The writing is on the wall. All economic metrics are trending downward. And, there are anecdotal observations of a significant downturn.
All over America, large portions of our major cities are being transformed into stomach-churning cesspools of squalor i.e. shit. Tens of cities are reporting massive increases in homeless populations. According to the New York Times America is facing “the worst drug crisis in American history”. There were more than 28,000 official complaints about human feces in the streets of San Francisco last year alone, and millions of rats are currently overrunning the city of Los Angeles.
And yet, Donald Trump insists he is making America great again, insisting that the economy is in good shape and that everything is going to be just fine.
Perhaps everything may seem “just fine” if you live in a heavily sanitized wealthy suburban neighborhood and you only get your news from heavily sanitized corporate media sources, but in the real-world things are getting bad.
The other day, LZ Granderson authored an editorial in which he described what life is like in Los Angeles right at this moment: “LA spent nearly $620 million in tax dollars last year to address the issue, and yet the number of homeless people increased by 16%,reaching nearly 60,000 people.” In Silver Lake, there are newly set up tent cities. There are people living underneath the highway overpasses. The skid is all over town.
Last weekend a columnist for the Los Angeles Times admitted that “Los Angeles has become a giant trash receptacle”. A swath of Los Angeles has devolved into a wasteland with rats scurrying among piles of decaying garbage and squalid tent cities, according to a series of stomach-churning photos that the Los Angeles Times says depict the “collapse of a city that’s lost control.”
“The city of Los Angeles has become a giant trash receptacle,” columnist Steve Lopez complained on Sunday.
The skid is everywhere.
Of course, that phrase, “the skid is everywhere”, could also apply to San Francisco, Portland, Seattle, Denver, Minneapolis, Chicago, Detroit, St. Louis, Memphis, Cleveland, Baltimore, Philadelphia, New York and countless other U.S. cities.
So, if things are this bad already in our major cities, what are those cities going to look like once we get deep into the next economic downturn that appears imminent.
And yet, Trump’s administration keeps insisting that the economy is in good shape and that everything is going to be just fine. As recently as June, Larry Kudlow, the director of the Trump White House’s National Economic Council, boasted to a national television audience the U.S. budget deficit “is coming down, and it’s coming down rapidly.” Yeah, really?
The U.S. government ran its largest budget deficit in six years during the fiscal year that ended last month, an unusual development in a fast-growing economy and a sign that – so far at least – tax cuts have restrained government revenue gains.
The deficit totaled $779 billion in the fiscal year that ended Sept. 30, up 17% from $666 billion in fiscal 2017, the Treasury Department said Monday. The deficit is headed toward $1 trillion in the current fiscal year, the White House and Congressional Budget Office said.
This deficit is the fifth largest in modern American history – in non-inflation adjusted terms – and it now stands at 3.9% of GDP, up from 3.5% a year ago.
On Friday, the Labor Department reported that 75,000 jobs were added to the U.S. economy in May. That number is consistent with the extremely disappointing figure that ADP reported a few days earlier, and it is well below the number of jobs that we need just to keep up with population growth each month.
Prior to this latest report, there were already more working age Americans without a job than at any point during the last recession, and now things just got even worse. But the government conveniently categorizes most working age Americans without a job as “not in the labor force”, and so officially the unemployment rate is “very low” right now.
What a joke?
The truth is that the middle class has been steadily shrinking for an extended period, and all the numbers that have been rolling in seem to indicate that an economic slowdown has begun. My point is that beyond the shrinking there is no hope of an elevation in real opportunity for the shrinking middle class. There is simply no hope.
For instance, when economic activity is expanding demand for key industrial resources such as copper, zinc and lumber increases and prices tend to go up. But when economic activity is contracting, demand for those key industrial resources diminishes and prices tend to go down.
And now we are seeing prices for copper, zinc and lumber decline precipitously.
Copper prices have fallen 6% in just the past month while zinc is down 8.5%. Copper and zinc are big components for many industrial and technology companies. People pay so much attention to copper as a barometer that traders jokingly call it Dr. Copper, as if it has a PhD in economics. Lumber prices are falling as well, plunging about 10% in the past month. That could be viewed as a sign that the housing market — particularly new home construction — is weakening.
If you were looking for some exceedingly clear indications of where the U.S. economy is heading soon, you just got them. If you want more look at the Dow. It closed recently at a lower level than it was on January 2018. 8 years of expansion and growth under Obama (after “W” drove the economy into a ditch), and we had two follow on years (spurred by Obama era economic momentum). But now it has all pooped out under Trump.
Here are two charts comparing the DOW under Trump and Obama (red is Obama’s).
All the branding and bragging don’t change facts. You can hand out baseball hats saying, “Let’s Make America Great Again” and fool them for some time. But you simply can’t change their day to day reality. Perhaps some Americans will continue to live in denial until the very end.
The truth is, almost 60 percent of the population is living paycheck to paycheck, people continue to rack up debt as if there was no tomorrow.
Unfortunately, most Americans are still completely in denial about what is happening, and they will find themselves ill-prepared to handle the very harsh economic environment that is ahead. In fact, we just learned that the average size of a new vehicle loan in the U.S. just hit a brand-new record high. People buying a new vehicle are borrowing more and paying more each month for their auto loan. Experian, which tracks millions of auto loans each month, said the average amount borrowed to buy a new vehicle hit a record $32,187 in the first quarter. The average used-vehicle loan also hit a record, $20,137.
But what is coming is not a joke. Because its painfully clear that Trump is slowly but surely turning the country to shit.
Donald Trump’s campaign assurances about balancing the budget and eliminating the national debt should be near the top of the list of his broken promises.
And, it’s now painfully obvious that the Republican Party, which spent the Obama era pretending to care deeply about fiscal responsibility and the terrible burdens deficits place on future generations, operated in bad faith. Every Republican who said the GOP tax breaks for the wealthy would pay for themselves ought to face some renewed questioning about how very wrong they were.
There is one more indicator worth mentioning. Tax revenue for October 2018 through January 2019 fell $19 billion, or 2 percent, Treasury said. It noted a major reduction in corporate tax payments over the first four months of the fiscal year, falling close to 25 percent, or $17 billion.
As part of the 2017 tax cut law, the tax rate paid by corporations was lowered from 35 percent to 21 percent. Spending, meanwhile, increased 9 percent over the same period. The biggest increases were for defense military programs, which saw a 12 percent increase, and Medicare, which saw a 16 percent increase.
It won’t get better. The Congressional Budget Office has projected that the deficit this year will reach close to $900 billion, because the government spends so much more money than it brings in through revenue. The ballooning deficit comes as interest rates are expected to begin rising, driving up the cost of borrowing money. The government is projected to spend $383 billion on interest payments for its debt this year, and that will rise to $581 billion in 2022, according to the CBO.
As a reminder, during the campaign Trump claimed that he would eliminate the national debt in a period of eight years. Last week, the Treasury Department reported that the national debt had clocked in at $21.974 trillion at the end of 2018, representing a $2 trillion bump since Trump took office. According to the Daily Beast, the president is unconcerned about the U.S.’s financial situation because he “won’t be here” when the shit truly hits the fan.
It’s very clear, all the numbers are pointing to Trump turning America into a shit hole. And he has the audacity to call other countries “Shit Holes”.