Two days before Christmas, the Dow hit an unprecedented landmark: For the first time, it soared over 18,000, pushed in part by a healthy surge in the third quarter GDP. “The annualized growth rate was revised up from a previous estimate of 3.9 percent, and was the biggest advance in gross domestic product since the third quarter of 2003,” reports Bloomberg.com. “Separate data today showed consumer spending rose more than previously estimated in the period, while orders for U.S. durable goods and purchases of new U.S. homes unexpectedly declined last month.”
Many people see this as an indicator of the economy’s wondrous recovery. These are the people to whom the stock market is demonstrable proof that America’s financial worries are over, that the economy is strong and stable, and that we are on the road toward a golden and prosperous future.
Gee willikers, times are good, aren’t they? What could possibly go wrong?
We’re being told consumer spending is behind the strong boost to the economy. Yet a closer look at the number reveals a lot of manipulation going on behind the scenes. What appears to be a booming market in fact reveals a great deal of rot at the foundation. Zero Hedge reveals “two-thirds of the ‘boost’ to final Q3 personal consumption came from, drum roll, the same Obamacare which initially was supposed to boost Q1 GDP until the ‘polar vortex’ crashed the number so badly, the BEA decided to pull it completely and leave this ‘growth dry powder’ for another quarter. That quarter was Q3.”
In other words, back in Q1 consumers were being forced to spend money on Obamacare, but it wasn’t convenient to include this forced spending in the first quarter, so government number crunchers decided to add that spending to the third quarter instead, to make things look better. Isn’t that nice?
Not only that, but things aren’t as rosy as they seem on Wall Street. Profit Confidential notes, “As of Dec. 12, 106 companies on the S&P 500 have issued guidance on their corporate earnings for this final quarter of 2014. Of these companies, 85 have issued negative guidance, while only 21 have issued positive guidance. … And the real problem is revenue growth – it’s just not there. … For the fourth quarter we are in right now, revenue for S&P 500 companies is expected to grow by just 1.4 percent. This is below the average of 3.5 percent over the last three years … telling me that American companies aren’t able to sell more.”
This article goes on to note grimly how companies are reduced to delusion and trickery in which 75 percent of the S&P 500 companies bought back their own shares.
So I ask you: Are things really and truly rosy with America’s economy? Or are we having the wool pulled over our collective eyes? “The stock market bubble will burst,” concludes the Profit Confidential article. “It is only a matter of time.”
You’ll notice how quiet the optimistic economists are concerning the $18 trillion national debt that is literally impossible to pay back. And they’re awfully quiet on things like the unemployment (or underemployment) rate among recent college graduates who, having no other prospects in front of them, delay leaving college and instead continue to pursue degrees and accrue staggering amounts of student loan debt, which in turn prevents them from achieving traditional benchmarks of adulthood such as buying homes or even getting married.
Does any of this sound sustainable to you? Or does it seem like our economy is a house of cards? As one person noted simply, “The economy is booming? That’s news for millions.”
My purpose in pointing out these grim realities in the face of the New Year is not to send folks into a tailspin of depression, but instead to instill a sense of hope by giving them the chance to brace for the upcoming crash. It’s been said the one simple secret to surviving any crisis is the ability to accept the scenario. “The more time you spend denying that this could ever happen to you, happen in your home town, or occur at all,” notes The Organic Prepper, “the less time you have to take definitive action. In fact, your willingness to accept that disaster could strike before it ever does puts you even further ahead, because you’ll be ready for immediate action without wasting valuable time wrapping your brain around it.” Denial doesn’t work.
“The difference,” notes The Organic Prepper about facing a crisis, “between the people who crumbled, becoming easily offended, snarling, and hysterical, and the people who were generous, calm, and effective? Their levels of preparedness, both mental and physical.”
What would you need to do to brace yourself for a severe economic downturn? This isn’t a rhetorical question; it’s a serious inquiry. What would you need to do to prepare yourself, both mentally and physically, against bad times? Would you need to get out of debt? Sell your expensive home and move somewhere cheaper? Store up tangible assets like food or precious metals rather than paper fantasies like stocks and bonds? Get closer to your friends, your family, your neighbors, or most importantly, your God?
Whatever it is you choose to do, action beats inaction and acceptance beats denial.
In a recent article on The Economic Collapse blog, Michael Snyder points out how there is hope in being prepared, whether it’s preparing for an exam or preparing for a music performance or preparing for an economic downturn. The act of studying, practicing, rehearsing and preparing make you far more equipped to handle an event. As Mr. Snyder puts it, “[T]here is hope in understanding what is ahead of us, and there is hope in getting prepared.”
George Orwell once said, “During times of universal deceit, telling the truth becomes a revolutionary act.” The booming stock market and the rosy GDP figures are deceitful. The truth is, we are building an economic house of cards. All it takes to topple the trembling structure is a small push … and the house comes tumbling down.
Therefore I urge everyone to take the “revolutionary” action of studying, practicing, rehearsing and preparing for what might happen in an economic crash. Wouldn’t you feel calmer and more hopeful to know you and your family would be less affected under these circumstances?
I wish you all a blessed and prosperous New Year … with full pantries and God at your side.
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