Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Category Archives: Economics

Global Research Firm: Shutdown Altering Lifestyles in Major ways

This article appeared online at TheNewAmerican.com on Tuesday, April 28, 2020:  

The global market research firm Euromonitor International (EI), headquartered in London, has been forced to revisit its 2020 predictions thanks to the coronavirus shutdown.

Some trends are being accelerated; others have been stalled; still others are being redirected.

For example, in its report released on December 31, 2019, EI said, “During times of economic, political or personal uncertainty, consumers are drawn to the comforts of home. In seeking to unwind and get back on track, consumers retreat to their personal safe spaces where they are free from the distractions of the world around them.”

“Shelter-in-place” mandates and “stay-at-home” orders have greatly accelerated this movement, as more and more consumers are turning their homes into multifunctional work and play centers: adding fitness centers, entertainment rooms, and school classrooms to their homes through retrofitting rooms’ previous usages. The home is increasingly being viewed as “the hub” of all activities, including social, family, religious, education, and exercise.

The momentum behind the “green” revolution has stalled,

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Trump Announces Cautious Reopening of U.S. Economy

This article appeared online at TheNewAmerican.com on Friday, April 17, 2020:

President Donald Trump told a gathering of governors in Washington on Thursday about his plan to reopen the U.S. economy, calling it “Opening up America Again.” He said, “We are not opening all at once but one careful step at a time.” Based on advice from his advisors, it calls for a three-phase, “science-based” strategy that he is recommending to the states.

Phase One calls for governors to announce that

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Trump Brokered Oil Agreement Using Rules From His “Art of the Deal”

This article appeared online at TheNewAmerican.com on Tuesday, April 14, 2020:  

Following the announcement that 23 oil-producing nations had formally agreed to cut world production of crude oil by 10 percent, Daniel Yergin, energy expert, author, and vice-chairman at IHS Markit, said this of President Trump: “Of all the deals he’s done in his life, this has to be the biggest and most complex. He had to be not only dealmaker but also divorce mediator.”

It took four days of intense virtual meetings and negotiations with leaders of the nations making up the OPEC cartel, plus Russia and Mexico, to get the deal done. In deal’s final form, global production of crude oil will officially be cut by 9.7 million barrels a day starting May 1. After two months, the cut will drop to 7.7 million bpd until January, and drop further to 5.8 million bpd for another 16 months.

The real cut will approach 20 percent of world production, reflecting the fact that many oil-producing nations are already suffering cuts due to the global shutdown in response to the COVID-19/coronavirus threat.

The president tweeted:

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Wall Street’s Monster Rally Unfazed by Record Unemployment Numbers

This article was published by The McAlvany Intelligence Advisor on Monday, April 13, 2020: 

Ned Davis, the head of Ned Davis Research, can’t explain it: Last week’s monster rally in stocks occurred while breathtaking unemployment numbers were reported. Said Davis: “It defies logic. My explanation is that … the market tends to look ahead.”

In the shortened trading week – the markets were closed on Good Friday – the popular averages all hit double digits: the Dow closed up 12.6 percent; the S&P 500 closed up 12.1 percent; and the tech-heavy Nasdaq closed up 10.6 percent.

This rally ignored the numbers from the Labor Department: 6.6 million people filed for unemployment insurance last week, bringing the total to 17 million claims in just the last three weeks. Some are expecting claims to exceed 25 million before the COVID-19 crisis is over.

Another indicator for a healthy and quick economic rebound is

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Massive Oil Discovery in Alaska to Provide More Supply as World Economy Recovers

This article appeared online at TheNewAmerican.com on Monday, April 13, 2020:

The announcement of a massive new oil find on Wednesday couldn’t have come at a better time. The 1.8 billion barrel prospect called Talitha is located next to the Trans-Alaska Pipeline on Alaska’s North Slope, reducing greatly the developer’s transportation costs when the field comes online in the next few years.

By that time the world’s thirst for low-priced crude oil will have returned following the COVID-19 shutdown, and Talitha’s low cost will help lead the United States and global economies to even higher levels of output.

Pantheon Resources updated an evaluation of an old exploration well and concluded that

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Consumer Prices in March Fall by the Most in Five Years

This article appeared online at TheNewAmerican.com on Good Friday, April 10, 2020:

The summary of how consumer prices behaved in March, released on Friday by the Bureau of Labor Statistics, noted that its index registered “the largest monthly drop since January, 2015.” The 0.4 percent drop in March is equivalent to a five-percent decrease in prices at the consumer level for a year.

Its Consumer Price Index (CPI) was pushed down mostly by the price of gasoline, which fell by 10 percent in March. This reflected the virtual collapse in crude oil prices, which dropped more than 30 percent last month.

Apparel prices also were down, along with new car prices, reflecting an absence of buyers in retail outlets and showrooms, thanks to the coronavirus shutdown.

When pressed on the matter, Federal Reserve Chairman Jerome Powell (head of the machinery that is responsible for increasing the money supply) said

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Stockman: The CARES Act is the Country’s “Greatest Folly”

This article was published by The McAlvany Intelligence Advisor on Good Friday, April 10, 2020:  

Never one to pull his punches, David Stockman, Reagan’s former OMB Director, unloaded at LewRockwell.com:

[CARES] … the greatest folly ever to beset our [country] is now racing full speed ahead.

Instead of belt-tightening, work-arounds, payment deferrals and negotiated price and wage adjustments for a few months … current and future taxpayers are being saddled with trillions of unnecessary obligations, which will prove to be the final straw on the debt-ridden camel’s back….

 

Because the ship-of-fools in the Eccles Building [which houses the Federal Reserve’s Open Market Committee] have led Washington and Wall Street alike to believe in what amounts to the greatest lie in financial history: that we can borrow and print our way back to prosperity!

His article is already out of date. The Fed and the Treasury are doubling down, adding an additional $2.3 trillion to the economy in the belief that such a flood can hasten the end of the economic depression caused by the powers-that-be.

That makes attempts to measure the real amount the Treasury owes by Truth in Lending and Boston University professor Laurence Kotlikoff irrelevant.

On April 7, Truth in Lending, the non-partisan think tank that tries to provide an accurate (read: full accounting of all promises) measure of the government’s true financial condition, released its latest report.

Instead of repeating the canard that the national debt is only around $23 trillion, it reported that the federal government actually owes more than $113 trillion when “off-budget” items like Social Security and Medicare are added back in.

For this, the think tank gave the Federal government a financial grade of “F.”

The report didn’t take into the account the CARES Act.

Professor Laurence Kotlikoff has developed the “intergenerational accounting” protocol that

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One in 10 Americans Out of Work; That Number Likely to Grow

This article appeared online at TheNewAmerican.con on Thursday, April 9, 2020: 

The latest report from the Labor Department on Thursday showed that 6.6 million people filed for unemployment insurance the week ending April 4. Forecasters were predicting 6 million.

The report also adjusted upward the number reported the previous week, to 6.9 million. Added to the claims filed the week before that, 17.6 million Americans are now out of work as a result of the coronavirus shutdown.

And that number is very likely much too low as the states’ unemployment offices have been buried with new claims that haven’t been processed yet.

Two questions are surfacing: Just how bad is it likely to get? And how long will it last?

Here is how bad it is at the moment:

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Government’s Coronavirus Stimulus Program Will Massively Increase National Debt

This article appeared online at TheNewAmerican.com on Wednesday, April 8, 2020: 

The Congressional Budget Office (CBO) projected that the federal government would run a deficit this fiscal year of more than $1 trillion, or about five percent of the country’s gross domestic output of goods and services.

William Foster, the lead U.S. analyst at Moody’s, the credit rating agency, says the deficit, thanks to the CARES (Coronavirus Aid, Relief, and Economic Security) Act, will instead likely approach 10 percent of GDP, while Fitch Ratings is predicting it will be closer to 13 percent. Either way, they both predict that the deficit this year will exceed the previous post-World War II record for the deficit, set in 2009, when it was 9.8 percent of GDP.

The CARES Act is injecting an expected $2 trillion of new money into the economy in order “to provide emergency assistance and health care response for individuals, families, and businesses affected by the 2020 coronavirus pandemic,” according to the act’s complete title. Other credit facilities, by loosening credit requirements, are expected to add up to another $4 trillion, with talks currently underway for CARES 2.0 to add even more new money to the economy.

None of this was taken into account by Truth in Lending, the non-partisan think tank that promotes “transparent government financial information,” when it published its latest report on the nation’s current financial condition on April 7. Instead of repeating the canard that the national debt is only around $23 trillion, it reported that the federal government actually owes more than $113 trillion when “off-budget” items such as Social Security and Medicare are added back in.

For this, the think tank gave the federal government a financial grade of “F.”

David Stockman, President Ronald Reagan’s director of the Office of Management and Budget from 1981-1985, called the move to flood the economy with new money the “greatest folly”:

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Coming Economic Rebound to Reverse Present Negative Business, Consumer Sentiment Readings

This article was published by The McAlvany Intelligence Advisor on Wednesday, April 8, 2020: 

Consumers and small business owners who are also Bible believers often open Psalms 31 in times like these, to read: “My hope is in the LORD … Be of good courage, and he shall strengthen your heart, all ye that hope in the LORD.”

Those who aren’t are telling pollsters that things are bad and likely to get worse.

Polls taken by the Conference Board, the University of Michigan, the New York Federal Reserve and the National Federation of Business (NFIB) are consistent: consumer and business sentiment is taking a dreadful hit thanks to the “social distancing” and “sheltering at home” protocols put in place last month to fight the virus.

With 250 million Americans affected, or about 75 percent of the country’s population, the results, although widely anticipated, were worse than expected.

The Federal Reserve Bank of New York reported on Monday that

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Polls Show Business, Consumer Sentiment Suffering Under Coronavirus Shutdown

This article appeared online at TheNewAmerican.com on Tuesday, April 7, 2020: 

Polls taken by the Conference Board, the University of Michigan, the New York Federal Reserve, and the National Federation of Independent Business (NFIB) are consistent: Consumer and business sentiment is taking a dreadful hit thanks to the “social distancing” and “sheltering at home” protocols put in place last month to fight the virus.

With 250 million Americans affected, or about 75 percent of the country’s population, the results, although widely anticipated, were worse than expected.

The Federal Reserve Bank of New York reported on Monday that

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What Will the Economic Recovery Look Like?

This article appeared online at TheNewAmerican.com on Tuesday, April 7, 2020: 

Regarding the economic recovery from the COVID-19 lockdown, there are hundreds of opinions, but only three scenarios. The recovery from the coronavirus shutdown will either look like a “V”, a “U,” or a “swoosh.”

Janet Yellen, the former Federal Reserve chair, said “I think a ‘V’ is possible, but I’m worried that the outcome will be worse.… It really depends on just how much damage [was] done during the time the economy [was] shut down.” Peter Berezin, chief global strategist at BCA Research, thinks that “once the infection rate has fallen by enough, we can ease off the most economically onerous measures, allowing GDP to slowly recover.”

That would be a “U”-shaped recovery, says Joachim Fels, global economic advisor at PIMCO, the global investment management firm that had $2 trillion under management before the stock market crashed: “Unlike previous recessions … the trigger of the present crisis is an exogenous shock. We are seeing the first-ever recession by government decree — a necessary, temporal, partial shutdown of the economy aimed at preventing an even larger humanitarian crisis.”

A “V”-shaped recovery would be like a coiled spring that has been pushed down and down and down until it finally springs back with great gusto. As Jeff Cox wrote at CNBC, “When the growth engine is turned back on, the U.S. [economy] will be turbo-charged and ready to roar.”

On the other hand,

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Ipsos, Harris Polls Report Virus Shutdown Is Closing Small Businesses Permanently

This article appeared online at TheNewAmerican.com on Sunday, April 5, 2020:  

Polls conducted among small business owners the third week of March by Ipsos and Harris are showing the damage already being done to small businesses by the coronavirus shutdown.

Ipsos’ poll of 500 small business owners and operators with 19 or fewer employees (most of them running business with zero to four employees) between March 25 and March 28 — conducted via email since many business owners weren’t answering their phones — showed that a quarter of them have already shut down temporarily while another quarter are expected to close by the middle of April.

Worse, four out of ten owners think they have less than six months until the shutdown forces them to close their businesses permanently.

Those still open are adjusting the best they can: shortening their business hours; laying off their employees or reducing their employees’ salaries, and foregoing taking a paycheck themselves from their business during the shutdown.

The numbers from the Harris poll — 300 business owners were polled on March 23 and March 24 — confirmed Ipsos’ results:

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Crude Oil Prices Pop on Trump’s Tweet: Saudi Arabia and Russia To Cut Production

This article appeared online at TheNewAmerican.com on Thursday, April 2, 2020:

President Donald Trump’s Tweet early Thursday morning pushed crude oil prices up more than 20 percent: “Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!”

Skeptics tempered the rise, noting that there was no deal, only a promise to restart the negotiations that failed in March between members of OPEC and Russia to limit production. Russia left that meeting with “acrimony,” which started a price war in which Saudi Arabia and Russia were both pumping at near-maximum rates. Since then, crude oil prices were cut in half, with some commentators suggesting prices could drop still further, from near $25 a barrel at present to less than $10.

Skeptics also noted that

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Biden Challenges Trump to a Debate, Again

This article appeared online at TheNewAmerican.com on Thursday, April 2, 2020:

Once again, the likely Democrat candidate for president, former Vice President Joe Biden, is challenging the president to a debate. During an interview with radio host Enrique Santos on Wednesday, Biden said he is “ready to debate President Trump on Zoom or Skype, any time he wants.”

The last time Biden challenged the president to a debate he claimed he would “beat him like a drum.” Unfortunately for Biden, that was back in February — ages ago in political terms. Following his Super Tuesday win, while being interviewed by Brian Williams, Biden challenged the president:

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Is Whiting Petroleum’s Bankruptcy a Harbinger?

This article appeared online at TheNewAmerican.com on Wednesday, April 1, 2020: 

The one-two punch of the oil war between Saudi Arabia and Russia combined with the COVID-19 shutdown of the U.S. economy was more than Whiting Petroleum could handle. With a $262 million payment due on Wednesday on its $2.8 billion of debt, the company filed for bankruptcy. President and CEO Brad Holly said the “severe downturn” in oil and gas prices forced his hand, and that bankruptcy and financial restructuring was the “best way forward.”

In early January,

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Wednesday’s ADP Jobs Report Misleading: Job Loss in March Much Worse

This article appeared online at TheNewAmerican.com on Wednesday, April 1, 2020: 

The country’s largest payroll processing company, ADP, reported on Wednesday that private-sector employment in the United States dropped in March by just 27,000 jobs — 9,000 in the goods-producing sector and 18,000 in the service sector. Although this number is far below the monthly average of 178,000 new jobs created over the previous four months, most were expecting a much larger drop.

ADP’s press release explains why: “The report utilizes data through the 12th of [March] … as such the March [report] does not reflect the full impact of COVID-19 on the overall employment situation.” In other words, watch out below: April’s report from ADP is likely to be much closer to the present reality. Economists were expecting ADP to report a job loss in March of 180,000.

That present reality is better reflected by recent reports from

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Just how bad is the U.S. Economy? The Waffle House Index just Flashed RED

This article was published by The McAlvany Intelligence Advisor on Wednesday, April 1, 2020: 

Waffle House restaurants almost never close. As one customer wrote: “I swear I’ve eaten at a Waffle House where a tree came in the front window and good chunks of the roof came off in bad weather, and they just kept right on serving like it was a Tuesday.”

The chain just announced that it has closed nearly 400 of its more than 2,100 restaurants.

FEMA considers the Waffle House as an indicator of the health of the overall economy. It uses what it calls its Waffle House indicator: Green, when the restaurants are open and serving a complete menu; Yellow, when they are operating on reserve or emergency power and offering a limited menu; and Red, when they are closed.

The closure of its restaurants reflects the news from the St. Louis Fed. Its President Jim Bullard just announced: “The unemployment rate … is going to be somewhere between 10 percent and … 42 percent.” The lower number is the most optimistic projection of present trends while the higher number is the most pessimistic. They reflect a minimum of 27 million jobs lost during the shutdown and 67 million at the worst.

Neal Boss, the director of public relations for Waffle House, tried to put those numbers into human terms: “To see something of this magnitude and [to] try to explain it in terms of human cost … we see how it physically affects people through the infection … there’s the human cost of the very individuals who have been disproportionately affected.”

He added:

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“Waffle House Index” Flashes Red as Unemployment Numbers Jump

This article appeared online at TheNewAmerican.com on Tuesday, March 31, 2020: 

The “Waffle House Index” flashed red last week as the impact of the coronavirus shutdown really began to bite. The Waffle House restaurant chain is a cultural icon with 2,100 locations, mostly in the South. It is also a leading indicator of the health of the economy. The Federal Emergency Management Agency (FEMA) uses the health of the chain as an indicator for the health of the economy as a whole.

As Craig Fugate, the former head of FEMA, expressed it this way: “If you get there and the Waffle House is closed? That’s really bad.”

The Index has three levels: Green (the restaurants are open, full, and operating with a complete menu); Yellow (they are operating on emergency power, serving only a partial menu); and Red (they are closed).

The chain has closed nearly 400 of its 2,100 restaurants, reflecting what St. Louis Fed President Jim Bullard just announced:

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March Car Sales Down 36 Percent; Prepare for the worst

This article appeared online at TheNewAmerican.com on Wednesday, March 25, 2020: 

There is simply no way to sugar-coat the numbers coming this week and next: They will be awful, ugly, frightening, “unprecedented,” “unparalleled,” and historical.

The early warning shot was the unemployment report last week that showed claims jumping by 50,000 over the previous month. Estimates are that March’s unemployment numbers will exceed two million.

Wednesday’s report from Edmunds showed that car sales dropped by a sickening 36 percent in March, compared to February.

The Federal Reserve estimates that

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.
Copyright © 2020 Bob Adelmann