Fall 2019 Economic Update – Warning

The U.S. economy’s excellent steady job-creation sputtered slightly in August 2019 and produced a mere 120,000 jobs, about 30,000 less than experts anticipated. It is the 3rd smallest gain in well over a year and came on top of other signs that the economy is sluggish leading into the Fall season. This coupled with many other factors such as interest rate increases and an impending large war in the Middle-East leads me to a prediction of sorts.

I strongly believe we indeed may have a looming Recession in store for us. I have a strict warning about the economy, so in this update please pay attention to the reasons why I fear impending economic pain in the form of a deep recession, similar or greater than the crash of 2008-09, is coming. This means Stocks (Corporate holdings) will drop by over 50 percent in value and Real Estate to follow suit shortly thereafter. Almost anything of significance can be the needle that pops the massive growth balloon we have had for almost 10 full years. A couple more possibilities: trade-tariff problems with China, or a large bank failure due to bad loans.

Most Americans are debt burdened, but at the same time saving more instead of investing in Capital items or large ticket products. College graduates within the past decade make up a large group of those holding onto their cash and not buying homes. Although savings may be up slightly compared to last year, the average per capita (adult person) credit card debt currently is nearly $6,000 this year.

This has put a damper lately on new home ‘starts’ and existing home sales. All American investors certainly feel more interest rate increases on the horizon, as they have tightened their wallets and are investing and in stocks, bonds and real estate less.

Currently, the unemployment rate is about 3.7 %, which is almost the lowest since 2000 (Source: Trading Economics). Since the Great Recession, (ended late 2009 with unemployment at 12%), the economy has added jobs consistently over most of that time period (monthly basis). This employment data is one of the few bright spots in the economy right now. Partially due to the new announcement that America is now an oil “independent” producing nation and no longer needs to import crude oil from OPEC nations. In fact, we have reserves and surpluses of oil that are estimated by some economists to last up to 11 years. This means if we were to stop producing crude oil entirely as a result of a large disaster, then America could survive for a full decade on what we have in storage. Great news for everyone living in the U.S., and for oil workers and prospective job candidates in that industry.

Commodities as of late September: Gold bullion is continuing (year over year) to increase in per ounce prices, which are almost exactly to $1,506 per ounce. Silver bullion has remained a great investment over the past year and has increased by double digits to approximately $17.85 per ounce. Crude oil is currently at a fairly low price per barrel of only $58.23, which is slightly lower compared to a year ago due to the surplus in supply. This is a nice gift for workers that need to commute daily, but poor news for oil investors and oil producers.