The U.S. Economy Officially Joins The Global Economic Slowdown – 1st Quarter GDP Comes In At 0.5% - Michael Snyder THE ECONOMIC COLLAPSE BLOG

The U.S. Economy Officially Joins The Global Economic Slowdown – 1st Quarter GDP Comes In At 0.5% Posted: 28 Apr 2016   Michael Snyder  THE ECONOMIC COLLAPSE BLOG Even the government is admitting that the U.S. economy is slowing down.  On Thursday, we learned that U.S. GDP grew at just a 0.5 percent annual rate during the first quarter of 2016.  This was lower than analysts were anticipating, and it marks the third time in a row that the GDP number has declined compared to the previous quarter.  In other words, GDP growth has been declining for close to a year now, and this lines up perfectly with what I have been saying about how the second half of last year was a turning point that plunged us into the early chapters of a brand new economic crisis.   And as you will see below, the official GDP number is highly manipulated, and the way that it is calculated has been changed numerous times over the years.  So the bad number that is being reported by the government is actually the best case scenario. Of course many of the “experts” being quoted by the mainstream media are saying that this is just a temporary blip and that good times for the U.S. economy are right around the corner.  For instance, check out this quote from Reuters… “The economy essentially stalled in the first quarter, but that doesn’t mean it is faltering,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “Some of the restraints to growth are dissipating. Growth is likely to accelerate going forward.” We have been told this same story for years, but the “acceleration” has never materialized.  In fact, Barack Obama is poised to become the only president in U.S. history to never have a single year when the economy grew by more than 3 percent during his presidency. That is a statistic that is hard to believe, but it is true. In addition, Louis Woodhill has pointed out that the average rate of U.S. economic growth during the Obama years will be the fourth worst in recorded history… Assuming 2.67% RGDP growth for 2016, Obama will leave office having produced an average of 1.55% growth. This would place his presidency fourth from the bottom of the list of 39*, above only those of Herbert Hoover (-5.65%), Andrew Johnson (-0.70%) and Theodore Roosevelt (1.41%) So does anyone out there still believe that there has been an “Obama recovery”? We also need to add another layer to our analysis.  By now, everyone should realize that the official GDP number is highly manipulated, and the way that GDP is calculated has been changed many, many times over the years. For example, here is Peter Schiff commenting on changes that were made in 2013… The latest example of this was revealed earlier this week when the Bureau of Economic Analysis (BEA) announced new methods of calculating Gross Domestic Product (GDP) that will immediately make the economy “bigger’ than it used to be. The changes focus heavily on how money spent on research and development (R&D) and the production of “intangible” assets like movies, music, and television programs will be accounted for. Declaring such expenditures to be “investments” will immediately increase U.S. GDP by about three percent. Such an upgrade would immediately increase the theoretic size of the U.S economy and may well lead to the perception of faster growth. In reality these smoke and mirror alterations are no different from changes made to the inflation and unemployment yardsticks that for years have convinced Americans that the economy is better than it actually is. And the following originally comes from a Bloomberg article which discussed changes that were made in 2015… The way some parts of U.S. gross domestic product are calculated are about to change in the wake of the debate over persistently depressed first-quarter growth. In a blog post published Friday, the Bureau of Economic Analysis listed a series of alterations it will make in seasonally adjusting data used to calculate economic growth. The changes will be implemented with the release of the initial second-quarter GDP estimate on July 30, the BEA said. One of the changes that was made last year was intended to artificially boost GDP growth numbers for the first quarter of each year. So without that artificial boost, what would the real number for the first quarter of 2016 look like? John Williams of shadowstats.com tracks what the official government numbers would be if honest numbers were actually being used, and according to him U.S. GDP growth has been continuously negative since 2005. But we certainly can’t have the press report those sorts of things.  If that were the case, then everyone would be talking about the “economic depression” that never seems to end. Unfortunately, the truth is that we are in the midst of a long-term economic decline, and we can see evidence of this all around us.  For example, on Thursday we also learned that the rate of homeownership in the United States has fallen once again, and it is now hovering just 0.1 percent above the lowest level ever recorded in American history… After gains in the second half of 2015, the homeownership rate fell to just 63.6 percent, seasonally adjusted, in the first quarter of this year, according to the U.S. Census Bureau. Homeownership hit a high of 69.4 percent in 2004, during one of the biggest housing booms in history. That was also when mortgage lending was arguably at its loosest level in history. The homeownership rate is now just one-tenth of 1 basis point higher than its all-time low in the second quarter of 2015. For many more numbers that show that the U.S. economy has continued to decline, please see the following articles that I authored earlier this month… #1 “Economy In Decline: Apple Reports Massive Revenue Decline As iPhone Sales Plummet Dramatically” #2 “In 1 Out Of Every 5 American Families, Nobody Has A Job” #3 “Stories Of Despair From The Forgotten People That The U.S. Economy Has Left Behind” #4 “47 Percent Of Americans Cannot Even Come Up With $400 To Cover An Emergency Room Visit” #5 “Corporations Are Defaulting On Their Debts Like It’s 2008 All Over Again” Now that U.S. GDP growth has been steadily dropping for three quarters in a row, hopefully people will wake up and begin to realize what is happening. We are entering very hard times, so now is not the time to go out and buy fancy new toys or to go into lots of debt. Rather, this is a time to tighten our belts, batten down the hatches and prepare for rough seas ahead. Sadly, most people continue to have blind faith that our politicians and the central bankers will be able to perform some kind of miracle to save us from what is coming. *About the author: Michael Snyder is the founder and publisher of The Economic Collapse Blog. Michael’s controversial new book about Bible prophecy entitled “The Rapture Verdict” is available in paperback and for the Kindle on Amazon.com.*

The Last 16 Times This Happened There Was A Recession… Michael Snyder THE ECONOMIC COLLAPSE BLOG

The Last 16 Times This Happened There Was A Recession…

Posted: 19 Jan 2016 PM PST  Michael Snyder  THE ECONOMIC COLLAPSE BLOG

Something has just happened that has signaled a recession every single time that it has occurred since World War I.  16 times since 1919 there have been at least 8 month-over-month declines in industrial production during the preceding 12 month period, and in each of those 16 instances the U.S. economy has plunged into recession.  Now that it has happened again, will the U.S. economy beat the odds and avoid a major economic downturn?  I certainly wouldn’t count on it. 

As I have written about repeatedly, there are a whole host of other numbers that are screaming that a new recession is here, and global financial markets are crumbling.  It would take a miracle of epic proportions to pull us out of this tailspin, and yet there are many people out there that are absolutely convinced that it will happen.
John Hussman is not one of them. 

In his most recent weekly comment, he examined this stunning correlation between month-over-month declines in industrial production and recessions.  To me, what Hussman has presented is overwhelmingly conclusive…

Last week, following a long period of poor internals and weakening order surplus, we observed fresh declines in industrial production and retail sales. Industrial production has now also declined on a year-over-year basis. The weakness we presently observe is strongly associated with recession. The chart below (h/t Jeff Wilson) plots the cumulative number of month-over-month declines in Industrial Production during the preceding 12-month period, in data since 1919. Recessions are shaded. The current total of 10 (of a possible 12) month-over-month declines in Industrial Production has never been observed except in the context of a U.S. recession. Historically, as Dick Van Patten would say, eight is enough.

After looking at that chart, is there anyone out there that still doubts that the U.S. economy is in significant trouble?

Many estimates of U.S. GDP growth for the fourth quarter of 2015 are already just a small fraction of one percent.  It would not be a surprise at all to see a negative number posted once it is all said and done.

And of course more bad news for the economy just keeps pouring in.  So far this week we have learned that the growth rate of federal withholding taxes has turned negative, Johnson & Johnson plans has announced that it is eliminating 3,000 jobs, and BP has announced that it is eliminating 4,000 jobs.

Of course it is not exactly a surprise that BP is cutting jobs.  At this point the entire energy industry is absolutely hemorrhaging workers.  As I wrote about yesterday, 130,000 good paying energy jobs have been lost in the United States since the beginning of last year.

But now we are seeing major firms outside the energy industry cutting payrolls.  Even financial giants such as Morgan Stanley are looking for ways to cut costs…

Morgan Stanley just announced fourth-quarter earnings, and it is providing detail to investors on a cost-saving plan called Project Streamline.
During a conference call, CEO James Gorman uttered a sentence that will most likely make the bank’s staff shudder.
“Too many employees based in high-cost centers are doing work that can sensibly be done in lower-cost centers,” he said.

The whole environment is changing.

When things start to get tough, big corporations start to get rid of people.  We saw this back in 2008, and it is starting to happen again right now.

And just like last time around, we are going to see millions of Americans lose their jobs during the hard years that are ahead of us.

But thankfully for the moment there is a brief lull in the action.  The financial turmoil that has gripped the planet was calmed on Tuesday when China announced that their economy grew at a rate of 6.8 percent during the fourth quarter of 2015.  This was right in line with expectations, and markets around the world responded positively to the news.

There is just one huge problem.  Everyone knows that GDP figures coming out of China are essentially meaningless.  If you believe that the Chinese economy actually grew at a 6.8 percent rate during the fourth quarter of 2015, then I have a bridge to sell you.  Virtually every other number coming out of China over the past several months tells us that the Chinese economy is shrinking, and so that 6.8 percent figure is extremely questionable at best.

Do you want to know the last time the communist Chinese admitted to having a recession?

It was in 1976.

Over the past four decades, economic growth figures have become a source of great national pride for China.  To admit that the economy is now imploding would bring great shame on the Chinese government and the nation as a whole, and so that must be avoided at all costs.

Yes, the numbers are fraudulent in the U.S. too.  According to John Williams of shadowstats.com, if the U.S. was actually using honest numbers the last recession never would have technically ended.

But in China they take this to ridiculous extremes.  The Chinese economy is fueled by exports, and Chinese exports have been down on a year over year basis for six months in a row.  And the primary reason why commodity prices have been absolutely collapsing is because of the economic contraction in China.

Of course if China had released a GDP number that was honest, global markets would have crashed hard.  So their lies are making everyone else feel a bit better for the moment, and every day of relative stability that we can enjoy from here on out is something to be thankful for.

As you read this article, markets all over Asia, Europe, South America and the Middle East are already in bear market territory.  More than 30 percent of the market has been wiped out in Brazil and Hong Kong, more than 40 percent of the market has been wiped out in China and Italy, and about 50 percent of the market has been wiped out in Saudi Arabia.

We are already experiencing a major global financial crisis.

The only question remaining is how bad it will eventually become.

Let us hope for more days like this one that are relatively calm.  But I wouldn’t count on things turning around significantly any time soon, because the economic fundamentals are telling us that big trouble is ahead.