Weekly Market Update by Retirement Lifestyle Advocates

Three Big Problems Illustrated in Charts

         One of the biggest headwinds facing the US economy is debt, both on the balance sheet of the federal government but also in the private sector.  These charts are from Michael Snyder’s recent piece (Source:  https://theeconomiccollapseblog.com/here-are-7-astonishing-economic-charts-that-will-absolutely-blow-your-mind/).

         This chart illustrates the rate of change in US Government spending.  Notice that from calendar year 2000 to the present that annual outlays by the federal government have increased by about 350% from about $2 trillion to about $7 trillion.

         That level of increase in government spending would have been considered impossible by many pundits at the turn of the century and year here we are.

         This chart shows the rate of increase in US Government debt.  Notice that government debt, not surprisingly, has increased at a faster pace than spending.

         In the calendar year 2000, government debt was about $10 trillion and now stands at more than $36 trillion.

         Unless we get spending under control at the federal level, more currency creation is the likely solution that will be offered by policymakers, which will lead to a highly inflationary recession.  Given the public pushback being seen from slightly more than $100 billion in cuts when $2 trillion is needed, it seems unlikely that spending will get meaningfully reduced, but we shall see.

         Private sector debt WILL be a problem regardless of government spending.  This chart shows that private sector debt has increased by about 300% since the calendar year 2000.  This is extremely bad news for an economy dependent on consumer spending in an environment of rising interest rates.

Buy Now, Pay Later…..For Lunch?

         In still another sign as to how the inflationary environment of the last four years has impacted lower-income and low-middle-income working Americans, DoorDash and Klarna are now teaming up to offer an ‘eat now, pay later’ plan.  (Source:  https://www.msn.com/en-us/money/markets/klarna-and-doordash-is-buy-now-pay-later-on-food-a-recession-indicator/ar-AA1BoPr7)

         Klarna is a service that offers buy now pay later services with a number of retailers and is now expanding financing options to Door Dash, an online food ordering and food delivery service.  Consumers ordering food from DoorDash will now be able to finance their meals and groceries over four payments.

         This development is just one more of many that tell us the economy is not doing well.  Seems the recession may already be here.

General Mills Sees “Snack Slowdown”

         Shares of General Mills fell as the company lowered guidance for the next year.  (Source:  https://www.zerohedge.com/markets/snack-slowdown-hits-general-mills)

         Net sales for the most recent year were down 5% from the prior year.  North American sales were hit hard, down 7.2% over the last year.

         General Mills Chairman and CEO Jeff Harmening had this to say in a written statement, “Our third-quarter organic net sales finished below our expectations, driven largely by greater-than-expected retailer inventory headwinds and a slowdown in snacking categories.  Stepping back, it’s been a challenging year.”

Another Retail Bankruptcy

         The retail chain “Forever 21” filed for bankruptcy last week; that was the second filing in six years.  (Source:  https://www.zerohedge.com/markets/retailer-forever-21-not-forever-files-bankruptcy-second-time-plans-liquidation-sale-0)

         In a statement, the Chief Financial Officer of Forever 21 had this to say, “While we have evaluated all options to best position the Company for the future, we have been unable to find a sustainable path forward, given competition from foreign fast fashion companies, which have been able to take advantage of the de minimis exemption to undercut our brand on pricing and margin, as well as rising costs, economic challenges impacting our core customers, and evolving consumer trends.”

         Economic challenges impacting our core consumers obviously means inflation.

         This week’s RLA radio program features an interview that I did with the publisher of “The Bitcoin Capitalist”, Mr. Mark Jeftovic.

         Mark and I discuss the sudden change of policy at the federal level now embracing cryptocurrencies and what it will mean for consumers moving ahead.

         The interview is posted and available by clicking on the "Podcast" tab at the top of this page.

“Communism is like prohibition.  It’s a good idea, but it won’t work.”

                                                      -Will Rogers