News of a possible “phase 1 trade deal” and movement toward a resolution of the Brexit fiasco have buoyed stocks and put a lid on silver and gold this week. But positive vibes on these two fronts overshadowed a lot of economic data that came out this week that was less than ideal. It seems the American consumer might be getting close to being maxed out. In this episode of the SchiffGold Friday Gold Wrap podcast, host Mike Maharrey digs into a big pile of debt and more.
In this week’s Friday Gold Wrap, Mike Maharrey covers some more bad signs in the economy, including rising oil prices, an unexpected drop in retail sales and a surge in negative-yielding government bonds. At best, it looks like the economy is slowing down. Or it could be the prelude to the next crisis. This raises an important question: who’s going to save us? Mike suggests we probably shouldn’t be counting on the politicians or the central bankers.
Even as the Federal Reserve and the financial news network pundits continue to dangle the prospect of a booming economy in front of us, we’re seeing more and more bad news that undermines this narrative and reveals the rotting foundation of the US economy. The wholesale inventory report that came out yesterday is the latest gloomy example.
If you saw the headlines about the latest retail sales figures, you probably noticed adjectives like “hot,” “booming” and “sizzling.” Total retail sales including food services were up 5.9% year-on-year in May.
That’s an impressive number until you factor in inflation. In fact, a decline in the dollar’s purchasing power accounted for nearly half the gains in retail sales.
Retail sales unexpectedly fell again in February. It was the third straight monthly drop and the first time the US economy has seen three straight months of declining retail sales since 2012.
Sales fell 0.1% in February. Analysts had expected an uptick of 0.3%. According to CNBC, households cut back on purchases of motor vehicles and other big-ticket items, pointing to a slowdown in economic growth in the first quarter.
So, why is this happening? Peter Schiff offered a simple reason in his latest podcast.
Americans are broke.
Could the house of credit cards Americans have built be on the verge of collapse?
Earlier this week, the New York Fed released the latest data on US household debt, revealing it has grown to a record $13 trillion. Americans have been spending, but they’ve been putting a lot of it on plastic. Credit card balances grew by $24 billion in the last quarter of 2017 alone. Meanwhile, US consumers owe $1.22 trillion on vehicle loans. This can only go on for so long. And there are indications that the American credit card spending spree may be winding down.
Retail sales unexpectedly fell in January, recording their biggest drop in nearly a year.