Fiscal Cliff deal
Imposed a $200bn tax hike on the middle class and below, while retaining all of the over $1.3tn a year of Corporate Welfare, thus causing declines in ordinary people's disposable incomes of around $200bn a year.
Federal Reserve printing
Is causing steep price rises in things like food and gas, due to the big banks speculating with the $1tn of new money being printed each year.
70% of the reported inflation rises in February were due to increases in the prices of food and gas.
The headline cpi number (which includes food & gas) was 0.7%, while core cpi (which excludes food & gas) was at 0.2% in February.
Current Federal Reserve policies are causing substantial declines in the disposable incomes of the 99%.
Europe's Recession
Europe has just entered a deep and prolonged recession due to it's mountainous debts.
Europe is America's largest export market.
Europe's debt crisis will awaken again and will explode in much greater magnitude than has been seen to date.
What is currently happening in Cyprus is just a small taste of what is yet to come.
Nothing whatsoever has been done to resolve Europe's debt problems over the last 3 years.
Indeed the reverse is absolutely true, the policies adopted in Brussels and by the ECB have consistently made things substantially worse.
The "austerity" programs adopted by Greece, Spain, Italy, Portugal etc. have actually increased government deficits by raising the cost of social benefits like unemployment payouts more than other spending reductions.
The "austerity" programs have been very largely directed at exactly the wrong things, e.g. Greece made a new order for $800m of new German arms contracts but cut spending on other things.
N.B. the rest of the world is dramatically slowing down too.
China, India, Japan, Brazil etc.
There will be no help from that direction either.
A worldwide economic recession is coming.
Obamacare
The full implementation of Obamacare in 2014 is set to have very significant detrimental effects on the US economy.
Healthcare premiums are set to rise by between 30% and 100% in 2014 and Obamacare will bring with it significantly raised inflation in just about everything else.
Total healthcare spending is set to rise by $300bn+ in 2014. That $300bn won't be available to spend on everything else.
The full implementation of Obamacare will significantly deepen the coming recession.
It is going to cost millions of American jobs over the next 2 or 3 years.
See the latest updates on this :-
http://ian56.blogspot.co.uk/2013/01/the-affordable-care-act-should-be.html
Overall
The US is expected to enter a very deep and prolonged recession starting 3rd Quarter 2013, if not before.
The growth rate of the American economy has been consistently slowing down at the rate of about 0.5% a quarter for well over a year now.
The average growth for 3rd and 4th quarters was 1% (you have to take them both together because of the substantial timing anomalies of large government arms purchases between the 2 quarters).
Projections of future growth rates by mainstream economists and institutions like the IMF are forever being lowered (they were just lowered again very recently).
This slowdown in growth is set to accelerate because of :-
The Fiscal Cliff deal (from January)
The increase in Federal Reserve printing by $480bn a year (from November 2012)
The growing realisation in the market and the actual events of Europe's debt crisis and deepening recession throughout 2013.
The coming realisation by businesses of the huge costs that Obamacare is going to bring at the start of 2014.
The effects of the above items are already showing up in the economic data.
E.G. The February jobs report was strongly recessionary, despite positive media headlines.
459,000 poorly paid part time jobs were created.
289,000 (relatively) well paid full time jobs were lost.
Overall the February jobs report showed a decline in total wages of about $3.5bn or a $42bn annualized rate, which is very strongly recessionary.
http://ian56.blogspot.co.uk/2013/03/february-jobs-reports-explained-and-why.html
Updated 03/31
Median incomes just took a 1.1% dive in February
http://finance.townhall.com/columnists/bobbeauprez/2013/03/31/the-chart-from-hell-n1553741/page/full/
N.B. This drop in income is pre-tax. It doesn't take account of the large middle class tax hike in the Fiscal Cliff deal or the drop in disposable incomes due to the recent price rises in food and gas.
Update 07/14
Obama is now seeking to delay the full implementation of Obamacare until after the 2014 mid-terms because he knows how much the economy will be adversely affected by it.
(By delaying the imposition of fines for businesses that do not comply with Obamacare etc.)
Disposable incomes continue to shrink (despite the media propaganda that the American economy is somehow "recovering").
June's "wonderful" job numbers were actually terrible.
360,000 poorly paid part time jobs were created and 240,000 relatively well paid full time jobs were lost, resulting in an overall decline in both total wages and average disposable incomes (by around $6bn just in June).
17,000 more people were unemployed in June.
The massive tax hike of $200bn a year imposed on the middle class and below, continue to shrink disposable incomes by $16bn a month.
The consumer is already tapped out - the only lending that is increasing are student loans and subsidized car loans.
The cost of taking out a new mortgage has increased by 36% since the start of May (new mortgage rates have risen from 3.3% to 4.49%).
This will kill off the housing market.
Mortgage rates :-
Rising house prices were already an economic red herring - the largest price rises were in the biggest bubble areas pre 2008 and were in large part caused by hedge finds buying up tens of thousands of properties.
Early hedge fund entrants are already exiting this market, i.e. the more savvy participants.
We await the mainstream to report news of the debt crises from Slovenia and Malta - Cyprus will need an increase in it's bailout.
The massive debt problems in France should start being reported by the mainstream before the year is out.
Japan has already lost confience in it's massive money printing scheme.
The stock market and Bond prices have already seen sizeable falls there.
Indications are already becoming apparent for the coming lack of confidence in the US bond market and Bernanke's money printing.
The prices of US junk bonds have fallen dramatically, while the cost of new mortgages has risen dramatically.
The voodoo economists at the big banks are currently busy slashing their Q2 GDP estimates.
Goldman has reduced it's estimate from +2.0% in April to +1.3% latest.
Barclays recently revised down their estimate to +0.6% and JP Morgan to +1.0%.
Goldman over estimated Q1 GDP by 1.4% (+3.2% estimate vs +1.8% revised actual).
The official initial Q2 GDP estimates come out on July 31st. (There are 2 subsequent revisions to every official report.)
Update 07/15 Goldman Sacs joins JP Morgan by revising Q2 GDP down to
I said a few weeks ago now that I was expecting a final print for Q2 GDP in the region of +0.6%.
We shall see.
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