Retail sales unexpectedly fell again in February. It was the third straight monthly drop and the first time the US economy has seen three straight months of declining retail sales since 2012.
Sales fell 0.1% in February. Analysts had expected an uptick of 0.3%. According to CNBC, households cut back on purchases of motor vehicles and other big-ticket items, pointing to a slowdown in economic growth in the first quarter.
So, why is this happening? Peter Schiff offered a simple reason in his latest podcast.
Americans are broke.
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There was another sign of trouble. Inventory numbers also indicate people aren’t buying what’s on the shelves. According to the Commerce Department, business inventories rose 0.6% on the heels of a 6% rise in December.
Of course, on Friday, we got the “too good to be true” Goldilocks jobs report. Peter said this doesn’t make sense.
So why didn’t any of those million people take their paychecks and spend them at a retailer? I mean, Trump is talking about all the great jobs, and all the raises that people have, and all the tax cuts. Why are retail sales down for three months in a row?”
Again, the most obvious and simple explanation is Americans are broke.
Retail sales were pretty hot during the last months of 2017, before falling off in December. But we also saw Americans running up record high levels of debt at the same time.
Last month, the New York Fed released the latest data on US household debt, revealing it has grown to a record $13 trillion. So yes, Americans have been spending, but they’ve been putting a lot of it on plastic. Credit card balances grew by $24 billion in the last quarter of 2017 alone. Could it be that Americans have maxed out the plastic?
At some point, a house of credit cards will collapse.
Peter also noted that the Atlanta Fed has once again lowered its GDP forecast for the first quarter of this year. Remember earlier in the year when they were talking about 5.4% growth? Well, now they’ve lowered that bar all the way down to 1.9%.
Peter said he could see GDP dropping below 1% in Q1 before it’s all said and done. The only thing that might save it is inventories. Those higher inventory numbers count toward GDP. But if inventories are rising, that means people aren’t buying and manufacturers will pull back to let inventories shrink. In other words, we are borrowing GDP growth from Q2 and shoving it into Q1.
So that means even if we’re going to get a weak number for Q1, we could have an even weaker number for Q2.”
Peter talked a little bit about the special election in Pennsylvania and asked a pretty poignant question: if everything is as great as Trump says, why does it appear his guy lost the race?
The president is trying to tell his voters that everything is great. Well, they know that it’s not. They’re just as broke now as they were a year ago. Their lousy jobs are the same. They’re still making no money. They’ve got part-time jobs. Nothing has gotten better.”
And what exactly has Trump done to make America great again anyway?
People are not shopping because they’re broke. They’re not voting for Republicans because they’re broke – because Trump has not already made America great again. It’s not that simple. I mean, what has Trump done to make America great again? Run bigger deficits? That’s all he’s done, right? He’s reduced government revenue and increased government expenditures. Is that all it took to make America great again? Is that the problem we had before we elected Trump – the deficits just weren’t big enough? America wasn’t great because the government wasn’t borrowing enough money?”
Peter said the reason America wasn’t great and still isn’t great is because the government got great.
Government got too big. Regulations were too many. Taxes were too high. There was too much bureaucracy. And none of that has changed.”
Yes. The Trump administration has cut some regulations. But it’s just spitting in the ocean. And Congress did cut taxes. But as Peter has said over and over, we got tax relief without government relief. Despite the president’s claims that he has already succeeded in making America great again, very little has changed. The bottom line is Americans are broke and we’re starting to see it in the economic data – if anybody was willing to pay attention.
I’ve noted that a few things I was looking at buying had 25% price jumps in just the past month. I’ll wait.
Apparently having no profit on no sales makes more business sense than a small profit on some sales.
I do not buy anything anymore because I have too much already. I am trying to reduce my STUFF since I have more junk than I need. I could buy more but WHY.
I can only imagine that the tourist and travel industry must be sucking right now.
I will venture to say that Semi-Auto firearms sales are out of the roof. Problem is those sales will not help the other retail factors . I can attest to the fact that the retailer I purchase my firearms from sold out of every major brand of AR-15 with in two hours of Trump’s “Let’s take the weapons first then do due process” statement. I just happened to catch a new stock item the very next day when it appeared on the retailer’s site. I immediately bought one before it sold out.
My wife also purchased a S&W M&P Shield .380 EZ on the 28th of Feb from Bass Pro Shop. It has been now more than 15 days and the local store still has not received it. I suspect they sold out of the pistols and now my wife’s order is part of a back order situation.
Final take on the economic state? Firearm sales are not enough to counter the decline in consumers ability to purchase unneeded/luxury items. Most people are struggling to pay for the outrageous utilities, Insurance (mandatory health, auto and soon to be life/home), food, clothing and taxes. Many will forgo purchasing even toys for their children when food, clothing and shelter look to be in doubt.
I was going to buy a certain defensive rifle before they are all outlawed; but first I had to pay my 2017 property taxes, pay for my 2018 tags, pay my double electric bills because of the cold weather, pay my 6 months car insurance and pay my 2017 Income Taxes but the rifle went up 20% in the mean time. I’ll have to settle for that feeling knowing one is just keeping the insurance companies and welfare maggots fat and happy.
As long as everyone keeps demanding more from the government the government will grow bigger and the service will get worse.
Already noticing that businesses are reluctant to spend money on services they need to maintain assets. Maintenance is feeling the pinch. This is going to affect employment. Am getting the sense that the economy is slowing. Hope I am wrong about this.
American’s are not only broke, but up the proverbial creek without canoe or paddle!
In November of 2007, Trump’s new Chief Economic Adviser, Larry (Snort) Kudlow, wrote an article about the economy titled; “Three More Years of Goldilocks”. He wrote that about five months before Bear Sterns exploded, where he at one time had been the chief economist 1987 – 1994. This despite the fact that the title “Economist” claimed by Kudlow is completely false! Having only undergraduate status, majoring in history at the University of Rochester.
In the “Goldilocks” article, Kudlow wrote: “I think the election-year economy will be stronger than the Fed’s estimate – closer to 3 percent. Too much is being made of both the sub-prime credit problem and the housing downturn”. Within six months, the S&P 500 collapsed 58%.
With the current administration having a revolving door to the cabinet room and access to the head of “emptiness” that Trump has turned out to be (showing his true self), the American people are well and truly screwed. Remember Larry (Snort) Kudlow’s latest observation on the economy:
“The profit picture is good. It’s looking real good, and growth is not inflationary just let it rip for heaven’s sakes. The market is going to take care of itself”. Hmm… whats coming within 6 months ?
And on and on it goes . I said many times the jobs that paid a high union wage with benefits matching what government employees now recieve are gone . With that tax base eroded government borrowed and borrowed and as the economic gurus talked Washington geek speak saying nothing and elected reps babbling about how they feel your economic pain . It’s all bull shit as they all scurry about like cats covering up shit .
When the credit market finally fails and the locals governments cannot get enough taxes from everything we own or earn the tax sale of previously owned property by the thousands and everything turns to absolute shit . Never fear our young adults will have been brainwashed enough to turn in the guns their parents etc …! Glad I am on top of the hill . At least the dog barking will give enough warning to take a final stand . Gee hope I am home for it ! I have a liberal relitive that is so blindly trusting of government it will turn us in thinking it’s helping us ! Thanks fool !
Tell your liberal relative you decided to sell your gun because you needed the money, or you changed your mind on guns, or you found someone offering over-market value for it, whatever excuse you can come up with . That way he doesn’t rat you out later. 🙂
Or she.
Never tell them you own one but if and when shtf don;t help them screw them
Never tell a liberal you own a gun.
Let it come as a delicious surprise!
The last 9 years has been one big transfer of wealth from ordinary working citizens to the US Gov’t. Wall Street reports inflation at or below 2%, but main street inflation is double that. Gas, utilities, food, car payments, house/rent prices are all up. Yet the average weekly income remains flat since the Bush II years. Remember that 2% inflation for 9 years drives prices up ~20%.
Keep voting in crooks who allow all this to happen, can’t stop stupid.
I need a new truck, but the price has more than doubled since I bought my new 2001 GMC Sierra, even though my pay has not.
That’s why I’m not buying anything.
Joe- You should have invested in Bitcoin, you would be well heeled right now. I wonder what happened to all of the crypto articles?
I would trust Peter Schiff over Larry Kudlow any day of the week. After all, he warned over and over against about the crisis before it hit in 2008.
Peter Schiff got one right a decade ago, and has been batting .0000 ever since.
Rdawg, do you like Larry Kudlow or do you think someone else should have been put in that position instead?
Mother Goo
Schiff sounds a little like his jewish brethren, the ones who are primarily responsible for the shape were in.
Trump is trying to be positive, but one man, even president, with his whole government and world against him, cannot make much of an impact.
Americans have become for the most part cowards, fat, lazy, rude, ignorant and selfish. I can’t think of a better recipe for disaster. Can you Mr Schiff? I wouldn’t be surprised if he is not related to Adam Schiff!!!
To the dawg and the boil: Is Schiff factually incorrect? Are his conclusions from his alleged facts illogical?
my budget is simple-if i can’t eat it ,drink it screw it or put it in the gas tank
i’m not buying it:>