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What Will You Do When Inflation Forces U.S. Households To Spend 40 Percent Of Their Incomes On Food?

What Will You Do When Inflation Forces U.S. Households To Spend 40 Percent Of Their Incomes On Food?

Did you know that the price of corn has risen 142 percent in the last 12 months?  Of course corn is used in hundreds of different products we buy at the grocery store, and so everyone is going to feel the pain of this price increase.  But it isn’t just the price of corn that is going crazy.  We are seeing food prices shoot up dramatically all across the industry, and experts are warning that this is just the very beginning.  So if you think that food prices are bad now, just wait, because they are going to get a whole lot worse.

Typically, Americans spend approximately 10 percent of their disposable personal incomes on food.  The following comes directly from the USDA website

In 2019, Americans spent an average of 9.5 percent of their disposable personal incomes on food—divided between food at home (4.9 percent) and food away from home (4.6 percent). Between 1960 and 1998, the average share of disposable personal income spent on total food by Americans, on average, fell from 17.0 to 10.1 percent, driven by a declining share of income spent on food at home.

Needless to say, the poorest Americans spend more of their incomes on food than the richest Americans.

According to the USDA, the poorest households spent an average of 36 percent of their disposable personal incomes on food in 2019…

As their incomes rise, households spend more money on food, but it represents a smaller overall budget share. In 2019, households in the lowest income quintile spent an average of $4,400 on food (representing 36.0 percent of income), while households in the highest income quintile spent an average of $13,987 on food (representing 8.0 percent of income).

…click on the above link to read the rest of the article…

Americans Have Already Skipped Payments On More Than 100 Million Loans, And Job Losses Continue To Escalate

Americans Have Already Skipped Payments On More Than 100 Million Loans, And Job Losses Continue To Escalate

Those that have been hoping for some sort of a “V-shaped recovery” have had their hopes completely dashed.  U.S. workers continue to lose jobs at a staggering rate, and economic activity continues to remain at deeply suppressed levels all over the nation.  Of course this wasn’t supposed to happen now that states have been “reopening” their economies.  We were told that things would soon be getting back to normal and that the economic numbers would rebound dramatically.  But that is not happening.  In fact, the number of Americans that filed new claims for unemployment benefits last week was much higher than expected

Weekly jobless claims stayed above 1 million for the 13th consecutive week as the coronavirus pandemic continued to hammer the U.S. economy.

First-time claims totaled 1.5 million last week, higher than the 1.3 million that economists surveyed by Dow Jones had been expecting. The government report’s total was 58,000 lower than the previous week’s 1.566 million, which was revised up by 24,000.

To put this in perspective, let me once again remind my readers that prior to this year the all-time record for a single week was just 695,000.  So even though more than 44 million Americans had already filed initial claims for unemployment benefits before this latest report, there were still enough new people losing jobs to more than double that old record from 1982.

That is just astounding.  We were told that the economy would be regaining huge amounts of jobs by now, but instead job losses remain at a catastrophic level that is unlike anything that we have ever seen before in all of U.S. history.

…click on the above link to read the rest of the article…

No, The U.S. Economy Will Definitely Not Be Returning To “Normal”. In Fact, Things Will Soon Get Even Worse.

No, The U.S. Economy Will Definitely Not Be Returning To “Normal”. In Fact, Things Will Soon Get Even Worse.

2020 has been quite a year so far.  It has been one nightmare after another, and yet the economic optimists continue to insist that economic activity will soon snap back to normal levels somehow.  So the economic optimists aren’t really alarmed by the fact that the core areas of our major cities have been torched, gutted and looted by rioters, because they assume that all of this violence is just a temporary phenomenon and that any damage that has been done can be repaired.  And they aren’t really alarmed by the fact that the COVID-19 pandemic is starting to escalate again.  In fact, over the last seven days we have seen the number of newly confirmed cases around the globe hit levels that we have never seen before.  They just assume that “the worst is behind us” and that the vast majority of the businesses and jobs that have been lost during this pandemic will be quickly recovered.

Wouldn’t it be wonderful if they were actually correct?

Sadly, the truth is that economic conditions will not be returning to normal.  Yes, some of the jobs that were lost will be recovered as states start to “reopen” their economies.  But more than 100,000 businesses have already permanently closed during this new economic downturn, and all of those jobs are lost forever.

And yes, the level of economic activity will rise as states end their lockdowns, but it will still be much lower than it was before COVID-19 started spreading like wildfire in the United States.

At this point, even the perpetually optimistic OECD is admitting that global economic activity as a whole will be way down in 2020

…click on the above link to read the rest of the article…

Most U.S. States Have ‘Reopened’ Their Economies, So Why Does Unemployment Continue To Spiral Out Of Control?

Most U.S. States Have ‘Reopened’ Their Economies, So Why Does Unemployment Continue To Spiral Out Of Control?

This wasn’t supposed to happen.  Once states started to “reopen” their economies, the tsunami of unemployment was supposed to end.  But instead, we continue to see Americans lose jobs at a pace that is far beyond anything we have ever seen before in all of U.S. history.  All the way back in 1982, there was a week when 695,000 Americans filed initial claims for unemployment benefits, and that all-time record was never broken until this year.  Of course we have seen monster number after monster number here in 2020, and we just learned that last week another 1.877 million Americans filed new claims for unemployment benefits…

Filings for unemployment insurance claims totaled 1.877 million last week in a sign that the worst is over for the coronavirus-related jobs crisis but that the level of unemployment remains stubbornly high.

Economists surveyed by Dow Jones had been looking for 1.775 million new claims. The Labor Department’s total nevertheless represented a decline from the previous week’s upwardly revised total of 2.126 million.

So even though more than 40 million Americans had already lost their jobs in 2020, there were still enough people losing their jobs last week to surpass the old record from 1982 by more than a million.

Just think about that.

Overall, a grand total of 42.6 million Americans have now lost their jobs since the pandemic began, and that makes this the largest spike in unemployment in all of U.S. history by a very wide margin.

And when the monthly employment report comes out on Friday, the official U.S. unemployment rate is expected to surpass 20 percent

…click on the above link to read the rest of the article…

10 Numbers That Show The U.S. Has Fallen Into A Horrifying Economic Depression

10 Numbers That Show The U.S. Has Fallen Into A Horrifying Economic Depression

The last recession was really, really bad, but it was never like this.  It is time for us to face reality, and that means admitting that the U.S. economy has plunged into a depression.  This is already the worst economic downturn that America has experienced since the Great Depression of the 1930s, and we are right in the middle of the largest spike in unemployment in all of U.S. history by a very wide margin.  Of course it was fear of COVID-19 that burst our economic bubble, and fear of this virus is going to be with us for a very long time to come.  So we need to brace ourselves for an extended economic crisis, and at this point even Time Magazine is openly referring to this new downturn as an “economic depression”.  Needless to say, there will be a tremendous amount of debate about how deep it will eventually become, but everyone should be able to agree that our nation hasn’t seen anything like this since before World War II.

In order to prove my point, let me share the following 10 numbers with you…

#1 According to a study that was just released by the National Bureau of Economic Research, more than 100,000 U.S. businesses have already permanently shut down during this pandemic, and that represents millions of jobs that are never coming back.

#2 The Federal Reserve Bank of Atlanta is now projecting that U.S. GDP will shrink by 42.8 percent during the second quarter…

A new GDP forecast from the Federal Reserve Bank of Atlanta for the three months through June estimates an unprecedented drop of 42.8 percent. The bank describes the data as a “nowcast” or real-time, compared with the official government report of GDP, which is dated. The first-quarter preliminary data, which showed a 4.8 percent dip, included a limited period of impact from COVID-19.

…click on the above link to read the rest of the article…

A Taste Of What Is Coming – Food Prices Just Increased By The Most That We Have Seen Since 1974

A Taste Of What Is Coming – Food Prices Just Increased By The Most That We Have Seen Since 1974

Get ready to pay much more for groceries.  I have been warning that the flood of new money that the Federal Reserve and Congress have been pumping into the system would have very serious consequences, and I have also been warning that food prices would be shooting higher.  When things start getting really crazy, demand for food and other basic essentials goes way up, and meanwhile this pandemic has significantly disrupted production of certain products.  So even though most of the economy is currently still in a deflationary phase, food prices are beginning to spike.  In fact, the U.S. Labor Department says that we just witnessed the largest one month increase since February 1974

The Labor Department reported Tuesday that prices U.S. consumers paid for groceries jumped 2.6% in April, the largest one-month pop since February 1974. The spike in supermarket prices was broad based and impacted items from broccoli and ham to oatmeal and tuna.

The price of the meats, poultry, fish and eggs category rose 4.3%, fruits and vegetables climbed 1.5%, cereals and bakery products advanced 2.9%, and dairy goods gained 1.5%.

Sadly, this is just the beginning.

Prior to this pandemic, Americans spent about 10 percent of their incomes on food.

As this new economic depression deepens, expect that number to eventually more than double.

We live at a time when global food supplies are becoming increasing stressed for a variety of reasons.  In wealthy countries this is going to force food prices aggressively higher, and in poor countries this is going to mean that a lot of people simply will not have enough to eat.

…click on the above link to read the rest of the article…

We Are Witnessing Economic Carnage Like We Have Never Seen Before, And The Economy Is Going To Continue To Bleed Jobs

We Are Witnessing Economic Carnage Like We Have Never Seen Before, And The Economy Is Going To Continue To Bleed Jobs

Now we are up to 33.5 million jobs lost.  In just 7 weeks, the U.S. economy has been completely turned upside down, and the numbers are unlike anything that we have ever seen before.  On Thursday, the Labor Department announced that 3.17 million Americans filed initial claims for unemployment benefits last week.  That brings the grand total for this crisis up to 33.5 million, and that figure absolutely dwarfs what we witnessed during the last recession.  And as I discussed yesterday, even the mainstream media is now admitting that millions of those jobs are never coming back.

Yes, some Americans will be going back to work now that the lockdowns are being ended, but for now it is being projected that the job losses will continue to surpass any gains that are made by workers that are returning to their old jobs.

In fact, one prominent economist told CNBC that it will likely take until mid-June before the number of Americans filing new claims for unemployment benefits each week falls below a million…

At the current pace, the week claims numbers should fall below 1 million by mid-June, according to Ian Shepherdson, chief economist at Pantheon Macroeconomics. “We’re very hopeful that June will see the beginnings of a rebound as states begin to reopen,” Shepherdson said.

To put that in perspective, prior to this year the all-time record for a single week was just 695,000.

So even when we get down to a million new claims each week, that will still be a catastrophic level.

And the truth is that these numbers don’t even tell the entire story.  Because state unemployment websites have been so overwhelmed, there are vast numbers of unemployed Americans that still have not been able to successfully file claims.

…click on the above link to read the rest of the article…

Inverted Global Yield Curve Creates “The Perfect Cocktail For A Liquidity Crunch” As The IMF Warns Of “A Second Great Depression”

Inverted Global Yield Curve Creates “The Perfect Cocktail For A Liquidity Crunch” As The IMF Warns Of “A Second Great Depression”

Why would the IMF use the phrase “a second Great Depression” in a report that they know the entire world will read?  To be more precise, the IMF stated that “large challenges loom for the global economy to prevent a second Great Depression”.  Are they saying that if we do not change our ways that we are going to be heading into a horrific economic depression?  Because if that is what they are trying to communicate, they would be exactly correct.  At this moment, global debt levels are higher than they have ever been before in all of human history, and in their report the IMF specifically identified “global debt levels” as one of the key problems that could lead to “another financial meltdown”

The world economy is at risk of another financial meltdown, following the failure of governments and regulators to push through all the reforms needed to protect the system from reckless behaviour, the International Monetary Fund has warned.

With global debt levels well above those at the time of the last crash in 2008, the risk remains that unregulated parts of the financial system could trigger a global panic, the Washington-based lender of last resort said.

And the IMF report also seemed to indicate that global central banks were responsible for the situation in which we now find ourselves.

In the report, an “extended period of ultralow interest rates” was blamed for “the build-up of financial vulnerabilities”

The IMF Global Financial Stability report read: “The extended period of ultralow interest rates in advanced economies has contributed to the build-up of financial vulnerabilities.

…click on the above link to read the rest of the article…

Trade Wars Lead to Shooting Wars and Depressions

Trade Wars Lead to Shooting Wars and Depressions

Trade wars were a principal factor in causing the Great Depression of the 1930s and World War II.

The current President of the U.S. has imposed tariffs on imported steel and aluminum effective March 23, 2018 and proposes tariffs on products imported from China. He has also proposed revoking U.S. participation in the North American Free Trade Agreement (NAFTA) which has enabled a large expansion of trade between the U.S., Canada and Mexico.

Mr. Trump says trade wars are easy to win. Wrong. Everybody loses in trade wars.

Trade Wars Hurt Everyone 

Mr. Trump’s trade war will have a bad effect on American trade and relations with important nations around the world, including Canada, Mexico, China and other Asian nations whose companies do business in the U.S., and European nations.

Prominent American companies whose business will be hurt by Trump’s trade war include Boeing and Union Pacific, to name only two.

Boeing currently sells nearly one-third of its airplanes to China. The Chinese earn U.S. dollars by exporting to the U.S. That is the source of the ability of Chinese airlines to buy Boeing aircraft.

Union Pacific is the largest U.S. railroad. It transports goods, both imported and of domestic origin through much of the U.S. The CEO of Union Pacific has warned that Trump’s trade war will hurt not only the business of the railroad, but many other businesses that transport goods via Union Pacific.

American companies hurt by Mr. Trump’s trade war will suffer shrinkage of their businesses and shrinkage in the number of people they employ.

…click on the above link to read the rest of the article…

Depression vs. “Helicopter Money”

Curiousity

QUESTION:  You wrote the Socrates site on 3/23/2016: “Once the “confidence” in government cracks for the BULK OF THE SILENT MAJORITY who do not listen to money supply and conspiracy theories, then we move into game over. That is when we will see assets rise as confidence shifts from a corrupt government for the majority will no longer trust then and they will turn to the private sector.” Mr. Armstrong can you please name the private assets that will appreciate? and if there are similarities with 1929, where we are now in 2016? Thank you for all your efforts to teach us the world economy.

DS

LongBranchNJ-DepressionScrip

ANSWER: There is absolutely no correlation with 1929 from the USA perspective. The people who see that nonsense do not know the facts or the history. The 1931 sovereign debt crisis was omitted from the history books. John Kenneth Galbraith blamed corporations in his book “The Great Crash” in which he states they ignored government defaults. There was no “helicopter money” for it was exactly the opposite – massive DEFLATION. There was a shortage of money to the point that hundreds of cities began to issue their own “Depression scrip.”

All of these forecasts projecting hyperinflation are based solely upon a misguided notion of what caused the German hyperinflation. The USA suffered massive DEFLATIONbecause of a contraction in money supply — not inflation — so we are not facing a 1929 scenario. The analysts that claim this event is commingled with the German hyperinflation are creating a hybrid of something that has NEVER taken place in history.

Confidence-wide

Everything hinges upon the confidence of the silent majority. They are starting to rumble. That is the key to the future. We are watching this begin with Trump, which is precisely in line with out model that calls for political chaos to emerge in 2016.

Will Gold and Silver Become the Underground Currencies of the Future?

QUESTION: Martin … the reasoning behind goldbugs … advising people to buy gold to thwart the cashless society that govts will soon impose on us all.  Do you think gold and silver will become the underground currency of the alternative economy as people try to get around the official cashless economy or not?

thanks
Regards
P

ANSWER:They probably will to some extent, but it will be very limited. Gold and silver have lost their mobility. You can no longer hop on a plane with a briefcase full of metal. The more likely outcome is that gold and silver will simply be a hedge against government. It is unlikely that everyone will simply be using them at the local Starbucks.

Government will make transactions in gold or silver illegal and equivalent to money laundering. These people are not about to let anything circumvent their dreams. Nevertheless, their plans are by no means sustainable. The more likely outcome will be that they collapse and we move to some new political system. However, keep in mind that this could take until 2032 for a complete reboot.

In France, a train that passes through Switzerland and Liechtenstein is routinely stopped. The French financial police enter and search bags and luggage for valuables. You cannot travel with valuables worth more than $10,000. They will confiscate whatever they can. In Italy, if you look like you have a lot of gold chains on they will pull you over and weigh them.

Business Cycle

The likelihood that you will be able to travel with gold is about zero. The likelihood that you will be able to go to the local grocery store and buy food with silver or gold coins is also zero.

…click on the above link to read the rest of the article…

The Economic Collapse Of South America Is Well Underway

The Economic Collapse Of South America Is Well Underway

Earth - Our World - Public DomainThe 7th largest economy on the entire planet is completely imploding.  I have written previously about the economic depression that is plaguing Brazil, but since my last article it has gotten much, much worse.  During 2015, Brazil’s economy shrank by 3.8 percent, but for the most recent quarter the decline was 5.89 percent on a year over year basis.  Unemployment is rising rapidly, the inflation rate is up over 10 percent, and Brazilian currency has lost 24 percent of its value compared to the U.S. dollar over the past 12 months.

At this point, Brazil is already experiencing its longest economic downturn since the Great Depression of the 1930s, and things are getting worse for ordinary Brazilians every single day.  The following comes from CNN

But with Brazil plunging into its worst recession in over two decades — hopes for a brighter future are fading. The Brazilian economy shrank 3.8% in 2015, according to government data published Thursday. That’s the biggest annual drop since 1990 and the country is in its longest recession since the 1930s.

I have never seen anything like this,” said Alves, 24, as he stood on his balcony overlooking Rocinha, a massive lower middle class neighborhood or favela in Rio de Janeiro where he grew up. “My parents would tell me about hard times, but today it is really tough. Prices are going up every day.”

So how did this happen?

Well, there are a couple of factors that are really hurting South American economies.

Number one, during the “boom years” governments and businesses in South America absolutely gorged on debt.  Unfortunately, many of those loans were denominated in U.S. dollars, and now that the U.S. dollar has appreciated greatly against local South American currencies it is taking far more of those local currencies to service and pay back those debts.

…click on the above link to read the rest of the article…

The Economic Collapse Of South America Is Well Underway

The Economic Collapse Of South America Is Well Underway

Earth - Our World - Public DomainThe 7th largest economy on the entire planet is completely imploding.  I have written previously about the economic depression that is plaguing Brazil, but since my last article it has gotten much, much worse.  During 2015, Brazil’s economy shrank by 3.8 percent, but for the most recent quarter the decline was 5.89 percent on a year over year basis.  Unemployment is rising rapidly, the inflation rate is up over 10 percent, and Brazilian currency has lost 24 percent of its value compared to the U.S. dollar over the past 12 months.

At this point, Brazil is already experiencing its longest economic downturn since the Great Depression of the 1930s, and things are getting worse for ordinary Brazilians every single day.  The following comes from CNN

But with Brazil plunging into its worst recession in over two decades — hopes for a brighter future are fading. The Brazilian economy shrank 3.8% in 2015, according to government data published Thursday. That’s the biggest annual drop since 1990 and the country is in its longest recession since the 1930s.

I have never seen anything like this,” said Alves, 24, as he stood on his balcony overlooking Rocinha, a massive lower middle class neighborhood or favela in Rio de Janeiro where he grew up. “My parents would tell me about hard times, but today it is really tough. Prices are going up every day.”

So how did this happen?

Well, there are a couple of factors that are really hurting South American economies.

Number one, during the “boom years” governments and businesses in South America absolutely gorged on debt.  Unfortunately, many of those loans were denominated in U.S. dollars, and now that the U.S. dollar has appreciated greatly against local South American currencies it is taking far more of those local currencies to service and pay back those debts.

…click on the above link to read the rest of the article…

Nicole Foss Podcast: The Age of Limits

Nicole Foss Podcast: The Age of Limits

The Automatic Earth’s Nicole Foss recorded a podcast yesterday with Jack Spirko at the Survival Podcast. I haven’t even had time to listen to it yet, but I’m sure it’ll be as lightheartedly entertaining as her appearances always tend to be ;-). One thing I did notice is that for the first 13 minutes or so, there is no Nicole, just talk about sponsors of the Survival podcast. So you might want to skip that. Enjoy!

 Episode-1660- Nicole Foss on Liquidity Crunch and Economic Depression [1:37:01]

Remarks by Jack at the Survival Podcast site:

Special Notice – In the interest of journalistic integrity I feel obligated to reveal something that occurred today. Skype screwed up and only Nicole’s side of the interview came out in the end. Luckily she is a talker and I didn’t say much in this interview. To make it functional for the audience I went though a re recorded my side and pieced the entire thing together. It came out really well but if anything seems missing this is why. Likely if I didn’t tell you you would never even know that my side wasn’t live…

Join Me Today to Hear Nicole Discuss…
• What is the Age of Limits
• The coming liquidity crunch and economic depression
• Some reasons taking out a mortgage may not be a good idea
• What this means for small farms in regard to debt
• How and why population will most likely be reduced
• Why we should not even focus on climate change as a problem
• What do you recommend for the average 9-5er should do
• How much longer can we kick the can down the road
• Nicole’s predictions for how the world wide economic crisis will play out
• Thought on a possible mass migration in the US

The Economic Depression In Greece Deepens As Tsipras Prepares To Deliver ‘The Great No’

The Economic Depression In Greece Deepens As Tsipras Prepares To Deliver ‘The Great No’

No Cards - Public DomainAs Greece plunges even deeper into economic chaos, Greek Prime Minister Alexis Tsipras says that his government is prepared to respond to the demands of the EU and the IMF with “the great no” and that his party will accept responsibility for whatever consequences follow.  Despite years of intervention from the rest of Europe, Greece is a bigger economic mess today than ever.  Greek GDP has shrunk by 26 percent since 2008, the national debt to GDP ratio in Greece is up to a staggering 175 percent, and the unemployment rate is up above 25 percent.  Greek stocks are crashing and Greek bond yields are shooting into the stratosphere.  Meanwhile, the banking system is essentially on life support at this point.  400 million euros were pulled out of Greek banks on Monday alone.  No matter what happens in the coming days, many believe that it is now only a matter of time before capital controls like we saw in Cyprus are imposed.

Over the past several months, there have been endless high level meetings over in Europe regarding this Greek crisis, but none of them have fixed anything.  And even Jeroen Dijsselbloem admits that the odds of anything being accomplished during the meeting of eurozone finance ministers on Thursday is “very small”

Some officials believe Thursday’s meeting of eurozone finance ministers will be perhaps the last chance to stop Greece sliding into default and towards leaving the euro.

However the president of the so-called Eurogroup, Jeroen Dijsselbloem, said the chance of an accord was “very small”.

And it is certainly not just Dijsselbloem that feels this way.  At this point pretty much everyone is resigned to the fact that there is not going to be a deal any time soon.  The following comes from Reuters

 

…click on the above link to read the rest of the article…

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