The Recession Arrived With Wardogs and Goldilocks’ Hopium – Part 5: SHTF

Originally published Apr. 25, 2024 by TraderStef on CrushTheStreet (updated)

As the powers that be continue pumping out officialdom data points and regurgitate Bidenomics as a success story into legacy media echo chambers, Americans from the poorest to upper middle class are being subjected to a completely different reality that is a recession- or depression-level economy and expressing that frustration with blunt expletives. The bread and circus narratives that emanate from uniparty comrades in Washington, D.C. and presidential candidates on the 2024 campaign trail lie when they proclaim promises or solutions for the unsustainable fiscal policy, an unpayable national debt bomb with annual interest payments blowing past $1 trillion, a lack of prioritizing domestic issues, the paucity of law and order on Main Street and throughout state and federal branches of government, and war funding that’s escalating a WW3 scenario with 5GW proxy wars on domestic and foreign soil.

“NYC union worker says what much of America is thinking right now.” – Spitfire & NYP Apr. 25

I suspect most Trump supporters will ignore his shortcomings that are not limited to the ongoing promotion of a self-proclaimed “Trumpcine” success story and ignoring the excess deaths and disabilities courtesy of the “warp speed” gene modification program. Just last week, he endorsed House Speaker Mike Johnson to ram through a $95 billion supplemental spending bill for endless war without an immediate shutdown of the U.S. border crisis and an illegal confiscation of Russia’s sovereign assets that will have an enormous and destabilizing impact on the global financial system already experiencing fragility. Once again, plebeians will likely be left to choose between a lesser of evils, engage in retaliatory voting, or may not vote due to disgust. The really bad news is that SHTF a couple years ago, and NormieLand passengers have a non-refundable one-way ticket that may terminate as a “Mad Max” hard-landing situation that will melt minds and enter their backyard to hasten “A Revolution is Afoot Masquerading as Civil War” (Twitter thread) in the United States. Here’s an excerpt from “Part 4: Shark Bait” published (thread) on Oct. 6, 2023:

“Warning signals of a recession have been nonstop since early mid-2022 and matured despite Goldilocks talk by analysts and financial rags that feed narratives… If you are of the same ilk as most Americans experiencing the depreciation of income due to inflation with an inflexible budget, you’re acutely aware of how the Bidenomics bullhorn that’s blaring success for the economy is nothing but a huge pile of stinking manure… and the bread and circuses since the Federal Reserve began raising interest rates… a soft landing the Fed hoped for is at risk after it enticed a spike in long-term interest rates at the highest level since the Great Financial Crisis (GFC) dawned in 2007. Slowing the economy and taming inflation are what the Fed set out to accomplish, but too much is never a good thing with no control over Capitol Hill’s fiscal policy or monetary policy silver bullet that automated financial markets are unable to agree with.” – TraderStef

The current state of world affairs has become so interrelated that it’s increasingly difficult to opine on a topic without falling into adjacent rabbit holes, so let’s try to focus on highlighting a few economic data points on the United States without wandering off. A good place to begin is an overview by Danielle DiMartino Booth from mid-April following the Federal Reserve’s March FOMC meeting and monetary policy decision plus one graphic from an early April interview that demonstrates the annual growth in government jobs since 1999. I suggest a perusal of MishTalk’s commentary on the Apr. 24 BLS jobs report, review a compilation of layoffs in 2024 via ZH, and mark your calendar for the next FOMC decision and live presser on May 1.

Layoffs Will Surge, “Only A Matter of Time’ Before Implosion” – iTrustCapital

On the bankruptcy front, Chapter 11 filings are rising rapidly and trending slightly higher than during the initial pandemic lockdown in mid-2020.

A personal savings rate in the U.S. that measures the percentage of disposable income saved is plunging to levels not seen since the GFC. The 30-year average is roughly 5.8%, but “as of Feb. 2024, it stood at 3.6%, down from 4.1% in Jan. 2024 and a significant 23.4% YoY decrease from 4.7% in Feb. 2023.”

The perceived strength in consumer spending that assists officialdom in not declaring a recession has been fueled by inflation and the increased use of credit card debt to purchase essentials. More Americans are living paycheck to paycheck this year than in 2023. 59% are citing inflation as the culprit, 59% cite a lack of savings, 33% cite credit card debt, 28% cite rising interest rates, 28% cite medical bills, 21% cite layoffs or loss of income, and 15% blame student loans.

Bank of America Just Told Us Something Important About Consumer Spending… “One reason for the consumer strength is that people are swiping their credit cards more often. Despite interest rates on credit cards that are the highest on record, people are piling on revolving debt. At the end of 2023, U.S. consumer credit card debt stood at $1.13 trillion. By some metrics, the financial health of the consumer is weakening. In an interview with Bloomberg TV last month, Moynihan noted that spending growth has decreased from 10% last year to 3% to 4% more recently. Not only that, but net charge-offs and delinquencies on credit card loans are also up. The overall delinquency rate on credit card loans nationwide is 3.1%, the highest rate since 2011.” – The Motley Fool, Apr. 21

Despite the known trend decline of real GDP (real value is adjusted for inflation) for the U.S. since 1950 (see St. Louis Fed chart), today’s GDP and inflation data shocked the Goldilocks mob. The first estimate for 1Q24 GDP clocked in at 1.6% and below the lowest estimate. That easily halved the 3.4% growth from 4Q23 and was the lowest print in two years with a stagflationary cherry on top. The PCE price index (aka core inflation) that excludes food and energy spiked from 2% to 3.7%, well above estimates. The Fed has a major dilemma on its hands because inflation will rise if they follow through with cutting interest rates, but the economy will tank quicker if rates are increased to combat inflationary pressure.

Small businesses in the U.S. are not happy, either. Their outlook has plunged to a 12-year low.

“U.S. Small Business Optimism craters to a 12-year low. When Biden, Yellen, and the crew talk about how ‘great’ the economy is… they miss the entire point. The inflation government created with excessive money printing has decimated the poor and the middle class.” – Kyle Bass, Apr. 9

“Yellen will drain the Treasury’s TGA between now and November… injecting another $750 billion into our system to continue the charade of economic growth going into the election.” – Kyle Bass, Apr. 9

“Financial Tea leaves: Yen is depreciating and yen carry trade under pressure; Regulators warning of clearing company bankruptcies; Moves by government to cut off self-custody of bitcoin; A bank failure announcement after close of market today. The hour of some kind of monetary reset draws ever closer.” – Edward Dowd (peruse his Website), Apr. 26 (inserted news links for reference)

A plethora of negative data points is infesting nearly all sectors of economic data, and this post is getting long in the tooth. I will add that you know SHTF when the “99 Cents Only” company announced it’s closing all 371 stores throughout four states. Meanwhile, two of the largest elephants in the room are the commercial real estate bust (thread) that’s well underway and a majority of Americans being totally unaware that Congress approved the confiscation of Russia’s sovereign assets last weekend that I covered in “Surge of ‘Little Green Men,’ and Metal is Poised to Strike – Part XXII: REPO Man” (thread). The first retaliatory strike over the bow arrived yesterday via a Russian court that ordered the seizure of $440 million in assets from JPMorgan. The following interview with Jim Rickards is a deep dive into consequences of the REPO Act.

REPO Act steals Russia’s sovereign assets, the adverse implications for U.S., a boost for BRICS, and lawsuits against Euroclear that presage economic chaos – Jim Rickards, Apr. 24

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