Did you know that there is more than $28,000 of debt for every man, woman and child on the entire planet? And since close to 3 billion of those people survive on less than 2 dollars a day, your share of that debt is going to be much larger than that. If we took everything that the global economy produced this year and everything that the global economy produced next year and used it to pay all of this debt, it still would not be enough. According to a recent report put out by the McKinsey Global Institute entitled “Debt and (not much) deleveraging“, the total amount of debt on our planet has grown from 142 trillion dollars at the end of 2007 to 199 trillion dollars today. This is the largest mountain of debt in the history of the world, and those numbers mean that we are in substantially worse condition than we were just prior to the last financial crisis. Continue reading »
After shrinking notably in Feb, March’s US Trade deficit exploded. Against expectations of a $41.7bn deficit, the US generated a $51.4bn deficit – the worst since Oct 2008 and the biggest miss on record. Exports rose just $1.6bn while imports soared $17.1bn with the goods deficit with China soaring from $27.3bn to $37.8bn in March. Ironically, just as the “harsh winter” was found to lead to a GDP boost due to a surge in utility spending, so the West Coast port strike which was blamed for the GDP drop, was actually benefiting the US economy as it lead to a plunge in imports. In March, however, the pipeline was cleared, and US imports from China soared by over $10 billion to $38 billion. End result: prepare for upcoming Q1 GDP downgrades into negative territory.
If U.S. economic growth falls any lower, we are officially going to be in recession territory. On Wednesday, we learned that U.S. GDP grew at a 0.2 percent annual rate in the first quarter of 2015. That was much lower than all of the “experts” were projecting. And of course there are all sorts of questions whether the GDP numbers the government feeds us are legitimate anyway. According to John Williams of shadowstats.com, if honest numbers were used they would show that U.S. GDP growth has been continuously negative since 2005. But even if we consider the number that the government has given us to be the “real” number, it still shows that the U.S. economy has stalled out. It is almost as if we have hit a “turning point”, and there are many out there (including myself) that believe that the next major economic downturn is dead ahead. As you will see in this article, a whole bunch of things are happening right now that we would expect to see if a recession was beginning.
The following are 16 signs that the economy has stalled out and the next economic downturn is here: Continue reading »
“In other words, if US inventories, already at record high levels, and with the inventory to sales rising to great financial crisis levels, had not grown by $121.9 billion and merely remained flat, US Q1 GDP would not be 0.2%, but would be -2.6%.
While we already observed that in Q1, US GDP rose by an appalling 0.2%, far, far below the consensus Wall Street estimate (in case you missed it, here again is the one thing every Wall Street economist desperately needs) and precisely in line with the Atlanta Fed forecast which we brought attention to in early March, confirming yet again that US stocks no longer reflect any fundamentals but merely Fed and global liquidity injections, there is something far more disturbing under the surface of today’s GDP report.
Specifically, the $121.9 billion increase in private, mostly nonfarm, inventories in the first quarter.
Cutting to the punchline, this was the biggest inventory build in history.
Another punchline: in Q1 2015, the US economy rose by a paltry $6.3 billion in nominal terms to $17.710 trillion.
Here is how the total GDP growth compares to just the increase in inventories, which as we wrote earlier this week, is the primary reason why the world is now gripped in a global deflationary wave. Continue reading »
And so the Atlanta Fed, whose “shocking” Q1 GDP prediction Zero Hedge first laid out nearly 2 months ago, with its Q1 GDP 0.1% forecast was spot on. Moments ago the BEA reported that Q1 GDP was far worse than almost everyone had expected, and tumbled from a 2.2% annualized growth rate at the end of 2014 to just 0.2%, in a rerun of last year when it too “snowed” in the winter. This was well below the Wall Street consensus of a print above 1.0%.
In other words, in the quarter in which the S&P rose to unseen highs, the economy ground to a near halt.Continue reading »
We’ve been in recession since at least December. Retail sales, which account for 67% of GDP have sucked for the last four months. Obamacare spending is the only thing that kept the 4th quarter GDP from being negative. Factory orders have crashed and it is clear to anyone with a functioning brain (disqualifies politicians, CNBC bimbos and boobs, and Ivy League trained economists) we are in recession. We’ve crossed the Blutarsky line.
“The relationship of U.S. net worth to GDP appears to have reached unsustainable heights,” warns NFIB Chief Economist William Dunkelberg, adding that a massive decline in the value of assets is “more likely” than a massive increase in GDP. Logically this seems unavoidable, unless you believe that we are truly wealthier now, even with an economy that is delivering a rather poor performance (historically weak output and sales growth) in real terms. It would seem not to be ‘whether’ we will adjust but when.
While every other word from talking-heads and policy-makers relates various anecdotes (or simple lies) about US economic growth, The Atlanta Fed appears to have taken a ‘data-dependent’ perspective on the real economy (as opposed to smoke and mirrors). Based on their GDPNow “nowcasting” model, The Atlanta Fed projects Q1 2015 GDP growth os just 1.2% (less than half current sell-side economist consensus) and getting weaker…
The last time US weather was this bad, annualized US GDP crashed from 2.3% to -2.9%.
Or perhaps this time will be different, and the laughable cadre of propaganda sycophants known as tenured and/or Wall Street economists finally admits thatcold weather in the winter had nothing to do with the economic plunge a year ago, and everything to do with the fact that when it comes to integrity and accuracy of economic data and estimations, the US now ranks pari passu with the Chinese department of truth?
Unless, of course, just like last year economists discover that it was “really cold” post hoc once again, and none other than the Fed decides to blame, drumroll, the weather for crushing its best laid plans (of central planners and men) to hike rates some time in the summer of 2015.
Few people understand the global economy and its (mis)management better than David Stockman — former director of the OMB under President Reagan, former US Representative, best-selling author of The Great Deformation, and veteran financier.
David is now loudly warning that events have entered the crack-up phase, which he predicts will be defined by the following 4 developments: Continue reading »
And just in case the fading impact of Obamacare is not already priced in, here is what Q4 inventories did: rising by $113.1 billion in Q4, this was the second highest quarterly increase in the 21st century, second only to September 2010. It’s all GDP-crushing liquidations from here. Continue reading »
China may have mastered the art of fabricating economic data to a level unmatched by anyone except the US Department of Labor, but its derivative countries have much to learn. And none other more so than one of China’s favorite sources of commodities over the past decade: Brazil. It is here that things are going from worse to catastrophic, as disclosed in today’s update of Brazil’s fiscal picture.
Here are the disturbing facts showing that behind the world’s propaganda growth facade, it is all hollow: Brazil’s consolidated public sector primary fiscal balance, which posted a significantly worse than expected R$8.1bn primary deficit in November driven by the R$6.7bn deficit of the Central Government, dipped into negative territory: -0.18% of GDP, driven by the significant deterioration of the Central Government finances.
“In short, two-thirds of the “boost” to final Q3 personal consumption came from, drumroll, the same Obamacare which initially was supposed to boost Q1 GDP until the “polar vortex” crashed the number so badly, the BEA decided to pull it completely and leave this “growth dry powder” for another quarter. That quarter was Q3.”
Back in June, when we were looking at the final Q1 GDP print, we discovered something very surprising: after the BEA had first reported that absent for Obamacare, Q1 GDP would have been negative in its first Q1 GDP report, subsequent GDP prints imploded as a result of what is now believed to be the polar vortex. But the real surprise was that the Obamacare boost was, in the final print, revised massively lower to actually reduce GDP!
This is how the unprecedented trimming of Obamacare’s contribution to GDP looked like back then.
The U.S. booty business is getting a big bump, as AP reports companies are cashing in on growing demand from women seeking the more curvaceous figures of their favorite stars. While Millennials may spend most of their day sitting on their Minaj-esque “big fat butts” playing Kardashian, the business of boosting butts is bursting. From padded panties and gym classes that promise plumper posteriors to the “Brazilian butt lift,” in which fat is sucked from a patient’s stomach, love handles or back and put into their buttocks and hips, French sociologist Jean-Claude Kaufmann says “there’s a trend to show off the buttocks in place of breasts due to the rise of Beyonce,” Jennifer Lopez, and more recently Meghan Trainor. The bottom line – butt lifts and implants are the fastest growing plastic surgery, helping GDP at a cost of $10-13k each.
Gym classes that promise a plump posterior are in high demand. A surgery that pumps fat into the buttocks is gaining popularity. And padded panties that give the appearance of a rounder rump are selling out.Continue reading »
We are sure it’s nothing to worry about, and in now way indicative of any global aggregate economic weakness, but global commodity prices (that would be the ‘stuff’ that is used to make the ‘stuff’ we all buy every day) are collapsing at the fastest rate since Lehman…
Of course, it’s all about over-supply, not under-demand… just like the Baltic Dry was not low because of shitty trade volumes but because of too many ships… but it’s just the other side of an uncomfortably real mal-investment-driven fiasco…
As the chart below shows… maybe it is the economy stupid and with US GDP expectations being ratcheted down after construction spending and trade deficit data, maybe the US is not decoupling after all. Continue reading »
I wrote an article recently over at Voices of Liberty that lays out the very dire picture for those of us who have yet to retire. The gist of the article is that the Fed has effectively robbed the retired class of any hope for having enough of a nest egg to live off through the end of their lives if they want to retire at 65.
Some may argue well this past 10 years has just been an anomaly of low interest rates but they will come back i.e. normalize to higher levels here in the next couple years. Well let me show you why that is simply wrong. Continue reading »