn’t seem to be bothered. Gold and silver have got a bit of a boost, but the equity market shrugged it off. This all makes me think back of the parable of the broken window, which was introduced by the well-known 19th century economist, Frédéric Bastiat, where he described why the money spent to recover from destruction is not actually a benefit to society.

But Michael, it appears as though Wall Street and the financial world might be buying into the idea of the broken window fallacy and viewing it as truth, and that all the destruction will somehow be good for the economy. What are your comments there, and what do you makes of the markets initial response here, to this terrible, terrible tragedy?

Michael Pento: I guess it’s part of the hyperbole and hysteria that encompasses Wall Street right now. Nothing can knock down the stock market. You didn’t even mention the fact that North Korea Kim Jung-un, his new regime, launched his 80th scud missile, and they’re ICBM’s, ballistic missiles, into the Sea of Japan and over Japan, and towards southern, south Sea of Japan. And nobody seems to care. As a matter of fact, the market rallied, from being down about 150 points in the pre-market to, I think, plus 58 on the DOW, yesterday (Tueday).

There’s nothing (that) can harm this market. The reason for that … The simple reason behind that, is that central banks have printed 15 trillion dollars’ worth of confetti and counterfeit money, leading out of the financial crisis, from 2008 to today. 15 trillion and counting. You know, don’t forget you still have 60 billion euros per month, over in Europe, and you’ve got the Swiss Central Bank. You’ve got the Bank of Japan, which is hopefully enamored with money printing in it, at least Mr. Kuroda, the head of the BoJ, understands that he can never, never, even think about, or hint about reducing his quantitative easing, or QQE program that he has.

Going back to Frédéric Bastiat … Wall Street, very low level of thinking, very idiotic group of individuals, who actually … I was listening to CNBC, comment about how … By the way my heart and my prayers go out to the people in Houston, and now in Louisiana. I heard a commentator on the show saying, “Hey, but let’s look at the good news here. Look at all the construction that’s going to happen, so this is actually a boom for the economy.” Well, you know, if you follow that philosophy, then we might as well just bulldoze all the houses, and all of the physical structures in the United States. That’s how you grow GDP. You don’t grow GDP through productivity, and you don’t grow GDP by increasing and boosting your labor force.

The new way of growing productivity now, is to break things, and to pray for catastrophic storms. Of course, they never think about where the money comes from. In other words, if I was going to fix this pane of glass, in the analogy that you brought up, the broken window analogy … Well, I was going to buy a pair of shoes, and now I have to spend that money on fixing the pane of glass. Or, if I have to just borrow that money, that money that’s borrowed, to fix the glass, would have been borrowed to, perhaps buy capital goods, and expand the economy. And of course, if that money is just printed, well then, we have the scourge of inflation. There is no magic. There is no free lunch, in anything, and especially in economics. That’s true.

Mike Gleason: When the flooding in Texas moves out of the news, the coming fight over the debt ceiling could be front and center. Now, it looked like, to us a fight was brewing with a contingent of conservative Republicans revolting on one flank, and Democrats looking to thwart Trump and his agenda, everywhere possible, on another. Trump and GOP leadership have their hands full, getting a bill to hike the borrowing limit passed. But it could be that Hurricane Harvey will be used to prevent a big fight here, relief for Texas, might be inserted into the bill to raise the borrowing cap. And few politicians will object for fear of being criticized. With that said, are you expecting a fight over the debt ceiling to be significant Michael? And any chance, we could see a government shut down here?

Michael Pento: Well, at first glance, a prima facie look at this, is that I expect more dysfunction in DC. I predicted this when Donald Trump was elected. I said that his massive reform of healthcare, his tax reform packages would be both, deluded, and delayed, and that’s exactly what has happened. And of course, Wall Street likes to look at every event as a positive. The glass is always half full. So, now they’re saying that we have hurricane that we have to pay for, that this is going to somehow make the passage of everything, tax reform, construction spending, infrastructure, the debt ceiling, the budget. Everything’s going to go smoothly.

I have my doubts. I run an actively managed portfolio. So, the base case scenario is dysfunction in DC. That has been very, very prudent, and a correct path to assume and to take. I believe it’s not going to go smoothly. I believe that we have to pass the budget by the end of September, and raise the debt ceiling by middle of October. Now, Mnuchin and Mulvaney, they were on opposite sides of this, but now they’re on the same talking points as Trump. They just want to raise the debt ceiling cleanly. But I don’t think the Tea Party Republicans, in the House of Representatives are going to go alone with that, so yes there will be a fight, even if they try to attach this hurricane spending bill, infrastructure bill to it.

Mike Gleason: The U.S. dollar isn’t looking too good these days. We’ve seen pretty steady decline, since the beginning of the year. Of course, the dollar is a terribly flawed instrument, and the fact that the DXY index traded at an all-time high late last year, was more a testament to just how bad other major world currencies must be. Where do you think we’re going from here? Is the dollar going to head lower?

Michael Pento: Well, we went from about 80 on the DXY … which is heavily weighted towards the euro … from 80 to above 100, in anticipation of what? Anticipation of Mr. Trump getting a lot of his agenda passed, rather quickly. And also the divergence between the two major central banks, between ECB and the Federal Reserve. And where, as we see now, things not shaking out that well at all. We see the dollar index has dropped from above 100, now at major support around 92. If it breaks through 92 on the DXY, I think it could head towards 80. All eyes are on the ECB. The ECB is primarily in charge here.

If Mario Draghi, on September seventh, announces a tapering of his 60 billion per euro a month, asset purchase program, I would expect the euro to skyrocket, and the dollar to fall precipitately, right through that 92, towards 80. And, of course if he does not taper his asset purchase program, then the dollar could catch a bid and head back towards 100.

That’s why, again, I run an actively managed portfolio, trying to guess the minds of these megalomaniac schizophrenics, that run central banks, is very, very difficult, so it’s best to have, not a passive ETF strategy, buy and hold, and then forget about your money. You have to actively manage your portfolio. So, I will react to, what Mario Draghi does. European GDP growth is very, not very strong, but getting stronger. They are missing on the inflation target, just as we are here in the United States, at least the way central banks measure inflation, if you don’t count everything that’s going up, like medical costs, and college tuition, and asset prices. So, who knows what they’re going to do, but you have to be reactive, rather than just proactive in this kind of environment.

Mike Gleason: Staying on monetary policy here for a moment. Any thoughts on where Trump goes with his Fed chair appointee early next year? Any chance Yellen get reappointed, or does he bring in somebody even more dovish? What do you think?

Michael Pento: Well, it’s hard to get someone more dovish than Janet Yellen, but … I guess, you know, I don’t have any special insight here. Gary Cohen would be my best guess, because Trump likes to put his fingerprint on everything, and he needs somebody in there who is going to really fight for low interest rates, and for deregulation policy. Yellen kind of submarines herself at Jackson Hole, talking about the importance of regulation in the banking system. So, my best guess is that, come February 2018, that we have a new Fed chair, and that person is Gary Cohen, who will really fight hard for low interest rates, and a weak dollar. Both those things espoused by our President Trump, not candidate Trump, President Trump, and there’s a difference.

Mike Gleason: Yeah. Very important distinction there, for sure. Let’s dig into the gold and silver markets here for a minute. Now, demand in the retail bullion market continues to be pretty soft. To our way of thinking. That can be largely attributed to a few factors. First off, bullion investors are more optimistic about a Trump Presidency, than the Obama Presidency.

Another is that, precious metals prices really haven’t been going anywhere for a while now. And then, also, those who have been buying gold and silver as a safe haven, have probably, just gotten exhausted. They’ve been on high alert, expecting significant fallout, resulting from ultra-loose Fed policy, massive Federal deficits, unlimited borrowing, et cetera.

But the reckoning, it never seems to come, so are bullion investors just going to have to live a while longer here, in purgatory, or do you see anything exciting developing in the months ahead for the metals?

Michael Pento: Oh. I see something very exciting developing. So, we have a condition here across the United States and in Europe – not in Japan as I mentioned – where we have central banks that absolutely believe they have solved all of the global, economic problems. And, what they have done instead, they’ve engendered, they’ve fostered a huge increase in debt. We have about a 70 trillion dollar increase in debt, coming out of the great recession. We have 230 trillion dollars of debt now in the globe. It’s about 330%, just about 330% of global GDP. And the entire global economy, as anemic as it is, and people talk about this global synchronized growth…

Global growth is not anywhere near where it was in the early 2000’s. We’re about – globally speaking, you look at the major developed economies – they’re about one percent, one to two percent. There is no big expanse in global growth, but whatever global growth there is, it totally and completely hinges on continued low interest rates. And central banks have now convinced that they’ve solved all our problems, as I said. And now, you look at the Fed, who entered QE in 2014, and now we’re getting ready for quantitative tightening, reverse QE to start this year.

And surely, I’m 100% convinced, if it doesn’t start in September, at least in the early part of 2018, Mario Draghi and the ECB, will start to taper, it’s assets. They were 80 billion. Now, they’re 60 billion. He’s going to be reducing his asset purchase program towards zero, certainly by the end of 2018. So, when that happens, you’re going to have … and the Fed likes to talk about tapering, they’re not selling assets, they’re just letting them roll off the balance sheet… assets do not roll off of a Fed’s balance sheet. When the Federal Reserve has a note due, what they’re going to do, is ask the treasury to pay them this note. Well, the treasury has no money.

So, the treasury has to sell an amount equal to the note due to the Fed. The treasury then, has to not only sell this debt, but has to now, service this debt, whereas before those interest payments were being refunded by the Fed to the treasury. And when the Fed gets this money, it’s retired. So, you’re talking about a draining of the money supply. You’re talking about that happening, not only in the United States, but also in Europe. And who’s going to buy all this debt?

Now, the debt has absolutely, as I said, skyrocketed, 70 trillion dollars increase. There isn’t any private source for this funding. No one is going to buy a German bund, yielding .37%, when there is no central bank around, and the central bank is getting ready to sell assets. There isn’t anybody who’s going to buy a U.S. 10-year note, yielding 2.2%, or 2.15 as we make this recording. Nobody is going to make that purchase, when the Federal Reserve is getting ready to sell trillions of dollars. They have four and a half trillion dollar balance sheet. If they take it down to two and a half, it’s two trillion dollars’ worth of mortgage backed securities and treasuries that are going to be adding to that a trillion-dollar deficit that we already have. Deficits go up huge, as interests rates go up. Interest rates rise. It’s a very vicious, counterproductive cycle.

If we have higher debt service costs for every one percent to 200 billion dollars. We have one trillion dollar in deficits, because of demographics. And if we have a recession, deficits will rise and buy an additional trillion dollars. We can have deficits well over two, approaching three trillion dollars, with no help from the government. This is going to cause, whatever relatively anemic economic growth to falter substantially.

And I will add this. We already have the automotive sector, and the real estate sector rolling over in this country. If we have a spike in interest rates, which will emanate from the ECB, whenever they decide to start tapering assets, and the German Bund rises towards nominal GDP, which is close to three percent, actually above three percent. You go from .37% to over three percent, that’s going to drag up yields across the globe, and that’s when the situations really going to be extremely pernicious.

And what’s going to happen then … now the gold market is already sniffing this out, by the way, as we breached $ 1,300 an ounce a couple of days ago … the gold market is sniffing out this: that central banks are going to have to get back into the QE programs, across the board. And when that happens, faith in fiat currencies – not just the dollar, all fiat currencies – is going to falter very dramatically. You see some of this, not only in the gold market, but you see this phenomenon in the cryptocurrency world.

There is going to be a dramatic watershed, trench and drop in the faith of central bankers. That’s the biggest bubble of all. And when that pops, gold’s going to go back to its all-time high, and well surpassing that level too. So, look for $ 2,000 an ounce gold. It’s going to happen rather quickly. I think it’s going to happen within the next couple of years, and you already see the beginnings of that happening today.

Mike Gleason: Well, we’ll leave it there. Fantastic stuff as always. Michael, it’s great to have you on, we respect your insights quite a bit. It’s excellent to have you join us every few months.

Now, before we let you go, as we always do, please tell people, who want to both read and hear more of your wonderful market commentaries, and also learn about your firm, and how they could potentially become a client, if they want to do that. Please tell them, how they can find out more information.

Michael Pento: Sure. You can email me directly, mpento@pentoport.com. My website is www.PentoPort.com. The office number here is 732-772-9500. Be glad to talk to you.

Mike Gleason: Well, thanks again Michael. Enjoy the Labor Day weekend. We look forward to catching up with you again later this year. Take care, my friend.

Michael Pento: Thanks again for having me back on Mike.

Mike Gleason: Well that will wrap it up for this week. Thanks again to Michael Pento of Pento Portfolio Strategies. For more information just visit PentoPort.com. You can sign up for his email list, listen to the midweek podcast that he does and get his fantastic market commentaries on a regular basis. Again, just go to PentoPort.com.

And don’t forget to check back here next Friday for our next Weekly Market Wrap Podcast, until then this has been Mike Gleason with Money Metals Exchange. Thanks for listening, and have a great weekend everybody.

Precious Metals News & Analysis – Gold News, Silver News




The Chinese Global Economic Strategy

In the fall of 1993, I was sitting in class in grad school. We were using case studies to explore business management decisions. My professor walked through the history of Otis Elevators, noting that the company had reached market saturation and had choices to make.

I was sort of paying attention… sort of not.

Then he called on me.

“Rodney! What should a company do when it reaches market saturation?!”

I fumbled. “Develop a new product or service?”

He thundered back, “Find another market!”

His point was that Otis Elevators had saturated the U.S. market, but had all of Europe to explore. It would be much easier to exploit untapped markets with a product they already provided than it would be to introduce a new product or service they’d need to develop.

I think the Chinese took the same class.

In 2013, the Chinese government introduced the Silk Road Economic Belt and 21st Century Maritime Silk Road initiative, which has been shortened to One Belt, One Road.

The plan was to develop infrastructure to facilitate trade among many players in Eurasia and Northern Africa. Or so that’s what the Chinese government told everyone. The details indicated other immediate goals, with trade as a long-term, add-on benefit.

After the financial crisis, China poured on the monetary coals to propel its economic engine. The county expanded credit at a torrid pace, fueling an unprecedented building boom. Roads, bridges, and condominiums sprung from the ground.

China produced and used more cement between 2011 and 2013 than the United States did in all of the 20th century.

That’s a lot of concrete.

But even in a land of 1.3 billion people, that pace of building couldn’t last.

Eventually, there would be a dramatic slowdown.

China now has empty cities. Not because everyone left, but because they built them and no one came.

Now, as their domestic expansion slows down, the Chinese have created an outlet for all of their resources and construction know-how…

Under the One Belt, One Road Initiative, the Chinese provide the resources, expertise, and much of the labor to build roads, bridges, ports, and other infrastructure in Pakistan, Kenya, India, Malaysia, and even Russia and Greece.

The initiative is expected to touch 68 countries and billions of people.

Of course, many of those countries can’t pay for expensive new ports and roads, but that’s not an obstacle, it’s an opportunity, if you’re the Chinese.

China will not only provide the materials, expertise, and labor, but also the funding! Through the Asian Development Bank and other entities, China is loaning money to foreign nations that then use the capital to buy stuff from China.

And once those projects are completed, guess which country will have a claim on the assets to repay the loans, and also have priority status when it comes to trade?

And the strategy doesn’t end there.

China has another issue that it’s turning into an opportunity.

The country is pretty good at building coal-fired electric plants. But, as one of the vocal members of the Paris Climate Accord, building a bunch of new coal plants creates bad optics. At least, when you build them at home.

The country also already has a lot of electricity generation capacity, and a fair amount of renewable energy. So as with their other spare capacity, they went looking elsewhere.

Over the next 10 years, China expects to build 700 new coal-fired electric plants, but 20% of the capacity will be overseas. While the new plants (with all of the environmental issues that come with them) will benefit the local populations, they’ll also support operations along the trade routes that will carry Chinese goods.

And I’m guessing that the plants in foreign countries will buy their coal from the Chinese.

The strategy is bold, but not without risks. What happens when locals in Pakistan get annoyed with Chinese workers? What happens when a friendly foreign government is toppled by a political foe that doesn’t want to honor previous arrangements?

These legacy issues will be interesting to watch. Will China be better at dealing with them than, say, every other nation in history that’s tried the same thing? We’ll see.

For now, it’s impressive to watch the Chinese implement their plans in so many locations, providing a much-needed outlet for their overcapacity at home.

For anyone interested, the Chinese are touting the initiatives as some sort of global, hand-holding, kumbaya thing that will unite the planet.

They’ve even released videos and songs to promote it, like this one. That way, people can feel good about helping the Chinese cement their hold on global trade for decades to come.

Rodney
Follow me on Twitter @RJHSDent

P.S. Want to hear exactly what Harry, Adam, Charles, John, and I have to say about the markets right now?

Don’t miss our first-ever Investment Action Summit, where we’re giving readers a chance to eavesdrop on our regular internal bi-weekly investment conference call.

We debuted the talk earlier today and don’t worry if you missed it. We’re replaying the event at 7 p.m. ET tonight. Click here to listen.

The post The Chinese Global Economic Strategy appeared first on Economy and Markets.

Rodney Johnson – Economy and Markets ()




Catch a Glimpse of our 2017 Irrational Economic Summit

On Monday we began a two-week series to highlight the truth about some of the hottest topics on the Street…

Cryptocurrencies.

Space Ex.

Legalized pot.

Fin-Tech.

You name it.

We’ve brought together experts at the top of their fields in each of these areas to share their insights with you over the coming days and weeks.

More importantly, all of them will be speaking at our Irrational Economic Summit in October. There, you’ll get a deeper dive into their research and findings, learn how to make some serious money from the real trends and get all your questions answered along the way.

Here’s a sneak preview:



Harry
Follow me on Twitter @harrydentjr

P.S. Book your ticket now before the event sells out. We’ll even take $ 500 off the price to sweeten the deal. Get all the details here.

P.P.S. As we were preparing to send you this email, Michael Terpin called me about yesterday’s SEC statement about “the DAO” (a failed German cryptocurrency from one year ago that the SEC stated may have violated U.S. securities laws but it wouldn’t take any action on). It turns out that many in the media have falsely reported this advisory will apply to ALL initial coin offerings. Michael wanted me to tell you this is absolutely NOT true. Just more proof that trusting mainstream media can be dangerous to your wealth.

The post Catch a Glimpse of our 2017 Irrational Economic Summit appeared first on Economy and Markets.

Harry Dent – Economy and Markets ()




12 Signs The Economic Slowdown The Experts Have Been Warning About Is Now Here

Since the election there has been this perception among the American public that the economy is improving, but that has not been the case at all.  U.S. GDP growth for the first quarter was just revised up to 1.2 percent, but that is even lower than the average growth of just 1.33 percent that we saw over the previous ten years.  But when you look even deeper into the numbers a much more alarming picture emerges.  Commercial and industrial loan growth is declining, auto loan defaults are rising, bankruptcies are absolutely surging and we are on pace to break the all-time record for most store closings in a single year in the United States by more than 20 percent.  All of these are points that I have covered before, but today I have 12 new facts to share with you.  The following are 12 signs that the economic slowdown that the experts have been warning about is now here…

#1 According to Challenger, the number of job cuts in May was 71 percent higher than it was in May 2016.

#2 We just witnessed the third worst drop in U.S. construction spending in the last six years.

#3 U.S. manufacturing PMI fell to an 8 month low in May.

#4 Financial stocks have lost all of their gains for the year, and some analysts are saying that this is “a terrible sign”.

#5 One new survey has found that 39 percent of all millionaires “plan to avoid investing in the coming month”.  That is the highest that figure has been since December 2013.

#6 Jobless claims just shot up to a five week high of 248,000.

#7 General Motors just reported another sales decline in May, and it is being reported that the company may be preparing for “more job cuts at its American factories”.

#8 After an initial bump after Donald Trump’s surprise election victory, U.S. consumer confidence is starting to fall.

#9 Since Memorial Day, Radio Shack has officially shut down more than 1,000 stores.

#10 Payless has just increased the number of stores that it plans to close to about 800.

#11 According to the Los Angeles Times, it is being projected that 25 percent of all shopping malls in the United States may close within the next five years.

#12 Over the past 12 months, the number of homeless people living in Los Angeles County has risen by a  staggering 23 percent.

And in case those numbers have not persuaded you that the U.S. economy is heading for rough times, I would encourage you to go check out my previous article entitled “11 Facts That Prove That The U.S. Economy In 2017 Is In Far Worse Shape Than It Was In 2016” for even more eye-popping statistics.

During a bubble, it can feel like the good times are just going to keep rolling forever.

But that never actually happens in reality.

The truth is that we are in the terminal phase of the greatest debt bubble of all time, and the evidence is starting to mount that this debt bubble has just about run its course.  The following comes from Zero Hedge

A recurring theme on this website has been to periodically highlight the tremendous build up in US corporate debt, most recently in April when we showed that “Corporate Debt To EBITDA Hits All Time High.” The relentless debt build up is something which even the IMF recently noted, when in April it released a special report on financial stability, according to which 20% of US corporations were at risk of default should rates rise. It is also the topic of the latest piece by SocGen’s strategist Andrew Lapthorne who uses even more colorful adjectives to describe what has happened since the financial crisis, noting that “the debt build-up during this cycle has been incredible, particularly when compared to the stagnant progression of EBITDA.”

Lapthorne calculates that S&P1500 ex financial net debt has risen by almost $ 2 trillion in five years, a 150% increase, but this mild in comparison to the tripling of the debt pile in the Russell 2000 in six years. He also notes, as shown he previously, that as a result of this debt surge, interest payments cost the smallest 50% of stocks in the US fully 30% of their EBIT compared with just 10% of profits for the largest 10% and states that “clearly the sensitivity to higher interest rates is then going to be with this smallest 50%, while the dominance and financial strength of the largest 10% disguises this problem in the aggregate index measures.”

The same report noted that net debt growth in the U.S. is quickly headed toward negative territory, and the last time that happened was during the last recession.

We see similar things when we look at the 2nd largest economy on the entire planet.  According to Jim Rickards, China “has multiple bubbles, and they’re all getting ready to burst”…

China is in the greatest financial bubble in history. Yet, calling China a bubble does not do justice to the situation. This story has been touched on periodically over the last year.

China has multiple bubbles, and they’re all getting ready to burst. If you make the right moves now, you could be well positioned even as Chinese credit and currency crash and burn.

The first and most obvious bubble is credit. The combined Chinese government and corporate debt-to-equity ratio is over 300-to-1 after hidden liabilities, such as provincial guarantees and shadow banking system liabilities, are taken into account.

We just got the worst Chinese manufacturing number in about a year, and it looks like economic conditions over there are really starting to slow down as well.

Just like 2008, the coming crisis is going to be truly global in scope.

It is funny how our perspective colors our reality.  Just like in 2007, many are mocking those that are warning that a crisis is coming, but just like in 2009, after the crisis strikes many will be complaining that nobody warned them in advance about what was ahead.

And at this moment it may seem like we have all the time in the world to get prepared for the approaching storm, but once it is here people will be talking about how it seemed to hit us so quickly.

My hope is that many Americans will finally be fed up with our fundamentally flawed financial system once they realize that we are facing another horrendous economic crisis, and that in the aftermath they will finally be ready for the dramatic solutions that are necessary in order to permanently fix things.

The Economic Collapse




A Healthy Economic Fear of China

There’s an old adage in finance concerning borrowing and lending: If you owe the bank $ 1 million, you have a problem. If you owe the bank $ 100 million, the bank has a problem.

It’s all about scale.

When it comes to countries and markets, there is no scale, and therefore no problem, like the Middle Kingdom.

China is the land of the “biggest.”

General Motors now sells more cars in China than it does in the States.

The country boasts more than 1.3 billion registered cell phones, the most of any nation, and basically one for every citizen.

Chinese domestic consumption is growing by double digits while consumers in the developed world keep a tight grip on their wallets. This trend has continued for a decade… but it might be changing.

Unfortunately, no one knows for sure because the Chinese are notorious for rosy projections and opaque results.

As the rest of the world convulsed during the financial crisis of 2008-09, China watched its GDP growth fall from 14.2% in 2007 to 9.2% in 2009. Something had to be done!

The Chinese government injected hundreds of billions of dollars into the economy, goosing economic growth back above 10%… for a year or so.

Eventually, even with more financial engineering, growth fell below 9%, then under 8%, and has now dipped below 7%.

To keep the factories open, China has become a posterchild for exploding debt.

Not national government debt, which stands at less than 50% of GDP, compared to the U.S. total of about 100%. In China, it’s all about non-financial debt, which exploded by 18% per year between 2010 and 2015, reaching 160% of GDP and certainly well beyond that today.

Through banks and local entities, the national government funnels loans to state-owned enterprises (SOEs), which are government-run businesses.

If a factory is an SOE, it must serve two masters – making a profit and satisfying political demands. When those two goals conflict, which happens when such a company should downsize (and fire workers) to be efficient, they often choose to be politically correct. This means borrowing money to operate since they’re bleeding cash.

This approach works as long as banks, at the direction of the government, keep funneling money to the losing entities. When the government grows weary of the charade, all bets are off.

Given recent statements to this effect from China’s President Xi Jinping, SOEs might lose their financial lifelines, which will lead to closing businesses and job losses.

This rotation away from bloated businesses will help the economy in the long run, but it will be painful in the short-term. And the pain won’t stay in China. It will ripple around the globe, washing up on foreign shores.

Recently Chinese futures for iron ore, coking coal (used in steel mills, among other places), and rebar got hammered (pun intended). It was interesting because official Chinese steel inventory sat below normal levels.

It could be a temporary dislocation in the markets, or it could be the beginning of a slide.

Around the same time, Moody’s downgraded Chinese debt from Aa3 to A1, noting higher debt levels and a softening economy.

Hmm.

Those who sell raw materials should be concerned, and not just those who sell to China.

When the biggest buyer in the market loses interest, all suppliers take a hit.

While the ebbs and flows in the iron and copper markets are well known, there’s another market that should be eyeing China with trepidation – oil.

Every week the world gets a glimpse at how much oil sits in inventory in Cushing, Oklahoma. This measure, along with some data points in Europe, provides insight on oil supplies.

But that’s only half the equation.

To estimate where the price of oil will go next, we need to know demand. And better yet, future demand. This is where things get murky.

Chinese oil purchases have been driving marginal demand for years. As more Chinese take to the road for the first time, this makes sense.

But the country has also been adding to its strategic petroleum reserve (SPR). The problem is, no one knows the size of the reserve or how much more the Chinese will store.

JPMorgan estimated that China added roughly 1.2 million barrels of oil per day to its SPR in the spring of 2016. But it doesn’t know for sure.

The Chinese report on their SPR, but their numbers seem a tad light.

Why would a nation almost four times the size of the U.S. have a reserve less than half the size of ours? Analysts think the Chinese reserve is closer to 600 million or 700 million barrels, just shy of the U.S. SPR capacity of 735 million.

No matter what the size, eventually the reserve will be full. Unless business and consumer energy consumption ramps up dramatically, which seems unlikely given slower GDP growth and potential cutbacks at SOEs, Chinese oil demand could decline.

If it happens soon, then the slowdown will coincide with OPEC’s attempt to prop up prices through continued production cuts. Falling production would be met with falling demand, thereby keeping the oil market in equilibrium at a time when U.S. inventories are near record highs.

And then there’s that pesky business of U.S. fracking companies ramping up production.

Let’s not lose sight of the fact that OPEC is a cartel, and is working with non-OPEC members to manipulate the markets. They need to drive up profits to help their busted budgets.

They should be very fearful of changing Chinese demand… and it couldn’t happen to a nicer bunch.

Rodney Johnson
Follow me on Twitter @RJHSDent

The post A Healthy Economic Fear of China appeared first on Economy and Markets.

Rodney Johnson – Economy and Markets ()




Is Puerto Rico’s Economic Collapse A Ploy By Liberals To Permanently Shift The Balance Of Power In Congress?

Next month, citizens of Puerto Rico are going to vote on statehood, and the absolutely devastating economic collapse that is gripping the island could be enough to push pro-statehood forces over the edge to victory.  Of course Congress has the final say on whether Puerto Rico becomes a state or not, but it is going to be very difficult to deny Puerto Rico’s 3.4 million residents statehood if they strongly insist that they want it.  Needless to say, if Puerto Rico becomes the 51st U.S. state that would greatly benefit the Democrats, because the population of Puerto Rico is very liberal.

Puerto Rico does not get to vote in presidential elections, but they do help select the nominees for both parties.  In 2016, 58,764 votes were cast in the Democratic caucuses held in Puerto Rico, and only 36,660 votes were cast in the Republican primary.  As a state, it is doubtful whether Puerto Rico would send any Republican lawmakers to Washington for decades to come.

So if Puerto Rico becomes a state, the Democrats would add two new senators and probably four or five representatives.

Puerto Rico would be the 30th largest state in the entire country, and so it would instantly have more political power than 21 other U.S. states.

This upcoming vote on June 11th is going to be extremely important, and pro-statehood forces are working very hard to get a positive result.  The following info about the referendum in June comes from Wikipedia

The fifth referendum will be held on June 11, 2017 and will offer two options: “Statehood” and “Independence/Free Association.” It will be the first referendum not to offer the choice of “Commonwealth.” Newly-elected Governor Ricardo Rosselló is strongly in favor of statehood for Puerto Rico to help develop the economy and help to “solve our 500-year-old colonial dilemma … Colonialism is not an option …. It’s a civil rights issue … 3.5 million citizens seeking an absolute democracy,” he told the news media.[30] Benefits of statehood include an additional $ 10 billion per year in federal funds, the right to vote in presidential elections, higher Social Security and Medicare benefits, and a right for its government agencies and municipalities to file for bankruptcy. The latter is currently prohibited.[31]

At approximately the same time as the referendum, Puerto Rico’s legislators are also expected to vote on a bill that would allow the Governor to draft a state constitution and hold elections to choose senators and representatives to the federal Congress.[31]

Over the past decade, Puerto Rico has been suffering through a nightmarish economic recession that never seems to end.  The island was recently forced to declare the equivalent of bankruptcy because it is facing $ 123 billion in debt and pension obligations.  At this moment 46 percent of the residents of Puerto Rico are living below the poverty line, the unemployment rate is 11 percent, and authorities just announced that another 179 public schools will be closing down.

It has been argued that the Obama administration could have done much more to alleviate the economic problems in Puerto Rico but that it purposely chose not to do so.

Why?

Well, the worse economic conditions get in Puerto Rico, the better it is for pro-statehood forces.  Puerto Ricans are being told that becoming a state is the key to Puerto Rico’s long-term economic future, and at this point many are willing to do just about anything to get the economic suffering to end.  The following is a short excerpt from a New York Times article entitled “Amid Puerto Rico’s Fiscal Ruins, a New Push for Statehood“…

A vigorous push for statehood was a central campaign promise of Gov. Ricardo Rosselló, 38, who was inaugurated in January. Next month, he will ask residents to vote, in a nonbinding referendum, for statehood as part of a long-term fix for a commonwealth facing a period of severe austerity that is likely to include shuttered public schools, frozen salaries, slashed pensions and crimped investments in public health. The island remains in the grip of a recession that has lingered for much of the past decade.

Could it be possible that this is what liberals have wanted all along?

Could it be possible that Obama and his minions saw Puerto Rico as a chess piece that could be used to permanently shift the balance of power in Congress?

Of course if Puerto Rico becomes a state that would have implications for presidential elections as well.

In the end, it will be Congress that decides what the fate of Puerto Rico will be, but if the people of Puerto Rico truly want to become the 51st U.S. state it is going to be really hard to deny them that opportunity indefinitely.

Last year at their national conventions, the Democrats and the Republicans both took the position that the citizens of Puerto Rico should be able to make this decision for themselves.  But once faced with a final decision, it is inevitable that many Republican members of Congress would be opposed to statehood.

Personally, I believe that either independence or “free association” would be much better for Puerto Rico, and let us hope that the people of Puerto Rico choose that direction.

But when people are really hurting, they will often grasp any sort of olive branch that is being offered to them, and right now the progressives are really pushing statehood.

Of course for strategists on the left, the goal is not to help the suffering people of Puerto Rico.

Rather, the endgame is complete domination of the U.S. political system by any means necessary.

The Economic Collapse




11 Reasons Why U.S. Economic Growth Is The Worst That It Has Been In 3 Years

Those that were predicting that the U.S. economy would be flying high by now have been proven wrong.  U.S. GDP grew at the worst rate in three years during the first quarter of 2017, and many are wondering if this is the beginning of a major economic slowdown.  Of course when we are dealing with the official numbers that the federal government puts out, it is important to acknowledge that they are highly manipulated.  There are many that have correctly pointed out to me that if the numbers were not being doctored that they would show that we are still in a recession.  In fact, John Williams of shadowstats.com has shown that if honest numbers were being used that U.S. GDP growth would have been consistently negative going all the way back to 2005.  So I definitely don’t have any argument with those that claim that we are actually in a recession right now.  But even if we take the official numbers that the federal government puts out at face value, they are definitely very ugly

Economic growth slowed in the first quarter to its slowest pace in three years as sluggish consumer spending and business stockpiling offset solid business investment. Many economists write off the weak performance as a byproduct of temporary blips and expect healthy growth in 2017.

The nation’s gross domestic product — the value of all goods and services produced in the USA — increased at a seasonally adjusted annual rate of 0.7%, the Commerce Department said Friday, below the tepid 2.1% pace clocked both in the fourth quarter and as an average throughout the nearly 8-year-old recovery. Economists expected a 1% increase in output, according to a Bloomberg survey.

Even if you want to assume that it is a legitimate number, 0.7 percent economic growth is essentially stall speed, and this follows a year when the U.S. economy grew at a rate of just 1.6 percent.

So why is this happening?

Of course the “experts” in the mainstream media are blaming all sorts of temporary factors

Economists blamed the weather. It was too warm this time around, rather than too cold, which is the usual explanation for Q1 debacles.

And they blamed the IRS refund checks that had been delayed due to last year’s spectacular identity theft problem. Everyone blamed everything on these delayed refund checks, including the auto industry and the restaurant industry. But by mid-February, a veritable tsunami of checks went out, and by the end of February, the IRS was pretty much caught up. So March should have been awash in consumer spending. But no. So we’ll patiently wait for that miracle to happen in second quarter.

They always want us to think that “boom times” for the U.S. economy are right around the corner, but those “boom times” have never materialized since the end of the last financial crisis.

Instead, we have had year after year of economic malaise and stagnation, and it looks like 2017 is going to continue that trend.  The following are 11 reasons why U.S. economic growth is the worst that it has been in 3 years…

#1 The weak economic growth in the first quarter was the continuation of a long-term trend.  Barack Obama was the only president in history not to have a single year when the U.S. economy grew by at least 3 percent, and this is now the fourth time in the last six quarters when economic growth has been less than 2 percent on an annualized basis.  So essentially this latest number signals that our long-term economic decline is continuing.

#2 Consumer spending drives the U.S. economy more than anything else, and at this point most U.S. consumers are tapped out.  In fact, CBS News has reported that three-fourths of all U.S. consumers have to “scramble to cover their living costs” each month.

#3 The job market appears to be slowing.  The U.S. economy only added about 98,000 jobs in March, and that was approximately half of what most analysts were expecting.

#4 The flow of credit appears to be slowing as well.  In fact, this is the first time since the last recession when there has been no growth for commercial and industrial lending for at least six months.

#5 Last month, U.S. factory output dropped at the fastest pace that we have witnessed in more than two years.

#6 We are in the midst of the worst “retail apocalypse” in U.S. history.  The number of retailers that has filed for bankruptcy has already surpassed the total for the entire year of 2016, and at the current rate we will smash the previous all-time record for store closings in a year by nearly 2,000.

#7 The auto industry is also experiencing a great deal of stress.  This has been the worst year for U.S. automakers since the last recession, and seven out of the eight largest fell short of their sales projections in March.

#8 Used vehicle prices are falling “dramatically”, and Morgan Stanley is now projecting that used vehicle prices “could crash by up to 50%” over the next several years.

#9 Commercial bankruptcies are rising at the fastest pace since the last recession.

#10 Consumer bankruptcies are rising at the fastest pace since the last recession.

#11 The student loan bubble is starting to burst.  It is being reported that 27 percent of all student loans are already in default, and some analysts expect that number to go much higher.

And of course some areas of the country are being harder hit than others.  The following comes from CNBC

Four states have not yet fully recovered from the Great Recession. As of the third quarter of last year, the latest data available, the economies of Louisiana, Wyoming, Connecticut and Alaska were still smaller than when the recession ended in June 2009.

Other states that have recovered have seen their economic recoveries stall out. Those include Minnesota, North Dakota, New Mexico, Oklahoma, South Dakota and West Virginia.

We should be thankful that we are not experiencing a full-blown economic meltdown just yet, but it is undeniable that our long-term economic decline continues to roll along.

And without a doubt the storm clouds are building on the horizon, and many believe that the next major economic downturn will begin in the not too distant future.

The Economic Collapse