ECONOMIC UPDATE: Banking Crisis Will Occur in 2024
The banking crisis that we forecast will occur in 2024 when more real estate companies default on their loans
NOTE TO READERS: The below article was found in this week’s Trends Journal. Please consider subscribing below for the world’s best trend-forecasting and independent news analysis.
Gregory Mannarino got it right. In his article this week he states that “Currently every single forward-looking economic indicator is pointing towards dramatically worsening economic conditions moving forward, and this IS good news for the stock market. While it may seem or even sound counterintuitive, in today’s environment the faster the economy craters the higher the stock market will go.”
Why does he say this? Because he is 100 percent correct when he says, “Today, there is no correlation whatsoever between the economy and the stock market.”
Let’s look at the worsening economic conditions. According to the Mortgage Bankers Association’s latest Commercial Delinquency Report, commercial mortgage delinquencies in the third quarter of 2023 increased for the third-consecutive month.
Feeling the pressure ahead on the banks as defaults rise—along with the high interest rates—bank stocks continue their slump, with the SPDR S&P Bank ETF down about 15 percent this year.
Indeed, what is barely mentioned in the mainstream media is one of our Top Trends for 2023, OFFICE BUILDING BUST. According to Kastle System, the office occupancy rate in the 10 largest cities in the U.S. is just 51.6 percent.
And as for the vacancy rate, how about this headline in The Colorado Sun last week: About 30% of Denver’s downtown office space is vacant—and that doesn’t include “zombie buildings.”
Yes, “zombie buildings”… empty office properties that are leased but empty.
And this is Denver, not down-and-out Detroit.
According to Morgan Stanley, the nonaccrual commercial real estate loans for banks it covered rose some 40 percent in the third quarter and are up 140 percent year-to-date.
TREND FORECAST: The banking crisis that we forecast will occur in 2024 when more real estate companies default on their loans.
As for the plantation workers of Slavelandia, JPMorgan said that Americans are running out of savings after having drained most of what they had during the COVID War when the government gave them free money and they were locked up and spending less. Indeed, according to the Federal Reserve, in the third quarter of this year, U.S. household wealth declined by over $150 trillion.
Feeling the declining economic pressure, as we note in this week’s Trends Journal, Americans are buying more now and paying a lot more later. According to Adobe Analytics, the BNPL trend (Buy now, pay later) accounted for over $10 billion in online spending since the beginning of November, an increase of 17 percent compared to last year.
As the Financial Times notes, “Researchers at the Federal Reserve Bank of New York warned in a September report of ‘the potential risks of overextension, whereby frequent use of BNP: funding leads to excessive debt accumulation over time.’” They also noted a study that showed consumers spent 20 percent more on BNPL than would otherwise… which means they are going broke but still buying.
TREND FORECAST: The bottom line is there will be a downturn in consumer spending in the coming months and holiday sales will not be as strong as The Street is forecasting. Therefore, with consumer spending accounting for nearly 70 percent of U.S. gross domestic product, there is a recession ahead.
And as we greatly detail in this and previous Trends Journals… from Japan to China, from the EU to the U.S., consumer spending is contracting.
What will change it? Just as the governments fought the COVID War by flooding economies with cheap money, we forecast they will do the same to prop up the coming economic contraction. In doing so, interest rates will fall and gold prices will rise.
Then there was the article that barely made the news that Warren Buffet’s firm sold nearly $30 billion of stocks so far this year. Indeed, the Oracle of Omaha sees what is coming as well as the banksters and others that have been selling shares which we have detailed in The Trends Journal.