Courtesy of Pam Martens.
The warning signs are piling up that the U.S. economy is stalling and the feeble measures of the President to address this economic slowdown with executive signings are too little too late. Congress needs to put partisan bickering aside and open its eyes to an onslaught of data pointing to an economy hitting a brick wall.
For five years now, the executive branch and Congress have been living under the Wall Street-imposed delusion that flooding the big banks with liquidity (bailouts and years of quantitative easing) would promote job growth in the private sector and restore good jobs to the middle class. What it restored instead were rising bonuses for a limited, elite set of the financial sector who have used that flood of cash to make highly leveraged, high risk wagers in trading venues around the world while exacerbating income inequality in the U.S. and elsewhere.
Signs of the slowdown abound. On February 12, Cisco’s CFO, Frank Calderoni, told MarketWatch that “Clearly, there’s been a slowdown and it’s been very abrupt. It’s difficult to determine how long it will last.”
On February 19, the International Monetary Fund warned of the risk of deflation – a condition incompatible with steady economic growth. Commodity markets are similarly showing a distinct deflationary trend. According to Bloomberg data, the Personal Consumption Expenditures Price Index, minus food and energy costs, “rose 1.2 percent in 2013, matching 2009 as the smallest gain since 1955. Of 27 categories of goods and services in the gauge, 18 showed smaller price increases over the past two years.”
News is coming out of the farm belt showing corn and soybean prices are slumping along with farm land prices. On February 12 the Wall Street Journal reported that “a monthly survey of Midwestern lenders by Omaha-based Creighton University in January found the outlook for farmland and ranchland prices was the weakest in more than four years.”
March is not even half over and two major retailers have announced large store closings. On March 4, Radio Shack said it will close up to 1,100 U.S. stores after reporting that its net loss widened to $191.4 million in the fourth quarter. Two days later, Staples announced it will close 225 stores in North America by the middle of 2015 as a result of weaker sales. The closures will represent approximately 12 percent of its total stores in North America. In 2013, the company closed 40 stores in North America. Other retailers, such as Famous Footwear, Sbarro, Build-A-Bear, and Albertson’s have also announced that they will be trimming the number of their physical store locations.
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