Economic Nostradamus: We Are Literally Witnessing a Collapse
With the Presidential election cycle in full swing our incumbent administration, the media, and their financial pundits continue to maintain that the US economy's green shoots have blossomed into fields of golden sunflowers. Despite what we're being told, however, the actual data tells a stunningly different story.
Richard Yamarone, a senior economist for Bloomberg Brief, has been called an economic Nostradamus for his prescient forecasting of the 2008 financial crisis, and now he's warning that the worst is not over. In a recent interview with King World News he suggests that not only is the economic outlook a barren desert devoid of any existence of green shoots, but we have a front row seat to witness the collapse of life in America as we know it:
"I think people are just running out of money. We have contracting, real disposable incomes. Most of the job creation that we have is from minimum wage type jobs.
"You are actually seeing this collapse, contracting on a real basis, of real disposable personal incomes. If you don't have the money, you can't facilitate expenditures. So that's the core of the problem. That's what's really going on in the US economy.- Advertisement -
"You don't listen to what all of these bigger numbers coming across the screen tell you. You talk to the people who are running the country. 99.7% of all employer firms in this country are small businesses. So when they speak, you have to listen.
"You have to listen to what the small businesses are telling you and right now they are telling you, 'Hey, I'm the head of a 3rd or 4th generation, 75 or 100 year old business, and I've got to shut the doors' or 'I've got to let people go. And if I'm hiring anybody back, it's only on a temporary basis.'
"In this current recession, we are not even close (to getting the jobs back) and that's 50 months and counting.
The fact of the matter is that meaningful jobs won't be returning any time soon. Recent (un)employment data indicate that cumulatively we are losing jobs each and every month. And, those jobs that do become available are minimum wage jobs that are insufficient to offset the income loss we've experienced since 2008.
The bottom line is that if people don't have money, they can't consume to keep the economy going. This leads to a vicious negative feedback loop that forces small (and large) business employers to lay off workers, which takes even more money out of the economy, which subsequently leads to more business closures and cutbacks.
As evidence of this effect we need look only at the most recent Gross Domestic Product (GDP) data which indicate that, while the economy is still officially growing, it's doing so at a snail's pace of just 2.2%. That's the official government statistic, so of course it's loaded with fuzzy math that fails to account for one very critical piece of information -- inflation. According to John Williams of Shadow Stats, if we accounted for inflation and calculated GDP as it should be done, without government up-side distortions, our economic growth has not only slowed, it's actually contracting at a rate 0f negative 2.2%. By all accounts, even though the mainstream narrative is one of growth, recovery and increased consumer spending, the US economy is and has been in a recession since 2005.
Consider that food stamp rates have doubled over that period to 48.5 million participants (that's one in six Americans!) and that we have an unofficial machination-adjusted unemployment rate in excess of 22% and one thing becomes absolutely clear: the average Joe Sixpack is broke, hungry and dangerously close to ripping to shreds the remainder of our country's social safety nets.
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