the secret became clear

February 10-16, 2024

Big news. The scale of deflation in the industrial sector of the American economy increased from -3.1% to -3.7%:

Pic. 1

Taking into account the data from previous reviews, we can confidently say that the industrial sector in the United States is doing very poorly and is in a steady decline. Especially taking into account the data on general prices (inflation is rising), see the next section. And this is extremely unpleasant information for the monetary authorities.

Macroeconomics. Dutch GDP -0.5% per year, 3rd minus in a row:

Netherlands GDP Annual Growth Rate
Pic. 2

Japan’s GDP -0.1% in the quarter after -0.8% in the previous quarter. Formally, there is a recession:

Japan GDP Growth Rate
Pic. 3

Recession in Britain too (GDP -0.3% in the quarter after -0.1% earlier):

United Kingdom GDP Growth Rate
Pic. 4

Moreover, the annual dynamics are already in the negative (-0.2%):

United Kingdom GDP Annual Growth Rate
Pic. 5

Orders for machines and equipment in Japan -14.1% per year, 13th minus in a row:

Japan Machine Tool Orders YoY
Pic. 6

The assessment of the current state of the German economy (ZEW survey) is the worst in 15 years, not counting Covid:

Germany ZEW Current Conditions
Pic. 7

US small businesses are pessimistic at the maximum in 10 months, the desire to hire staff is minimal since the peaks of Covid (since May 2020):

United States Nfib Business Optimism Index
Pic. 8

The number of new buildings in the USA is -14.8% per month, minus the Covid failure, the worst dynamics in 9 years:

United States Housing Starts MoM
Pic. 9

Construction orders in Britain -30.5% per year, not counting Covid, this is the bottom for 5+ years; and before that, such numbers were only in 2009:

United Kingdom Construction New Orders
Pic. 10

Argentina’s CPI (consumer inflation index) is still +20.6% per month after a record +25.5% a month earlier:

Argentina Inflation Rate MoM
Pic. 11

And +254.2% per year – 33-year top:

Argentina Inflation Rate
Pic. 12

Nigeria CPI +29.9% per annum, 28-year peak:

Nigeria Inflation Rate
Pic. 13

“Net” (excluding highly volatile components of fuel and food) CPI in the USA (+0.4% per month) is growing at the maximum in 9 months:

United States Core Inflation Rate MoM
Pic. 14

“Net” PPI (industrial inflation index) in Britain -0.4% per year, minimum since 2009:

United Kingdom Core Producer Prices YoY
Pic. 15

PPI excluding food, fuel and trade services in the US +0.6% per month, a 2-year high; clinic services +2.2%:

United States Producer Prices Final Demand Less Foods, Energy, and Trade Services MoM
Pic. 16

Prices for producers and importers in Switzerland -2.3% per year, excluding Covid, this is a 7-year bottom:

Switzerland Producer and Import Prices YoY
Pic. 17

US retail sales -0.8% m/m, 10-month bottom:

U.S. Retail Sales
Pic. 18

Over the same 10 months, sales excluding cars showed the worst dynamics (-0.6% per month):

United States Retail Sales Ex Autos MoM
Pic. 19

Jobless claims in Britain rise for 5 months in a row:

United Kingdom Claimant Count Change
Pic. 20

Australia’s unemployment rate at 2-year high:

Australia Unemployment Rate
Pic. 21

Main conclusions. A rather interesting picture is emerging: industrial prices in the US are falling, while the PPI index is growing. How can this be? But the fact is that the full volume of industrial goods is mainly the beginning of technological chains. Prices there are falling because no one needs semi-finished products. But in final (and, very likely, imported) goods they are growing. In other words, production in the United States is falling, and imports are growing against the backdrop of stimulating demand.

At the same time, retail sales are falling. Well, everything is clear here, the poor have less and less money and they are reducing purchases of increasingly expensive goods (the fall in demand in the fall is high, higher than inflation).

The growth in consumer inflation over the month is very serious, the US monetary authorities must start doing something. It is already clear that it is impossible to soften monetary policy, that is, the rate will remain high, and the money supply needs to be reduced. The trouble is that industry is already falling, as is the level of sales, that is, the standard of living of the population. In a pre-election year, this is unacceptable for the ruling party.

It will be another matter if there is a consensus in choosing Trump (or Nicky Haley, but this is gradually becoming a fantasy). But then the problem will be that it will be necessary to negotiate with Trump. But the worse the economic situation, the less inclined he will be to agree to the proposed conditions. And cleaning up the administrative apparatus will become easier and easier.

In general, it can be noted that the development of the structural crisis has led to the fact that in almost all major economies of the world that are in liberal conditions (for example, not in Russia or Iran) the economic decline has become obvious. We wrote that the recession in the US economy most likely began in the fall of 2021, but then one could argue with us. Today there are no special grounds for such disputes.

Well, we remind you that an economic downturn is not at all a reason for your personal business to start falling. Yes, working in falling markets is very different from working in rising markets, but the growth rate in falling markets is much higher. So we wish our readers a successful weekend so that they can start the work week with new thoughts and ideas!


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