by Michael Snyder, The Economic Collapse Blog:
They were able to delay the U.S. economy’s day of reckoning, but they were not able to put it off indefinitely. During the pandemic, the Federal Reserve pumped trillions of dollars into the financial system and our politicians borrowed and spent trillions of dollars that we did not have. All of that money caused quite a bit of inflation, but it also created a “sugar rush” for the economy. In other words, economic conditions were substantially better than they would have been otherwise. Unfortunately, there will be a great price to be paid for such short-term thinking. From the federal government on down, our entire society is absolutely drowning in debt, and now it appears that our economic problems are about to go to the next level.
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In early 2024, there are all sorts of signs that economic activity in the U.S. is really starting to slow down.
For example, we just learned that consumer spending “fell sharply” during the month of January…
Consumer spending fell sharply in January, presenting a potential early danger sign for the economy, the Commerce Department reported Thursday.
Advance retail sales declined 0.8% for the month following a downwardly revised 0.4% gain in December, according to the Census Bureau. A decrease had been expected: Economists surveyed by Dow Jones were looking for a drop of 0.3%, in part to make up for seasonal distortions that probably boosted December’s number.
However, the pullback was considerably more than anticipated. Even excluding autos, sales dropped 0.6%, well below the estimate for a 0.2% gain.
Sadly, the truth is that U.S. consumers just don’t have as much money to spend these days.
They are up to their eyeballs in debt, and delinquency rates have been spiking.
Many consumers are tightening up on their finances, and so it shouldn’t be a surprise that Disney+ lost more than a million subscribers during the fourth quarter of last year…
Disney+ Core subscribers (which include U.S. and Canada customers, as well as international users, excluding the India-based Disney+ Hotstar) dropped to 111.3 million from the 112.6 million reported in the previous quarter, according to Disney’s quarterly earnings results released Wednesday.
In early 2024, we have also seen large employers ruthlessly slash payrolls all over the nation.
The following summary of some of the most shocking layoffs that we have seen recently comes from Zero Hedge…
1. Twitch: 35% of workforce
2. Roomba: 31% of workforce
3. Hasbro: 20% of workforce
4. LA Times: 20% of workforce
5. Spotify: 17% of workforce
6. Levi’s: 15% of workforce
7. Xerox: 15% of workforce
8. Qualtrics: 14% of workforce
9. Wayfair: 13% of workforce
10. Duolingo: 10% of workforce
11. Washington Post: 10% of workforce
12: Snap: 10% of workforce
13. eBay: 9% of workforce
14. Business Insider: 8% of workforce
15. Paypal: 7% of workforce
16. Okta: 7% of workforce
17. Charles Schwab: 6% of workforce
18. Docusign: 6% of workforce
19: CISCO: 5% of workforce
20. UPS: 2% of workforce
21. Blackrock: 3% of workforce
22. Paramount: 3% of workforce
23. Citigroup: 20,000 employees
24. Pixar: 1,300 employees
During the pandemic we witnessed a lot of temporary layoffs, but the last time we saw large corporations conducting permanent mass layoffs on such a widespread basis was in 2008 and 2009.
And we all remember what happened back then.
Meanwhile, the cost of living continues to rise faster than paychecks.
For example, it is being reported that the cost of auto insurance has been increasing at “the fastest annual rate on record”…
The cost of auto insurance jumped 1.4% in January, bringing the total annual gain to 20.6% – the fastest annual rate on record. When compared with early 2019, motor vehicle insurance is nearly 40% more expensive. Experts say the problem could soon get worse before it begins to improve.
Needless to say, most Americans have not seen their paychecks increase by 20.6 percent over the past year.
Of course just about everything else has been rapidly getting more expensive too, and that isn’t going to change any time soon.
On top of everything else, we are also facing an unprecedented commercial real estate crisis.
Our financial institutions are sitting on mountains of bad commercial real estate loans, and Kevin O’Leary is warning that “thousands more” will fail within the next three to five years…
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