Do you believe that a recession is coming?
If so, you certainly have a lot of company. It turns out that more than two-thirds of all U.S. households “are preparing for a possible recession” right now. There is a growing national consensus that that U.S. economy is heading for big trouble, and this is causing a lot of people to cut back on spending. In fact, we just witnessed the first drop in retail sales in seven months. If this slowdown in retail spending extends into the holiday season, that could potentially be absolutely disastrous for the entire retail industry. We are already in the midst of the worst “retail apocalypse” in U.S. history, and we are learning of more store closings with each passing day. But of course it isn’t just the retail industry that is in very serious trouble, and I have some brand new numbers from a couple of other sectors that I will share with you below.
But first let’s talk about this new survey that just came out that says that 69 percent of all U.S. households “are preparing for a possible recession”…
More than two-thirds of U.S. households say they are preparing for a possible recession.
Some 69% of participants in a recent poll said they were taking steps to shore up their finances ahead of a possible downturn, including 44% who said they were spending less money. Some 10%, including 13% of college graduates, are looking for a better or more stable job.
Considering what I do, it makes perfect sense to me that more than two-thirds of the country would be preparing for a recession.
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But it would be very interesting to see this number broken down by political affiliation. In general, Democrats tend to be far more pessimistic about the economy than Republicans are right now, and that is just because Donald Trump is in the White House.
I would suspect that the percentage of Trump supporters that are “preparing for a possible recession” would be well under 50 percent, but that is just a guess on my part.
In any event, the truth is that 100 percent of Americans should be preparing for a recession, because the warning signs are all around us.
And on Wednesday another economic red flag emerged. For months, the economic optimists have been touting “the strength of the consumer” as one of the bright spots for the economy, but last month retail sales dropped for the first time in seven months…
U.S. retail sales fell for the first time in seven months in September, raising fears that a slowdown in the American manufacturing sector could be starting to bleed into the consumer side of the economy.
The Commerce Department said Wednesday that retail sales dropped 0.3% last month as households slashed spending on building materials, online purchases and especially automobiles.
That is certainly not the end of the world, but it does indicate that consumers are starting to scale back their spending.
Of course that is the last thing that retailers want to see happen. We are already on pace to absolutely shatter the all-time record for store closings in a single year, and we just learned that Sears and Kmart will soon be closing more stores…
Sears and Kmart store closings are expected to continue into early 2020.
While more than 100 Sears and Kmart stores will shutter in the coming months, additional closures will stretch into January.
Company officials did not release an official list of the locations that will close. But news outlets across the nation, as well as documents filed with state governments, show some of the closings will happen in January 2020.
Sears has essentially been in the process of liquidating for a very long time, and we can only hope that eventually this incredibly painful liquidation will mercifully come to an end.
For many other retailers, this holiday season will be a “make or break moment”, and we should probably expect another huge wave of store closing announcements early in 2020.
And as I noted above, it isn’t just the retail industry that is really struggling. We are already in a “transportation recession”, and we just learned that the Cass Freight Index has now declined for ten months in a row. The following comes from Wolf Richter…
Freight shipments by all modes of transportation – truck, rail, air, and barge – within the US fell 3.4% in September 2019, compared to September last year, according to the Cass Freight Index for Shipments. For the index – which tracks shipment volume of consumer and industrial goods but not of bulk commodities – it was the 10th month in a row of relentless year-over-year declines
Another sector that is facing very tough times is the auto industry, and according to Reuters over 7 million Americans are seriously delinquent on their auto loans…
More than 7 million Americans are already 90 or more days behind on their car loans, according to the New York Federal Reserve, and serious delinquency rates among borrowers with the lowest credit scores have by far seen the fastest acceleration.
If all these numbers remind you of the last recession, that would make perfect sense, because we haven’t seen anything like this in more than a decade.
And all of this is happening even though the federal government is adding a trillion dollars to the national debt each year and the Federal Reserve has begun flooding the financial system with fresh cash.
In terms of “economic stimulus”, our leaders are already pushing the accelerator all the way to the floor, and it is simply not working.
This truly is the beginning of the end for the U.S. economy, and most Americans can now see that very tough times are ahead.
But what most Americans don’t understand is that what we will be facing won’t be anything like 2008.
Instead, it will be much, much worse.