27 Huge Red Flags For The U.S. Economy

Tyler Durden's picture




 

Submitted by Michael Snyder of The Economic Collapse blog,

If you believe that the U.S. economy is heading in the right direction, you really need to read this article.  As we look toward the second half of 2014, there are economic red flags all over the place.  Industrial production is down.  Home sales are way down.  Retail stores are closing at the fastest pace since the collapse of Lehman Brothers.  U.S. household debt is up substantially, and in 20 percent of all U.S. families everyone is unemployed.  In so many ways, what we are witnessing right now is so similar to what we experienced during the build up to the last great financial crisis.  We are making so many of the very same mistakes that we made the last time, and yet our "leaders" seem completely oblivious to what is happening.  But the warning signs are very clear.  All you have to do is open your eyes and look at them.  The following are 27 huge red flags for the U.S. economy...

#1 Despite endless assurances from the Obama administration that we are in an "economic recovery", the number one concern for U.S. voters is "Unemployment/Jobs" according to a recent Gallup survey.

#2 Historically, sales for construction equipment manufacturer Caterpillar have been a pretty good indicator of where the global economy is heading next.  Unfortunately, sales were down 13 percent last month and have now experienced year over year declines for 17 months in a row.

#3 During the first quarter of 2014, profits at office supply giant Staples fell by 43.5 percent.

#4 Foot traffic at Wal-Mart stores fell by 1.4 percent during the first quarter of 2014.  Analysts seem puzzled as to why Wal-Mart is "underperforming".  Perhaps it is because the U.S. middle class is being steadily destroyed and U.S. consumers are tapped out at this point.

#5 It is being projected that Sears will soon close hundreds more stores and will eventually go out of business altogether...

The company said this week that it may sell its 51% stake in Sears Canada, which operates nearly 20% of the company's stores worldwide. It has quietly closed nearly 100 U.S. stores in the last year. Next week, it's expected to announce dismal fiscal first quarter results and possibly yet more store closings.

 

"They have too many stores and they're losing a lot of money, burning cash," said John Kernan, an analyst with Cowen.

 

Kernan expects the company to close 500 of its 1,980 U.S. stores in a few years and, ultimately, to go out of business.

 

"The lights are going off at Sears and Kmart," he said. "There are tumbleweeds blowing through the parking lots at Kmart. They're basically completely irrelevant."

The "retail apocalypse" just continues to roll on, but the mainstream media is treating this like it is not really a big deal.

#6 The labor force participation rate for Americans from the age of 25 to the age of 29 has fallen to an all-time record low.

#7 According to official government numbers, everyone is unemployed in 20 percent of all American families.

#8 As families struggle to pay their bills, many of them are increasingly turning to debt in order to make ends meet.  Earlier this month we learned that total U.S. household debt has increased for three quarters in a row.  And as I noted in one recent article, total consumer credit in the United States has increased by 22 percent over the past three years, and 56 percent of all Americans have "subprime credit" at this point.

#9 Interest rates on student loans are scheduled to increase substantially on July 1st...

As of July 1, federal student loan rates will edge up. Rates overall will be up 0.8% compared to current rates.

 

Federal Stafford Loans for undergraduate students will be 4.66% — up from 3.86%. Federal Stafford Loans for graduate students will be 6.21% — up from 5.41%.

 

Federal Grad PLUS and Federal Parent PLUS Loans will be at 7.21% — up from 6.41%.

This is going to put even more pressure on the growing student loan debt bubble.

#10 U.S. industrial production fell by 0.6 percent in April.  This should not be happening if the economy truly was "recovering".

#11 Manufacturing job openings in the United States have declined for four months in a row.

#12 Existing home sales have fallen for seven of the last eight months and seem to be repeating a pattern that we witnessed back in 2007 prior to the last financial crash.

#13 In the real estate bubble market of Phoenix, sales in April were down 12 percent year over year, and active inventory was up 49 percent year over year.  In other words, there are tons of homes on the market, but sales are going down.

#14 The homeownership rate in the United States has dropped to the lowest level in 19 years.

#15 Trading revenue at big banks all over the western world is way down...

Late Friday, it was JPMorgan who said trading revenues will be down 20 percent this quarter. Now Barclays says trading revenues in the first three months were down 41 percent. The company cited "challenging trading conditions resulting in subdued client activity." Like JPMorgan, Barclays also warned they were seeing no improvement in trading in the second quarter.

#16 Jan Loeys, JPMorgan's head of global asset allocation, is warning that the Federal Reserve is creating a huge financial bubble which could "push us into a credit crisis"...

Where do we go from here? To this analyst, still very subdued economic growth, both at the US and global level, implies continued easy monetary policy. The risk is that bond yields rise no faster than the forwards. Financial overheating (asset inflation) proceeds much faster than economic overheating (CPI inflation). Before CPI inflation has a chance to emerge, and before monetary policy is truly above neutral, a financial bubble will have popped up somewhere and will have corrected, pushing the economy down. That is what has happened in the past 25 years. The behavior of central banks gives us no confidence that this time will be different: Central banks talk about financial instability, but appear to define this mostly in term of bank leverage. Each successive boom and bust is always in another place. A bubble can emerge without leverage. It is not possible to project exactly where this boom and bust cycle will take place as knowing where it will be would induce evasive actions that should prevent it from occurring. One possible ending, among many, is that ultra-easy rates having induced credit markets to grow much faster than equity markets, combines with reduced market making by banks (many of whom have become like brokers) to create a liquidity crisis when the Fed starts the first set of rate hikes. This could then be bad enough to close primary markets, and thus push us into a credit crisis.

#17 Peter Boockvar, the chief market analyst at the Lindsey Group, is warning that the U.S. stock market could experience a 20 percent decline once quantitative easing completely ends.

#18 A lot of other big names are telling CNBC that they expect a significant stock market "correction" very soon as well...

A bevy of high-profile names have warned lately that the market is on the doorstep of a major move lower. From long-term market bulls such as Piper Jaffray to short-term traders such as Dennis Gartman, expectations are high that the major averages are poised for a big dip, with calls varying from 10 percent or so all the way up to 25 percent.

#19 The number of Americans enrolled in the Social Security disability program exceeds the entire population of the nation of Greece and has just hit another brand new record high.

#20 Poverty continues to grow all over the country, and right now there are 49 million Americans that are dealing with food insecurity.

#21 According to Pew Charitable Trusts, tax revenue in 26 U.S. states is still lower than it was back in 2008 even though tax rates have gone up in many areas since then.

#22 Barack Obama is doing his best to keep his promise to destroy the U.S. coal industry...

The EPA is about to impose a new regulation that will reduce carbon emissions from existing power plants starting June 2 and will become permanent in 2015. The new regulation, according to Politico, is the “most dramatic anti-pollution regulation in a generation.” Because the new regulation will further cripple the coal industry, as coal-burning plants will be severely affected, American power will become more dependent on natural gas, solar and wind.

#23 Climatologists are now saying that the state of Texas is going through the worst period of drought that it has experienced in 500 years.

#24 It is being reported that "dozens of Texas communities" are less than 90 days away from being completely out of water.

#25 It is being projected that the drought in California will cost the agricultural industry 1.7 billion dollars and that approximately 14,500 agricultural workers will lose their jobs.

#26 Due in part to the drought, the price of meat rose at the fastest pace in more than 10 years last month.

#27 According to recent surveys, only about a quarter of all Americans believe that the country is heading in the right direction.

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Wed, 05/21/2014 - 20:58 | 4783340 BeetleBailey
BeetleBailey's picture

#28...eat drink and be merry....CAUSE THIS FUCKING TRAIN'S HEADED FOR A BRICK-FUCKING-WALL

Wed, 05/21/2014 - 22:39 | 4783606 Manthong
Manthong's picture

I’m just happy there ain’t moar red flags or flares and that my future health and safety is secured by the unnaturaly born citizen.

 

Wed, 05/21/2014 - 22:48 | 4783641 LetThemEatRand
LetThemEatRand's picture

When I first read this I thought it was an expose on Obama's true vision -- 27 Huge Red Fags for America.  I'll keep my eyes out and post the real link when I find it.

Wed, 05/21/2014 - 23:04 | 4783681 Harbanger
Harbanger's picture

Besides the MIC, Hollywood and hookers.  What's our economy?

Wed, 05/21/2014 - 23:38 | 4783753 LetThemEatRand
LetThemEatRand's picture

You're forgetting that which funds the 3 you listed -- bankers.

Thu, 05/22/2014 - 03:28 | 4784003 Boris Alatovkrap
Boris Alatovkrap's picture

In Crimea and East Ukraine is huge red flag (with white and blue stripe above) that thing is to be very bad for Ukraine people... also is huge red flag on border of Vietnam. Too bad star spangle flag is so impotent after boy king is drive USSA economy through latrine.

Thu, 05/22/2014 - 06:08 | 4784058 new game
new game's picture

i'm seeing white flags splatted with blood, whilst the banksters cash in...

tie a yellow ribbon around my cock and have a banker suck on that package...

Thu, 05/22/2014 - 07:03 | 4784110 Boris Alatovkrap
Boris Alatovkrap's picture

Never forgetting, all war is bankster's war.

Thu, 05/22/2014 - 07:25 | 4784143 BigJim
BigJim's picture

Speaking of which... what's going on in Donetsk? Didn't they threaten all-out war on Ukraine if their forces didn't leave over the weekend?

Thu, 05/22/2014 - 15:31 | 4785964 Boris Alatovkrap
Boris Alatovkrap's picture

Old Russian proverb, "When you are eat cabbage roll, expect plenty gas, but no solid waste... until later when get run in trouser."

Thu, 05/22/2014 - 08:41 | 4784316 WarHorse
WarHorse's picture

Not sure how bankers are "cashing in" these days.  Tons of finance people are out of work and bonuses are 1/2 the size and 60% deferred.  99% of bankers/traders are honest.  Give it a rest already. 

Thu, 05/22/2014 - 09:08 | 4784390 RaceToTheBottom
RaceToTheBottom's picture

Banksters and their minion thugs have not even begun to get their....

They are a cancer that needs to be removed.

Thu, 05/22/2014 - 10:18 | 4784619 Omen IV
Omen IV's picture

 "99% of bankers/traders are honest"

IS THIS A SURVEY or a personal opinion?

how  could it be possible when the criteria #1 for "any" position is sociopath status? 

Thu, 05/22/2014 - 07:45 | 4784170 Lost My Shorts
Lost My Shorts's picture

Sorry Boris, Amerikansky taxpayer no give ?????? about Ukraine and tired of being whole world's ????.  Boy king's mistake is not keeping us farther from those conflicts, and letting his chain be yanked by DC pundits who promote the fantasy that the USA can control the world just by swinging big ?????.

Thu, 05/22/2014 - 15:38 | 4786002 Boris Alatovkrap
Boris Alatovkrap's picture

Dear Mr. Shorts,

USSA citizenry is love any excuse for war, but that is beside of point. You are please to consider behavior of one super power is affecting of behavior of other super power and when USSA is sufficiently to demonstrate global ineptitude, then "red line" chatter and hash-tag diplomacy like giggle school girl is only to make Russian autocrat chuckle and proceed with impunity. So you are take that and swing big ????? for display only.

Sincerest regards,

Boris

Wed, 05/21/2014 - 20:59 | 4783343 fonzannoon
fonzannoon's picture

"A lot of other big names are telling CNBC that they expect a significant stock market "correction" very soon as well..."

wow. The awfulness of this article can't even be measured. It actually can't be measured.

Wed, 05/21/2014 - 21:04 | 4783363 g'kar
g'kar's picture

Look what they can do to the stock market in 2 picoseconds. The news just can't keep up.

Wed, 05/21/2014 - 22:43 | 4783630 Manthong
Manthong's picture

oh heck.. get into the spirit of things...

embrace the crushing as we are all plummeted into the chasm created by our betters.

..or maybe some might not react so meekly.

Thu, 05/22/2014 - 01:29 | 4783904 OldPhart
OldPhart's picture

My comment from Mike's Blog.

Prepping for annual audit right now. Sales of Ready mix concrete, aggregate, steel and steel fabrication are down 10% from last year. Our transportation of these materials from our own sources are down 6%, and outside sources 7% (the costs/revenue depends on distance).

We were a $60 million business in 2005. We did $23 million for FY 03-2014. In 2005 we had 30% government business, in 2014 we have 60% government business.

At least we got to build the guard towers for the FEMA camps.

Wed, 05/21/2014 - 21:16 | 4783387 LetThemEatRand
LetThemEatRand's picture

"It actually can't be measured."

The Fed is working on a chart big enough to measure it.  Practice makes perfect.

Thu, 05/22/2014 - 00:16 | 4783819 Poundsand
Poundsand's picture

It went parabolic!  Just need a taller chart!

Wed, 05/21/2014 - 21:25 | 4783407 TheFourthStooge-ing
TheFourthStooge-ing's picture

One huge red flag for the US economy: the hammer and sickle banner of the USSA.

Wed, 05/21/2014 - 22:35 | 4783600 knukles
knukles's picture

Is banner most important sickle for people's collective.

Thu, 05/22/2014 - 11:50 | 4784949 buyingsterling
buyingsterling's picture

*******************************************************
I added the ass-terisks so that twats will read this. If you're not a twat, move on, this is for the little girls running this author down.
I'm gonna come back here all day today and I'm going to Take the piss out of anyone who replies to this with anything other than a sincere apology. (after a nap, I got up early to see my oldest awarded top student in her class)

"The awfulness of this article can't even be measured. It actually can't be measured."

I'm sick of useless eaters running down Michael Snyder. What are you doing? FUCK ALL, that's what, FUCK ALL! NOTHING.
What would be better, RE an article on the overall state of the economy? Do you want a prosaic exposition of the various elements? Then FUCKING WRITE IT, ASSHOLES.

Until then, either stop reading his posts (you won't because there's good information in all of them) or just keep your shitty, cranky little opinions to yourself. Save your snide shit for the control freaks. This fellow is one of ours.

********************************************************

Wed, 05/21/2014 - 21:01 | 4783350 CrashisOptimistic
CrashisOptimistic's picture

I got 27 reasons why I am tired of Snyder's lists.  But I'll leave y'all to your own.

Wed, 05/21/2014 - 21:42 | 4783457 Handful of Dust
Handful of Dust's picture

"Foot traffic at Wal-Mart stores fell by 1.4% ... but scooter use is up 430%."

Thu, 05/22/2014 - 00:17 | 4783821 Poundsand
Poundsand's picture

Going to have to start building some infrastructure under those aisles pretty soon.

Thu, 05/22/2014 - 08:00 | 4784201 StormShadow
StormShadow's picture

Ummm gee why would that be? Oh yeah they cut EBT by $100/mo. Why is this such a mystery.

Thu, 05/22/2014 - 03:06 | 4783988 Confused
Confused's picture

He has lists of lists of lists. 

 

While there might be some useful information, for which I am thankful, it does get rather old that it is all presented in the most digestible form. ZH should just have a news scroll at the bottom of the site for Mr. Snyders lists. 

Thu, 05/22/2014 - 06:25 | 4784074 free_lunch
free_lunch's picture

All that is needed to change things, is the average IQ upgraded by 30 to 50 points for the masses, ignoring what they think they know and start thinking about everything from scratch.

 

 

See, nothing to worry about, the future looks bright!

 

PS: The average will go up, one way or the other. My bet is on the other.

Thu, 05/22/2014 - 08:35 | 4784289 oklaboy
oklaboy's picture

faacts is facts....

Wed, 05/21/2014 - 21:03 | 4783358 OpTwoMistic
OpTwoMistic's picture

WTF ?

Wed, 05/21/2014 - 21:03 | 4783359 pods
pods's picture

Number 28:  Snyder is using quotes from the parasitic banker class to describe the state of the economy.

pods

Thu, 05/22/2014 - 11:54 | 4784972 buyingsterling
buyingsterling's picture

So when it's shit and the bankers concede that, then what? It's utterly irrelevant? What's your point pods?

Wed, 05/21/2014 - 21:09 | 4783365 JustObserving
JustObserving's picture

The biggest red flag that one can see everyday is that all US markets are completely manipulated.  When your government will not permit free or fair markets, you can be sure that the end is nigh.

Wed, 05/21/2014 - 22:57 | 4783666 DeadFred
DeadFred's picture

In my opinion it has been a really, really long time waiting for that nigh to come by.

Thu, 05/22/2014 - 07:28 | 4784146 BigJim
BigJim's picture

The markets can remain nigh longer than you can remain solvent.

Thu, 05/22/2014 - 11:02 | 4784768 venturen
venturen's picture

government? It is the bankers control the government. You don't think Blackrock, Caryle, Goldman, etc don't just decide how they are making money next year....and give their orders to the people you elected, to pass the law....to allow them to make that money, if they don't just Bloomberg a Fed minion to print them what they need? 

 

I am sure Standley Fischer(bank of Israel & FED gov, can't make this stuff up) at the FED won't put a dent in a certain group taking ALL YOUR MONEY! 

Wed, 05/21/2014 - 21:08 | 4783370 Cattender
Cattender's picture

i only need one reason to UNDERSTAND how bad it is.... Printing Money/Zero percent Interest LOCKED IN FOREVER!!!!!

Wed, 05/21/2014 - 22:52 | 4783660 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

Locked in forever, or until The Big Reset?

Wed, 05/21/2014 - 21:19 | 4783391 km4
km4's picture

A map of the worst countries in the world in which to be a worker via @BoingBoing http://boingboing.net/2014/05/21/a-map-of-the-worst-countries-i.html

“Countries such as Denmark and Uruguay led the way through their strong labour laws, but perhaps surprisingly, the likes of Greece, the United States and Hong Kong, lagged behind,” said ITUC general secretary Sharan Burrow.

USA USA USA ;-)

Wed, 05/21/2014 - 21:33 | 4783430 km4
km4's picture

whomever does a negative on my comment 

1) does not believe in meaningful statistics

2) does not believe in factual science

3) is just a fucktard IDIOT who probably voted for Obama twice

4) all of the above

Wed, 05/21/2014 - 22:40 | 4783622 knukles
knukles's picture

Dude (wasn't me gave you any red marks, BTW) ITUC is the International Trade Union Conference, about as far a left wing group as one can get.
HQ in Brussels? 
Du-fucking-h
That's where your reddies are coming from.
It is neither science, nor "factual" through their lenses.
Ain't science trough anybody's lenses, FFS

Thu, 05/22/2014 - 10:44 | 4784695 Peanut Butter E...
Peanut Butter Engineer's picture

Grouping Hong Kong into your list with USA and Greece was your mistake.

Thu, 05/22/2014 - 01:42 | 4783920 OldPhart
OldPhart's picture

Socialists don't like Fascists.

And the United States is now Fascist.

Wed, 05/21/2014 - 21:20 | 4783393 DirkDiggler11
DirkDiggler11's picture

Out of the 14,500 agricultural workers in Kalifornia expected to lose theor jobs, 14,499 are illegal ailiens, paying almost zero taxes.
The price we pay for cheap strawberries, indeed.

Wed, 05/21/2014 - 21:47 | 4783480 RafterManFMJ
RafterManFMJ's picture

The sooner that shit state burns, the better.

Wed, 05/21/2014 - 22:17 | 4783551 Omegaman2211
Omegaman2211's picture

Same with the other 49.

Wed, 05/21/2014 - 22:43 | 4783631 knukles
knukles's picture

RafterMan, don't wish for...you night get it good and hard...
CA produces a hugmiongous amount of America;'s food and contributes a piss load more to the Feds for everybody else than we get back ...

The Dumbocraps think of us as a natural resource  ...  as slave labor and a tax base.

Thu, 05/22/2014 - 01:45 | 4783922 OldPhart
OldPhart's picture

Plus 1 for the most creative spelling of 'humongous'.

Do NOT follow this link or you will be banned from the site!