I Know What The Economy Did Last Summer (Part 1: Carmageddon And The Retail Apocalypse)

October 3, 2017

Summer closed in a whirlwind of weather chaos for the United States and its territories. At the start of the summer, the US economy began to show signs that it was flying apart. The two most obvious were the big blowouts in the auto industry and in retail, not all of which could be attributed to a shift to online sales.

The auto industry rolled over this year and began a decline similar to the one we experienced at the start of the Great Recession…. In response, car markers started offering record incentives (like $0 down, 0% interest on a 80-month loan), which brought an improvement to sales in July. You have to ask, just as I did back in 2007, “What is the end game when such incentives take profit down to nil?”

...Even with such pricing and financing incentives, one firm, SouthBay Research, threw cold water on the Census Bureau’s July sales report, declaring the figures “unbelievable.”

Over the summer, delinquencies also spiked on “deep sub-prime auto loans” (now matching — like so many other things in the auto industry — their crisis-era milestone from 2007).

...Summer also deepened the retail apocalypse that I wrote about earlier and that has become the economic topic of the year…. Of course, the worst for retail in 2017 will come in the decisive fourth quarter when all profits for the year are usually made. Stores that weathered through a rough 2016 holiday season, hoping for a 2017 season that would give them a comeback, will fall through the floor when 2017 fails to provide fourth-quarter salvation for those starving companies that have managed to hold on….

Into this darkening world of woes, the Fed’s new austerity skulks into our presence like a Halloween cat, as Grandma Yellen finally begins to claw back the money she magically created out of thin air. And October, a month known for surprises, explodes into our presence with the worst lone-gunman massacre in US history — not an economic problem exactly and yet the very kind of thing I predicted last January would be the most horrible change in 2017 — an upsurge in the severity and intensity of domestic violence.

…And, yet, just as President Trump had the White House flag lowered to half-mast and mourned the Las Vegas massacre as an “act of pure evil,” the insane stock market shook all this off and partied on to clock a 152-point gain in the Dow Index and a record close. As if we needed some absolute proof that the stock market is completely unhinged from reality! The sheer screaming mania of that should send a chill to your bones.

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David Haggith started writing about the economy after he predicted The Great Recession half a year before it hit and was puzzled as to why no economists or stocks analysts saw it coming. In the months after the crisis broke out, he started to write humorous editorials in a series titled “Downtime,“ which chided the U.S. government and bankers who should have seen the economic collapse coming but whose cronyism, greed and ineptitude caused them to run the world into a ditch. Those articles were published in The Hudson Valley Business JournalThe Valley City Times-Record (North Dakota), and The Daily Herald in Tennessee. Haggith is dedicated to regularly criticizing the daily news — not just the content but the uncritical, unthinking nature of almost all of the reporting. He now writes his own blog, The Great Recession Blog, to break down the news as an equal-opportunity critic toward both Republicans and Democrats / Conservatives and Liberals … since neither kind of politician has done anything worthwhile to plot a better economic course. His articles are regularly carried by several economic websites.

During 1500s the Spaniards had taken 16,000,000 kilograms of silver from Peru.