Economy

U.S. Retail Sales Fall, Again; The Next Crash Is Near

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by Jeff Nielson, Sprott Money:

Retail sales have fallen yet again in the mighty U.S. economy, home of the Never-Ending Recovery . Once again, this number has fallen even before we adjust it for inflation, in order to make the statistic meaningful. A retail sales number which is not adjusted for inflation (by subtracting the rate of inflation) only tells us how much depreciating money the people spent, not how many goods and services they actually purchased.

In June of this year, the month just reported; U.S. retail sales are estimated by the government to have fallen (month-over-month) by 0.3%, a seemingly insignificant number. But this is before we adjust that number for inflation. What is the rate of inflation, the real rate?

Our governments hide that secret with statistical falsifications too numerous to list, and in many cases too complex to explain to those without a formal background in economics. But we can see this real inflation, in our own lives. Food and shelter, the two most-important categories of consumption, are soaring at the most-rapid pace seen in our lifetime, somewhere above 20% per year.

Other categories of “consumer goods” have increased in price at a much lower rate, but here’s the point. As more and more of our populations descend to the economic status of Working Poor (or lower), food and shelter become the only categories of consumption. Thus, for this growing majority of our populations, the “inflation rate” for food-and-shelter becomes THE inflation rate: 20+% per year.

John Williams of Shadowstats.com estimates inflation to be near (but not above) 10%. But he calculates that inflation rate honestly using the “basket of goods” of a Middle Class society (the Middle Class of the United States). That society no longer exists. In the basket of goods of the Working Poor; there is only food and shelter.

For the smaller, more-affluent half of our societies; Mr. Williams’ estimate is undoubtedly as accurate as any estimate currently being produced. When we aggregate these two halves of society, the Working Poor suffering from 20+% inflation, and the relatively Affluent Minority living with a still-despicable inflation rate of 8 – 10%; we get some number at/above 15%. For statistical convenience, however; let’s assume a conservative, overall inflation-rate of 12% per year.

Now let’s return to the unadjusted number for retail sales reported by the U.S. government. The monthly decline of 0.3% becomes a plunge of 1.3% once we subtract the monthly inflation rate (12% per year, divided by 12 months). But we’re used to seeing statistics expressed as annualized numbers.

If we take this monthly plunge in retail sales and “annualize” it; we see that U.S. retail sales fell in June at an annualized rate of 15.6%, once adjusted conservatively for inflation. In a consumer economy that is a sickening rate of decline. Now it’s time to look at the Big Picture. Here we see that U.S. retail sales have been falling not just this month, or just this year. Adjusted for inflation, U.S. retail sales have been falling every year, and nearly every month – cumulatively.

If we go back to the end of 2007, to the bursting of the U.S. housing-bubble, and the collapse of the U.S. economy first became visible/painful for the American people; since that time U.S. retail sales have plummeted by roughly 50%. Let me repeat this; in this consumer economy, U.S. retailers are selling roughly half as many goods (and services) as they were selling less than eight years ago.

This relentless, severe decline in retail sales is not the symptom of some mere recession. A collapse of this magnitude and duration – in a consumer economy – can only be the symptom of a Greater Depression . Here it must be understood that the term “consumer economy” itself is nothing but an economic euphemism for a dying economy .

What does an economy do when it no longer produces enough goods to pay its own bills? It “consumes”, meaning it cannibalizes (i.e. consumes) all of the accumulated wealth of that society. And when the “consumer economy” has cannibalized all that wealth? It turns to debt .

As a matter of arithmetic; no entity can pile-up more and more debt forever, not even according to the voodoo economics of charlatan economists. What happens when a dying, consumer economy has mooched/borrowed all the debt it is capable of absorbing? We get the U.S. economy .

This dying economy is now so ridiculously over-burdened with debt (public, private, and corporate) that it has become impossible to even sustain its level of consumption, once it has paid the massive, and ever-increasing, interest on these debts. This is true even with the Federal Reserve’s money-printing cranked-up to an insane extreme, and interest rates ratcheted-down to the ultra-insane/ultra-fraudulent level of 0%. The parasitic blood-sucking of the One Bank , the “collector” of all these interest payments has now made the U.S. economy unable to tread water, even with maximum stimulation.

To hide this death spiral, the U.S. government (like all Western regimes) refuses to adjust its “retail sales” number for inflation, and also tells ridiculous economic lies, claiming the official “inflation rate” is near-zero, even as we see food and real estate prices skyrocketing at a never-before-seen pace. But while you can lie about an economic collapse to populations of Kamikaze Lemmings , you can’t hide the economic carnage produced from that collapse – forever.

Thus, roughly every eight years, the One Bank and its Western political servants stage an official “crash”. It triggers a collapse in our bubble stock markets , which triggers a short-term economic shock, but most of the “crash” itself is simply our corrupt governments partially adjusting their previous economic lies, to acknowledge (in part) this economic death-spiral.

Read More @ SprottMoney.com

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