5 signs that U.S. and world economy is in trouble

1. U.S. Retail Sales Collapse

In post-industrial America, the economy depends on and is driven by consumerism, i.e., retail sales.
But those sales are tanking.
Bloomberg reports, Jan. 15, 2016, that after an anemic gain of 0.4% in November 2015, retail sales in December actually fell 0.1% — in spite of lower gas prices and the “holiday” Christmas buying frenzy on which retailers traditionally rely to lift them into the black.
For all of 2015, purchases climbed only 2.1%, making 2015 the weakest year since 2009, the trough of the Great Recession.
U.S. retails sales 2007-2015
The retail sales collapse affects 6 of 13 major categories, including grocers (!) and the following:

  • 1% drop at general merchandise stores.
  • 1.1% drop in receipts at gasoline stations, from the drop in gas prices.
  • 0.9% drop in sales at clothing chains.
  • 0.2% drop in sales at electronics stores.

Analysts say the slowdown indicates Americans probably preferred to sock away the savings from cheaper fuel instead of splurging during the holiday season.

2. Most Americans have less than $1,000 in savings

That is only sensible, given the fact that most Americans — a whopping 62% — have less than $1,000 in their savings accounts, and 21% don’t even have a savings account, according to a new survey of more than 5,000 adults conducted last month by Google Consumer Survey for personal finance website GOBankingRates.com.
That means many Americans have no emergency savings for things such as a $1,000 emergency room visit or a $500 car repair. Faced with an emergency, they say they would raise the money by reducing spending elsewhere (26%), borrowing from family and/or friends (16%) or using credit cards (12%). (Read more here)

3. U.S. Industrial Production Collapse

It is not just retail sales that are tanking. U.S. industrial production plunged 1.8% year-over-year (2014 to 2015), which is the fastest pace of collapse since May 2008 when the Great Recession began. Historically, a 1.8% year-over-year decline in industrial production has never not produced a recession. (Source)
U.S. industrial production 1971-2015

4. Hundreds of Wal-Marts to be closed

The collapse of retail sales is also seen in retail giant Wal-Mart‘s decision to close hundreds of stores.
The AP reports, Jan. 15, 2016, that with 11,000 stores worldwide and a global workforce of 2.2 million, the world’s biggest retailer Wal-Mart is closing 269 stores, more than half of them (154) will be in the U.S., including 102 smallest-format stores called Wal-Mart Express, which were opened as a test in 2011.
Altogether, 16,000 Wal-Mart “associates” will be laid off, 10,000 of whom in the United States.
The closures will begin at the end of this month, January.

Wal-Mart has 4,500 stores in the U.S., with 1.4 million employees. The stores being shuttered account for less than 1% of Wal-Mart’s global revenue.

More than 95% of the U.S. stores set to be closed are within 10 miles of another Wal-Mart. The Arkansas-based company said it is working to ensure that workers are placed in nearby locations.

The announcement comes three months after Wal-Mart Stores Inc. CEO Doug McMillon told investors that the world’s largest retailer would review its fleet of stores with the goal of becoming more nimble in the face of increased competition from all fronts, including from online rival Amazon.com. McMillon said in a statement: “Actively managing our portfolio of assets is essential to maintaining a healthy business. Closing stores is never an easy decision. But it is necessary to keep the company strong and positioned for the future.”

minimum wage increase

ZeroHedge points out that Wal-Mart’s troubles began when “the world’s largest retailer bowed to pressure to raise wages for its lowest-paid employees…. In short order, it became apparent that the reverberations from the $1.5 billion endeavor would spell trouble for the company.” When the retail giant’s efforts to squeeze the supply chain failed to plug the gap, the company resorted to store closures, job cuts and reduced hours.

5. Global economy in trouble

H/t FOTM‘s josephbc69
Even more frightening are signs that the economic slump is not just in the U.S., it is worldwide, as indicated by continued collapse of the Baltic Dry Index, which shows the global economy seems to be grinding to a halt. (Source)
The Baltic Dry Index is an assessment of the price of moving major raw materials by sea. As such the Index is an indicator of global trade because raw materials and most manufactured goods are transported by sea. A steep and continuing drop in the Index means goods aren’t being hauled by ships because factories aren’t buying and retailers aren’t stocking.
Baltic Dry Index 1985-2015
The graph below shows how the Baltic Dry Index is an indicator of world trade:
Baltic Dry Index of world trade
SuperStation95 (95.1-FM, New York, NY) reports on Jan. 8, 2015, that the North Atlantic appeared empty of cargo ships in-transit. The ships instead were anchored along the North American and European coasts, with few or none moving.
cargo ships in North Atlantic
SuperStation95 explains:

Commerce between Europe and North America has literally come to a halt. For the first time in known history, not one cargo ship is in-transit in the North Atlantic between Europe and North America. All of them (hundreds) are either anchored offshore or in-port. NOTHING is moving.
This has never happened before. It is a horrific economic sign; proof that commerce is literally stopped
The reason commerce has stopped is simple: People are not buying things.   When people do not buy things, retailers do not sell things, so they do not order more goods for stock.
When retailers do not order goods, manufacturers don’t make anything because there are no orders to fill.  When manufacturers do not make goods, they don’t order raw materials for manufacturing.
When there are no orders for raw materials, commodities sellers do not sell raw materials. When no raw materials are sold, there is no shipping by large cargo ships, (or railroads or tractor trailers) to move anything.
Put simply, the global economy is LITERALLY stopping.  Right now.  Today.

Note: Snopes called SuperStation95’s article “false”. Here’s SuperStation 95’s rebuttal:

By their own admission in their report today, Snopes’ representations about shipments traveling via sea, is based upon their information for January 12.  Our story was published on January 8 and dealt with ocean-going freight, on January 7 and 8.
Further, our article dealt solely with the “north Atlantic” not the Pacific or the Mediterranean or any other ocean.  So whatever information Snopes has from the 12th — and from OTHER OCEANS — has no bearing whatsoever on whether our story from January 8 was accurate!  We stand-by our story.

A snapshot taken by MarineTraffic.com and posted by ZeroHedge seemed to show a dearth of cargo ships in transit across the world.
Marine Traffic
Sorry for the bad news, folks, but it looks like we are heading toward very rough waters.

UPDATE:

A few hours after this post was published, I received this email from an acquaintance who’s an American expatriot living in Panama, Central America:

My family and I live on a hill in Panama that overlooks the Bay of Panama (Pacific side) about 7-15 miles off in the distance, and at dusk we can see the lights of the ships awaiting their turn to pass through the canal. It is a beautiful and romantic sight.
Normally, as I look out, I see the skyscrapers on Costa del Este and to the left maybe 5-6 ships in the bay; in between the skyscrapers maybe 3 or more (another few are blocked by the buildings) and then to the right, a few more closer to the canal. I am used to seeing 12 or more. The ships have to wait in the bay as long as a day or so because they must take turns passing through, so they accumulate.
So as soon as I read the above quote from the FOTM post (from Item no. 5), I glanced out the kitchen window and lo and behold, instead of at least a dozen or so ships, I was able to count only three, some of which are possibly cruise ships.
So no, no one is making this up. BTW, the reason the Panama Canal is an indicator of US-Europe traffic is that, in addition to those headed to the US east coast, there will be some headed from Europe to the West Coast as well, which would pass thru the canal.

~Eowyn

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Auntie Lulu
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Auntie Lulu

I think that many, many of us thought that the days of sunshine and roses would come to an end. Hopefully, the majority of us (FOTM) contributors and readers have positioned themselves so that they are not carrying nonsensical credit card debt, and the like. There is something to be said for being a Plain Jane who does not chase after every shiny, new product to hit the shelves. God Bless all of you, please be frugal.

MomOfIV
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MomOfIV

Amen Auntie!

Glenn47
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Glenn47

But but but we have been told we are in a recovery. Today the stock market ended down almost 400 points.i expect to see a major crash there.
This lack of shipping is very telling. Good find Joseph.

truckjunkie
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truckjunkie

We HAVE to be in a Recovery-Obama SAID it ON TV!! Never mind that EVERY SINGLE other indicator says otherwise!
(sarc)

Joe
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Joe

If Obama said it, it must be true! I make a lot of money because I’m the poster boy for Mental Health Week>

Anonymous
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Anonymous

Thanks, Democrats!! (Money under the mattress looks real good right about now… not to mention cigarettes, ammo, gold, diamonds, etc.)

truckjunkie
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truckjunkie

…and GUNS!

Anonymous
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Anonymous

Yup!

josephbc69
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Friends: This should NOT be happening, because we have Social Credit [SC], the cure for our wretched corporate capitalist-banker conspiracy; SC can put an end to poverty and material lack. It’s what WAC Bennett used to make BC the best place on Earth. However, both the liberal-progressives and the neo-cons –supported by our wretched corporate capitalist-banker conspiracy– never admit they know this. Instead, the role of the Bank of Canada [BoC] is NEVER discussed by any party in any election; it’s as if the BoC doesn’t exist and SC is past history. In the US, it’s much, much worse: it’s… Read more »

MomOfIV
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MomOfIV

slavery never ended, it was just repackaged…instead of slaves working on plantations (which exists today in some countries) people today are slaves to the dollar and credit…the “overseers” are the politicians/government and the “masters” are the banks who use the governments to steal precious natural resources from countries in exchange for useless paper.

josephbc69
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Too true, MomOfIV, too true, all of what you’ve written!

MomOfIV
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MomOfIV

Thank you Joseph. I’m looking forward to reading your post on Social Credit.

josephbc69
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Even though it’s economics, it has a heart, for economics must serve humankind, not humans for economic ends and evil. I will write with a light hand, no ideology, which is what far too much of modern economics became, w/o factual basis in our real human world.

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josephbc69
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This essay is dedicated to MomOfIV, and I hope my message is clearly explained. ~~~~~~~~~~~~~ Dear Eo: This was sent to our local MLA –same as a State Representative– a ‘progressive’ who campaigned on increasing employment via local projects funded by the Province, etc., the usual crapola. She’s never asked me to come to her nearby office and lay it out, even though if it were adopted she’d become the next Premiere of the Province in a landslide! From the date, you can see I knew this further collapse was coming; I was doing all I could to alert politicos… Read more »

MomOfIV
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MomOfIV

Thank you Joseph! I am honored by your dedication. 🙂 The usa has only 1 public bank in north dakota and they enjoy the benefits of public banking while everyone else gets screwed by the private banks, especially the federal reserve. I agree 110% we need to get rid of private banks, they are worse than the mafia and all the criminals in our prison system combined. And I’m all for printing and using an alternative form of currency. I think the only way this can be accomplished is if everyone were made aware of the truth and kicked the… Read more »

josephbc69
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Well, as for “Any ideas on how to get people ‘in touch’,” I think I just did that, by posting these essays & articles where a group of concerned, intelligent people will now inform themselves and prepare to end the Fed Res Bunco, for a start. The Fed Res Bunco will of course wail & scream for the 17 trillions of Satanically impossible debt they claim is owed them, BUT the act that empowered the Fed Res Bunco was in and of itself a fraud, in clear violation of the US Constitution’s strictures on the creation of currency and our… Read more »

MomOfIV
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MomOfIV

I mean people who aren’t reading and don’t want to be informed. Definitely, we want to be informed and make prudent decisions based on factual evidence, but what about those who don’t care?
That’s my question….there’s a growing population of people who don’t care what happens as long as they “get theirs”. How do you reach them to teach them to care?
Also, I always figured the best way to pay off the debt is to simply use the same system the bankers use on us….print it up and say “paid in full”.

josephbc69
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Mom, your concern for those “people who aren’t reading and don’t want to be informed” is a heart-breaker, and shows that you likely had to struggle to get some young ones up and running. It’s the old quandary about leading a horse to water, but as to how much it drinks –if any!– aye, there’s the rub! We can only offer what we have and let it go at that: if we do manage to get some inspired enough that they go on to become autodidacts, that’s great! And now, with the overall use of both computers and he Internet,… Read more »

MomOfIV
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MomOfIV

Amen! Joseph, Amen!

Heather
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Thank you again Dr. Eowyn! My husband and I have tried to prepare by buying freeze dried food and other things.
What is most telling is the prophesy in the bible. We know this world is coming to an end and I want the evil to stop and look with great anticipation for the Lords return. We need to be prepared spiritually and we need to help lead the lost to Christ as “The World Falls Down” (a little tribute to David Bowie, who just died…hope he accepted Jesus before his last breath).

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