Is the Economy really that bad? Yes, yes it is.

The Democrats complained for MONTHS that the economy was the best ever - the BEST! But as we look across the global economy today, there's very real evidence that we're treading on thin ice. Beneath the surface of macroeconomic data lie unsettling signals pointing to a fragile and vulnerable economic landscape.

from Eurodollar University

Job markets are cooling, consumer resilience is fading, and global demand is faltering in key sectors. Central banks, once steadfast on inflation control, are now cutting rates more aggressively than anticipated. Together, these indicators paint a picture of a world economy struggling to maintain stability, with potential downturns lurking in multiple directions. Below, we break down the key data points and industry insights that underscore this precarious economic moment.

Labor Market Weakness:

• Declining Job Openings: Job openings tumbled by over 400,000 in September 2024 to 7.44 million, the lowest since January 2021. This signals weakening demand for workers.

• Low Hiring Rate: While slightly up for three months, the hiring rate remains depressed at around 5.5 million in September 2024, far below healthier levels.

• Declining Quits Rate: The quits rate fell to around 3 million, similar to 2015 levels, suggesting workers are hesitant to leave their jobs due to a perceived lack of opportunities.

• Rising Layoffs: Layoffs and discharges rose above 1.8 million in September 2024, the highest since January 2023, signaling a potential uptrend in job losses.

• Private Payroll Weakness: Private payrolls were under 100,000 in every month except September since May, even reaching close to zero in August (revised).

• Weak October Payrolls: A meager increase of 12,000 jobs in October 2024, with private payrolls down 28,000.

• Declining Hours Worked: The hours worked index has been flat for four months (since May 2024). The average workweek fell back to a cycle low of 34.2 hours.

• Anecdotes:

  • Bartenders, waiters, and waitresses report declining tips, foot traffic, and overall lower restaurant sales. Some have had their hours cut despite base pay raises, forcing them to seek additional jobs.

  • Nissan cutting production of North American models by 30% due to lower sales and rising inventories. Similar struggles reported by Ford and Stellantis.

  • German auto parts maker Schaeffler AG cutting 4,700 jobs in Europe due to lower automotive production and general industrial weakness.

• Expert Quotes:

  • Ryan Sweet (Oxford Economics): While a prior job openings increase was encouraging, he emphasizes the importance of consistent improvement and close monitoring of the quits and layoff rates.

  • Elizabeth Renter (NerdWallet): Observes that employers are hesitant to hire and workers are reluctant to leave their current jobs.

Consumer Distress:

• Declining Credit Card Use: Revolving credit declined in August 2024, marking the second decline in three months and the largest drop since 2021.

• Weak Income Growth: Nominal personal income growth slowed significantly, growing at an annualized rate of just 0.8% over the last three months, a level consistent with recessionary periods. Disposable personal income shows similar weakness.

• Rising Loan Losses: Banks report soaring loan losses, provisions, and charge-offs, particularly for consumer loans like credit cards.

• Consumer Pessimism: Surveys show rising consumer pessimism, with an increasing number fearing they'll miss a debt payment. Probability of finding a new job if one is lost is hovering at a low of 52.73%.

• Anecdotes:

  • Ally Financial reports intensifying credit challenges, with borrowers struggling due to high inflation, cost of living increases, and a weakening employment picture.

  • City Group notes credit losses are rising as consumers shift spending to basic necessities.

  • Almost half of American car shoppers expect to pay $35,000 or less for a new car, but with average prices closer to $50,000, many are walking away. 73% of consumers delay car purchases due to cost.

• Expert Quotes:

  • Russ Hutchinson (Ally Financial CFO): States that consumers are struggling and that it will be "harder for longer."

  • Mark Mason (Citigroup CFO): Points to rising credit losses as consumers prioritize basic needs over discretionary purchases.

  • Jamie Dimon (JPMorgan CEO): Expressed concern about forecasting net interest income, citing the crucial role of the yield curve and potential recession.

Global Weakness and Uncertainty:

• Declining Global Demand: A major chipmaker equipment supplier reports a 50% drop in bookings, indicating a sharp fall in demand and broader global economic weakness.

• Luxury Goods Slump: A leading luxury goods maker reports falling revenues, its first decline since 2020, attributed to an "uncertain economic and geopolitical environment."

• Weakening Industrial Production: Reports show a sharp drop in US industrial production, including manufacturing, with downward revisions to previous months.

• Declining Oil Prices: Oil prices continue to fall, despite purported stimulus measures, signaling weak global demand.

• Falling Copper to Gold Ratio: The copper to gold ratio hits new lows, breaking below critical thresholds, signaling deflationary pressures and economic weakness.

• Rising Credit Spreads for Automakers: The bond market is showing increasing concern about car makers, with rising credit spreads indicating higher perceived risk.

• India's Economic Stumble: India, a recent growth engine, shows signs of cracking, with a falling rupee, contracting industrial production, and softening survey data.

• Japan's Leading Indicator Plunge: Japan's key leading indicator hits its lowest level in years, signaling a potential slide back into recession due to global weakness.

• IMF Downgrades Global Growth Forecast: The IMF lowers its global growth projections, warning of risks.

• Anecdotes:

  • A major railroad reports lower-than-expected revenue due to faltering demand.

  • A paint manufacturer warns of a slump in automotive production.

• Expert Quotes:

  • Christine Lagarde (ECB President): Admits that both inflation and the economy are heading downwards.

  • Kazuo Ueda (Bank of Japan Governor): Expresses concern about the uncertain global economic outlook.

  • Some analysts express optimism about stimulus in China, despite weakening indicators.

Here are all the recent companies reporting indicators of a MASSIVE economic slowdown or serious recession:

• Nissan: Cutting production of North American models by 30% due to falling sales and rising inventories.

• Ford: Also experiencing softening demand and rising vehicle inventory levels, along with concerns about achieving cost-cutting targets.

• Stellantis: Reporting grim results, with worldwide shipments down 20% and North American revenues down 42% in the third quarter. Facing dealer revolts and excess inventory.

• Schaeffler AG: German auto parts maker cutting 4,700 jobs in Europe due to lower auto production and broader industrial weakness.

• Volkswagen: Predicting European car sales will not return to pre-pandemic levels, expecting only around 14 million vehicles sold per year in the future. Considering factory closures and job cuts in Germany.

• CSX: Railroad company reporting lower-than-expected revenue due to weakening demand for various goods, including cars.

• PPG Industries: Paint manufacturer warning of a slump in automotive production in both the US and Europe and trimming its sales and earnings outlook.

• Amazon: Implementing return-to-office policies, potentially leading to employee attrition.

• ASML: Chipmaker equipment supplier reporting a 50% drop in bookings, signaling a sharp fall in demand and impacting investment in productive capacity.

• Intel: Announced radical cost-saving measures, including laying off at least 15,000 employees, due to weakening demand.

• LVMH: Luxury goods maker reporting a 3% decline in year-over-year revenue in the third quarter, its first revenue drop since 2020.

• Ally Financial: Reporting intensifying credit challenges, particularly in auto loans, and tightening lending standards.

• Citigroup: Noting rising credit losses as consumers prioritize essential spending.

• JPMorgan Chase: Reporting higher loan losses and provisions, primarily driven by credit card debt. Net interest income also declined.

• Bank of America: Experiencing a 12% drop in net income due to rising expenses and higher loan losses. Net interest income declined as well.

• Boeing: Strike impacting manufacturing jobs and potentially affecting suppliers.

• Spirit AeroSystems: Supplier to Boeing, potentially facing layoffs if the Boeing strike continues.

• Facebook (Meta): Investing heavily in AI, but revenues are offsetting spending, raising questions about the profitability of AI investments.

• Nvidia: Mentioned in the context of the AI bubble and potential impact of its waning on semiconductor demand.