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Peter Schiff: Evidence Shows the Economy Has Already Entered into a Recession
These days, depending on who you listen to, you might turn on a financial network and hear one economist say that they are bullish on the U.S. economy (for at least the short term anyway), but if you change the channel, just a second later you may very well hear someone else saying its almost time to run for the hills. How do you know who to listen to? There isn’t much people can do at this point to prevent a crash that’s coming one way or the other, but if nothing else, it would probably be a VERY good idea to know when the bottom is about to fall out, so you can keep your family as safe as possible, and be as prepared as possible. How can you do that?
In the following video, Alex Jones interviews Peter Schiff, who Alex frequently invites on as a guest, because of Peter’s great track record when it comes to forecasting major economic trends. It’s hard to take politics out of it, and pretend there isn’t an imbecile at the wheel in the Oval Office who has yet to make a single economic decision to better the economic environment in this country, so look at some basic facts. Just this week a federal judge accused Obama’s lawyers fighting for his illegal amnesty of being “intentionally deceptive,” engaged in a “calculated plan of unethical conduct,” and the misconduct was “serious and material enough…” that he ordered they attend ethics classes.
Within that same post are five examples of blatant, bold faced, Obama lies. Given Obama’s track record of dishonesty, and the fact that it’s an election year, is it more or less likely the 1.4% GDP for fourth quarter of 2015, and .5% GDP for the first of 2016 is over or under inflated? Peter makes the argument that when the final numbers shake out, at least for the first half of this year, first and second quarter will be negative, which means we’re in a recession RIGHT NOW! Michael Snyder makes the same point in the article below. Snyder says:
“And just like in 2008, when the financial markets do finally start catching up with reality it will likely happen very quickly.”
In the interview, Peter talks about this week’s release of last month’s FED meeting minutes, which said something to the effect of how if the job market improved, there was a chance the Fed could raise rates. So far, labor has only weakened, and virtually every piece of economic data to be announced has been worse than expected, so nothing suggests there has been anything close to improvement, but the Obama administration doesn’t think rationally, it thinks in terms of politics… always.
Listen to what Peter says. He says to prevent a crash the likes of which we’ve never seen, the market needs more cheap money and that rates would need to be cut to near zero again; however, in an election year that would send the signal that Obama’s economic policies have been a total failure, and so have the Fed’s, and I wouldn’t expect Obama to get honest now all of a sudden.
In order for Hillary to be able to campaign on how great the Democrat’s economy has been (the one with 100 MILLION working age Americans out of work), if conditions warranted, raising rates would signify the economy is getting stronger again. As Michael Snyder points out below, so far this year, job cut announcements are up 24 percent over last year, and try to recall how violently the markets reacted at the smallest of rate hikes back in January. The Fed’s decision (based solely on political pressure) prompted the worst start to a year in stock market history.
So, we all know Obama doesn’t give a rip about anyone but Obama. Understand that if rates go up, it is for political reasons, not economic ones, and the fallout could be unimaginable. If you watch the pundits on TV, there is already non-stop talk about a possible rate hike, because people are trying to “will” the economy to good health by pretending, and by towing the company line for Obama, but as Peter says, the truth is that the U.S. is in far worse shape than Puerto Rico who we’ve heard so much negative press about lately with their debt.
The Fed meets June 14-15. Be aware of their decision, and keep an eye on the stock market. Nothing the Fed does could be so bad it would send us into the dark ages over night, but if the bottom falls out of the market, and you start to see panic, you’ll know why. So, prepare before June 14th just to be safe. Stay vigilant in watching your surroundings. As Michael Snyder says below:
“Don’t take your eyes off of the deteriorating economic fundamentals, because it is inevitable that the financial markets will follow eventually…”
Just be sure you’re not asleep at the wheel when they do.
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You are about to see a chart that is undeniable evidence that we have already entered a major economic slowdown. In the “real economy”, stuff is bought and sold and shipped around the country by trucks, railroads and planes. When more stuff is being bought and sold and shipped around the country, the “real economy” is growing, and when less stuff is being bought and sold and shipped around the country, the “real economy” is shrinking. I know that might sound really basic, but I want everyone to be on the same page as we proceed in this article. Just because stock prices are artificially high right now does not mean that the U.S. economy is in good shape. In fact, there was a stock rally at this exact time of the year in 2008 even though the underlying economic fundamentals were rapidly deteriorating. We all remember what happened later that year, so we should not exactly be rejoicing that precisely the same pattern that we witnessed in 2008 is happening again right in front of our eyes.
During the month of April, the Cass Transportation Index was down 4.9 percent on a year over year basis. What this means is that a lot less stuff was bought and sold and shipped around the country in April 2016 when compared to April 2015. The following comes from Wolf Richter…
Freight shipments by truck and rail in the US fell 4.9% in April from the beaten-down levels of April 2015, according to the Cass Transportation Index, released on Friday. It was the worst April since 2010, which followed the worst March since 2010. In fact, shipment volume over the four months this year was the worst since 2010.
This is no longer statistical “noise” that can easily be brushed off.
Of course this was not just a one month fluke. The reality is that we have now seen the Cass Shipping Index decline on a year over year basis for 14 consecutive months. Here is more commentary and a chart from Wolf Richter…
The Cass Freight Index is not seasonally adjusted. Hence the strong seasonal patterns in the chart. Note the beaten-down first four months of 2016 (red line):
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This is undeniable evidence that the “real economy” has been slowing down for more than a year. In 2007-2008 we saw a similar thing happen, but the Federal Reserve and most of the “experts” boldly assured us that there was not going to be a recession.
Of course then we immediately proceeded to plunge into the worst economic downturn since the Great Depression of the 1930s.
Traditionally, railroad activity has been a key indicator of where the U.S. economy is heading next. Just a few days ago, I wrote about how U.S. rail traffic was down more than 11 percent from a year ago during the month of April, and I included a photo that showed 292 Union Pacific engines sitting in the middle of the Arizona desert doing absolutely nothing.
Well, just yesterday one of my readers sent me a photograph of a news article from North Dakota about how a similar thing is happening up there. Hundreds of rail workers are being laid off, and engines are just sitting idle on the tracks because there is literally nothing for them to do…
Intuitively, does it seem like this should be happening in a “healthy” economy?
Of course not.
The reason why this is happening is because businesses have been selling less stuff. Total business sales have now been declining for almost two years, and they are now close to 15 percent lower than they were in late 2014.
Because sales are way down, unsold inventories are really starting to pile up. The inventory to sales ratio is now close to the level it was at during the worst moments of the last recession, and many analysts expect it to continue to keep going up.
Why can’t people understand what is happening? So far this year, job cut announcements are up 24 percent and the number of commercial bankruptcies is shooting through the roof. Signs that we are in the early chapters of a new economic downturn are all around us, and yet denial is everywhere.
For instance, just consider this excerpt from a CNBC article entitled “This key recession signal is broken“…
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Treasury yields are behaving as if they are signaling a recession, but strategists say this time it’s more likely a sign of something else.
The market has been buzzing about the flattening yield curve, or the fact that yields on longer duration Treasurys are getting closer to yields on shorter duration securities.
In the case of 10-year notes and two-year notes, that spread was the flattest Friday than it has been on a closing basis since late 2007. The yield curve had turned negative in 2006 and stayed there for months in 2007 before turning higher ahead of the Great Recession. The spread was at 95 at Friday’s curve but widened Monday to more than 96.
Treasury yields are very, very clearly telling us that a new recession is here, but because the “experts” don’t want to believe it they are telling us that the signal is “broken”.
For many Americans, all that seems to matter is that the stock market has recovered from the horrible crashes last August and earlier this year. But in the end, I am convinced that those crashes will simply be regarded as “foreshocks” of a much greater crash in our not too distant future.
But if you don’t want to believe me, perhaps you will listen to Goldman Sachs. They just came out with six reasons why stocks are about to tumble.
Or perhaps you will believe Bank of America. They just came out with nine reasons why a big stock market decline is on the horizon.
To me, one of the big developments has been the fact that stock buybacks are really starting to dry up. In fact, announced stock buybacks have declined 38 percent so far this year…
After snapping up trillions of dollars of their own stock in a five-year shopping binge that dwarfed every other buyer, U.S. companies from Apple Inc. to IBM Corp. just put on the brakes. Announced repurchases dropped 38 percent to $244 billion in the last four months, the biggest decline since 2009, data compiled by Birinyi Associates and Bloomberg show. “If the only meaningful source of demand in the market is companies buying their own shares back, then what happens if that goes away?” asked Brad McMillan, CIO of Commonwealth “We should be concerned.”
Stock buybacks have been one of the key factors keeping stock prices at artificially inflated levels even though underlying economic conditions have been deteriorating. Now that stock buybacks are drying up, it is going to be difficult for stocks to stay disconnected from economic reality.
A lot of people have been asking me recently when the next crisis is going to arrive.
I always tell them that it is already here.
Just like in early 2008, economic conditions are rapidly deteriorating, but the stock market has not gotten the memo quite yet.
And just like in 2008, when the financial markets do finally start catching up with reality it will likely happen very quickly.
So don’t take your eyes off of the deteriorating economic fundamentals, because it is inevitable that the financial markets will follow eventually.
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IF YOU READ NOTHING ELSE, THE FOLLOWING POSTS ARE ESSENTIAL:
What Exactly Does Global Economic Collapse Coming May 2016 Mean?
Dr. Willie and Peter Schiff Together: Total Currency Collapse and Reset Coming
When Obama Suspends 2016 Election, a Guide to Survive Martial Law (Videos)
Jim Willie: How the Loss of the US Dollar as Reserve Currency Affects You Personally
Economic Implosion Will Lead to Stock Market at 5,000 by 2017 Forecaster Says
Ron Paul, Jim Willie, Peter Schiff, and Collapse of US Dollar on a Global Scale
FOR MORE GREAT MATERIAL FROM JIM WILLIE:
Dr. Jim Willie, Threat’s by Putin, Death of U.S. Dollar, and a New Arms Race
Dr. Jim Willie: Deutsche Bank Could Very Well Collapse Entire Banking System
Dr. Jim Willie: 7 Signs U.S. Economy Collapses; Gold Will Soon Back US Dollar!
Dr. Jim Willie: “Violent Gold and Silver Breakout” Coming to Economic Markets!
Dr. Jim Willie: Western Economic Markets Collapsing; Eurasian Markets Rise
Dr. Willie: Economic System is Collapsing Right Now; Us Dollar in a “Short Squeeze”
Dr. Jim Willie: The Dollar is Dead! Even Mainstream Media Realizes it!
Jim Willie: Chinese Replace US Swift Banking System, Hastening US Dollar Collapse
Dr. Jim Willie – Secret Meeting at the G20 to Take Down the US Dollar
Dr. Jim Willie: Financial Deals Happening Behind Closed Doors; US Not Invited
Dr. Jim Willie: Economic Collapse is On Our Doorstep
Jim Willie: “The Quickening” is Approaching Global Economic Markets
Jim Willie: Both Our Allies and the American People Absolutely Hate Our Government
Jim Willie: U.S. Dollar is Now a Matter of National Security Due to Poor Decisions
Jim Willie, the Crumbling Global Economy, and the Dollar Crisis
FOR MORE GREAT MATERIAL FROM PETER SCHIFF:
Peter Schiff: “Trump’s Very Massive Recession May Have Already Begun”
Peter Schiff: Americans Fear Future With ‘Dead-End Economy, Crap Jobs, and Awful Wages’
Peter Schiff: “Can Donald Trump Really Make America Great Again?”
Peter Schiff: Dollar Collapse Will Be the Single Biggest Event In Human History
Peter Schiff: Obama “Peddling Fiction” As Unemployed Tops 100 Million People
Peter Schiff: Here Comes the Great, Great, Great, Great Recession!
Peter Schiff: “Whatever Obama Was Calling Recovery… is OVER!”
CNBC Actually Admits Peter Schiff Was Right… Again (Video)
Peter Schiff and Reagan Advisor: Complete Economic Collapse Immediately Ahead
Peter Schiff: Warning! Economic Storm Clouds Ready to Rain
Peter Schiff: Death of the US Dollar Is Imminent; Fed Out of Options
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Not where I live in southern Nevada. Building is way up, unemployment is down. Basically, if you really want to work in my town, jobs are available. New housing starts everywhere. Prices of homes have taken off like a rocket in southern Nevada but they fall just as quick when it busts. No sign of that, though. But the crash happened so fast last time, contractors dumped off about $250,000 worth of building material to build some townhomes in my hood on Friday afternoon. They never returned to build the homes, because they knew they were bankrupt on Monday. It took about a month before all that was stolen, I used to watch guys back up pickups and load them up. I figured WTF, better than rusting out in the open but that’s how fast the crash happened. On Thursday my home was worth $348k, the following Monday you couldn’t sell if you had to. It went from 348k to $126k. Now, it’s back up.
For most sectors of the economy the Recession of 2007 never ended. It continues to this day.
The real unemployment rate is currently [May 2016] ….22%. The Government % numbers are only people who are collecting benefits or actively looking for work. The vast majority of the real unemployed are not counted.
Few people know this fact. During the so-called Great Depression of the 1930s, the unemployment rate never got higher than about 24%.
Today in 2016 the real unemployment rate is around 22%.
Are we in a Depression? You come to your own conclusion on that.