Here is a summary of some of the significant economic data/news that came out last week.
Third-quarter 2019 new orders for durable goods remain on track for a second annual decline. August 2019 Real New Orders for Durable Goods showed a monthly gain of 0.2% [1.0% ex-Commercial Aircraft], but an annual decline of 4.9% [down by 2.1% (-2.1%) ex-Commercial Aircraft].
The shockingly bad May jobs report dumped a bucket of cold water on central bankers and mainstream pundits. A June interest rate hike that was a foregone conclusion just a week ago disappeared like a teenager when it’s time to do the dishes. Suddenly, a lot of people are starting to realize the great Obama economy isn’t quite as advertised.
Peter Schiff has said several times we are in a “phony recovery,” and the US economy is likely already in recession. A few other “contrarian” voices like Mike Maloney have echoed Peter’s warning. If we dig a little deeper, we find buried in the jobs data a major red flag that indicates that they are probably right.
The number of temporary jobs has been on the decline since peaking last December. In May, the economy shed 21,000 temp jobs, bringing the total to nearly 64,000 lost since December of last year.
Why is this so significant?
Donald Trump managed to shove his way into the spotlight again last week, claiming the US is heading for “a massive recession.” Unsurprisingly, the mainstream media scoffed at Trump’s assertion, pointing to the “great jobs report” that came out Friday.
The report did show the US economy added some 215,000 jobs, slightly more than expected. But once again, the headlines only tell a little piece of the story. And once again, most mainstream media and financial analysts are ignoring the bigger picture. In fact, all of the positive spin about a great employment outlook is nothing more than an April snow job. As Peter Schiff succinctly put it in his recent podcast, this was not a good jobs report:
We added the jobs we don’t want; we lost the jobs we do want. That is the real story. It’s the story nobody wants to tell. Everybody wants to talk about the number as if this is some kind of economic miracle.”
No matter how much data you point to showing the health of the US economy isn’t as good as advertised, you will inevitably hear the refrain, “But look at the jobs numbers!”
Just the other day, Peter Schiff appeared on Fox Business and said the US economy is likely already in recession. Peter repeated his prediction that the Fed wasn’t going to raise rates again, but would instead drop them to zero. National Alliance Securities Global strategist Andy Brenner was having none of that. He insisted the Fed would raise rates at least two more times this year because the economy is doing OK. And what was his proof? You guessed it – jobs!
Peter made mincemeat out of Brenner’s argument, pointing out that most of the new jobs in the February report were part-time and low paying.
Eighty percent of these jobs are service-sector jobs, many of them are minimum wage jobs. You can’t raise a family on these jobs. Many kids can’t even move out of their parents’ houses because they can’t get a job.”
No matter what kind of negative economic data comes out, President Obama, central bankers, and media analysts gloss over it and point to the “great” jobs numbers as evidence the US economy is doing well. But in reality, it’s all smoke and mirrors.
Last Friday, the media reported “better than expected” labor numbers with more than 200,000 jobs added in February and a low 4.9% unemployment. But as Peter Schiff pointed out in his Schiff Report video blog over the weekend, it was really a terrible jobs report.
The reports are only good superficially. Once you look beneath the surface, and believe me, it’s a very thin layer, you find out how meaningless the numbers are.”
Despite the added jobs, average hourly earnings dropped. Analysts expected the number to rise 0.2%. Instead, hourly earnings dropped 0.1. On top of that, hours worked fell from 34.6 hours to 34.4. Looking at the data together shows weekly earnings fell 0.7%. That represents the biggest drop in weekly earnings ever.
Media and government officials keep telling us the economy looks great, but a peek behind the curtain tells a different story.
Some people do see the writing on the wall. Peter Schiff has been saying the US may well have already entered a recession. Last month, Jim Grant echoed Peter, saying the US economy likely went into recession in December 2015. And in a recent interview, Rogers Holdings Chairman Jim Rogers said there is a 100% probability the US will be in a downturn within a year:
It’s been seven years, eight years since we had the last recession in the US, and normally, historically we have them every four to seven years for whatever reason—at least we always have. It doesn’t have to happen in four to seven years, but look at the debt, the debt is staggering.”
With four states officially in recession, and economic data continuing to point toward a broader downturn, it’s getting increasingly difficult for officials to sell the illusion of a strong US economy.
Peter Schiff has been saying for weeks that the US may already be in a recession. Recently, Jim Grant appeared on CNBC’s Closing Bell and echoed Peter’s sentiments, saying the US likely went into recession in late December. And while officials at the Federal Reserve keep insisting the US economy remains strong, some mainstream analysts have started sounding recession warning bells as well. In fact, the number of mainstream economists predicting a recession within the next 12 months continues to rise.
So far, people have been able to blow off talk of a looming recession as mere chatter, but in some US states, it’s not just speculation; it’s reality. According to a Bloomberg report, four US states have officially gone into recession, with three more “at risk of prolonged declines.”
Peter Schiff has been saying for months that the US economy isn’t nearly as good as Federal Reserve and government officials want you to believe.
Mainstream analysts and pundits seem to be doing their best to toe the line and paint a rosy picture, but we are starting to see a lot of cracks in the narrative. It’s becoming increasingly difficult to ignore the signs of real trouble in the economy.
A recent CNN story warning us to brace for a “rare recession in corporate profits” as fourth quarter earning begin coming in over the next week serves as a case in point:
The Federal Reserve Bank of Atlanta’s GDPNow estimate released today forecast a dismal 4th quarter GDP number. The forecast was nearly cut in half from 1.3% on December 23rd to 0.7% today. It remains much worse than the mainstream consensus estimates:
Here’s what the Atlanta Fed had to say, citing the same manufacturing numbers Peter Schiff shared this morning:
The Fed appears to be skipping merrily toward an interest rate hike this afternoon, which is supposed to signal that the US economy has recovered. But as Peter Schiff has been pointing out relentlessly on his Facebook page, the actual economic data tells a completely different story. In fact, the economy isn’t nearly as good as advertised.
This is precisely why Peter and many other economists say they don’t think interest rates will stay above zero for very long, even if the Fed does indeed go forward with a hike.
Here are just a few of the warning signs over the last week or so.