Despite the bogus BLS employment report last week (so the Fed could raise rates before the next financial crisis hits), all economic data confirms an economic recession. Corporate profits are falling, and their forecasts for next quarter are worse. Global trade is slowing dramatically. Oil prices and other commodities are plummeting to multi-year lows. Manufacturing and Services surveys are flashing red. China, Japan and European economies continue to suck wind. Layoff announcements by major corporations are up 40% over last year. A global deflationary recession is underway. Only a CNBC bimbo, shill or Ivy League educated economist isn’t bright enough to see it.

Retail sales came out this morning and they were worse than dreadful. They confirmed the horrific quarterly reports from Macy’s, Nordstrom’s, and Kohl’s. Total retail sales grew a minuscule 0.1% from September and only 1.7% versus last year. It’s even worse than it looks. When you back out the subprime auto loan spurred auto sales (long term rentals), retail sales grew only 0.5% over last year. That is far less than true inflation, so on a real basis retail sales are FALLING like a rock. This only happens during recessions. And it isn’t a one month thing. Retail sales, even including loan boosted auto sales, are flat over the last three months and up only 2.1% for the first 10 months of the year.

The decline in gasoline sales due to plunging prices has contributed to the lousy retail sales numbers, but the storyline of the economic bulls was how this was going to boost the spending of consumers across the board. That storyline is as dead as an Obamacare patient. It seems all the gasoline savings immediately went to pay for the soaring cost of Obamacare, even though the BLS says there is no healthcare inflation. There are a few areas that jump out at me and paint an even darker picture:

  • Three of the strongest retail sales categories over the last year were auto sales, furniture sales, and building materials, with growth of 6.2%, 5.2%, and 4.3% respectively. The main reason these three areas have been relatively strong is because you don’t need cash, a minimal level of income, or even a job to make a purchase at these retailers. All you need is for the finance company employed by the retailer to approve you for a loan. The 7 year 0% auto loans go to those with decent credit. The subprime loans go to anyone that can fog a mirror. Every furniture retailer is offering 5 years with no interest payments for their Veterans Day sales. Lowes and Home Depot offer no interest for 12 or 24 months for any purchase over $500. It’s the Fed’s easy money 0% interest scheme that is producing this fake strength. The people “buying” those cars, sofas, and washing machines don’t have the money and when the bill comes due, the losses will be epic.
  • The powers that be should really start worrying after seeing the auto sales crash, despite huge incentives being offered by the desperate car dealers, along with the easy credit. It seems they may have saturated the market by giving away brand new cars to anyone with a pulse. At least the Repo companies will be booming over the next few years and used car prices should crash.
  • Another strong area has been restaurants and bars, with 5.5% year over year growth in October. This is significantly lower than the growth earlier in the year, but it is still decent. I believe this is the area that will be the last to crash. Older people are drowning their sorrows at bars. Young people, living with their parents, can’t afford houses, rent, or vehicles, but socializing with their friends using a credit card is still possible. Life has become so miserable for so many people, the only enjoyment they can find is going out to a restaurant or bar.
  • The last strong area is internet retail, with a 7.1% growth over last year. Despite state governments doing their best to crush internet retailers by adding sales tax to most transactions, consumers are staying away from malls in droves. Who would possibly want to drive miles to a crowded decaying mall, venture into a Sears, Kmart, or JC Penneys and deal with the low IQ drone employees, find out what you wanted is out of stock, or pay more than you would on-line? Amazon and the rest of the on-line retail establishment will continue to destroy bricks and mortar retailers.
  • Besides gas stations, only department stores and electronics stores have negative YTD sales after 10 months. The downward death spiral of Sears, Penney, Macys, Best Buy and many lesser retailers will not reverse. Their real estate is old, decrepit, and antiquated. After this Christmas season there will be announcements of hundreds of store closings, as ghost malls spook our suburban sprawl landscape.

Lastly, one final chart to show even the most brainless twit on CNBC that we are presently in a recession, despite the rhetoric and propaganda being spewed by the dying legacy media. Look closely at where retail sales peaked and began to fall. Quantitative easing stopped on October 29, 2014. Shockingly, retail sales began falling and haven’t stopped. The trillions of fiat printed since 2008 has solved nothing.

Doctor Bernanke and doctor Yellen injected a massive dose of adrenaline into a patient with cancer. The patient showed the appearance of recovery, but the cancer has metastasized and spread through the entire system. Competent doctors would have cut the cancer out by allowing bankrupt banks to liquidate and purging the system of cancerous debt. Instead they took steps to promote the proliferation and spread of the cancerous debt. Now the ptient is terminal.

If it looks like a recession, walks like a recession and quacks like a recession, it’s a recession.


  1. Retail sales report suggests car-sales boom may be nearing end

    By Steve Goldstein

    Published: Nov 13, 2015 11:01 a.m. ET

    Car sales have been booming. But there’s a worrying sign in the latest retail sales report that the industry might have to shift to a lower gear.

    Total light vehicle sales in October were at a decade high, and have been above 18 million for two months running, according to figures from Autodata. There is never been a time where sales have been over 18 million for two straight months.

    But the retail report released by the Commerce Department Friday showed a decline in spending at motor vehicle dealers. The 12-month rate of spending on vehicles didn’t match the admittedly superb rate of growth in unit sales for the second straight month.

    That means promotional activity. Volkswagen VOW3, +0.31% not surprisingly, in October revved up incentives by 56% compared with the same month of 2014, to counter the effect of the revelations that it illegally put defeat devices onto its diesel line. But it wasn’t just VW. Industry wide, incentives rose by 14%, according to media reports citing Autodata figures.

    There could be more incentives in store. Ford F, -0.39% is running a “Friends & Neighbors” discount plan through the rest of the year, that could force the hand of other players.

    There have been a number of factors behind the surge in vehicle sales — the improving jobs picture, tumbling gasoline prices, loose lending and the revival of the housing market (the latter is particularly a driver of pickup truck sales).

    But the rise in incentives suggests that auto makers realize that banner times may soon end. It’s not to say that auto sales will turn negative, but the prospect of higher interest rates, of slowing employment gains and tighter lending all could help puncture the auto boom.

  2. I want to see it on MSNBC or CNN before I believe it cuz I’m really dumb, like TOTALLY. Nothings real until it is shown on those channels.

  3. nicely summarized. Main stream media speaks from a script.

    Made 2 purchases/ie, from 2 on-line sites. Some curtains (far less cost than the fabric
    and my time) lined, shiny faux silk. Rationale: dead sick of pulling the shades. Lace
    panels behind are only good for daytime.

    Linen for 3 beds, company in Maine, great quality. All equal, they will last a decade+.
    The cheapo sets widely available do not survive the 2nd washing intact.

    Aren’t brand new cars equipped with computer based vulnerabilities for remote

    And who wants to go to a mall anymore? Dead stores walking/waiting.
    I am not “happy” about this, but facts are facts.

  4. We buy almost everything on-line: Sheets / Towels / Shoes / Coats / Clothes / auto parts / tools / drug store items.

    It’s so easy to find the lowest price once you get a part number. Needed an oxygen sensor for my Volvo. The difference between the same identical Bosch part over $50! And no sales tax.

    We got so sick and tired of going to the drug store, and they had only one shampoo, or only small packs of dental floss. We found an online source and now we order a years supply of shampoo, floss, toothpaste, blades, etc.

    Retail is doomed.

  5. Hey, Mr. Gore!!

    Resuming the depression? That sounds better than crash-bang-riot-starve
    zombie-war and so on.

    I really enjoyed your books. My Mother loved the Golden Pinnacle especially.

    Did you know they men writing here swear? Not Mr. Quinn though.

  6. by Karl Denninger

    And Now, The Market Splat

    This is no longer “just” a profit recession, you see.

    Nor is it “just” a commodity recession.

    Nor is it “just” a transportation recession, although that one ought to get your attention, and fast.

    No, it’s also in industrial machinery and, well, pretty-much everything else, with few exceptions. Even retail sales are getting hammered.

    How do you square where the market is with this economic fact and outlook?

    You don’t.

    One of the two is wrong, and that one will move (and probably quite rapidly) to match the other.

    PS: I’ve seen this movie before, and so have you. Topping pattern, swoon, attempt to break out above old highs fails on false, pumped media hype and hope, and then……..

  7. One by one we’ve watched this government admit breaking every rule
    that was ever made… QE is just another one liner for what’s been
    going on since 1913.

    2 years ago asked Bob Moriarty if we must presume that the
    FED circumvents the bonding process to issue unbonded
    and authorized money creation… he said , anyone who believes otherwise
    is a fool.
    Because of the typical one year lag time for liquidity to take
    hold, we must presume that trillions of unapproved dollars
    are flooding into the system for 2016, right now.

  8. Well lying by politicians still works, so why should they stop until the gig finally blows up, then they will revert to “the terrorists are responsible”. Its so pathetic it makes you sick to your stomach. Its worse than the worst hangover you ever had in your college days. Sail on oh ship of fools.

  9. What we need is another ethically challenged, moral corrupt, lying and self promoting political self proclaimed hero who is bought and paid for by the money few. Go Hillary Go. We need more of your kind of leadership as you are really qualified. And on top of it all you are a female. So we had our black president now we can have our female president who will continue to lead us into the hell hole of depression in the middle of a race war that had terrorist bombings. All for the benefit of the banks, insurance companies, and the masters of the money universe. Just ask CNBC who fits the bill. Oh yes Bill will be there helping too! What more could we possibly want?


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