Profile image
Contributor profile | More stories
Story Views

Last Hour:
Last 24 Hours:

Is the economy about to MELT DOWN?

Friday, March 17, 2017 4:48
% of readers think this story is Fact. Add your two cents.
Free Credit Card  

Is the economy about to MELT DOWN?

The stock market soared after President Trump’s election, the Bureau of Labor Statistics reported in November that unemployment was down to 4.6%, and the bond market is recovering from last year’s downturn, so our economy is in great shape, right?

Not so fast.


The record-challenging rise in the stock market was partially fueled by expectations of Trump’s tax plan, but most of it was money leaving the bond market and looking for a soft place to land. Nobody wants to put money into bank accounts, because it earns almost no interest, certainly far less than is lost to price inflation.

Stocks are at a remarkably high CAPE (Cyclicly Adjusted Price-Earnings) ratio, but that doesn’t seem to frighten anyone. This is, historically, just how the stock market has looked before every major crash in the last century. Undue optimism in the market is a clear sign that the market is ripe for a major downturn.

The BLS’s report about November 2016 pointed out that 178,000 new jobs were created that month, bringing unemployment down to 4.8%. This sounds wonderful, until you look at the reality behind those numbers.

Of those 178,000 jobs, only 9,000 were for full-time (35 hours or more per week) jobs, and most of those gains were in low-paying fields. Demand for waitstaff in restaurants and bars remains high, but good-paying jobs for skilled workers remain scarce. The unemployment rate is only that low because they are ignoring the discouraged working-age people who are no longer even looking for a job. Our working-age adults who have a job (even a low-paying part-time job) were only 63% of the potential workforce back in March, very close to the all-time low of 62.4% it reached in October, 2015.

President Obama’s ‘recovery’ was achieved by manipulating numbers, not by any real-world recovery. President Trump inherited an ailing economy, and the problems that caused it show no signs of being cured any time soon. Trillions spent on Quantitative Easing did not cure the problems left after the housing bubble burst, it has only inflated a stock market and debt bubble.

The National Debt is up to almost $20 trillion dollars, and the interest on that debt was $432,649,652,901.12 for the 2016 fiscal year. Interest rates have gone up since then, as the debt continues to climb. At some point, Congress is going to run out of room to kick that can down the road.

Inflation is claimed, by the Consumer Price Index, to be only 1.7% for the year ending last November, which doesn’t sound so bad. But that’s not what’s really happening.

The Chapwood Index looks at the prices for the top 500 goods and services that we buy (insurance, gasoline, coffee, movie tickets, etc.) in the 50 largest cities in the U.S., and they claim that the city with the lowest inflation, Albuquerque, has a 5-year average of 7.3% per year. 21 of the cities have an average of 10% or more inflation.

Consumer debt has soared, too. Total private debt is expected to be $12.5 trillion for 2016, higher than the $12.37 trillion in December 2007, when the Great Recession started. The most expensive debt, credit cards, costs the average household $1,292 in interest every year, and with plans to raise interest rates three times in 2017, that burden will just get heavier.




We encourage you to Share our Reports, Analyses, Breaking News and Videos. Simply Click your Favorite Social Media Button and Share.

Report abuse


Your Comments
Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

Top Stories
Recent Stories



Top Global

Top Alternative




Email this story
Email this story

If you really want to ban this commenter, please write down the reason:

If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.