U.S. Economy Slips Into Recession Quicksand

The U.S. economy is sinking into a recession, a persistent, widespread contraction of economic activity.  It will not become official until July 28 after the government releases the data for the Gross Domestic Product (GDP).  However, the economic storm clouds have been forming this entire year. 

In the face of warning signs, economists, market analysts and the Biden Administration never wavered from rosy economic predictions. Even when the GDP declined 1.6% in the first quarter, they spun the news as a speed bump. The economy was poised for a rebound.    

There will be a rude awakening when the second quarter GDP data drops on Wall Streets this week. The Atlanta Federal Reserve, which tracks GDP weekly, is forecasting a 1.6% decline.  Negative growth in two consultive quarters meets the economic criteria for a recession. 

Experts assured Americans that inflation was only temporary.  The economy was just shaking off the cobwebs after the pandemic lockdown.  Recession was a distant chance. How did everyone from Treasury Secretary Janet Yellen to Fed Chairman Jerome Powell to Wall Street get it so wrong?   

The answer: They viewed the current economic conditions through the lens of past economic recoveries. 

There has never been a volcanic disruption as what occurred in 2020 with the exception of the Great Depression.  The U.S. sustained massive job losses, extensive business closures, broken supply chains and the shutdown of manufacturing. This was unlike any past economic jolt.  

For months, the recession-deniers have pointed to strong job growth as a sign the economy is rebounding from the first quarter GDP doldrums.  In the past, job growth indicated a growing economy.  But the job figures are not a reliable predictor in the wake of the pandemic that shutdown the economy. 

The American economy lost 22 million jobs from February to April, 2020.  By the end of that year, there were still more than 11 million unemployed Americans.  In 2021, the economy added 6.7 million jobs. This year the job gains stand at 2.74 million.  That's 9.4 million jobs in one-and-a-half years. 

For the most part, these gains reflect people returning to their former jobs after being laid off. Most are not new jobs created by innovation or business investment, which would indicate growth. Federal Reserve data shows the number of workers today are 500,000 below the level in February, 2020.

In the midst of reported job gains, 11 million job openings remain unfilled, despite six million unemployed workers.  During the economic boom of 2019, job openings averaged 7 million.  America's labor supply has been depleted because fewer workers are in the job market.

The labor pool shortage may be partially attributed to the 2.4 million workers who retired early in the first 18-months of the pandemic. Total retirements from March 2020 to July 2021 reached 4.2 million. Anecdotal evidence suggests some retirees are re-entering the workforce due to inflation. 

A phenomenon know as the "Great Resignation" is also roiling the job market.  The BLS reports 47 million workers voluntarily quit their jobs in 2021.  The trend is likely to continue.  A McKinsey study finds 40% of workers and the self-employed expect to leave their jobs in the next three to six months.

Many take time off to re-evaluate their career options and personal priorities. If they return to a job, it usually is for better pay, more opportunities for advancement, improved work-life balance and job flexibility.  This constant churn in-and-out of the workforce helps explain the 11 million job openings. 

Confronted with this evidence, experts cite the low unemployment of 3.6% as as sign a recession is unlikely. Bureau of Labor Statistics unemployment data does not count so-called discouraged workers or those "marginally" attached to the workforce who haven't sought a job in a month. 

Buried in the BLS statistical tables is a figure known as the U-6 data. The St. Louis Federal Reserve watches this number more closely than the headline figure generated by the government.  The metric measures real unemployment at 7.0%, by including discouraged and marginally attached workers.

Another measurement of economic activity is total retail sales, a key indicator of consumer spending.  Retail sales ticked up 1% in May, but adjusted for 1.3% price inflation for the month, sales actually declined.  

Consumer spending is the best barometer of the economy, because it accounts for about 70% of the GDP.   Looking back, the feverish spending of late 2021 and earlier this year was predictable. 

The average American had saved 33% of household income during 2020, building a financial cushion. Coupled with stimulus payments, consumers were flush with cash. After paying off $82 billion in credit card debt in 2020, credit availability shored up consumer confidence to keep shelling out money. 

However, as inflation heated up, soaring to 9.1% recently, spending began tapering off over time.  Stimulus payments dried up.  Enhanced unemployment benefits ended. Americans began dipping into savings to sustain spending.  Today households  are saving just 4.4% of income.   

The latest data from the Bureau of Economic Analysis shows credit card debt jumped 20% in April (the latest figure available) to a near record of $1.103 trillion.   The Fed reports revolving debt and credit card balances combined skyrocketed 19.6% from the previous year in April. 

In another harbinger of a slowdown, June saw a 20-year low for home mortgage applications as average home prices hit a record.  A spike in interest rates, orchestrated by the Fed, discouraged many first-time homebuyers from purchasing a home.  Homebuilders are are preparing for a downturn. 

Perhaps, the clearest clue of economic trouble is Americans are cutting back on driving.  Motorists purchased almost 10% less fuel in the week ended July 9 and an estimated 7.8% less in the week ended July 16.  Gas prices are falling because inflated prices are curbing demand.  

With the spending binge ending, consumers are in a gloomy mood. Consumer Sentiment data tracked monthly by the University of Michigan reveals confidence has fallen to 51.1% from 81.2% just a year ago. When people feel less confident, it influences their spending and saving habits. 

Businesses are grappling with uncertainty too.  Microsoft, Tesla, Netflix, Google and J.P. Morgan head a list of business firms either laying off workers or reducing hiring. In May, the latest figure available, 1.4 million workers were laid off and discharged.  Jobless claims in June were the highest since January. 

Once the government data confirms what consumers already know, don't expect an about face from the experts or an admission of failure to forecast the recession.  The usual suspects, Wall Street and the administration, will begin preaching a recovery is just a quarter away.

No doubt, at some point, the economy will begin to right itself.  But the lingering question is: "How long will that take?" Be forewarned that no one really knows that answer, however, you can bet there will be plenty of forecasters touting a turnaround soon.   

Unfriendly Skies For Airline Travelers

Airlines are flying into headwinds, stirring thunderous passenger turbulence. Thousands of flights are cancelled, leaving travelers stranded for days at a time.  Flight schedules are routinely scrambled. Airlines are scrapping routes. Flight delays are a daily occurrence. Turmoil shakes the skies. 

The downdraft in airline performance is documented by Department of Transportation data. Year-to-date, 430,444 U.S. flights have been delayed, a 250% increase from 2021.  A staggering 76,776 flights have been scrubbed, a 253% rise.  On-time performance is its lowest level since 2014.

Snarled flights are a nightmare for Americans ready to resume vacations after two years of pandemic bondage.  Hikes in travel bookings should be good news for airlines which weathered two years of crippling losses totaling nearly $200 billion.  Instead  it has created wind shears for airlines.

In the midst of this bumpy ride, passengers are paying more for worst service.   In the last year, the Consumer Price Index (CPI) for airline tickets rose 25%, the largest jump since the Federal Reserve of St. Louis began tracking in 1989.  High prices and uneven service are unnerving passengers. 

The main issue for U.S. and global airlines is a shortage of pilots.  U.S. airlines are scrambling to hire 13,000 pilots this year, more than double the previous annual record.  For perspective, the industry hires about 5,000 to 7,000 annually, according to United Airlines CEO Scott Kirby. 

The pandemic exacerbated the shortage by scuttling new pilot training and hiring, while triggering a wave of early retirements. Despite a $100 billion government bailout, which included $54 billion for benefits and wages, the big commercial carriers offered pilots early retirements to cut labor costs.  

After a wave of offers, American Airlines lost 5,400 pilots; Delta 2,000; and United 450, plus 1,750 were furloughed. Airlines are now poaching each others pilots, with higher salaries and benefits. To stem losses, pay for senior pilots at United Airlines now top $450,000 annually.

Easing the shortage will be practically mission impossible.  About 5,5773 pilots a year are hitting the mandatory retirement age of 65 each year.  The number reflects the aging of the pilot labor pool. Seniority pay and benefits encourage pilots to work until retirement. 

Normally, the big carriers fill jobs by recruiting pilots from the cockpits of regional airlines. However, the number of regional pilots has dwindled from its peak of 19,000 to about 14,000, draining the talent pool of pilots for the large carriers.    

To retain pilots, American recently extended 50% pay premiums for regional pilots through August, 2024.  The military, a source for trained pilots, is struggling to find aviators. The Air Force reported a shortage of 1,650 aviators at the end of 2021. 

The Federal Aviation Administration, which certifies new pilots, handed out an average of 6,500 certificates annually in the past decade.  When the virus disrupted training programs, there were fewer certificates issued in 2020 and 2021.  Regional airlines are career entry points for newly minted pilots.  

The prognosis for solving the pilot shortage is cloudy. There is industry momentum for raising the retirement age to 67, a bandaid solution. Regional carriers are petitioning the Federal Aviation Administration to reduce the standards for flight hours by 50% for new pilots.

Both proposals raise safety issues which regulators have so far frowned upon. It means the pilot shortage will continue at least through 2029, according to industry executives. The problem won't be helped by the fact the U.S. carriers will lose about half of its pilots to retirement in the next 15 years.

Although it's hardly comforting, the U.S. isn't the only nation dealing with a dearth of pilots. Europe has not only faced pilot issues, but labor strikes and understaffing at airports. London's busy Heathrow Airport asked airlines to curtail schedules as mountains of baggage could not be handled.

Unless airlines can reach smoother air,  travelers may soon decide it is not worth the hassle to fly.  That would be a downburst to an industry recovering after two years of financial disaster.  The carriers must act with urgency and innovation to recruit and train the next generation of aviators.   

America Being Undermined By Marxist Ideology

America is under siege with rampant lawlessness.  Murders in Atlanta have spiked 43%.  Rapes have soared 236.6%. Los Angeles gun violence has jumped 40% since 2020.  Downtown shootings in Chicago have increased 64%.  New York City's crime index is up 27.8%.  

Lost in the data, is the cruel fact that 181 children aged one month to 11 years old have been murdered. Two year olds are gunned down while their mothers watch in horror.  A total of 681 teenagers have died in gun violence this year.  A least 36 policemen have been killed trying to protect citizens.

George Soros-backed district attorneys responsible for prosecuting violent offenders are instead releasing the thugs into society. Criminals with long rap sheets are set free, only to be arrested again. What kind of a society allows this to happen?  Sounds like Venezuela or Tijuana, Mexico.

Much of the blame for the upsurge belongs at the feet of politicians in big cities who refuse to back police.  During the riots of 2020, mayors stood by as buildings were torched, stores were looted, police were injured and bystanders beaten.  The current vice president offered to pay bail for the rioters.  

In the bloody aftermath, defunding the police became a battlecry for politicians who wanted to cozy up to Black Lives Matter, Antifa and other violent groups.  Police budgets were slashed.  Politicians issued new restrictions on policing,  leaving citizens and businesses at the mercy of criminals.

This lawlessness extends to the Southern Border with Mexico. An unprecedented flood of illegal immigrants are brazenly invading the U.S.  In fiscal year 2022, there has been a 78% increase in the number of crossings compared to the same period a year ago.

The crisis will only grow worse as Title 42 is expected to expire soon. The Trump Administration invoked the order to restrict migrants entry into the U.S., including those seeking asylum.  Whenever it is lifted, there will be a Tsunami of crossings.   

Estimates are the end of Title 42 will boost the number of illegal alien crossings to more than 3 million by the end of fiscal year 2022.  That's more than the population of Chicago (2.6 million). Even that projection likely understates the massive tide of illegals because it does not include "getaways."

The Customs and Border Protection agency estimates 220,000 illegal immigrants evaded Border Patrol capture in just a a four-month period from October 2021 to February 2022.  These so-called "getaways" were spotted on cameras and sensors at the border but the agency lacked manpower to capture them.   

Estimates of the total "getaways" range from 400,000 to 800,000, who have stole into America undetected since January, 2021, according to former Border Patrol brass.  Although no one can say for sure, Border Patrol agents suspect many are drug and human smugglers now operating in the U.S.  

This incursion is the handiwork of powerful Mexican drug cartels. While the Biden-controlled media focuses on the bedraggled masses, the news outlets ignore the fact that every single person who enters the U.S. illegally has paid a member of the drug cartel.

Human smuggling is the dirty underbelly the media refuses to expose. Smuggling rings in Central America recruit poor citizens and then exploit them by demanding money for a ticket to the U.S.  The immigrants then pay guards at the Mexican border before they are handed off to cartel traffickers

Drugs, including Chinese-made fentanyl, are being transported by immigrants who do the cartel's dirty work as payment for entry. U.S. fentanyl deaths are setting records.  Law enforcement officials know an undetermined number of drug mules link up with Central American drug gangs in the U.S. 

The smugglers operate with impunity in broad daylight.  Why is America impotent to stop this criminal activity?  Other countries around the globe have found ways to deal with the problem.  But the most powerful country on Earth is powerless to stop these cartel criminals?  That makes no sense.  

Beyond lawlessness, the Biden Administration has overseen cataclysmic economic disruption. Inflation is running at a 40-year high.  Gasoline prices are the highest ever. Fuel costs have rippled through the economy,  driving up prices of food and other goods. Empty grocery shelves are a new reality. 

Biden upset the economic equilibrium in 2021 when he embarked on a new green deal policy offensive. His decisions shackled oil production in the U.S., driving up gas prices 66% before the Ukrainian war. American consumers are bearing the brunt of this disastrous government policy.

A fair examination of today's biggest issues leads to the inevitable conclusion that these disasters, from lawlessness, to overheated inflation, are all self-inflicted by the Biden Administration.  It could still reverse course but there appears to be no sense of turning back for this deeply unpopular president.

Biden campaigned on the promise to fundamentally change America. Few voters realized that would  involve denigrating American values, reordering the economy, shrugging at lawlessness and importing a permanent underclass dependent on Washington for food, housing, healthcare and free education.  

His ideological approach has all the earmarks of Marxism, Communist or Socialism.  Today the media refers to those who support Biden policies as progressives.  That term was coined as a distraction.  What Americans are witnessing is the implementation of a new dogma linked to Marxism.  

To buttress that view, look no further than the government sanctioned indoctrination of American children in the nation's schools. Classrooms are being turned into re-education camps, which preach anti-American themes.  Kids are taught America is a racist, patriarchical country.

Critical race theory and gender identity are high on the list of today's educator tenets Children as young as five are being treated to drag queen shows as part of their learning.  Kids are being sexualized in an effort to replace parental upbringing with a government orthodoxy about families and gender.  

Communists are masters of indoctrination of children to make the state the most important parental figure for kids.  The breakup of families is a goal of Marxism.  Why are America's schools being overtaken by powerful teachers unions with a decidedly pro-socialist viewpoint?  

Next to indoctrination, a key strategy of Communists is a takeover of the distribution of information and news.  The state controls what citizens watch, listen and read.  America is getting closer as censors at social media platforms filter the information to fit an agenda supported by the administration. 

The big media cabal no longer ferrets out truth but falls in lock step with the Biden Administration. Journalism has long since died. Activist reporting is the new rule in newsrooms.  Reporters who don't adhere to doctrine are fired.  The truth may set us free, but the media will imprison our minds. 

The Biden Administration has its own plan to stamp out truth.  A group is being organized behind closed doors in Washington to implement censorship.  The Orwellian squad is called The Disinformation Governance Board.  Why does a democracy need a censorship board?

Biden apologists argue the board, operating under the aegis of the Department of Homeland Security, will target the spread of disinformation by agents of Russia, China and Iran.  Why does the country need a draconian Disinformation Governance Board to do that?  Why can't the FBI arrest these "agents"?  

Once the media outed the board, the Team Biden fired the director and announced a "pause."  Don't be deceived. There is no pause. There is an ongoing effort to spruce up the charter for the board to appear more supportive of free speech.  America does not need a Ministry of Truth. 

Americans routinely ask: Why is all this happening? They are stunned watching their country riddled with chaos and a loss of American values. What may seem like a coincidental confluence of crises is a deliberate breakdown of law and order and a reordering of the economy and education. 

Before democracies loose their freedoms, most undergo frenetic chaos.  That creates a power vacuum for tyrants to grab power. They control speech, control law enforcement, control the justice system, control drug supplies, propagandize the citizenry and control children's minds.   

America is reaching an inflection point.  If Americans do not get involved, then the country will simply drift into Marxism.  There is still time but the clock is ticking and each day brings more destructiveness. Soon the country could devolve into a period of unchartered anarchy.  

We the people are the last defense for the preservation of freedom and American values. Courageous citizens are suing their government, showing up a school board meetings, using their voices to call out Washington's overreach and becoming more politically active. We all must do our part.