Seventeen Indicators Showing The Economy is About to Collapse

President Obama and his administration has been traveling the country trying to pass along the message to voters about how effective their $787 (now $825 billion+)  recovery plan has been. They are calling the effort an effort “recovery summer.” Perhaps a better name for it would be the Economy's a Bummer. In fact the real story is the stream of bad news saying the economy is heading for a double-dip recession, not a recovery.

Actually things may not be pointing to a recession but worse, a depression. Here are seventeen indications that the economy is about to go from bad to worse:

• U.S. Treasury yields have dropped to stunning new lows.  So why are they so low?  Well, it is because so many investors are anticipating that we are headed into a deflationary period.  In fact, many economists are warning that the fact that Treasury yields are so low is one of the clearest signs that economic trouble is ahead.

• The Conference Board's Consumer Confidence Index declined sharply to 52.9 in June.  Most economists had expected that the figure for June would be somewhere around 62.  If consumers aren't confident they won't be spending money.  If American consumers don't start spending money soon a lot of American retailers are going to go belly up.

•  The M3 money supply plunged at a 9.6 percent annual rate during the first quarter of 2010.  If the M3 keeps declining at that kind of a rate it is going to put extreme deflationary pressure on the U.S. economy.

•  Many economists are now warning that the "China investment bubble" is about to burst.  In fact, Kenneth Rogoff, Harvard University professor and former chief economist of the International Monetary Fund, claims that China’s property market is beginning a "collapse" that will send a shockwave across the globe.

•  Nouriel Roubini is warning that Europe's economy could stop growing as soon as this year.  Back in 2007 and 2008, the U.S. was the epicenter of the financial crisis, but many analysts believe that it will be Europe this time around.

• Vacancies and lease rates at U.S. shopping centers continued to get worse during the second quarter of 2010.  If things don't pick up soon will we see half empty shopping malls by the time Christmas rolls around?

• Some analysts are warning that if BP goes under as a result of the Gulf of Mexico oil spill that it could cause the total collapse of the worldwide derivatives market and unleash a liquidity crisis unlike anything the world financial system has ever seen.

• Things are so bad at the state level in the U.S. that economist Mark Zandi is projecting that up to 400,000 workers could lose their jobs in the next year as states, counties and cities struggle with lower tax revenues and significantly reduced federal funding.

• Two Federal Reserve officials recently said that U.S. unemployment is likely to stay high for a long time.  Normally Fed officials are some of the biggest cheerleaders for the economy.  If they are not optimistic about the employment situation that is a very bad sign.

• Analysts are warning that the "death cross" is coming.  The Standard & Poor's 500 50-day moving average is about to cross beneath the 200-day moving average, and many economists say that this is a very strong indication that a new recession is about to begin.

•  One prominent trader says that the Dow Jones Industrial Average is repeating a pattern that appeared just before financial markets collapsed during the Great Depression.

• Ambrose Evans-Pritchard, one of the most respected financial columnists in the world, really raised eyebrows recently when he declared that this "really is starting to feel like 1932".

• In the month of May, sales of new homes in the United States dropped to the lowest level on record.

• The National Association of Realtors recently announced that its seasonally adjusted index of sales agreements for previously occupied homes dropped 30 percent in May.

•  Banks in the U.K. are being instructed to hoard cash in preparation for the next financial crisis.

• The average duration of unemployment in the United States has risen to an all-time high.  Millions of unemployed Americans are fighting off deep despair and depression as they find it nearly impossible to find a decent job.

• Small and mid-size banks across the United States are failing at a rapidly accelerating pace.  The truth is that the entire U.S. banking system is teetering on the brink of disaster.

• At this point just about everyone can see the writing on the wall.  Literally dozens of top economists and world leaders are declaring that we are likely to enter the second leg of a "double-dip recession" at some point over the next twelve months.

Even the Democrats are about to abandon ship:

Dean Baker, co-director of the left-leaning Center for Economic and Policy Research, said Obama has himself to blame for the fact that so many Americans do not appreciate the steps Obama took to resurrect the economy.

...
“I don't really see any good stories for them in the near future,” said Baker.

He pointed to the housing market as one reason for pessimism, but also noted that budget constraints are expected to lead state and local governments to lay off workers, exacerbating an already brutal labor market.

“If anything, it's likely to get worse,” he said of the economy.

 Fasten your seat belts folks, the Economy is going to get a lot bumpier.