The U.S. economy has been treading water, fueled mostly by monthly Federal Reserve QE payments to big banks. A trickle of these billions of dollars has been reaching the middleclass 'demand engine' in the form of low interest loans for housing and cars. Like a small drop of water falling into an ever expanding ocean of poverty the subsequent multiplier effect has had little impact sustaining this morbid economy. Further exacerbating our socio-economic collapse are the efforts of Plutocrats and their paid stoolies in Washington attempting to dilute our continuant leverage and lower our wages across all professions by dumping hordes of foreigners inside our borders. This potpourri of easily manipulated beholden supplicants is the next weapon deployed by the big business/elitist governmental bloc called Corporatism that is trashing our world to feed their insatiable greed. Is it any wonder this rickshaw of an economy is teetering on outright collapse?
How are citizens supposed to make ends-meet in a country dominated by business elitists that caress dirt cheap foreign labor? With insufficient job creation to even meet the number of monthly new entrants into the labor market, accelerating underemployment, and a declining labor participation rate already depressing demand how can further slashing wages across wide swathes of professions do anything but tank demand for all products?
November was when real-income deprived middleclass citizens already overburdened with excessive debt started reining in their purchases. No longer enticed by easy credit dripping down from banks flush with government cash tapped out consumers negatively assessed their financial situation amid continuing falling real incomes. Heavy discounting during the Christmas season (that seriously depressed the profit margins of retailers) lured income-starved consumers to dip deep into their savings: this prevented a probable sales drop.
Once past the seasonal tradition of spending consumers began scaling back purchases to only those comprising their most basic needs. In January, economic indicators starting reflecting that the U.S. economy was sliding back into the abyss. Given that the U.S. economic debt machine is the purchasing engine for a world also suffering from the income syphoning of the super-wealthy we shouldn't be surprised that Europe is now starting down a deflationary path that has been exacerbated by government income slashing targeted at low to middle income citizens.
Some very disturbing precursors of a global economy being drowned by a U.S. middle class squeezed into oblivion are starting to surface. Below are some indicators of the shift of a somewhat stabilized U.S. economy on a government fed credit life support system that is now exhibiting signs of terminal failure.
- Durable goods orders fell 4.3% in December
- Wal-Mart cut its fourth quarter earnings forecast and reduced future earning to below its low-end projections
- Amazon fourth-quarter earnings fell below earlier estimates
- Chevron reported lower revenues and profit
- MasterCard fourth-quarter profits were below expectations
- Consumer spending rose in December but only because income strapped consumers dipped heavily into savings to make purchases
- University of Michigan and Thomson Reuters reported that consumer sentiment sunk in January over worries about declining job prospects
- Chicago PMI fell in January to 59.6 from December's 60.8 with employment continuing to weaken
- Mattel (the toy maker) reported that net sales fell 6.3% with North American sales plummeting an unprecedented 10%
- European Union reported a drop in January inflation of 0.7% instilling a bona-fide fear of deflation taking hold in Europe based upon the current downward trend
- China's PMI dropped in January to 50.5% – a six month low. Most disturbing were falling new orders