It Is Worse Than We Thought
Francesco Abbruzzino, The Uncensored Report, LLC
The U.S. economy is slowing down more quickly than almost all of the experts had anticipated. As I detailed yesterday, U.S. consumers have been getting hit extremely hard by this economic slowdown, and at this point most Americans believe that a recession is coming. But could it be possible that a recession has already begun? As you will see below, the numbers seem to indicate that such a scenario is quite likely. But whether we are already officially in a recession or not, the truth is that whatever we are experiencing now is nothing compared to the pain that is eventually coming down the road.
Do you remember how painful it was for our society when the first housing bubble spectacularly imploded back in 2008?
Well, it is starting to happen again. On Thursday we learned that pending home sales in the United States have now fallen for six months in a row…
Pending home sales slipped in April, as contract activity decreased for the sixth consecutive month, the National Association of Realtors® reported. Only the Midwest region saw signings increase month-over-month, while the other three major regions reported declines. Each of the four regions registered a drop in year-over-year contract activity.
The Pending Home Sales Index (PHSI),* www.nar.realtor/pending-home-sales, a forward-looking indicator of home sales based on contract signings, slid 3.9% to 99.3 in April. Year-over-year, transactions fell 9.1%. An index of 100 is equal to the level of contract activity in 2001.
Earlier in the week, I discussed the fact that new home sales were 26.9 percent lower this April than they were last April.
We are clearly past the peak of the housing bubble, and now the rollercoaster is very rapidly headed in a downward direction.
Of course the economy as a whole is starting to head in a downward direction. On Thursday we also learned that U.S. GDP for the first quarter of 2022 had been revised even lower…
First-quarter gross domestic product declined at a 1.5% annual pace, according to the second estimate from the Bureau of Economic Analysis. That was worse than the 1.3% Dow Jones estimate and a write-down from the initially reported 1.4%.
Downward revisions for both private inventory and residential investment offset an upward change in consumer spending. A swelling trade deficit also subtracted from the GDP total.
Many experts are assuring us that GDP growth will bounce back into the green for the second quarter.
But it if doesn’t, that would mean that GDP has contracted for two quarters in a row, and that would officially confirm that we are in a recession right now.
Of course even if GDP does bounce back this quarter, the outlook for the months ahead is not promising at all.
In fact, a survey of 500 prominent CEOs just found that 75 percent of them expect a recession to begin by the end of next year…
At this time last year, the Fortune 500 CEOs we surveyed were breathing a collective sigh of relief as profits and revenues came roaring back from the ravages of the pandemic. This spring, that roar sounds uncomfortably loud, as companies cope with soaring inflation and the growing likelihood that sky-high prices and labor shortages will help tip the economy into recession. In all, 75% said they expected the next recession to begin by the end of 2023, though only 32% believed it would start in this calendar year.
Just about everyone can feel that economic troubles are in our future, and that will especially be true if the Federal Reserve keeps raising interest rates.
