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Money Trouble Ahead: 15 Indications That Bad Times Are About To Hit The U.S. Economy

2011 is shaping up to be a really bad year for the U.S. economy. There are all kinds of indications that big trouble is ahead. So far financial markets are weathering all of the chaos around the world fairly well, but just as there were huge flashing warning signs before the 2008 financial crisis there are also huge flashing warning signs now.  The price of oil is soaring, the U.S. housing market is experiencing huge problems, the cost of living in America recently hit a new record high and each week the globe seems to become even more unstable.  How much pounding can our fragile economic system take before it completely collapses?  As the price of oil goes even higher, it is going to cause economic growth to slow down and it is going to cause the prices of the things that we all buy at the stores to go up at the same time.  It is very likely that we are entering a period of “stagflation” similar to what we experienced in the 1970s.  This is going to cause a huge amount of money trouble for millions of American families.  Already there are vast numbers of American families that are barely making it every month.  Tens of millions of Americans are already receiving government assistance.  So what is going to happen when the next financial crash happens and we experience yet another major economic downturn?

The truth is that the financial system was never “fixed” after the crash of 2008.  If anything, it is more vulnerable today than it was back then.  Even as you read this, major imbalances are building up in the global financial system, and at some point a “tipping point” will be reached.

Once that tipping point is reached, it will not be too long before the U.S. economy experiences the next wave of economic problems.  Perhaps we will be fortunate and it will not be as bad as the 2008 crash.  Perhaps this next wave will be even worse than 2008 was.  Only time will tell.

But all of the warning signs are there.  The following are 15 indications that bad times are about to hit the U.S. economy….

#1 The price of gasoline is about to cross the psychologically-important $4 a gallon threshold in some areas of the United States.  For example, the average price of gasoline is now $3.977 in San Diego County and it is $3.955 in Riverside and San Bernardino counties.

#2 The price of oil moved up close to the $105 mark by the end of the day today, and that means that more gasoline price increases are likely on the horizon for American consumers.

#3 In February, food prices in the United States rose at the fastest rate in 36 years.

#4 According to the U.S. Labor Department, the cost of living in the United States hit a brand new all-time record high in the month of February.

#5 According to the National Association of Realtors, sales of previously existing homes in the United States dropped a stunning 9.6 percent in February.  The National Association of Realtors also has announced that the median home price is the lowest it has been in 9 years.

#6 The U.S. is already in the midst of a real estate crash that never seems to end, but many are warning that it is about to get even worse.  For example, prominent housing analyst Gary Shilling is warning that U.S. housing prices are likely to drop another 20 percent.

#7 According to the Mortgage Bankers Association, at least 8 million Americans are at least one month behind on their mortgage payments at this point.

#8 According to the U.S. Census Bureau, the number of new building permits declined 20.5 percent in February on a year over year basis.  According to John Carney of CNBC, a huge decline in building permits is usually an indication that a recession is coming….

All nine recessions since 1959 have seen a year over year decline in building permits. In eight of the last nine the annual rate of change hit negative 20 percent or lower, and the economy went into a recession.

#9 31 percent of the homeowners that responded to a recent Rasmussen Reports survey indicated that they are “underwater” on their mortgages.

#10 Millions of American families are drowning in debt and debt collectors are becoming increasingly aggressive.  According to a new Federal Trade Commission report, consumer complaints about debt collectors rose by 17 percent last year.

#11 Meredith Whitney is warning that even though it may take longer than she originally projected, we are still going to see a wave of municipal bond defaults worth hundreds of billions of dollars.

#12 The war in Libya is putting upward pressure on the price of oil, it is yet another drain on U.S. government finances, and it is raising tensions across the globe.  Vladimir Putin has called the NATO operation in Libya a “crusade” and China is calling for an immediate cease-fire.  Financial markets do not like instability of this nature.

#13 The rest of the Middle East is melting down as well.  More than 40 demonstrators have been killed in Yemen and the president of that country has declared a state of emergency.  Government buildings are still being set on fire in Egypt.  Ivory Coast is in the midst of a full-blown revolution, and there are ongoing protests in about a dozen other nations across North Africa and the Middle East.  This is really bad for global economic stability.

#14 The damage from the tsunami in Japan continues to affect more American Workers.  GM has just announced that they are going to temporarily lay off workers at a Buffalo engine plant due to a shortage of parts from Japan.  When supply chains are going to get fully back to normal is anyone’s guess.  GM has also temporarily shut down a facility in Shreveport, Louisiana due to supply problems.

#15 There continue to be indications that the amount of radiation being released by the damaged Fukushima Daiichi nuclear power plants is much higher than we have been led to believe.  The following is an excerpt from a recent report by NHK World….

“Japan’s science ministry says radiation exceeding 400 times the normal level was detected in soil about 40 kilometers from the troubled Fukushima Daiichi nuclear power plant. The ministry surveyed radioactive substances in soil about 5 centimeters below the surface at roadsides on Monday. The ministry found 43,000 becquerels of radioactive iodine-131 per kilogram of soil, and 4,700 becquerels of radioactive cesium-137 per kilogram about 40 kilometers west-northwest of the plant. Gunma University Professor Keigo Endo says radiation released by the iodine is 430 times the level normally detected in soil in Japan and that released by the cesium is 47 times the norm.”

400 times the normal level amount of radiation 40 kilometers from the plant?

That is something that should be taken very seriously.

Sadly, radiation levels continue to rise throughout northern and central Japan.  If a significant amount of people have to be evacuated from Tokyo at some point that is going to be absolutely devastating for the global economy.

So what should Americans be doing?  How can middle class families weather the storm that is coming?

Well, one thing that can be done is to start saving money and not spending it on frivolous things like new cars and international vacations.  Many Americans did not learn the lessons of 2008 and they are running around blowing money as if the good times will never come to an end.

Also, now is a good time to get out of debt.  Millions of American families are literally drowning in debt, and when the next financial crash comes it is the families that are overextended that will be the most financially vulnerable.

When you see a storm coming, the prudent thing to do is to make preparations.  Most people believe what they want to believe, but anyone that cannot see the economic storm clouds on the horizon at this point has got to be pretty clueless.

Our entire economic system is slowly failing.  Hopefully the folks running things will be able to hold the economy together for a while longer, but when you stop and think about who we have in charge, there are not many reasons to be optimistic.

  • George Kadlec

    Hiliare Belloc once stated “It is a nice questions whether ignorance or stupidity play the greater part in human affairs.”

  • RAF

    The average American does care about anything except American Idol right now.

  • Gary

    Tax the rich and spread the wealth=problem. There is plenty of money in this country. It is in too few hands. This is a fact and is not open to being debated.

  • ken

    Gary, you’re being naive. Raise taxes further and you’ll collect LESS tax revenue. Furthermore, if you can figure out how to separate out the “rich” from small business owners you’ll have to tell us all how (hint: “annual income level greater than X” won’t cut it).

  • Tao Jones

    “Tax the rich and spread the wealth=problem. There is plenty of money in this country. It is in too few hands. This is a fact and is not open to being debated.”

    Did you read the Drowning In Debt piece that was on this web site a few days ago?

    Even if we took EVERY SINGLE CENT currently held by EVERY SINGLE MILLIONAIRE in this country, it would not be enough to cover our debt.

    This is a global problem; your naked Class Envy seems to be blinding you.

    We are saying, “The whole house is on fire!” and you keep saying, “Take the water that’s in the fridge to put it out!”

    You’re so fixated on this Tax the Rich nonsense that I am starting to wonder if you are even a real person, or just a bot set up to annoy the rest of us trying to have an actual discussion.

  • Mark …

    Look, the problem is

    1. demographics … a Tsunami of baby-boomers spending less and less over the last 10 years, and starting to retire now.

    Japan had a militaristic regime during the 1930s with an enormous (often forced) baby-boom, and Japan peaked out around 1990.

    The Western baby-boom started 20 years, and guess what, the West peaked out 20 years later.

    With China’s one-child policy starting in the 1960, the country created an artificial baby-boom. So China too will start to peak out within the next 20 years.

    2. globalization … the sale out of North American and European jobs to Asia by corporations.

    3. peak-oil and therefore tons of other peak-products which are created/transported by oil.

    4. Idiot banking and easy credit rules (asked/voted for by the baby-boom generation).

    We can’t do anything about the baby-boom situation.

    But we can do everything about globalization if there is political will.

    However, there is absolutely no political will to stop imports from Asia … until the whole financial system collapses and people finally wake up.

    After one or two years of hyperinflation, the debts will be paid off and you will get a bottom from which to build a new economy again.

    At that point, peak-oil will be a blessing, because it will make Pacific transport too expensive, and jobs will simply have to come very close to home again.

    It’s not until the baby-boom generation is mostly gone before the economy will finally start to rocket again.

    There has been many wars in the past. This usually created (mini) baby-boom generations (our post-WW-II generation was extremely large), and that often created depressions 60 years later.

    This is why depressions seem to come in 70-80 year cycles: 5 year War + 5 years of recovery + start baby-boom + 60 years before retirement == 70-80 year before a new depression starts.

    I hope this explains a lot.

    Enjoy !

  • Jack Nichols

    I am ready bring it on

  • Tim

    Taxing the rich and spreading the wealth is not the answer to our problems. Entrepeneurs with capital to invest create opportunities for the rest of society, who either don’t have the necessary capital or who have the capital but aren’t willing to take on the risks involved in enterprising. Why should the government take from those who have been rewarded by taking on those risks and give those to who haven’t? When you consider what an entrepeneur has to go through to build a successful business–the start-up costs, government regulations, often fierce competition–those who have been rewarded through sacrifice and hard work are entitled to enjoy the fruits of their labor and do with their wealth as they see fit.

  • Tim

    Gary, you need to educate yourself as to the cause of this nation’s problems. Personally, I’m just as outraged as anyone else who understands why we’re in the situation we’re in. But, you know what? There’s not much I can do to stop what’s happening. But I can help others prepare for what’s coming. And, I’ve made quite a bit of money as a result of the Fed’s destruction of the dollar. Anyone can, if you invest wisely.

  • mondobeyondo

    Game on.

    $100 oil will put a quick end to the desert boom cities (i.e. Phoenix, Arizona.) The housing crisis lowered the anvil. The coming oil crisis will finish them off. These cities were founded and developed on the premise of $100 or cheaper oil per barrel. Now that oil is over $100/bbl.. it’s bye, bye, baby. Exxon, Chevron, Texaco, all running dry.

    And it’s not just Phoenix. How about Los Angeles? Las Vegas? Those cities, and many others, being seduced by the “car culture” transportation and limitless gasoline. Sorry, but your “409 is not so fine” (apologies to the Beach Boys!!)

    She’s real fine, my 409… but only as long as the Harbor Freeway merges into Interstate 10. When the gas runs out, your 409 will be an oversized doorstop. Just like your late model Toyota, Nissan, and Honda. Or if you prefer, Chevy Tahoe or Ford Explorer.

    Should’ve bought a bike! No, not bike as in Harley Davidson, bike as in Schwinn. Buy a bike, and soon you’ll be singing that other Beach Boys hit, “I Get Around”.

  • A Dodgy Bloke

    I figure unless Saudi implodes or something really stupid happens in the Middle East we got maybe a year maybe a little more. Every major industrialized nation is in trouble their banks are in trouble their in trouble fiscally, their demographics suck.
    What’s most troubling is the vast majority of people out there have no clue what’s coming, or what caused it. .

  • Buy American

    If we just ignore Gary, do you think he will go away?? He seems to feed off of being kicked around for being an idiot. Kind of like the little nerdy brat in middle school who always got punched by everyone but kept coming back with stupid comments only to get pounded again…

    I think there is another factor that I haven’t seen commented on very much and that is the low fertility rate of Americans. We are averaging 1.6 kids per couple which means our population is dwindling. We need to have a minimum of 2.2 to survive as a society. After the depression of the 30s we had the baby boom and many young workers soon entered the labor force to sustain the economy and their aging parents and grandparents. In our case, with medical advances, the geriatric generation will soon be much larger than the taxpaying worker generation and this alone creates an unsustainable situation. The solution in Europe where the fertility rate is 1.3, is to import muslim immigrants who’s fertility rate is over 8 kids per family. Europe will be a muslim colony within 30-40 years, but, they will be able to preserve their societies.

    What about the US? Is this our only hope? Say what you may about Latin immigrants, but they are producing the required 2.2 kids per family. Ironically, they may be the ones paying for your nursing home and arthritis pills in a few decades….unless of course, you prefer muslim immigrants.

  • Gary

    I can almost guarantee that Obama will run in 2012 on taxing the rich. This is the reason for the tax cuts for the rich agreement for 2 years. Like it or not 81% of Americans agree that we need to tax the rich to solve budget issues way before cutting services for the poor.

    Everyone who says taxing the rich will not solve our problems is either a right wing nut or just plain clueless. When the top richest 400 have more than the bottom 155 million I think that yes we need to tax the rich and spread the wealth more.

    This is gaining a lot of traction with the American public.

  • Gary

    Rich= over 200,000 per year. Some in the congress are proposing a millionaires and billionaires tax. I love it. Take these scum bag thief’s money and return to the people. We could DOUBLE ssi by taxing the rich. That would do WAY more to stimulate the economy than letting the uber rich keep it. No its not theft for the imbeciles who will parrot this from Rush/Fox.

  • David

    Gary , you are just plain ol’ wrong. I have a neighbor that thinks like you. His parents are siblings. Go figure.

  • Owen

    Physical preparation may not help a whole lot this time. Better some than none, but what will you do without freedom? This planned collapse is designed to eliminate people. Made no mistake about it, global population reduction has begun. Flee to Jesus while there is yet time for it weill be Jesus who puts an end to these evil designs.

  • http://www.aseamaximum.com Brian Dinelli

    Take from Peter and give to Paul, by taxing the rich. It will make them richer if you understand economics & cycles. I am heavily involved in the home based business industry and every year with profit or not, I am seeing the benefits of owning a home business. Great tax incentives in the hundreds and thousands. Also I do suggest you get financial education not from the schools but from someone who is successful. Get educated 1st then make decisions. I learned the hard way. Another safe investment against all these problems is going back to gold & Silver. Since 1971, when our american dollar was taken off the gold standard, it has been a crazy for the US & world economies. Silver is so cheap and depleting, so who cannot invest $30 a month to buy silver when its the safest investment during inflationary times.

    All the Best
    Brian

  • ken

    Gary, there are a huge number of small business owners in this country “making” over 200k/year, but who are definitely not rich. Have you ever managed your own business? Do you even understand the point I making here? Soaking the rich further is, unfortunately, not only a wrongheaded idea, but it is also impossible to administer. By the way, I am neither rich nor a right-wing nut. History has shown us that socialism does not work – it has even more problems than our own screwed-up system does. The devil you know…

  • http://www.pathtoasia.com rhea

    It has already hit the US economy, the financial system as a whole is already at its worst and the government has already known about this. The problem is they have just taken it for granted and is confident that they can use consumer’s money/consumer credit to increase its fake assets.

    We help Americans find jobs and prosperity in Asia. For details, visit http://www.pathtoasia.com/jobs/

  • unclsam

    Gary, it has been people like you, and thoughts like yours that has led to the death of millions of people in the last hundred years. Do us all a favor and move to Cuba where your communist ideas can find a friend…

  • buck

    G. Edward Griffin says the government does not need our stinking income tax at least in order to operate!

    It is beyond me how hard it is for the goons in government to come to grips with the fact they are spending us into oblivion and it must stop. It’s all done with debt gratitude of the Federal Reserve conspiracy.

    It’s too late. I do believe we are screwed. Dig in!

    http://video.google.com/videoplay?docid=6507136891691870450&hl=en#

  • McDian

    @Gary: Go right ahead and tax the rich Einstein! And you will drive more of that tax base out of the country, undermine the small businesses that essentially are the back bone of our economy and pretty much drive the United States from a 1st world nation to a 3 rd world nation over night.

    You really don’t get it and it’s readily apparent that your envy of others success is preventing logic and reason from even starting to form a glimmer in your mind.

    Already because of the exorbitantly high corporate tax rate we are seeing jobs in this nation flee overseas. We have been watching this happen for the last 10-15 years now. That is a prime example of how your idea to tax the rich is down right ignorant. Those jobs that go overseas, that erodes the entire middle class tax base, which is where the majority of our taxes come from. It also increases the disparity between the wealthy and the poor but creating more poor people as they lost their jobs to someone overseas that will do it for a fraction of the cost (you can also blame Unions for our national issues as well) AND at a lower tax rate.

    So Gary, your idea is an excellent way to complete the task of destroying the American dream and ending the Republic as we know it.

  • http://www.danielrevelationbiblestudies.com Robert Stout

    Excellent article as usual!!! All these 15 indications are “Real Warning Signs” but not to many people take it seriously!!! They will before too much longer, when it seriously effects each and every person living in the US and the world. It takes a very serious disaster or incident to wake people up!!! God’s judgments here soon will wake every man, woman and child to the realization that Almighty God has a few things to say to the human race, and He intends to arrest the attention of the world with a massive earthquake that literally stops everything and everyone in their tracks. Prepare today, because procrastination will destroy you!!! Read God’s Word in Revelation 8:5 to 9:23!

  • gus johns

    Tao Jones, right on comment — are you the same Tao (Bob) Jones that I knew 40 years ago around Bellevue/Woodinville?

  • Eurum Banks

    To refrain a quote from someone else: more like another Great Depression than Mad Max. Having debt payments of over 10% of GDP in the US is no different than the debt crisis in Greece, Portugal or Ireland. Except there isn’t anyone both big enough AND willing to bail the US out. So we might see insolvency – reneging on debt payments – and as a result a very, very decreased dollar (due to lack of international trust). We could very easily see any bank savings wiped out, if that occurs. The minute you see the US default on a loan (God forbid), go to the bank, take out everything you have, and buy practical, real items that everyday people used and need everyday.
    My 2 Cents

  • Jerry

    Mark:

    Huh???

    Where are you getting your data from? None of it makes any sense.

    The “Baby Boom” in western countries ended in the early 1960′s, coinciding with the advent of modern birth control.

    Japan’s population has been in decline. Hell, has anyone even noticed anyone under the age of 40, other than military and rescue workers in Japanese video footage?

    BTW, the Baby Boomers ARE spending money: At gun shows, on things like ammunition, backpacks, LED flashlights, etc. The Survivalism-oriented retail market is filled with them!!!

  • George Orr

    Just make sure no one becomes educated about United Nations Agenda 21, and everything will remain right on course.

    And, of course, UN Agenda 21 is a conspiracy theory that is a complete waste of your time.

    The future is already destined to happen because there aren’t enough brain cells in America to prevent it from happening.

  • cdogg

    Consumption is out of control in the USA, and that is a huge part of our problem. We import more than we export. That means more money leaves the country than what comes in. On top of that, we have millions of hispanic immigrants sending US dollars back to their homelands to support their families. That takes more money out of circulation. As technology improves we replace workers with machines. As more corporations go global, we outsource more jobs. Both of these factors contribute to high unemployment and only an increase in that direction. It would not matter if gas got up to 10 dollars per gallon if we were not dependent on it. But instead of putting greater effort into decreasing dependency, we attempt to keep the prices down. If we worked, shopped, and socialized all within walking distance from our homes, we would only need cars for traveling great distances to visit family and vacation. But we do not prefer that kind of lifestyle. We want more more more but are not able to sustain such a luxurious lifestyle. We need to change our way of life to survive in the long run.

  • PolackBojo

    I’m with Jack…”I’m ready bring it on!!!”

  • KaD

    I like the line of reasoning but how are people like me who’ve lost their jobs and run out of unemployment supposed to ‘save money’ and ‘pay down debts’???

  • Beavis

    You all are right. If we simply try to tax the rich for what they make this year it will never work, they will simply say they didn’t make anything and back it up with however many lawyers it takes. Thats what they do now, why would they change?

    I say we send them to gitmo until they give up all thier secret accounts, then eat them.

    It looks great on a bumper sticker;

    Eat the rich!

    Then they won’t need all quadrillions they have stashed in Switzerland. We can simply transfer the balance into Fort Knox! A quadrillion here, a quadrillion there, and pretty soon your talking about real money!

  • Rick

    Americans STILL don’t get it. They’re not saving their money, they’re spending it again. They have fallen for the obsession we all have with economic growth. All growth does is make the money less valuable, goods more expensive, and makes the rich richer.

  • http://asouthernwriter.com Joyce

    I like having fun, watching TV, going out etc… as any person would, BUT I know what’s coming and I am trying my best to prepare for it – and trying to wake up others (not much luck!) My mother recently got some debtors off of her back. They were truing to garnish her wages, when she doesn’t make that much to begin with. Long story short, her and my father ended up finding out that the company ILLEGALLY done it! People will find out more than likely when it’s too late…

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