John Williams: ECONOMY Going into FREEFALL!

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John Williams of ShadowStats.com says we’re a long way from prosperity. In this interview with The Gold Report, Williams debunks the myth of economic recovery and warns that we still have serious debts to settle. 

That is why he is recommending caution in 2015 to preserve purchasing power and maintain your standard of living.

The Gold Report: Your hyperinflation report predicted 2014 would be dominated by economic distress, financial crisis and panics. Were you surprised by the performance of the economy this year?

 

John Williams: No, at least not in terms of the actual performance. We’re getting some fantasy numbers, which I’ll be glad to address. The economic distress continued. If we look at the consumer conditions, generally median household income has continued to be stagnant at a low level of activity, below where it was in 1967 as adjusted by the Consumer Price Index (CPI).

If the individual consumer is not out there buying, we don’t have good activity in the bulk of the U.S. economy. 
Credit growth is very limited for the consumer… all the growth there has been in federally owned student loans, not in the type of consumer loans that would usually go into buying washers and dryers and such. 
 

TGR: If there are all of these negative signs going on, why are the GDP numbers so high?

JW: The government understates inflation. The problem is if you use too low a rate of inflation when adjusting economic numbers for inflation, that tends to overstate economic growth. When there is a roughly 2% annual understatement of GDP inflation, it means that GDP is basically overstated by two percentage points. 
 

As far as what happened in 2014, what did surprise me was the strength of the dollar. That’s where the risks run for the immediate future, particularly into 2015.

The dollar is unusually strong, the strongest it’s been in some time. If we look at the factors that drive it, the dollar is very vulnerable. Right now, our economy purportedly is booming, and the rest of the world is in recession. So that, on the surface, would tend to result in a strong dollar. 

I’ll contend, though, that our economic growth is not real. The numbers will weaken. Retail sales and industrial production actually have much higher credibility than the GDP in that we’ll see indications there of renewed recession. We’ve already seen a sharp slowing so far in the data for Q4/14.

Some months back, the economic numbers all of a sudden started to take off in a manner not seen in a decade, not supported by any underlying fundamentals. Then the Fed said it would cut back on its tapering and eliminate its purchases of new Treasury securities, which was seen as a positive for the dollar because it meant the Fed was going to shy away from further, open debasement of the dollar.

But here’s where the risk comes: The U.S. economy has not recovered. It’s still in trouble. The numbers, as we move forward into 2015, are going to get …There is MUCH more to the story. This economic and statistics expert tells what he sees happening in 2015 in real estate and more. Read the rest of the story here at GramsGold.com

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Walter J. “John” Williams has been a private consulting economist and a specialist in government economic reporting for more than 30 years. His economic consultancy is called Shadow Government Statistics(www.ShadowStats.com).