Recession 2016: In Some States, A Very Deep Economic Downturn Has Already Arrived - Michael Snyder THE ECONOMIC COLLAPSE BLOG

Recession 2016: In Some States, A Very Deep Economic Downturn Has Already Arrived Posted: 22 Feb 2016 Michael Snyder  THE ECONOMIC COLLAPSE BLOG Did you know that there are some U.S. states that have already officially fallen into recession?  Economic activity all over the planet is in the process of slowing down, and there are some areas of the country that are really starting to feel the pain.   In particular, any state that is heavily dependent on the energy industry is hurting right now.  During the years immediately following the last recession, the energy industry was the primary engine for the growth of good paying jobs in America, but now that process is completely reversing.  All over the U.S. energy companies are going under, and thousands upon thousands of good jobs are being lost. On Sunday evening, Bloomberg published an article entitled “The U.S. States Where Recession Is Already a Reality“. The following is an excerpt from that article… As economists size up the chances of the first nationwide slump since 2009, pockets of the country are already contracting. Four states — Alaska, North Dakota, West Virginia and Wyoming — are in a recession, and three others are at risk of prolonged declines, according to indexes of state economic performance tracked by Moody’s Analytics. The three additional states that are “at risk of prolonged declines” are Louisiana, New Mexico and Oklahoma.  What all of those seven states have in common is a strong dependence on the energy industry.  Last year, 67 oil and gas companies in the United States filed for bankruptcy, and approximately 130,000 good paying energy jobs were lost. If the price of oil does not go back up, this could be just the beginning.  It is being reported that a whopping 35 percent of all oil and gas companies around the planet are at risk of falling into bankruptcy, and the financial institutions that have been backing these energy companies are getting very nervous. Of course things could shift dramatically for oil and gas companies if World War 3 suddenly erupts in the Middle East, and that could literally happen at any time.  But for the moment the outlook for the energy industry continues to be quite dreary. Let us also keep in mind that the problems for the U.S. economy are not limited to the energy industry.  According to CNBC, corporate profits in the United States have now declined for three straight quarters, and this is the very first time this has happened since the last recession… With 87 percent of the S&P 500 reporting, total blended fourth-quarter earnings have shown a decline of 3.6 percent, according to FactSet. Assuming the trend holds up, it will mark the first time profits have fallen for three straight quarters since 2009. But the road ahead doesn’t get any easier. FactSet is now projecting that earnings will decline 6.9 percent in the first quarter, a stunning move lower over time considering that in September the expectation was for 4.8 percent growth. As corporate profits fall, layoffs are starting to increase.  Just the other day we learned that the number of job cuts in this country shot up 218 percent during the month of January according to Challenger, Gray & Christmas. It is starting to look very much like 2008 all over again, and I am convinced that it will soon be much, much harder to find work in America. Here are some more numbers that indicate that the U.S. is heading into a major economic slowdown… –U.S. exports were down 7 percent on a year over year basis in December. –U.S. manufacturing activity has been in contraction for four months in a row. –U.S. factory orders have fallen for 14 months in a row. –The Restaurant Performance Index in the United States has dropped to the lowest level that we have seen since 2008. –Orders for Class 8 trucks in the United States dropped by 48 percent on a year over year basis in January. But the mainstream media continues to try to convince all of us that everything is going to be just fine.  Earlier today, CNN ran an article entitled “U.S. recession fears fade after market rally“, and the Wall Street Journal published an article entitled “The U.S. Economy Is in Good Shape” that got a tremendous amount of attention. Well, if the U.S. economy is in such great shape, then why are some of the biggest retailers in the entire nation shutting down stores at a frightening pace.  The following list of store closures comes from one of my previous articles… -Wal-Mart is closing 269 stores, including 154 inside the United States. -K-Mart is closing down more than two dozen stores over the next several months. -J.C. Penney will be permanently shutting down 47 more stores after closing a total of 40 stores in 2015. -Macy’s has decided that it needs to shutter 36 stores and lay off approximately 2,500 employees. -The Gap is in the process of closing 175 stores in North America. -Aeropostale is in the process of closing 84 stores all across America. -Finish Line has announced that 150 stores will be shutting down over the next few years. -Sears has shut down about 600 stores over the past year or so, but sales at the stores that remain open continue to fall precipitously. Perhaps things look fine for the moment in New York City or Washington D.C. or San Francisco or wherever it is that these “reporters” write their articles. But for ordinary Americans that operate in the real world, the pain of this new economic downturn is already exceedingly apparent.  Here is more from Bloomberg… Dale Oxley doesn’t need to hear about rising odds of a U.S. recession to dread the future. For the West Virginia homebuilder, the downturn has already arrived. “Everyone is going to have to tighten their belts,” said Oxley, the 48-year-old owner of a Charleston-area construction company. “The next couple of years are going to be difficult.” Unfortunately for hard working Americans like Oxley, what we have seen so far is just the tip of the iceberg. We have entered a long downturn that is ultimately going to be even more painful than the last recession was. And everything changes if Saudi Arabia and Turkey get trigger happy and decide to invade Syria.  If that happens, it could very well be the spark that sets off World War 3 and a full-blown meltdown of the global financial system.

If The Economy Is Fine, Why Are So Many Hedge Funds, Energy Companies And Large Retailers Imploding? - MICHAEL SYNDER THE ECONOMIC COLLAPSE BLOG

If The Economy Is Fine, Why Are So Many Hedge Funds, Energy Companies And Large Retailers Imploding?  MICHAEL SYNDER  THE ECONOMIC COLLAPSE BLOG Posted: 18 Nov 2015 04:06 PM PST If the U.S. economy really is in “great shape”, then why do all of the numbers keep telling us that we are in a recession?  The manufacturing numbers say that we are in a recession, the trade numbers say that we are in a recession, and as you will see below the retail numbers say that we are in a recession.  But just like in 2008, the Federal Reserve and our top politicians will continue to deny that a major economic downturn is happening for as long as they possibly can.  In this article, I want to look at more signs that a dramatic shift is happening in our economy right now. First of all, let’s consider what is happening to hedge funds.  For many years, hedge funds had been doing extremely well, but now they are closing up shop at a pace that we haven’t seen since the last financial crisis.  The following is an excerpt from a Business Insider article entitled “Hedge funds keep on imploding” that was posted on Wednesday… BlackRock is winding down its Global Ascent Fund, a global macro hedge fund that once contained $4.6 billion in assets, according to Bloomberg’s Sabrina Willmer. “We believe that redeeming the Global Ascent Fund was the right thing to do for our clients, given the headwinds that macro funds have faced,” a BlackRock spokeswoman told Business Insider. The winding down of the Ascent fund is the second high-profile hedge fund closing in 24 hours. The Wall Street Journal reported Tuesday that Achievement Asset Management, a Chicago-based hedge fund, was closing. And those are just two examples.  Quite a few other prominent hedge funds have shut down recently, and many are wondering if this is just the beginning of a major “bloodbath” on Wall Street. Another troubling sign is the implosion of so many energy companies.  Just like in 2008, a major crash in the price of oil is hitting the energy sector really hard.  Just check out these stock price declines… -Cabot Oil & Gas down 37.27 percent over the past 12 months -Southwestern Energy down 68.11 percent over the past 12 months -Chesapeake Energy down 73.98 percent over the past 12 months A number of smaller energy companies have already gone out of business, and several of the big players are teetering on the brink.  If the price of oil does not rebound significantly very soon, it is just a matter of time before the dominoes begin to fall. We are also seeing tremendous turmoil in the retail industry.  The following comes from Investment Research Dynamics… The retail sales report for October was much worse than expected.  Not only that, but the Government’s original estimates for retail sales in August and September were revised lower.  A colleague of mine said he was chatting with his brother, who is a tax advisor, this past weekend who said he doesn’t understand how the Government can say the economy is growing (Hillary Clinton recently gave the economy an “A”) because his clients are lowering their estimated tax payments.  Businesses lower their estimated tax payments when their business activity slows down. The holiday season is always the best time of the year for retailers, but in 2015 there is a lot of talk of gloom and doom.  Most large retailers will not start announcing mass store closings until January or February, but without a doubt many analysts are anticipating that once we get past the Christmas shopping season we will see stores shut down at a pace that we haven’t seen since at least 2009.  Here is more from the article that I just quoted above… Retail sales this holiday season are setting up to be a disaster.  Already most retailers are advertising “pre-Black Friday” sales events.  Remember when holiday shopping didn’t begin, period, until the day after Thanksgiving?  Now retailers are going to cannibalize each other with massive discounting beforeThanksgiving.  Anybody notice over the weekend that BMW is now offering $6500 price rebates?   The collapsing economy is affecting everyone, across all income demographics. Last week we saw the stocks of Macy’s, Nordstrom and Advance Auto Parts do cliff-dives after they announced their earnings.  I mentioned to a colleague that the Nordstrom’s report should be the most troubling for analysts.  Nordstrom in their investor conference call said that they began seeing an “unexplainable slowdown in sales in August in transactions across all formats, across all catagories and across all geographies that has yet to recover.”   I think that a chart would be helpful to give you an idea of how bad things have already gotten.  Jim Quinn shared this in an article that he just posted, and it shows the change in retail sales once you remove the numbers for the auto industry.  As you can see, the numbers have never been this dreadful outside of a recession… But stocks went up 247 points on Wednesday so everything must be great, right? Wrong. The stock market has never been a good barometer for the overall economy, and this is especially true these days. In 2008, stocks didn’t crash until well after the U.S. economy as a whole started crashing, and the same thing is apparently happening this time around as well. One of the things that is keeping stocks afloat for the moment is stock buybacks.  In recent years, big corporations have spent hundreds of billions of dollars buying back their own stocks.  The following comes from Wolf Richter… IBM has blown $125 billion on buybacks since 2005, more than the $111 billion it invested in capital expenditures and R&D. It’s staggering under its debt, while revenues have been declining for 14 quarters in a row. It cut its workforce by 55,000 people since 2012. And its stock is down 38% since March 2013. Big-pharma icon Pfizer plowed $139 billion into buybacks and dividends in the past decade, compared to $82 billion in R&D and $18 billion in capital spending. 3M spent $48 billion on buybacks and dividends, and $30 billion on R&D and capital expenditures. They’re all doing it. Later in that same article, Richter explains that almost 60 percent of all publicly traded non-financial corporations have engaged in stock buybacks over the past five years… Nearly 60% of the 3,297 publicly traded non-financial US companies Reuters analyzed have engaged in share buybacks since 2010. Last year, the money spent on buybacks and dividends exceeded net income for the first time in a non-recession period. Big corporations like to do this for a couple of reasons.  Number one, it pushes the price of the stock higher, and current investors appreciate that.  Number two, corporate executives are usually in favor of conducting stock buybacks because it increases the value of their stock options and their own stock holdings. But now corporate profits are falling and it is becoming tougher for big corporations to borrow money.  So look for stock buybacks to start to decline significantly. Even though it is taking a bit longer than many would have anticipated, the truth is that we are right on track for a massive financial collapse. All of the indicators that I watch are flashing red, and even though things are moving slowly, they are definitely moving in the same direction that we saw in 2008. But just like in 2008, there will be people that mock the warnings up until the day when it becomes completely and utterly apparent that the mockers were dead wrong.