There shall be pain in 2016

There’s plenty of pain coming down the pike for corporate America. I can see a dirt cloud rising on the horizon of companies charging towards bankruptcy courts.

You can’t have the type of economy we’ve had for the last 6 months and not expect it. Crude oil prices have been nearly cut half, with plenty of drillers and such using oil in the ground as collateral to fund operations, with the price cut loans will be called in as collateral dries up. Retailers cutting jobs, closing stores and slashing sales estimates.

The US outlook, per the Fed, sees a growing economy with perhaps 4 rate hikes this year taking the Fed funds rate up to 1%. The bond market does not see this at all, and they usually win these battles. I believe we will see zero rates before we see 1% rate this year.

The raw data from the Labor Dept. on December jobs showed 11k new jobs created. The remainder of the 292K were statistical noise. The number of jobs created in 2015 was 2.4 million and wages  grew less than 2% for the third year in a row as food service, health care workers and profession services independent contractors were the top job categories for the year.

Most of these jobs carry no medical or any other type of benefits since the positions are either part-time or an outsourced job. In December the number of people holding two or more jobs climbed to the highest level since 2008.

None of those statistics lead me to believe there will be much in the way of discretionary spending by consumers this year to reverse the trend for increased spending. Consumer spending makes up  70% of GDP.

The Atlanta Fed seems to believe the same thing as it says growth in the last quarter of 2015 will be 0.8% GDP. We will get the first estimate of that number at the end of January.


I want to thank all the Gray’s Economy readers for one of the biggest days ever for visits Monday on the topic of the Great Fleecing. wp.me/ppklu-lG

The greatest transfer of wealth where trillions were placed with the banks and the debt was placed with the American people.

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