Run for your lives?

May 6-12 мая 2023

Big news. Sharp drop in prices for the full range of manufactured goods in the United States.

Pic. 1

The April value of the index was -3.0%, in fact that March one was only -1.09%. And in June 2022 there was an increase for 23%. It is celar, that the decline is is due to the fact that in some industries there is a serious decline, while in others there is an increase (otherwise, where would the growth in consumer inflation come from, see the next section of the Review).

This situation can have only one explanation: the decline in prices was either in intermediate industries, due to increased competition and falling demand. Or in the final ones, but there, too, there was a decrease in demand due to increased competition with imports, for which prices just increased. A fairly typical case: high-quality American-made goods began to sell worse, and cheap Chinese imports increased sales. And in this regard, the growth of demand, sellers have increased prices.

In any case, this is a clear indicator of the strengthening of the crisis processes in the American economy (which we will see in the next section of the Review). Note that similar processes are taking place in the Chinese economy. In general, everything is proceeding in accordance with our forecasts, it is even possible that the pace of crisis processes is increasing. But here, most likely, politics makes its negative contribution.

Macroeconomics. UK GDP in March -0.3% per month:

United Kingdom Monthly GDP MoM
Pic. 2

Industrial production in Germany -3.4% per month – the worst dynamics in a year:

Germany Industrial Production MoM
Pic. 3

In Britain -2.0% per year – the 21st negative in a row:

United Kingdom Industrial Production
Pic. 4

If we take into account the systematically underestimated inflation (by 4-5 percent, at least), then we get a very gloomy picture of a structural crisis in all its glory. Theoretically, the decline should be about 1% per month or 10% per year, but taking into account the colossal budget subsidies, it turns out to be less, 7-8% decline.

Italian industrial output -0.6% m/m – 3rd consecutive minus:

Italy Industrial Production MoM
Pic. 5

And -3.2% per year – the 6th minus in the last 7 months and the 8th minus in 10 months:

Italy Industrial Production
Pic. 6

U.S. small business optimism is at its lowest in more than 10 years:

United States Nfib Business Optimism Index
Pic. 7

Imports in China are actively falling, hinting at weakness in demand:

China Imports YoY
Pic. 8

Building permits in Australia -17.3% per year – the 18th consecutive minus:

Australia Building Permits YoY
Pic. 10

Their level is the lowest in 11 years:

Building Approvals, Australia
Pic. 11

The mortgage rate in Britain (7.41%) is approaching the 25-year peak of 2007 (7.74%):

United Kingdom BBA Mortgage Rate
Pic. 12

CPI (Consumer Inflation Index) China -0.1% per month – 3rd negative in a row:

China Inflation Rate MoM
Pic. 13

And only +0.1% per year – a 2-year low, minus covid fluctuations, this is the bottom since 2009:

China Inflation Rate
Pic. 14

PPI (industrial inflation index) China -3.6% per year – the 7th minus in a row and a 3-year low, previously this was in 2015:

China Producer Prices Change
Pic. 15

Deflationary trends in China against the backdrop of constant economic stimulus are a sure sign of very serious problems!

New Zealand Food Inflation +12.5% pa – 36-year high:

New Zealand Food Inflation
Pic. 16

Index of economic optimism in the US (IBD / TIPP review) at the semi-annual bottom:

United States IBD/TIPP Economic Optimism Index
Pic. 17

American sentiment (review by the University of Michigan) is the worst in six months:

United States Michigan Consumer SentimentApril
Pic. 18

Including their expectations for six months ahead, the most pessimistic in 10 months:

United States Michigan Consumer Expectations
Pic. 19

And 5-year inflation expectations are at their peak in 15 years (+3.2% per year:

United States Michigan 5-Year Inflation Expectations
Pic. 20

No wonder: the April CPI index in the USA (4.9%) is only symbolically less than the March indicator (5.0%), and the real figures, in which citizens live, are much higher. We do not think that consumer inflation in the US is less than 10%, and this, of course, is an indicator of a very serious crisis.

U.S. Initial Jobless Claims Highest in 19 Months:

United States Initial Jobless Claims
Pic. 21

The same picture is in the 4-week moving average of this indicator:

United States Jobless Claims 4-week Average
Pic. 22

Japanese household spending -0.8% per month – 4th negative in the last 5 months:

Japan Household Spending MoM
Pic. 23

And -1.9% per year – also the 4th minus for 5 months and the weakest dynamics for the year:

Japan Household Spending YoY
Pic. 24

Swedes spending -1.1% per month – 2-year bottom, 3rd minus in 4 months and 8th in 10 months:

Sweden Household Spending MoM
Pic. 25

And -4.0% per year – not counting the covid failure, it was worse only once, in December 2008 (-4.3%):

Sweden Household Consumption YoY
Pic. 26

Let me remind you that 2008 is the year of the beginning of the IV crisis of falling capital efficiency (see M. Khazin “Memories of the Future. Ideas of the Modern Economy”, M., 2019)

The Bank of England raised the rate by 0.25% to 4.50%: Judging by the fact that the logic of the Fed is repeated, there are no people in the leadership of the UK monetary authorities who would propose any constructive plan either.

Main conclusions. The overall picture looks depressing – and the question arises, maybe the acceleration of crisis processes is really taking place? Well, for example, due to the fact that colossal resources are withdrawn from the producing economy and invested in defense production? It is difficult to answer this question, since we also see statistical data with large distortions, and they change regularly, and it is difficult to compare them. But in any case, we will closely monitor the overall picture.

Well, some additional data showing the problems of the United States.

The first is the outflow of deposits from commercial banks:

Pic. 27

Moreover, which is typical, from all banks, and not an overflow of deposits from small banks to large ones:

Pic. 28

The reasons are also more or less clear, just look at the graphs of credit risks for a rather funny set of countries:

Pic. 29

It becomes directly ashamed of the situation in the United States and the policy of their monetary authorities. And here is a schedule of current budget interest payments against the backdrop of military and investment spending:

Pic. 30

Well, right Russia in the summer of 1998!

And it immediately becomes clear that it will not resolve easily and quickly! However, our readers are both armed with information and understand the theory of the process, so they can safely relax on weekends and meet the working week on the eve of summer holidays.


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