ECONOMIC UPDATE: Worst of the Economic Crisis Has Just Begun
With oil and gas prices rising as winter sets in, a bad situation will be made worse as Europe also sinks into Dragflation.
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Back in November of 2022, The Trends Journal had forecast a stock market spike in 2023. We noted that over the past 40 U.S. midterm elections, the S&P 500 rose 16.3 percent in the next 12 months and considering the economic data, the trend would continue.
Then in February, we had forecast a market slump in March, followed by an equity spike until August. And, this past July we had forecast the beginning of a sharp U.S. equity market decline beginning in September and into October.
The markets peaked in August with the S&P 500 up nearly 20 percent since the start of the year. Heading for its first quarterly loss of the year, the S&P is now down 8 percent from its high. The Russell 2000 Index of small-cap stocks is down 11 percent from its high while The Nasdaq and Dow are down more than 6 percent and 4 percent respectively this month.
Adding insult to the economic injury, with interest rates high, August new home sales came in low, with homes under contract down 8.7 percent from July, according to the Commerce Department.
Feeling the pressure of rising inflation, higher interest rates, and lower economic expectations, the Consumer Confidence Index, which was at 108.7 in August, fell to 103 in September, according to the Conference Board… sinking the fastest since December 2020 when much of the world shut down to fight the COVID War.
Barely, if ever, reported by the Presstitutes is that governments and the Bankster Bandits are responsible for the worsening economic conditions. It was they, who, in their quest to fight the COVID War, flooded the world with countless trillions of dollars of fake money backed by nothing and printed on nothing—and lowering interest rates to record lows—to artificially prop up economies and equities that should have crashed because of the global lockdowns.
With any number below 80 signaling a recession within the next year, the Conference Board’s Expectations Index—which measures consumers’ income expectations and the outlook for business and labor market conditions—slumped 73.7 in September, down from 83.3 in August and 88 in July.
The Conference Board’s chief economist Dana Peterson said that “Expectations for the next six months tumbled back below the recession threshold of 80, reflecting less confidence about future business conditions, job availability, and incomes,” and that they “may be hearing more bad news about corporate earnings, while job openings are narrowing, and interest rates continue to rise—making big-ticket items more expensive.”
As forecast, here we are. Get ready. The worst of the economic crisis has just begun.
Presstitutes on Parade
The true economic hardship facts add up to “zero” when reported by the mainstream media. On the business end of so-called “journalism,” all they do is sell the line that the economy will stay strong and to keep gambling in the stock market casino. (It should be noted that minus “business,” all the mainstream media sells to the public is fear, hysteria, and celebrity bullshit to keep pumping up their sinking ratings).
The equation is simple. The higher interest rates rise, the deeper economies will fall. And again, barely, if ever, reported by the Presstitutes is that governments and the Bankster Bandits are responsible for the worsening economic conditions. It was they, who, in their quest to fight the COVID War, flooded the world with countless trillions of dollars of fake money backed by nothing and printed on nothing—and lowering interest rates to record lows—to artificially prop up economies and equities that should have crashed because of the global lockdowns.
As a result of the cheap money printing schemes, as Gregory Mannarino details in his article this week, “MAXIMUM SATURATION”, the system becomes unable to support any more debt and then starts to break down.
Again, this was caused by politicians and the Bankster Bandits, who, after denying it for years, began to raise interest rates to fight the inflation spiral they created. So, the future is clear to see. The higher interest rates rise, the deeper equities and economies will fall and the guess on the The Street keeps changing from the belief that the U.S. will hold interest rates where they are and only slightly lower them in 2024.
And the “big” news making the business news today is that Jamie Dimon—the head of the crime-infected JPMorgan Chase, which has admitted to five separate felony counts brought by the U.S. Department of Justice, says considering the rate of inflation, interest rates could go up much higher than their current 5.25 percent to 5.50 percent range.
In an interview with The Times of India he said, “I am not sure if the world is prepared for 7 percent. I ask people in business, ‘Are you prepared for something like 7 percent? The worst case is 7 percent with stagflation. If they are going to have lower volumes and higher rates, there will be stress in the system. We urge our clients to be prepared for that kind of stress.”
TREND FORECAST: Dimon is wrong. The U.S. will not sink into stagflation, it will fall into Dragflation: declining economic growth and rising inflation.
On the equity market side, this is not rocket science. With high-interest rates providing investors 5 percent or more in money market funds and/or U.S. Treasuries, there will continue to be less gambling money going into equities. Thus, the longer interest rates stay high, and the higher they go, the deeper the equity markets will fall.
Therefore, there is a high probability of a severe stock market selloff in October. And when the equity markets crash, the struggling consumers will awaken to the real dangers confronting the entire economy.
With holiday hiring already down as we reported in last week’s Trends Journal, the upcoming holiday consumer spending may well fall into negative territory. And with some 70 percent of the U.S. Gross Domestic Product based on consumer spending, the U.S. will slide into Dragflation.
Over in Europe, recession has hit Germany, the fourth largest economy in the world, and will hit the rest of the Eurozone economies according to S&P Global. Last Friday HCOB released its flash Composite Purchasing Managers’ Index (PMI) for the Eurozone which measures overall economic conditions that came in at 47.1 in September. Any number below 50 equals contraction.
TREND FORECAST: And now, with oil and gas prices rising as winter sets in, a bad situation will be made worse as Europe also sinks into Dragflation.
Economist and Statesman Lyndon LaRouche publicly presented the solution to the crisis in his Four Laws for economic recovery in 2014. It and all of LaRouche's writings and videos are available at www.larouchepub.com or simply google LaRouche's Four Laws.
Here is the solution.
There is plenty of more.
Let the System destroy itself... I don't care.
The Future belongs to Fritz Freud.
https://fritzfreud.substack.com/p/suing-richard-branson-and-elon-musk