SOS: Distress Signals from the American Economy in Trouble

Red Flags Ahead: Unpacking Concerns about the Fully American Economy in Trouble

Warning Signs: Trouble for the American Economy

Updated May 30, 2023

Utilizing a historical backdrop to reinforce this assertion, we find that little has shifted since our initial declaration years ago. The Baltic Dry Index is a steadfast economic gauge, yet it has consistently fallen short of revisiting its past peaks. This index, known as a pivotal leading indicator, unequivocally signals that without the infusion of liquidity, the Fed has undertaken since the 2009 financial crisis, we could have been mired in a severe recession.

Sustaining this economy’s vitality hinges on a continuous influx of funds. Although the Fed has momentarily halted its financial injections, it’s inevitable that they will curtail rate hikes, considering our annual interest payments already exceed a staggering 1 trillion USD.

Baltic dry Index 2023

According to the BLS, the unemployment rate is roughly 5%. Shadow statistics, on the other hand, state that as of Dec 2015, the unemployment rate stands at 22.9%

3 charts illustrating american economy in trouble

The American Economy and the Issue of Wage Stagnation

Real wages have been declining since 2000. In fact, $22.41 today has the same purchasing power as an hourly salary of 4.03 cents hand in 1973. Median Income continues to drop; the middle class has been decimated since the financial crisis in 2008.  This trend is going to continue for the foreseeable future.

Median household Income declining: Obama Economic recovery a sham

Another factor contributing to lower wages is corporate greed.  Corporations use billions of dollars to buy back shares instead of investing and growing their companies. When you buy back shares, you artificially boost the earnings per share metric (EPS); this is alchemy at its best.  This is done without spending money on new equipment or hiring new workers. It is fast, simple and fraudulent, but the government is not prosecuting anyone so that this trend will continue. We covered this recently in an article titled “share buybacks just another Wall Street Scam.”

Number of households on food stamps indicates economic recovery is not real

Assessing the Progress: Is the American Economy on the Upswing?

This chart vividly portrays the ongoing deterioration of the situation across the years, extending beyond solely the recession of 2008-2009. The count of individuals reliant on government aid to secure basic sustenance has consistently risen throughout this so-called economic recovery period. Contrary to the expected trend of fewer people seeking government assistance as the economy improves, this chart signifies a transition from unfavourable circumstances to even more dire conditions. Injecting the markets with surplus money disproportionately benefits the exceedingly affluent, establishing an atmosphere that penalizes savers while favouring speculators.

Lastly, the looming issue of student debt represents a ticking time bomb. This debt currently stands at $1.3 trillion and is expanding at an alarming pace of approximately $2,800 per second. As of June 2015, Bloomberg data indicated that 11.5% of this debt had remained overdue for at least 90 days. An alarming 40 million Americans now bear some form of student loan, with 70% of college students graduating while burdened by debt and no assurance of securing employment upon graduation. According to the Department of Education, by 2025, this debt is projected to surge to nearly $2.5 trillion. A substantial default in this domain could potentially dwarf the impact of the 2008 financial crisis, rendering it comparably mild.

Insights and Observations: Random Notes on the Markets – September 2019

It requires minimal effort to succumb to panic, yielding no rewards whatsoever. Those who react with panic in the face of challenges ultimately reap the consequences they have earned. This has even less than zero value in the market context, given that the masses consistently sell when the market hits its lowest point and buy when it peaks. On the contrary, individuals who exhibit astute behaviour by refraining from panic stand to gain substantial rewards. This pattern has persisted for millennia and is unlikely to change for another millennium.

In the realm of markets, there are no definitive laws or fixed regulations, except for the necessity to possess the skill to adapt to various situations. Emotions play a significant role, and chaos ensues when emotions spiral out of control. This is why the masses often engage in stampede-like behaviour when markets experience a downturn, and conversely, they eagerly jump in when a bubble is on the verge of bursting. Despite centuries passing since the Tulip Bubble, little has evolved in this regard.

Taking command of one’s life is imperative, without relying on the government or any private entity for rescue. This entails living within 1-2 standards below your means and channelling the surplus funds into the stock market. Consider it from this perspective: You would inevitably spend this money on unnecessary purchases aimed at impressing people you don’t truly value with money you can’t genuinely afford to pay.

Other articles of interest 

3 ways investors can make money from common stock: Let's Sherlock It 

3 Ways Investors Can Make Money from Common Stock: Let’s Sherlock It 

3 Ways Investors Can Make Money from Common Stock: Let's Dig Deep  July 10, 2024 In finance, investors are constantly ...
Which Kind of Portfolio Would a Financial Adviser Recommend to a Young Investor?

Which Kind of Portfolio Would a Financial Adviser Recommend to a Young Investor?

Which Kind of Portfolio Would a Financial Adviser Recommend to a Young Investor? The Truth Updated July 09, 2024 Young ...
Thinking Fast and Slow Chapter-by-Chapter PDF Summary

Thinking Fast and Slow Chapter-by-Chapter PDF Summary

Thinking Fast and Slow Chapter-by-Chapter PDF Summary July 9, 2024 Introduction: "Thinking, Fast and Slow" is a groundbreaking work by ...
Why is Putting Even a Small Amount into Savings from Every Paycheck a Smart Money Habit?

Why is Putting Even a Small Amount into Savings from Every Paycheck a Smart Money Habit?

Why is Putting Even a Small Amount into Savings from Every Paycheck a Smart Money Habit? July 9, 2024 Saving ...
Which Statement Is True of the Relationship Between Risk and Return?

Which Statement Is True of the Relationship Between Risk and Return?

Which Statement Is True of the Relationship Between Risk and Return? Updated July 4, 2024 The relationship between risk and ...
Classical Conditioning vs Operant Conditioning in Investing: Master Market Psychology

Classical Conditioning vs Operant Conditioning in Investing: Unlock Smarter Strategies

Classical Conditioning vs Operant Conditioning in Investing: Master Market Psychology July 3, 2024 In the ruthless investing arena, where fortunes ...
Norse Pagan Religion, Viking-Style Warriors

Norse Pagan Religion, from Prayers to Viking-Style Warriors

The Origins of Norse Pagan Religion: The Creed of the Fierce Vikings July 3, 2024 Echoes of Ancient Realms In ...
What is the Greater Fool Theory: Don’t Panic or React Like a Fool

What is the Greater Fool Theory: Don’t Panic or React Like a Fool

What is the Greater Fool Theory in Investing: Stay Calm, Avoid Foolish Reactions July 3, 2024 The Greater Fool Theory ...
The Intelligent Investor PDF: Dive into Wisdom, Not Just Pages

The Intelligent Investor PDF: Dive into Wisdom, Not Just Pages

The Intelligent Investor PDF: Focus on Facts, Not Files  July 2,  2024 The renowned book, "The Intelligent Investor," by Benjamin ...
Describe Some of the Arguments That Supporters and Opponents of Wealth

Describe Some of the Arguments That Supporters and Opponents of Wealth Tax Make

Describe Some of the Arguments That Supporters and Opponents of Wealth Tax Make: Key Perspectives Unveiled July 2, 2024  The ...
In which situation would a savings account be the best investment to earn interest: In a crash

In which situation would a savings account be the best investment to earn interest

In which situation would a savings account be the best investment to earn interest? During Euphoric Times July 01, 2024 ...
Which of the following statements are true if the Efficient Market Hypothesis holds?

Which of the following statements are true if the Efficient Market Hypothesis holds?

Which of the following statements are true if the Efficient Market Hypothesis holds? Let's delve deeply into the topic of ...
What is a Limit Order in Stocks and more

What is a Limit Order in Stocks: An In-Depth Exploration

What is a Limit Order in Stock: An In-Depth Exploration Updated July 1,  2024 Limit orders are like setting a ...
From Student Loans to Financial Freedom: A Post-Graduation Roadmap

 From Student Loans to Financial Freedom: A Post-Graduation Roadmap

From Student Loans to Financial Freedom: A Post-Graduation Roadmap June 30, 2024  Introduction For many recent graduates, the transition from ...
Real-Life Doppelgangers: A Thrilling Dive into AI's Identity Revolution

Are Doppelgangers Real: Enter the Age of AI Identity Replication

AI's Unleashed Perils: Prepare for the Onslaught of Real-Life Doppelgängers June 30, 2024  The Fascinating World of Doppelgangers: More Than ...