American Economy: Sweeping under the rug
The search for a way not to recognize the truth, causes the occupant of the White House (refusing to mention his name) and his team to redefine what is a recession.
In fact, there is indeed an unusual situation in the U.S.
Jobs:
Full employment, 11 million jobs available, no candidates, which leads us to believe that everything is going well and tends to improve.
GDP
On the other hand, we had a fall in GDP in the first quarter of 1.6%, and in the second one result of 0.9% that “surprised” the “experts” who predicted growth of around 0.3% to 0.9%. Reality proved that it was more of a blue-plan illusion by the “experts” accomplices of the White House. In fact, there was a further contraction of 0.9% of GDP in the second quarter.
The computers, which do not have the influence of “opinion makers” and “experts”, were more assertive. The ones from Monetary Policy Analytics, which is run by former Fed Director Larry Meyer, nailed the economic contraction to exactly 0.9%.
Fall in sales expectation
We also have a decrease in the deficit in the trade balance of consumer goods, which was $5.9 billion less in June, compared with May ($104 billion to $98.2 billion), which we can assume was a drop in the expectation of sale by importers.
Walmart has already warned the market that it will have lower profitability because, with the extraordinary increase in gasoline and food, leaves less for other purchases like food etc.
Citizens’ wages:
It is also worth noting that the average amount per hour paid fell 3.6% in the last year.
Level of consumer confidence:
Consumer confidence fell to 95.7 points in July, down from 98.4 in June. Again the “experts” made a mistake because they claimed it would be a low to only 97 points (Wall Street Journal)
Consumer spending, is down 4% in the second quarter
Real estate and other properties:
With 8% less in the sale of houses, their values tend to continue falling because we add the main factor to this that ‘and the increase in interest, as well as used and new cars should start going on sale.
In June, 22.1% of pending home sales were canceled in West Palm Beach, 22% in Fort Lauderdale and 21.5% in Miami. The national cancellation rate is as high as 15%.
Production:
It is important to realize that consumers are served, because they bought what they needed or not, with the resources that were generously given to them by the government and now, already, orders decrease in factories and, with the strengthen of the dollar, becomes less competitive abroad.
Some recommendations:
•Keep current jobs and if you add another stream of income
•Do not take out a loan and if you do, take it into fixed interest
•If you have a loan including mortgage, variable interest, turned them to fixed interest or try to eliminate as much dent as possible.
•Assess spending and try to eliminate all unnecessary spendings
•Luxury and pleasures do not pay the bill;
•Try to change habits, from meat to chicken from soda to water, etc.
•If you have risky assets (stock exchange, currencies, etc.) try to move to fixed income or liquidate.
•If you have a high-valued asset, try selling and storing it in a box. There will be better opportunities for implementation during the crisis.
•Manage your activities to save before the crisis come in strong, ensure your future;
•Gain effectiveness in your activities
•Zeal by its customers, they are your great collection
•Zeal for good tenants
•Take attention to opportunities and business. In crises- many lose and some win
•See which businesses and customers will be most affected in the crisis, they are liabilities
•Seek new deals that will be good in the crisis
•Does not make commitments thinking that “you just *might* be able to afford”
•The dollar will continue to strengthen against other currencies.
There are good points in this whole situation. The US problem is not economic, it is political. Unlike Europe, the US can and has been self-sufficient in energy and still is in food.
Spending on services remains high, the labor market remains strong. If gasoline continues to decline for fear of a worldwide recession, US inflation may decline more quickly.
I hope this hurricane of a recession doesn’t happen, but it’s worth to take precautions. We hope that the FED can perform the miracle of soft landing by raising interest rates, without diminishing economic activities.
Carlo Barbieri
