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A “Stealthy” Next Recession?

Summary:
A "Stealthy" Next Recession? Authored by Mac Slavo via SHTFplan.com, A confusing economic situation has just been made more confusing.  The government claims that jobs are still being created when other indexes show otherwise. This is not the first time this year conflicting and confusing numbers have been released: Odd Economic Numbers: Consumer Confidence Falls, ...

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A "Stealthy" Next Recession?

Authored by Mac Slavo via SHTFplan.com,

A confusing economic situation has just been made more confusing.  The government claims that jobs are still being created when other indexes show otherwise.

A

This is not the first time this year conflicting and confusing numbers have been released:

Odd Economic Numbers: Consumer Confidence Falls, But Consumer Spending Remains High

Not much about that made any real sense to anyone who looked at it, and we are now getting more confusing information.

According to a report by Forbes, the prospects of a recession in the U.S. The Institute of Supply Management’s November survey shows that the index of factory activities in the U.S. fell to 48.1 from 48.3 in October (any reading below 50 is indicative of a contraction).  However, the Department of Labor also reported that 266,000 jobs have been added to the economy in November, bringing the unemployment rate down to a historic low of 3.5%. A confusing situation has just been made more confusing.

Factory activities fell, but the U.S. is somehow adding jobs? Forbes was baffled too.

Developed world economies have meanwhile been seriously weakened by prolonged zero interest rates, making them vulnerable to unexpected shocks. Extraordinarily low interest rates distort the price of money, arguably the single most important price signal in a market economy. They poison the business environment, allowing poorly run businesses to survive, jamming the gears of creative destruction that drive any economic renewal. The survival of poorly run businesses also suck profits from more successful businesses, sapping their ability to expand. –Forbes

The next recession could already be here and may never be technically a recession. The next recession, however, may not technically qualify as one. The accepted definition of a recession is two consecutive quarters of contraction in an economy. But, we could have, for example, one quarter of 0.3% growth, followed by a contraction of 1.2% the next, then anemic growth in the third and fourth quarter of, say, 0.1% each, and then another contraction of 0.5%  and so on. While the technical definition of a recession may never be met, the economy would still be shrinking, left to wane inexorably by impotent monetary and fiscal policies. It would be a recession by stealth.

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Brandon Smith, Founder of Alt-Market.com, notes that it is also important to point out that the REAL economic data on employment, GDP, etc. shows aggressive declines. 

Government data on employment is utterly rigged to the upside, as they continue to ignore around 95 million working age Americans without jobs.  If these people were counted (as they were during the Great Depression), the unemployment rate would be closer to 25%.  If GDP were calculated as it was during the 1980's, then the US would have negative growth for most of 2019 and would already be considered in recession.  Ultimately, the economic crash going on right now will plant its feet somewhere, and right now it is becoming obvious in debt related sectors.  With consumer debt, corporate debt and national debt at historic highs, the crash will spread from debt into everything else...

Tyler Durden Wed, 12/11/2019 - 10:27
Tyler Durden
Tyler Durden (a pseudonym) represents the idea that a return to truly efficient markets is a possibility and a necessity. After having experienced the inner workings of capitalism at various asset managers and advisors, Tyler believes that the current model is flawed and a deleveraging at every level of modern society is needed to reinspire the fundamental entrepreneurial spirit. Visit his blog: ZeroHedge (http://www.zerohedge.com/)

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