- Q1 GDP was even lower than initially reported…
- The “hollowed out” economy…
- Robert Kiyosaki’s latest book shows you the compounding power of weekly income…
Dear Reader,
Yesterday the United States Bureau of Economic Analysis revised its first-quarter estimate of the gross domestic product.
The revision was downward.
The first-quarter contraction represents the first quarterly contraction in three years. Fox Business:
- The Commerce Department’s Bureau of Economic Analysis (BEA) released its third estimate for first quarter gross domestic product (GDP), which found the U.S. economy contracted at an annual rate of 0.5% in the first quarter, which runs from January through March.
- Economists surveyed by LSEG had expected the economy to contract at a 0.2% rate in the quarter…
- The 0.5% GDP contraction shown in the final first-quarter GDP figures is the first quarterly contraction since the first quarter of 2022.
I remind you that two consecutive quarters of contraction — in the official telling — equals recession.
Will the second-quarter reading indicate recession?
Not a Good Sign
Why did the gross domestic product contract in the year’s first quarter?
We are informed that withering personal consumption bears central blame.
The initial report card listed a first-quarter 1.7% consumption increase.
The subsequent card revised the figure downward — to 1.2%.
Yesterday’s revision depressed the figure further… to 0.5%.
Not since the onset of the 2020 plague has quarterly personal consumption languished so.
Is it because the American consumer has abandoned her credit card for the piggy bank?
Has she forsaken spending because she has recalled the ancient virtues of thrift… prudence… and deferred gratification?
Alas, she has not. She scarcely holds any savings whatsoever.
She long ago shattered her piggy bank upon the floor.
Not a Good Formula
Thus Bankrate reports that:
- New Bankrate data shows that a large percentage of Americans don’t have three months of expenses saved, and many people don’t have any emergency savings at all…
- Only 46% of U.S. adults have enough emergency savings to cover three months of expenses. Additionally, 30% of people have some emergency savings but not enough to cover three months’ expenses, and 24% have no emergency savings at all.
Meantime, credit card delinquencies are on the jump.
The national delinquency rate has — in fact — increased for the last 10 quarters.
Shall I heap Pelion upon Ossa?
The United States Bureau of Labor Statistics reports that recurring unemployment claims dangle at their highest point since November 2021.
Depressed savings rates… elevated delinquency rates… slackening employment.
Is this the formula for a bountiful economy?
I hazard very strongly it is not.
The Trend, the Trend
It is said that one swallow does not a summer make.
And I concede, freely, openly, that one freeze does not a winter make.
The second-quarter gross domestic product may trampoline above the first — as may the third.
Yet I am not half so confident. I believe a lingering trend is in motion.
I have likened the United States economy to jalopy automobile.
I claimed it may give the appearance of an exotic racing auto — sleek, finely lined, waxed to a blinding sheen.
Yet beneath this racer’s glittering surface lurks a lemon.
The transmission slips gears. Cracks run through the pistons. Rust corrupts the engine block… and oil oozes from every seam.
The “Hollowed Out” Economy
Economics commentator Charles Hugh Smith has arrived at a resembling conclusion.
Yet he refers not to a jalopy economy — but to a “hollowed out” economy:
- Our economy has been hollowed out in virtually every sector, from Higher Education to Healthcare to housing. Much of what passes for “growth” is either waste (BS work, planned obsolescence, fraud), statistical trickery or artificial stimulus.
- The shell remains standing but it now requires massive injections of borrowed money to prop up the rotted facade…
- The status quo has pushed us into extremes of hollowed-out instability to maintain a superficial appearance of normalcy and stability. But it’s all fake.
I believe there is vast justice here.
Do I claim it is “all fake?”
I do not. Yet I do believe much of it is indeed fake.
When More Is Less
The debt-based economy requires habitual credit expansion to maintain steam.
Yet as its volume expands, its impact diminishes.
More becomes, in fact, less.
Continues Mr. Smith — who has assuredly not gone to Washington:
- Everything has been hollowed out by insiders being enriched by a system that must be propped up with trillions in borrowed money lest it collapse under its own bloated weight.
- Insiders, grifters and apologists always trot out rationales which boil down to transparent self-serving excuses cloaked by piteous bleating…
- Now that everything’s been hollowed out, nobody is accountable or takes responsibility for any of it. Disconnecting self-serving greed from consequences is the key dynamic in hollowing out once-functional institutions and sectors.
Was It Inevitable?
Like seasons, civilizations run in cycles — from rosy dawn, to high and cloudless noon, to twilit sundown.
Perhaps we are merely observing American civilization nearing twilight. It may even have been inevitable, given historical inevitabilities.
I do not know.
Yet a man views the world through his own distorted lens. And perhaps my lens is the improper lens.
Regardless, it is a summer Friday. And our thoughts should turn to pleasanter fancies.
Even if American civilization is nearing twilight…
Let us hold the sun up in the sky as long as possible… and maximize remaining daylight.
Brian Maher
for Freedom Financial News
