Weekly Market Update by Retirement Lifestyle Advocates
Is a Recession Imminent?
There are many economic data points that point to a recession this year. I am of the opinion that we are already in a technical recession. Here is a bit of what has helped me reach that conclusion.
Commercial Real Estate Continues to Collapse
Between September 2023 and September 2024, commercial real estate foreclosures rose 48% (Source: https://listverse.com/2025/03/04/ten-signs-2025-will-be-the-year-of-the-u-s-recession/). Foreclosures are happening across all geographic regions, with the State of New York seeing a 48% rise in foreclosures over that time frame and the State of Florida seeing a 49% rise.
The ripple effect of these foreclosures is a decline in property tax revenue meaning states and municipalities are forced to cut services or raise tax revenue from some other source. A couple of examples are the cities of Charleston and Joseph, Utah, where homeowners have experienced an increase in the property taxes on their homes of up to 130%. (Source: https://libertas.institute/op-eds/elderly-people-shouldnt-become-homeless-because-of-property-taxes/)
Consumer Debt Is At Record Highs
Capital One recently deemed 6% of the total debt outstanding to consumers “irrecoverable.” That’s the highest percentage since 2010 when many consumers were still trying to find their financial footing after the Great Financial Crisis.
As you might imagine, this irrecoverable debt is largely concentrated among the lower and lower-middle classes, but more of the middle class is struggling, too. More of the middle class made minimum credit card payments last year; that number was the highest it had been since 2012. (Source: https://www.ft.com/content/c755a34d-eb97-40d1-b780-ae2e2f0e7ad9)
Rising Levels of Negative Auto Equity
Negative equity in automobiles simply means that the auto owner owes more on the car than the car is worth.
39% of drivers with financed vehicles have negative equity in their cars, up from 31% in the third quarter of 2024. That’s a massive increase. (Source: https://caredge.com/guides/caredge-black-book-negative-equity-report-q4-2024)
Owners of electric vehicles are the hardest hit with negative equity. 54% of electric vehicle owners are underwater in their vehicle; that’s up from 46% in the third quarter of 2024.
Owners of Tesla’s, Kia’s and Jeep are in the worst shape financially.
Not surprisingly, negative equity is most prevalent when the loan terms are longer. 84-month loans have a median negative equity of a negative $8,485, while 36-month loans have a median positive equity of $7,783.
The Housing Market Is Slowing
After a buying frenzy in real estate that began in late 2020, the housing market is now slowing dramatically.
The rapid rise in housing prices was fueled by low interest rates and mass corporate buying from companies like Blackrock and Zillow. This trend is now reversing, as I discussed last week.
As of the fourth quarter of 2024, 55% of homes listed for sale had been on the market for more than 60 days. (Source: https://www.cnbc.com/2024/12/31/housing-market-supply-stale.html)
Active listings in November 2024 were 12.1% higher than they had been in November 2023. Homes that did go under contract for sale took 43 days on average, the longest period since 2019.
Bankruptcy Rates Are Up
At this point in 2025, the number of weekly bankruptcy filings is averaging 9,175. At this time one year ago, the number of weekly filings averaged 7,338. (Source: https://www.uscourts.gov/data-news/judiciary-news/2024/01/26/bankruptcy-filings-rise-168-percent)
Bottom line: bankruptcies are higher.
But bankruptcies are also becoming more severe with the number of Chapter 7 bankruptcies increasing compared to Chapter 11 and Chapter 13 filings. This means that more business entities are forgoing attempts to restructure their payment plans in favor of liquidating their assets to pay off debts. This troubling trend has been building for a couple of years.
The Real Unemployment Rate
While the official unemployment rate is a rather modest 4.2%, that number doesn’t reflect the reality that Americans have been facing. If you filter the employment numbers to include unemployed people who can’t find anything but part-time work or who make a poverty wage (approximately $25,000 annually), the percentage is actually 23.7% (Source: https://www.politico.com/news/magazine/2025/02/11/democrats-tricked-strong-economy-00203464)
That means one in four Americans today are functionally unemployed.
Mass Layoffs
Private sector jobs are being eliminated.
Meta (formerly Facebook) is laying off 3,600 employees. Overall, the tech sector has laid off 95,000 workers in the last year.
Manufacturing has also been hit. John Deere laid off 2,000 employees in Iowa in the last year alone. (Source: https://www.desmoinesregister.com/story/money/agriculture/2025/02/21/john-deere-layoffs-ankeny/79437187007/)
Nissan has laid off 9,000 employees over the past year. Amazon has dropped 12,000 employees, and Sam’s Club has laid off 11,000 workers.
Boeing has laid off 17,000 workers and Citi eliminated 20,000 jobs.
This week’s RLA radio program features an interview that I did with cycles analyst Dr. Charles Nenner. Dr. Nenner’s research is utilized by many institutional investors and hedge funds. I get Dr. Nenner’s take on each of the financial markets, including stocks and gold.
The interview is posted and available now by clicking on the "Podcast" tab at the top of this page.
“Creativity is allowing yourself to make mistakes. Art is knowing which ones to keep.”
-Scott Adams
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