"The Economy Is Crashing Even Faster
Than A Lot Of The Experts Had Anticipated"
By Michael Snyder
"It’s happening. Throughout 2021 and 2022, a whole host of experts were warning that we were going to see another economic crisis like we witnessed in 2008 and 2009, and now it is here. In fact, it is unfolding at a pace that is even more rapid than most of the experts had anticipated. The housing market is crashing, hordes of retail stores are closing, the commercial real estate market is headed for a colossal disaster, food prices continue to surge, and the worst wave of layoffs in more than a decade just continues to get even worse. So many of the economic trends that I have been tracking on The Economic Collapse Blog are now reaching a crescendo, but most Americans still don’t understand how bad things will eventually become.
On Tuesday, we learned that existing home sales in the United States have now fallen for 12 months in a row…"U.S. existing home sales slowed for the 12th consecutive month in January as high mortgage rates, surging inflation and steep home prices sapped consumer demand from the housing market. Sales of previously owned homes tumbled 0.7% in January from the prior month to an annual rate of 4 million units, according to new data released Tuesday by the National Association of Realtors (NAR). On an annual basis, existing home sales are down 36.9% when compared with January 2021."
It is the slowest pace since November 2010, when the U.S. was still in the throes of the housing crisis triggered by subprime mortgage defaults. Just think about these numbers for a moment. Existing home sales have dropped every single month for an entire year. That is catastrophic. Overall, existing home sales are a whopping 36.9 percent lower than they were at this time last year. We haven’t seen anything like this since the last housing crash.
Meanwhile, rapidly rising interest rates and the work at home trend that began during the pandemic have combined to create a giant mess for the commercial real estate industry. At this point, projects are starting to fail at a furious pace…"The giant investment manager Brookfield Asset Management recently defaulted on a total of over $750 million in debt for a pair of 52-story towers in Los Angeles, according to a February securities filing. Real-estate firm RXR is in talks with creditors to restructure debt on 61 Broadway, a 34-story tower in Manhattan’s financial district, according to people familiar with the matter. Handing over the building to the lender is among the options under consideration, these people said."
In another sign of distress, a venture of an investment manager affiliated with Related Cos. and BentallGreenOak is in similar debt-restructuring talks over a $150 million warehouse-to-office conversion project in Long Island City, N.Y., that hasn’t filled up as much space as expected, according to people familiar with the matter.
Sadly, this is just the tip of the iceberg. As I discussed the other day, I believe that we will eventually see the worst commercial real estate crisis in the entire history of our nation.
Of course the whole economy is moving into very troubled times. The Conference Board’s index of leading economic indicators has now dropped lower in each of the past ten months. The last time we witnessed a streak of this magnitude was in 2008. Even Walmart and Home Depot are acknowledging that a very challenging economic environment is in front of us, and bleak forecasts from both companies helped to spark another round of panic selling on Wall Street…"US stocks plunged on Tuesday after fourth-quarter earnings and forecasts from mega-retailers like Walmart and Home Depot raised concerns about the strength of the US consumer. The Dow and S&P 500 each closed with their worst day since December 15 – the Dow fell about 696 points, or 2.1%, while the S&P dropped by 2%. The Nasdaq Composite closed 2.5% lower."
Consumer spending accounts for about 70% of America’s gross domestic product, the broadest measure of the US economy, so a slowdown could weigh on growth and even send the United States into a recession. As economic activity slows down, major retailers are closing hundreds of locations all over the country…"America is bracing for a mass exodus of retail stores across the nation this year, with more than 800 big box locations set to close from California to New York. Among the iconic names to announce they are downsizing includes Bed Bath & Beyond, Walmart, Gap and Party City. At least 803 stores are set to be shuttered over the rest of 2023, with many forced into desperate cost cutting measures amid rampant inflation and declining bottom lines."
Sadly, there will be more. A lot more. Needless to say, a lot more layoffs are coming too. In fact, we just learned that McKinsey & Co “plans to eliminate about 2,000 jobs”…"McKinsey & Co. plans to eliminate about 2,000 jobs, one of the consulting giant’s biggest rounds of cuts ever. The firm known for devising staff-reduction plans for its clients is taking the ax to some of its own, with the move expected to focus on support staff in roles that don’t have direct contact with clients, according to people with knowledge of the matter."
So many people are going to lose their jobs in the months ahead. The tech industry is supposed to be one of the backbones of our economy, but they have been laying off workers faster than almost any other sector. And the numbers tell us that the pace of tech layoffs in 2023 is already way ahead of last year. If you do not have a job right now, I would recommend grabbing one while you still can. And if you do have a job that you value, I would try to hold on to it as hard as you can.
These are the times that we have been warned about, and eventually economic conditions will be even worse than they were in 2008 and 2009. Those running our economy were able to keep things propped up for quite a while by pushing interest rates all the way to the floor and by flooding our system with mountains of fresh money. But in the process they created a tremendous amount of inflation, and meanwhile our long-term economic problems just continued to get even worse. Now a day of reckoning has arrived, and our leaders are all out of solutions."
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