While some are pointing to record stock gains as a sign of a booming economy, the fact is the only thing holding the economy up is hope; hope that the current administration can somehow dig the country out of the mess we’ve found ourselves in. But one look at the numbers is enough to make even the biggest optimist frown.
The predicted Trump bump seems to be hitting a wall, and not the one we were promised during the elections.
During the first quarter of 2017, U.S. GDP grew at the worst rate in three years, increasing at a seasonally adjusted annual rate of only 0.7%
The following stats are 7 reasons you need to prepare for economic hard times:
It seems we haven’t learned from the housing bubble scams that caused the 2008 financial crisis. Mortgage lenders are once again pushing risky subprime loans and many of the problems that caused the last crisis have been compounded by idiotic politicians who keep pushing the can down the road.
While risky subprime mortgages are again becoming a real problem, the coming crisis could come as a result of lenders who went from pushing mortgage scams to pushing auto and student loans on people who have no chance of ever paying them back.
1. The Auto Loan Bubble.
Subprime auto loan default rates are surging and are closely matching the mortgage defaults we saw just before the crash of 2008. But how bad is the problem?
In December 2016, New York Federal Reserve researchers found 6 million Americans were delinquent with car payments and predicted that number would only worsen. We are seeing a record number of people taking out loans they can’t afford who are also pushing their payments out over longer time periods than we’ve ever seen.
According to Debt.org, 30% of car loans now stretch between 72 and 84 months. The average amount financed in 2015 was $28,711 with average monthly payments of $485, a record high for both lengths of loan and amount financed.
2. The Student Loan Crisis.
Even more troubling is what we are seeing in the student loan industry. There has been a debt explosion for students, with student loans growing from $260 billion in 2004 to $1.31 trillion last year. According to the Federal Reserve’s most recent Household Debt and Credit Report, the student loan default rate is 11.2%, which is almost where the peak mortgage default rate was at in 2010.
But what makes the Student Loan bubble even more worrying is the fact that so many of these loans were given to people who have zero collateral and zero chance of paying them back.
We have 18 year-olds who are taking on, in some cases, hundreds of thousands of dollars in debt, even though the Fed’s own numbers say that over 25% of college graduates salaries are no higher than for people with only a high school diploma.
In April, the St. Louis Federal Reserve published a report titled Student Loan Delinquency: A Big Problem Getting Worse? They determined that of the nearly $1.3 trillion in non-bankruptcy-dischargeable student loans, the delinquency rate for students in repayment is over 27 percent.
3. Retail Apocalypse: 8,000 stores expected to close in 2017
For anyone who thinks the economy is on the rebound, just check out how many retail outlets are failing.
In 2008, there were a record number of retail closures, with 6,163 stores shutting their doors. In 2017, we are on pace to beat that number with experts warning we could see over 8,000 store closures by year’s end.
“Thousands of new doors opened and rents soared,” Richard Hayne, chief executive of Urban Outfitters Inc., told analysts last month. “This created a bubble, and like housing, that bubble has now burst.”
4. Retailers Are Going Bankrupt at a Record Pace
2017 is setting records for the number of retailers who are filing for bankruptcy. In the first three months of this year, 14 retail chains have filed for bankruptcy protection or liquidation. Department stores, electronics retail, and apparel shops are at highest risk, according to S&P Global Market Intelligence.
The largest bankruptcies so far this year, according to S&P, are privately held shoe merchant Payless, outdoor apparel chain Gander Mountain, and apparel retailer, BCBG Max Azria.
In 2016, there were 18 bankruptcy filings for the entire year.
5. Consumer bankruptcies are rising at the fastest pace since the last recession.
The following numbers come from Wolf Richter:
In December, bankruptcy filings rose 4.5% from a year earlier. In January they rose 5.4%. It was the first time consumer bankruptcies rose back-to-back since 2010. I called it “a red flag that’ll be highlighted only afterwards as a turning point.”
In March, consumer bankruptcy filings rose 4% year-over-year, to 77,900, the highest since March 2015, when 79,000 filings occurred, according to the American Bankruptcy Institute data. The turning point has now been confirmed.
Total US bankruptcy filings by consumers and businesses in March spiked 40% from February and rose 4% year-over-year to 81,590, the highest since March 2015.
6. Six out of every ten Americans can’t cover a $500 emergency.
According to CNN, 6 in 10 Americans don’t have $500 in savings. Only 41% of adults say they have $500 to cover either a surprise bill or an emergency.
7. We are still $20 Trillion in debt!
If you want to see the real ticking time bomb, look no further than our nation’s debt. Despite all the promises from Congress, we are still at $20 trillion in debt with no end in spending in sight. But even more troubling than the debt they tell us about is the debt that no one want’s to admit is out there.
The latest government projections show that we have over $127 trillion in unfunded liabilities. There simply isn’t enough money for the things government keeps promising to the people. In fact, the Social Security Administration says that by 2034 payroll taxes collected will only pay for about 79 percent of scheduled benefits.
So what can you do?
During an economic collapse, precious metals are the best assets to possess because they are extremely liquid. Gold, silver, platinum, and palladium can easily be sold. Many people accept them in exchange for goods and services. Precious metals also provide relative stability in value. In fact, during troubling economic times, people scramble to buy silver and gold. As such, their value tends to appreciate quite quickly.
Ultimately, investing in precious metals is the perfect way for preparing for economic collapse. However, even if the collapse doesn’t happen, you can still enjoy an appreciation in the value of your assets. Talk about killing two birds with one stone!