Economic meltdowns are never unforeseen if we know where to look. The signs are always there, waiting to be read by those who pay attention. As we navigate through some critical times in the current U.S. economy, a series of unsettling trends has emerged that indicates a significant downturn. These are not mere blips on the radar; they are part of a worrying pattern.
Here are seven trends that suggest an economic disaster is approaching very rapidly:
1. Decline in Tax Revenues
Tax revenue acts as a barometer of the overall economic climate. Less tax revenue implies a slowing economy. Currently, federal and state government tax revenues are declining at an alarming rate:
- The U.S. state and local governments experienced the worst decline in income tax revenues ever recorded.
- This has been the second steepest year-over-year percentage decline in history.
- Federal tax receipts have also dropped to recessionary levels, nearing -10% YoY. These figures not only signal a reduction in economic activity but raise concerns about the government’s ability to fund essential services and investments.
2. Decrease in Demand for Trucking Services
The trucking industry is often considered the lifeblood of the economy. The latest numbers from the U.S. Bank Freight Payment Index are deeply concerning:
- Spending by shippers dropped 10.9% compared to the second quarter of 2022.
- Shipment volume dropped by 9%. This unprecedented decline in demand for trucking services is an unambiguous sign that businesses are shipping fewer goods, reflecting a broader economic slowdown.
3. Loss of Full-Time Jobs
The recent employment report is disconcerting as the U.S. lost 585,000 full-time jobs in July. This decline represents the biggest monthly drop since the record COVID crash. Although some may tout employment as a “bright spot,” the numbers tell a different story, raising questions about the stability of the labor market.
4. Rising Job Cuts
In addition to the loss of full-time jobs, U.S. employers have announced more job cuts this year than in all of 2022. Major corporations like CVS Health are shedding jobs to save money, which could reflect a lack of confidence in future business prospects. These job cuts have real human consequences and can further dampen consumer spending and confidence.
5. Crushing of the Housing Market
The surge in interest rates has resulted in monthly costs for new homebuyers being almost 20% higher than a year ago. The typical monthly mortgage payment is now $2,605, a 19% increase. This is decimating the housing market, pushing homeownership out of reach for many and potentially signaling a broader financial crisis.
6. Skyrocketing Delinquency Rates in Commercial Real Estate Mortgages
The unprecedented spike in delinquency rates for commercial real estate mortgages is a sign that we are in the early stages of the worst commercial real estate crisis in U.S. history:
- Delinquency rate spiked to 5.0% in July, up from 2.8% in April.
- The rate has surged 3.4 percentage points so far this year. These figures spell potential catastrophe for commercial landlords, lenders, and investors, creating a domino effect that could further destabilize the economy.
7. Increasing Financial Insecurity Among the Population
With the share of U.S. adults who can’t afford a $400 emergency expense rising, the fragility of American financial security is becoming increasingly apparent. Despite some decreases in headline inflation, the fact that only 46% of U.S. adults can cover this emergency cost underscores the vulnerability many Americans face.
Conclusion
Despite voices of optimism from some quarters, the indicators above tell a very different story. From disappearing tax revenues to job losses, from a beleaguered housing market to rising financial insecurity, the economic situation is anything but rosy.
These trends are not isolated; they are interconnected and reflective of underlying structural weaknesses in the economy. The apparent “technical glitches” in banks and the fragility of financial institutions further highlight the need for caution.
Unfortunately, many Americans seem to be overlooking these glaring signs. Faith in leadership and the hope that everything is under control could lead to a bitter awakening.
It is incumbent upon us to recognize these trends for what they are: clear warning signs. They are not mere economic aberrations but signals of an impending crisis. The time to act, to prepare, and to be vigilant is now. Ignoring these signs would indeed be willingly blind.
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