Many economists, bankers, and CEOs believe that the United States is already in a recession, and the Federal Reserve’s likely interest rate cut this week won’t help at all. In fact, several analysts say that the only reason the economy is even “afloat” is because of consumer spending.
Greg Becker, the CEO of Silicon Valley Bank, took to pinpointing trade issues and a slowdown in global growth as root causes of an eventual downturn. He described the next recession as likely to be “a self-inflicted wound.” “It’ll be a perception-created recession,” Becker said. As more people fear an economic pullback, they will “pause spending” and thus, ironically, create the recession they feared, he said. But people haven’t paused their spending even in the face of reports of an upcoming recession.
Regardless of the state of the economy, consumer spending remains high and that’s what’s keeping the economy from an all-out crash, says a CIO. “I’m very sympathetic to the argument for a cut because in my opinion the manufacturing/trade side of the U.S. economy is in a recession and you can argue it’s a global recession in those two areas, so it’s really just the consumer that’s keeping us afloat here,” said Peter Boockvar, CIO of Bleakley Advisory Group. “On the other hand, I’m of the opinion that a rate cut’s not going to help.”
https://www.shtfplan.com/headline-news/consumer-spending-spikes-in-march-but-credit-card-balances-are-at-all-time-highs_04302019
Patrick Byrne, the CEO of online retailer Overstock.com, sounded an ominous note for the several years ahead as well. “I think it will be bad,” he said. “To be honest, I think that ’08 was the hors d’oeuvres course,” he said according to Fortune. Bryne, a longtime cryptocurrency enthusiast, compared what he anticipates will happen to the economy to what might happen to a bridge overloaded with too many vehicles. “It’s a little bit like asking me there’s a bridge that was designed to hold 20 cars passing over it at a time and there’s now 100 going over it,” Byrne said. “When’s it going to break? When’s it going to collapse? That’s really your answer.”
“I’m kind of shocked it’s gone on this long,” Byrne continued. “I think that we have deep, deep, structural, architectonic level problems in our economy that will surface.”
Just stay prepared for an economic crash. Keep your personal finances in good shape and you could easily weather the storm. It isn’t a bad idea to have some gold or silver either. Preparing for an economic crash is perhaps the hardest scenario to plan for because you just never know what it’s going to look like.
It will be UGLY…!!!!!
In the day when mortgage rates were double digit there was room to make an impact by cutting interest rates expecting a significant impact. With rates in the 3.5% range what can be borrowed has been borrowed. The consumer be it business or individual, reason for loan aside, still must pay the principal. Like an orange in hand the initial squeeze obtains a lot of juice. Subsequent application of force gets less and less result, the consumer is dry.
Agreed. A rate cut of 25-50 basis points will do nothing for the real economy and only stimulate equities. Bad idea. 🙁
DK
Yep, the previous and traditionally used relatively easy methods of economic stimulation have been exhausted. Now its done for show because there are no other options. It appears to this layman that direct injection of money via one or likely more methods (raising minimum wage, directly giving money) will be sincerely discussed. Each intervention is requiring greater subsequent interventions to forestall the correction; because of them it becomes more severe.
Many are looking for a parade of goose stepping jack booted thugs to announce “communism is here”. The reality is the communist/fascist hybrid is a centrally controlled economy divorced from the capitalist cornerstone of supply and demand and with it price discovery. The hybrid is the communist type direct intervention of the welfare state coupled with central bank control over the value of money. The fascist end is the retention of private ownership of the “means of production”.
A RATE CUT ISN’T GOING TO HELP, “THE U.S. ECONOMY IS IN A RECESSION”
Yet after creating the coming disaster, politicians have to look like they are trying to do something to fix the problem.
It is very possible that the Fed will HIKE rates. It has no interest (or responsibility) in helping the US. Our economy must be destroyed to provide a path to the ‘global economic reset’ (their phrase not mine). Perhaps they have done enough damage and we are ready for the take-down.
Montana Guy
But in the end TPTB need to US military as their global enforcer to keep in line those attempting to leave the reservation that are not being held in effectively with the present, “carrot and the stick”. The US military is the bludgeon in event of a failure in persuasion of the aforementioned. The is funded by the creation of fiat money with dilution into the world through US reserve currency status. This is the perplexing reality I see.
Remind Self:
Proof read before posting. You get the idea anyway.
If the other guy, abroad, (not you) is getting the unfair deal, via a mugging, if you’re getting the long end of the stick and perpetrating the mugging, why are your resources being sold off, to satisfy the odious debt, and why is your quality of life in decline.
I saw one well-regarded stock guru, just reading the newspaper, on camera, in a shouty voice. Some people get a sexual thrill from being yelled at.
If you don’t know, for certain, whether you’re in the red, if you believe it could happen, but are just unsure, plz ffs quit giving us advice about it.
Or, I’m gonna say it’s for a completely unrelated reason, that we are listening to you.
“Regardless of the state of the economy, consumer spending remains high, and that’s what’s keeping the economy from an all-out crash…”
Yes, consumer spending was up 2.85%.
But, government spending was up 5%. That contributed .85% to the overall 2.1% rise in GDP. Without the government debt being added the GDP would only be 1.25%. So, look for the government to continue to increase spending to keep GDP positive, if the other areas are shrinking. The debt must grow or it all crashes.
The 1.5 trillion slated to the Pentagram for this and next year should instead be given to the American people equally shared. That’s of by and for the people. Not to the criminals undermining liberty.
People are looking at this the wrong way. The US corporate (fascist) system is global. It thinks global and global means there are many markets and folks out there to make money from. They don’t care about America – it is a spent force.
The world’s middle class is growing and that is where the money is.
The U.S. is basically bled dry literally!! WE are tapped out so badly, there isn’t $hit left for the corporate buffoons to rob & steal from us. The fat lady sang a long, long time ago: the “party” is over as we knew it folks…
I work with these guys all around the world. They are wealthy, energetic, in control and they left the US decades ago.
They are running an investment firm in Ho Chi Minh City, a Food enterprise in Prague, whores in Costa Rica etc.
The only time they get sad is when they have to drag their butts back to the US to see family.
A coin with tails on both sides. The two major parties go about business in different ways, but both lead to the same outcome, “selling out our future”.
Tax cuts with increase government spending is illogical. Unfortunately American’s can’t get off the debt-drug. Household debt and government debt are at all time highs. Essentially, despite a 10 year “boom”, America hasn’t been more broke.
Imagine wants going to happen to household debt when we hit a downturn and unemployment spikes?
The economy is already in a depression. All of the real indicators regarding manufacturing, trade, retail, autos and RVs, housing, homelessness, people living in their cars, etc. indicate it. But if you go by the government’s manipulated numbers the economy is booming. Mark, I don’t know what you are talking about when you say the consumer is spending. You must not be paying attention to declining auto, home, retail sales, and declining restaurant activity. Also, what do you mean by an economic crash? A stock market crash? Or something else?
No, we have never left the recession going on 20 years.
Majority of peep are in debt and barely hanging on.
Someone correct me if I am wrong…but health care costs are factored into consumer spending. AHCA has put millions in the poor house!
Cell phones w data plan – check
Increased taxes – check
Little to no savings – check
Cable, internet service – check
Auto expenses – check
Food prices – check
Tuition increases – check
Home rental cost – check
Utility increases – check
The U.S. consumer has been getting hit relentlessly.
Russel Means, “Welcome to the reservation.” A very interesting free full length youtube documentary regarding American economic politics from the perspective of a Native American.
I keep on telling people, low interest rates stimulate the ‘lenders economy’, not the general economy. When you don’t have all that debt, you contribute more to a positive economy and innovation. If you love to stay stuck in the past, be sure to lease and never own, treat your home like an atm, subscribe to everything, and never actually clear your title from the bank. The fed continues to incentivize risky behavior by not hiking the home lending rate back to where it should be, double digit figures. However, given the success of masking inflation with continued devaluation of the dollar, at a 2 percent rate, year over year, it’s become imperative to de emphasize saving and emphasize ‘market investments’.
Invest in yourself, try actually owning your home free and clear with no mortgage.