ECONOMIC UPDATE: Buy Now, Pay Later Economy

Bank of America had forecast that U.S. public debt will hit $54 trillion by 2033

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.

Everything’s coming up roses. In Japan, the world’s third-largest economy, its central bank said today that it will keep its cheap money scheme going (i.e. quantitative easing) and its negative 0.1 interest rates to juice up its economy which contracted at an annualized 2.9 percent rate in the last quarter.  

“With extremely high uncertainties surrounding economies and financial markets at home and abroad, the bank will patiently continue with monetary easing,” the Bank of Japan declared. 

Over in the world’s fourth-largest economy and the largest one in the EU, German business morale slumped in December according to the Ifo Institute survey which also reported a fall-off in both expectations and current conditions with its business climate index at 86.4 in December compared to 87.2 in November. “As the year draws to a close, the German economy remains weak,” said the Ifo president Clemens Fuest.

While it is clear that much of the economic future depends on where interest rates are heading, there are many wild cards, especially the Israel War and our forecast that Ukraine will up their war with Russia which in turn make a gloomy economic future into a very dark one. -Celente

In fact, Germany’s economy is weak and getting weaker. In the first two quarters, economic output in the first quarter registered zero growth, up just 0.1 percent in the second quarter and down 0.1 percent in the third quarter. From imports to exports to consumer spending, Germany is in a slump. Feeling the third quarter weakness, consumer spending, which accounts for some two-thirds of German GDP, fell 0.3. Its exports slumped 0.8 percent and imports sharply fell by 1.3 percent.

Over in China, the world’s second-largest economy, its economy and its 1.4 billion people are, as we have been reporting, still suffering the socioeconomic aftershocks of its three years of zero COVID policy that followed Beijing’s launching of the COVID War on its Chinese Lunar New Year in 2020, “The Year of the Rat.”  

And now, identifying “significant risks,” such as the slumping real estate sector, declining exports, and imports, massive youth unemployment, and an aging population, the World Bank projects China’s growth will slow to 4.5 percent next year from 5.2 percent this year. 

Again, as we have greatly detailed, China’s economy, especially the real estate sector, was way overbuilt and ready for a steep contraction even before the COVID War. Its economy boomed in 2001 as a result of joining the World Trade Organization. Back in 1999, its GDP totaled a bit over a trillion dollars. Today it’s at $18 trillion as a result of Western manufacturers going there to use cheap labor to get their products made, which boosted their revenue stream as well as China’s.

As a result of higher labor costs, China’s self-imposed three years of zero-COVID sanctions and the ramping up of geopolitical conflicts with the West that have put sanctions on China, that trend has significantly reversed. More Western manufactures, hedge funds, private equity groups, and venture capitalists will continue to do less business with China.  And the less business they do, the deeper China’s economy will fall.

Back in the U.S.A.

While the rest of the world is going down, the government and The Street keep selling high hopes for America despite some 61 percent of the people living paycheck to paycheck, according to Lending Club. 

And as for those plantation workers of Slavelandia, as we reported, with the credit card debt soaring to above a trillion dollars, they are celebrating the holiday season by buying more and paying later. 

GIVE THE GIFT OF TRENDS

Indeed, the buy now—pay later trend has dramatically escalated this year. 

Since the beginning of the year, U.S. consumers jumped onto the buy-now-pay later platform, spending nearly $65 billion as of 6 December according to Adobe Analytics. 

Up 15 percent from a year ago, with the holiday season still going strong, that rate will increase. Thus, more people will owe more and have less to spend in 2024.  And making a bad situation worse, the interest rate on unpaid credit is as high as 36 percent.

And speaking of borrowing more and sinking deeper in debt, America’s national debt increased by $2.6 trillion in the last six months, bringing the total debt level to nearly $34 trillion, according to the U.S. Treasury Department.  According to Bloomberg, the interest on the debt on an annualized basis is more than $1 trillion.

Making a bad situation worse, back in November, the Bank of America had forecast that U.S. public debt will hit $54 trillion by 2033. 

TREND FORECAST: While it is clear that much of the economic future depends on where interest rates are heading, there are many wild cards, especially the Israel War and our forecast that Ukraine will up their war with Russia which in turn make a gloomy economic future into a very dark one. 

And even with interest rates falling, the debt levels of the plantation workers of Slavelandia will keep rising and the lasting effects of inflation will have eaten away their ability to save more and buy more.