Guest Post: 20 Signs The U.S. Economy Is Heading For Big Trouble In The Months Ahead

Tyler Durden's picture

Authored by Michael Snyder at The Economic Collapse blog,

Is the U.S. economy about to experience a major downturn?  Unfortunately, there are a whole bunch of signs that economic activity in the United States is really slowing down right now.  Freight volumes and freight expenditures are way down, consumer confidence has declined sharply, major retail chains all over America are closing hundreds of stores, and the "sequester" threatens to give the American people their first significant opportunity to experience what "austerity" tastes like.  Gas prices are going up rapidly, corporate insiders are dumping massive amounts of stock and there are high profile corporate bankruptcies in the news almost every single day now.  In many ways, what we are going through right now feels very similar to 2008 before the crash happened.  Back then the warning signs of economic trouble were very obvious, but our politicians and the mainstream media insisted that everything was just fine, and the stock market was very much detached from reality.  When the stock market did finally catch up with reality, it happened very, very rapidly.  Sadly, most people do not appear to have learned any lessons from the crisis of 2008.  Americans continue to rack up staggering amounts of debt, and Wall Street is more reckless than ever.  As a society, we seem to have concluded that 2008 was just a temporary malfunction rather than an indication that our entire system was fundamentally flawed.  In the end, we will pay a great price for our overconfidence and our recklessness.

So what will the rest of 2013 bring?

Hopefully the economy will remain stable for as long as possible, but right now things do not look particularly promising.

The following are 20 signs that the U.S. economy is heading for big trouble in the months ahead...

#1 Freight shipment volumes have hit their lowest level in two years, and freight expenditures have gone negative for the first time since the last recession.

#2 The average price of a gallon of gasoline has risen by more than 50 cents over the past two months.  This is making things tougher on our economy, because nearly every form of economic activity involves moving people or goods around.

#3 Reader's Digest, once one of the most popular magazines in the world, has filed for bankruptcy.

#4 Atlantic City's newest casino, Revel, has just filed for bankruptcy.  It had been hoped that Revel would help lead a turnaround for Atlantic City.

#5 A state-appointed review board has determined that there is "no satisfactory plan" to solve Detroit's financial emergency, and many believe that bankruptcy is imminent.  If Detroit does declare bankruptcy, it will be the largest municipal bankruptcy in U.S. history.

#6 David Gallagher, the CEO of Town Sports International, recently said that his company is struggling right now because consumers simply do not have as much disposable income anymore...

"As we moved into January membership trends were tracking to expectations in the first half of the month, but fell off track and did not meet our expectations in the second half of the month. We believe the driver of this was the rapid decline in consumer sentiment that has been reported and is connected to the reduction in net pay consumers earn given the changes in tax rates that went into effect in January."

#7 According to the Conference Board, consumer confidence in the U.S. has hit its lowest level in more than a year.

#8 Sales of the Apple iPhone have been slower than projected, and as a result Chinese manufacturing giant FoxConn has instituted a hiring freeze.  The following is from a CNET report that was posted on Wednesday...

The Financial Times noted that it was the first time since a 2009 downturn that the company opted to halt hiring in all of its facilities across the country. The publication talked to multiple recruiters.

The actions taken by Foxconn fuel the concern over the perceived weakened demand for the iPhone 5 and slumping sentiment around Apple in general, with production activity a leading indicator of interest in the product.

#9 In 2012, global cell phone sales posted their first decline since the end of the last recession.

#10 We appear to be in the midst of a "retail apocalypse".  It is being projected that Sears, J.C. Penney, Best Buy and RadioShack will also close hundreds of stores by the end of 2013.

#11 An internal memo authored by a Wal-Mart executive that was recently leaked to the press said that February sales were a "total disaster" and that the beginning of February was the "worst start to a month I have seen in my ~7 years with the company."

#12 If Congress does not do anything and "sequestration" goes into effect on March 1st, the Pentagon says that approximately 800,000 civilian employees will be facing mandatory furloughs.

#13 Barack Obama is admitting that the "sequester" could have a crippling impact on the U.S. economy.  The following is from a recent CNBC article...

Obama cautioned that if the $85 billion in immediate cuts -- known as the sequester -- occur, the full range of government would feel the effects. Among those he listed: furloughed FBI agents, reductions in spending for communities to pay police and fire personnel and teachers, and decreased ability to respond to threats around the world.

He said the consequences would be felt across the economy.

"People will lose their jobs," he said. "The unemployment rate might tick up again."

#14 If the "sequester" is allowed to go into effect, the CBO is projecting that it will cause U.S. GDP growth to go down by at least 0.6 percent and that it will "reduce job growth by 750,000 jobs".

#15 According to a recent Gallup survey, 65 percent of all Americans believe that 2013 will be a year of "economic difficulty", and 50 percent of all Americans believe that the "best days" of America are now in the past.

#16 U.S. GDP actually contracted at an annual rate of 0.1 percent during the fourth quarter of 2012.  This was the first GDP contraction that the official numbers have shown in more than three years.

#17 For the entire year of 2012, U.S. GDP growth was only about 1.5 percent.  According to Art Cashin, every time GDP growth has fallen this low for an entire year, the U.S. economy has always ended up going into a recession.

#18 The global economy overall is really starting to slow down...

The world's richest countries saw their economies contract for the first time in almost four years during the final three months of 2012, the Organisation for Economic Co-operation and Development said.

The Paris-based thinktank said gross domestic product across its 34 member states fell by 0.2% – breaking a period of rising activity stretching back to a 2.3% slump in output in the first quarter of 2009.

All the major economies of the OECD – the US, Japan, Germany, France, Italy and the UK – have already reported falls in output at the end of 2012, with the thinktank noting that the steepest declines had been seen in the European Union, where GDP fell by 0.5%. Canada is the only member of the G7 currently on course to register an increase in national output.

#19 Corporate insiders are dumping enormous amounts of stock right now.  Do they know something that we don't?

#20 Even some of the biggest names on Wall Street are warning that we are heading for an economic collapse.  For example, Seth Klarman, one of the most respected investors on Wall Street, said in his year-end letter that the collapse of the U.S. financial system could happen at any time...

"Investing today may well be harder than it has been at any time in our three decades of existence," writes Seth Klarman in his year-end letter. The Fed's "relentless interventions and manipulations" have left few purchase targets for Baupost, he laments. "(The) underpinnings of our economy and financial system are so precarious that the un-abating risks of collapse dwarf all other factors."

So what do you think is going to happen to the U.S. economy in the months ahead?

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TruthInSunshine's picture

A Beautiful Deleveraging in reality = indebted, broke ass debt serfs buying what they need, not want, in increasingly smaller quantities, all over the world.

Welcome to The Bernank's "Virtuous Circle" monetary policy catching up to reality, where the lag is great & the closing of the gap will be tremendous.

LawsofPhysics's picture

Bingo.  Long sharcropping and all physical assets of real value.

Zap Powerz's picture

Um, Whatev.

Like, did you guys see Jackie Obama last night at the Oscars! Like O. M. G.!!!!!!

She is so cool and amazing! I loved her dress. She is like, a totally classy woman and stuff!




That is what the VAST majority of Americans are thinking about right now.  Not the debt Tsunami that will crush our economy and destroy their way of life.

Antifaschistische's picture

no debt tsunami...  :)

My favorite is the MSM (White House PR Machine) is running news stories non stop on how the sequester will result in the total shut down of all meat processing plants in the US, which will not only result in widespread terminations in the meat processing/packing plants, but will also remove chicken from the tables of America.

And...that lines at airports will be as much as 3 hours long with a 10% layoff of TSA agents.  (this one I don't get since at least 70% just stand around doing nothing anyway - a 10% reduction would only 60% of them stand around doing nothing)

If the meat processing story is true...and all USDA inspectors will be furloughed, then it's obviously political sabotage to beat the American people into submission and agreement to burn another trillion on the US Credit Card.

I'll turn into a vegetarian before I'd agree to another cent of borrowing. 

TuesdayBen's picture

MSM trying to scare sheeple into believing shrinking Gubmint just a tiny bit yields catastrophe

Stuck on Zero's picture

If the "sequester" is allowed to go into effect, the CBO is projecting that it will cause U.S. GDP growth to go down by at least 0.6 percent and that it will "reduce job growth by 750,000 jobs".


If that's the case then why did Congress vote for it?  Also, if cutting spending costs jobs then if we increase spending we'll have many more jobs.  Nothing but complete BS from the government.




kralizec's picture

#13 & #14 are bullshit, who the hell put that crap in there?

$85b less spent than the asshats want and its all doom and gloom?

Anybody dumb enough to believe these jackasses will ever seriously CUT anything raise your hand, someone will be there shortly to kick your ass!

Totentänzerlied's picture

They are entirely justified in their assumption that none of the sheeple will stop and think "maybe the government shouldn't be involved in airport security and meat packing in the first place". The USDA's job is make sure government-approved toxins and poisons get on your table and in your body. Fuck 'em.

DoChenRollingBearing's picture

@ Zap Powerz

Sadly, you are right.  I understand why ZH is so bearish tonight.

Go Tribe's picture

That was Jackie Obama? I thought it was Shaq in a dress.

Mr Pink's picture

I thought they were giving Chewbacca a lifetime achievement award

DoChenRollingBearing's picture

@ LawsofPhysics

+ 1

I know a guy in the rural SE who sharecrops out some of his land.  I agree with you, but you do need to have an enforcement mechanism (either the local .gov or be armed...) to make sharecropping stable should things get rough.

I completely agree with you re being long "assets of real value."

algol_dog's picture

Just a minute TIS - What about German business confidence?  Hmm?

blindfaith's picture

yes, and they will be very happy to hear on their bought and paid for trolls in the main street media the the government says that inflation is .....ZERO.  I want to move there, this ZERO inflation place....don't you?

LawsofPhysics's picture

"#2 The average price of a gallon of gasoline has risen by more than 50 cents over the past two months.  This is making things tougher on our economy, because nearly every form of economic activity involves moving people or goods around."


Sorry, I view this as a positive as I would happily welcome sharecroppers and my farming co-op would do fine if we didn't have to move things as far.  Fuck it, I'll feed and work with my neighbors.  All you crowded new-age city folk can fuck off.

RebelDevil's picture

Cheap Energy is always the basis for excellent economic growth (as in the Industrial Revolution).

Expensive Energy = Trouble.

Shell Game's picture

In the case of the U.S.-Bubble-A., 'artificailly' cheap energy, due to the exorbitant privelage of reserve currency status, and world MIC, led not to excellent economic growth, but massively unsustainable economic growth and the explosion of criminality in the power elite.  Fuck cheap energy, I'll take moderately affordable energy and honest money. Fuck the unholy 'growth' mantra...

dick cheneys ghost's picture

best comment I've read in sometime...................

DoChenRollingBearing's picture

Indeed, Shell Game and "dick cheneys ghost", very perceptive.

Never One Roach's picture

My sister is in Korea...says gas there over $8 a gallon. We got it good here as the above post states. Articial, yes.

DoChenRollingBearing's picture

The distances are less in South Korea, 6 hours takes you across the whole country any direction.  Their country is more geared to serious manufacturing, transport costs for their products (to port) are not as high as in larger countries.  In our case, almost nothing for bearings from the plant to Busan.

France, for example, is as large as TEXAS, transport costs (with a similar $8.00 or so for gasoline) will hurt them more than Korea.

Nice info re Korea, a country I am always interested in, thanks.  + 1

dubbleoj's picture

Korea is gorging itself on full-priced samsung products and gucci belts, waistlines are expanding in tandem. Debt consumption is rising so fast that credit card spending is no longer allowed to be deducted from tax forms starting this year as it has been in the recent past. Dont wait up, we're catching up to you guys quick. 

OldE_Ant's picture

chuckle.  You forgot the increase in SSI taxes as well as gas prices.  I just saw $4gas again in my area.

But hey we can cover it with the gains in the market for the year.  Oh yeah that's gone as of today as well.

All with the USD going up, oil NG down.  Who'd have thunk.

Ah the benefits of a centrally planned economy.

I'm going long on Bens schlong because he must be getting real hard right now.

85B - fuck this double it bitches to 170 and toss an extra 85B to the US govt for a year of sequestration for a cool 245B - god damn we are going to have to order some extra ink and paper for the printers that's a lot of hundreds.

markitect's picture

I filled up a zip car in Downtown Chicago Last week $4.40 gal.  Gas is paid for in the hourly zip car rate but they have to be losing their ass.  I dont see how $9 / hr covers it all.

cbaba's picture

Its all big Ponzi .

You don't see the scam here, most of the business is not profitable at all, the super cheap credit available from Fed and banking cartel with leverage ratio of 10  makes banks lend anybody investing very big, billion or more, these are not need to be profitable. The main scam here is to go and open the company to the public and sell shares at any arbitrary price, this is the moment they make money and they make their  biggest buck here, if you look at their balance sheets they have some profit but also they have lots of debt..

Wait few years for interest rates to rise, you will not believe what you see, the most famous companies will go bankrupt within months....


1100-TACTICAL-12's picture

The city and the burbs will definitely not be the place to be. A couple of turnips and a pork chop will give ya a go at some yuppie's fake boobed trophy wife.

22winmag's picture

If that's the case, I'm going twice in exchange for a can of beef stew. I have cases stacked to the roof so I'm gonna have to stay in shape.

Never One Roach's picture

All those "cheap" zero-down houses built by the millions in the burbs don't look so cheap now. Sometime speople learn.


Sumtimes they don't.

TeMpTeK's picture

The 200+ pnt correction test run is over... Onward!

max2205's picture

Ben will see saw bonds and stocks till you beg to get off the ride.  He needs the ten year below 1.8% and will wack stocks but keep an uptrend till he exits

BKbroiler's picture

#21 - Bunga Bunga collateral damage

tawdzilla's picture

The epitome of the wealth effect 

Tijuana Donkey Show's picture

American spring bitchez! The plan was to get everyone amped out, buy guns, and then kill each other! Why round everyone up, when they can just all kill each other? I'm gonna mount a 50 Cal on my Rascal, and riot as long as the battery holds out. 

gaoptimize's picture

That is an expensive kill.  Beter keep moving near the trees.

PeterSchump's picture

Try to buy any ammo lately? I can't get enough to shoot myself, never mind my fellow citizens. Keep trying. Something else is brewing.

dick cheneys ghost's picture

21) Jim Cramer is a douchebag

azzhatter's picture

with apologies to douchebags worldwide

Iriestx's picture

Reader's Digest has gone bankrupt like 11 times in 5 years.  This is a sign that print is dead, not that the US economy is in the toilet.

mr. mirbach's picture

Clissic Blue Hair Scare - Readers Digest is bankrupting! Better buy some Gold!

francis_sawyer's picture

#21... Cramer is wildly bullish!

nobusiness's picture

Sequestration is not an issue.  The federal government will spend more next year and the rest of this year than it did last year not less.  Infact with sequestration the national debt will go up yes up 7 trillion over the next 10 years.


all it does is reduce the increase in spending.  to call it austerity is stupid.



McMolotov's picture

Whatever, dude. Did you hear they're increasing chocolate rations?! Let's celebrate the good news with some Victory Gin.

eclectic syncretist's picture

Proles aren't allowed to drink gin, just shitty beer in dirty glasses.

HungryPorkChop's picture

I think the new model is Small Business can F'ng Die as long as I can continue to bail out the banks..  What is the definition of that type of economic system?

McMolotov's picture

The kind that ends with dead bankers.