It Is Worse Than We Thought – Investment Watch

by Michael

The U.S. economic system is slowing down extra shortly than nearly all the specialists had anticipated.  As I detailed yesterday, U.S. shoppers have been getting hit extraordinarily laborious by this financial slowdown, and at this level most Individuals consider {that a} recession is coming.  However may it’s potential {that a} recession has already begun?  As you will note under, the numbers appear to point that such a situation is sort of possible.  However whether or not we’re already formally in a recession or not, the reality is that no matter we’re experiencing now’s nothing in comparison with the ache that’s ultimately coming down the street.

Do you keep in mind how painful it was for our society when the primary housing bubble spectacularly imploded again in 2008?

Nicely, it’s beginning to occur once more.  On Thursday we discovered that pending dwelling gross sales in the US have now fallen for six months in a row…

Pending dwelling gross sales slipped in April, as contract exercise decreased for the sixth consecutive month, the Nationwide Affiliation of Realtors® reported. Solely the Midwest area noticed signings enhance month-over-month, whereas the opposite three main areas reported declines. Every of the 4 areas registered a drop in year-over-year contract exercise.

The Pending House Gross sales Index (PHSI),* www.nar.realtor/pending-home-sales, a forward-looking indicator of dwelling gross sales primarily based on contract signings, slid 3.9% to 99.3 in April. 12 months-over-year, transactions fell 9.1%. An index of 100 is the same as the extent of contract exercise in 2001.

Earlier within the week, I mentioned the truth that new dwelling gross sales have been 26.9 % decrease this April than they have been final April.

We’re clearly previous the height of the housing bubble, and now the rollercoaster may be very quickly headed in a downward path.

After all the economic system as a complete is beginning to head in a downward path.  On Thursday we additionally discovered that U.S. GDP for the primary quarter of 2022 had been revised even decrease…

First-quarter gross home product declined at a 1.5% annual tempo, in line with the second estimate from the Bureau of Financial Evaluation. That was worse than the 1.3% Dow Jones estimate and a write-down from the initially reported 1.4%.

Downward revisions for each personal stock and residential funding offset an upward change in shopper spending. A swelling commerce deficit additionally subtracted from the GDP complete.

Many specialists are assuring us that GDP development will bounce again into the inexperienced for the second quarter.

However it if doesn’t, that will imply that GDP has contracted for 2 quarters in a row, and that will formally verify that we’re in a recession proper now.

After all even when GDP does bounce again this quarter, the outlook for the months forward just isn’t promising in any respect.

In truth, a survey of 500 distinguished CEOs simply discovered that 75 % of them anticipate a recession to start by the tip of subsequent yr…

Presently final yr, the Fortune 500 CEOs we surveyed have been respiratory a collective sigh of aid as income and revenues got here roaring again from the ravages of the pandemic. This spring, that roar sounds uncomfortably loud, as firms address hovering inflation and the rising chance that sky-high costs and labor shortages will assist tip the economic system into recession. In all, 75% mentioned they anticipated the following recession to start by the tip of 2023, although solely 32% believed it could begin on this calendar yr.

Nearly everybody can really feel that financial troubles are in our future, and that can particularly be true if the Federal Reserve retains elevating rates of interest.

Sadly, the Fed feels pressured to lift charges as a result of inflation has gotten wildly uncontrolled.

For those who can consider it, the typical worth of a gallon of gasoline in the US has risen by 47 cents in simply the previous month alone…

Gasoline costs have elevated by over 47 cents within the final month alone because the U.S. continues to smash fuel worth data daily underneath President Joe Biden’s management.

On Wednesday, Could 25, the U.S. recorded one more all-time excessive, as the typical worth of fuel stands at $4.599 for normal fuel. This displays an over 47 cent rise within the final month alone. One month in the past, the fuel worth common stood at $4.123.

That’s insane!

And U.S. pure fuel costs have risen nearly 150 % to date in 2022…

U.S. pure fuel costs have skyrocketed practically 150% this yr whereas stock ranges have shrunk, signaling extra shopper ache forward of the summer season season.

The Henry Hub pure fuel spot worth, an indicator of nationwide costs, stormed previous $9.30 per million British thermal models (MMBtu) Thursday, up from its early January worth of $3.74 per MMBtu and the best degree since 2008, in accordance to authorities knowledge.

Meals costs proceed to soar into unthinkable territory as properly.

This week, a single journey to the grocery retailer value me 309 {dollars}, and I used to be attempting to be very frugal.

309 {dollars}!

I keep in mind a time when you may purchase a used automobile for that type of cash.

For years, I’ve been warning that our leaders have been destroying our foreign money and setting the stage for nightmarish inflation, and now that point has arrived.

And all the borrowing and spending that our flesh pressers have been doing has made our nationwide long-term monetary issues exponentially worse…

Over the previous two years, $4.6 trillion has been supplied by Congress in response to the COVID-19 pandemic. The affect on inflation, significantly the timing of the $1.9 trillion American Rescue Plan Act in March 2021, is topic to some debate, however what can’t be denied is the affect this spending has had on the curiosity paid on the nationwide debt. Between 2011-2018, curiosity on debt held by the general public averaged $272 billion yearly. Between 2019-2021, annual curiosity on the debt averaged $389 billion, a rise of $117 billion, or 43 %. The president’s fiscal 2022 finances, which is the primary to mission deficits of greater than $1 trillion for 10 consecutive years, estimates that FY 2022 curiosity on debt of $26.3 trillion shall be $305 billion and attain $941 billion in FY 2031, or greater than triple the quantity for the present fiscal yr. By that point, curiosity funds will account for 59 % of the projected $1.6 trillion deficit.

We may have prevented all of this if we had taken a special path.

However we didn’t.

As a substitute, we stored sending the large spenders again to Washington time after time.

We thought that we may hold kicking the can down the street and get away with it, however as an alternative now we have actually destroyed America’s monetary future.