Skip to comments.The U.S. Economy Has Collapsed: “This Is A Monstrous Negative Revision”
Posted on 06/25/2014 1:31:56 PM PDT by Signalman
For months the administration, financial pundits and Wall Street analysts made it a point to inform Americans about the healthy state of our economy. One of the key metrics theyve used as proof of recovery was the Gross Domestic Product (GDP) which measures the productive output of the U.S. economy as a whole.
Earlier this year the U.S. Bureau of Economic Analysis noted that this measure was showing positive growth. But now, after a second official revision, all of that purported growth used to goad consumers into spending more money on homes, cars and other goods has been revealed to be nothing but conjecture. According to the BEA, not only did economic growth stall during the first quarter of 2014, it completely collapsed, signalling a significant shift in consumption habits amid increasing food and energy prices:
Real gross domestic product the output of goods and services produced by labor and property located in the United States decreased at an annual rate of 2.9 percent in the first quarter of 2014 according to the third estimate released by the Bureau of Economic Analysis.
The government first made consumers believe that the economy grew. Then they revised this down to slight negative growth. The latest revision of -2.9% growth is significant, because even with official inflation at over 2% Americas economic output has declined. It seems that no matter how much money they pump into the system, it isnt enough to offset the lack of income or job growth.
This is a monstrous negative revision.
A big part of it was non-residential fixed investment. Rather than invest, companies have issued debt and bought back stock. But this does nothing for the economy it simply blows a bubble in the market. How long before that comes home to roost? Not long now, I suspect.
If you think companies dont expect a recession inbound, youre nuts. Inventory draw-downs subtracted 1.7% from the GDP number. Companies dont build inventories if they dont think they can sell them as such this is a forward indicator.
Oh, and current production profits? Theyre down while current taxes were up. Obamacare anyone? Worse is that undistributed profits decreased too and this is the second quarter sequentially in which they did. What does a company pay dividends with? Undistributed profits.
So for two quarter the markets has risen like a rocket while the fuel for that rise has been exhausted for the last six months.
This will turn out well, Im sure.
Officially, we have not yet entered a recession. That requires two quarters of negative growth. However, the current trend indicates thats exactly whats going to happen. In the next 30 days the BEA should be releasing the GDP rate for the second quarter of 2014. According to economist John Williams that will more than likely show a negative print and will lead to an official confirmation that the U.S. has entered another recession.
Whats worse, unlike the previous recession that followed the collapse of 2008, there is no way out of this one.
The reason for this is that the consumer is strapped doesnt have the liquidity to fuel the growth in consumption.
Income the median household income, net of inflation, is as low as it was in 1967. The average guy is not staying ahead of inflation.
As a result personal consumption is more than two thirds of the economy theres no way you can have positive sustainable growth in the U.S. economy without the consumer being healthy.
As the renewed downturn gains wider acceptance or wider recognition, that will intensify the selling pressure. When someone starts selling, its going to be a race for the door, and I am looking for a dollar selling panic to be the trigger for the onset of hyperinflation.
I dont see what will save it at this point.
To cries of fear mongering and doom porn contrarian economists and analysts warned that these numbers were being fabricated, despite the fact the the underlying fundamentals showed a clear draw-down in consumer confidence, company inventory, home sales and overall spending.
Now all of those warnings are coming to pass.
We have entered the next leg down and given that the governments of the world have pretty much used up all of the arrows in their quivers, there is nothing to stop whats coming.
And whats coming is nothing short of a complete collapse of our way of life. Hard to believe? Yes. Implausible? No.
It is so plausible, in fact, that well known radio commentator Mark Levin recently noted that the U.S. government has been actively preparing for and simulating the collapse of our financial system, as well as the widespread violence that will follow.
Ill tell you what I think theyre simulating.
The collapse of our financial system, the collapse of our society and the potential for widespread violence, looting, killing in the streets, because thats what happens when an economy collapses.
Im not talking about a recession. Im talking about a collapse, when people are desperate, when they cant get food or clothing, when they have no way of going from place to place, when they cant protect themselves.
There arent enough police officers on the face of the earth to adequately handle a situation like that.
This is happening right here and now. The streets may not devolve into madness tomorrow or next month, but piece by piece the foundations of Americas economic health and social structure are crumbling. The time to finalize preparations for whats coming is now.
Its going to go from bad to worse.
The only thing “Propping” up the Ecomony right now is the “Propaganda Bubble”....
Milton Friedman was right. You can only keep up the illusion of prosperity for only a short time with all that borrowing, printing and squandering of capital with government spending. Also if your regulatory agencies initiate an anti capitalist, anti carbon energy crusade with endless rules regulations and taxes, the private sector slows down considerably. Obama and Bernacke have done more to harm America than any two individuals ever to serve in high office.
It’s been fiat for probably my entire lifetime. I don’t know if we are near the abyss or not, but we are not the first country to tank and will certainly not be the last. Nothing but are greed and liberalism to blame.
Time to step it up if you can.
If one encounters
Looking to buy your food
Just lock and load
And blow them away
Oh, and take their money of course.
In my view the real SHTF is when the markets start to puke up all the fake money. So far that’s not happening yet, because “everybody” desperately wants to keep the merry-go-round running. It will, but timing is everything.
Has Obama blamed it on Global Warming yet or will that be next week ?
The corrupt MSM goes first.
The Republicans will take over Congress in November and be promptly blamed for the recession.
“The Republicans will take over Congress in November and be promptly blamed for the recession. “
And there will be a resurgence in tent cities, and high fuel prices will be an issue again.
With the media running Baghdad Bob interference? Yeah, buy some silver
+1. The Dow 17,000 mark isn’t far off, either.
At least we are in the [food] growing season.
In Zimbabwe the stock market soared while the people were collecting wheebarrows full of paper money to buy a loaf of stale bread. Inflation also inflates stock prices I guess
This is treacherous territory.
But fortunes are made in treacherous times.
I want to be a junior version of John Paulson 2008.
That and the near-zero interest rates on savings. When one sells stock, they have to pay capital gains, so they don't have the full amount for themselves. And what they do have brings in no interest on savings. Besides that, they lose out on dividends. People feel trapped and have decided to "sell" when the prices start declining.
Only.....SURPRISE....the big boys will know ahead of time when to burst the bubble and they'll take their profits. For the rest of us, prices will drop like a rock before we can even get a bid in.
The thing is, the ptb want it that way. Otherwise, CDs and other safe savings would be paying 1% now, 2% soon after. That's the only way to gradually deflate the bubble.
Just received word from my accountants that new IRS Form 720 needs to be filled out.
Form 720 is a quarterly Federal Excise Tax...it is part of Obamacare (I believe). I have 3 employees so the cost to me is $2.00 per employee). $ 6.00 total. I figure by the time this is filled out and process the end results will be a loss of money to the gubment. How much will it cost them to keep audit me and process 6 bucks?
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