Americans aren’t spending much because they don’t have much money. From Peter Schiff at schiffgold.com:
Retail sales unexpectedly fell again in February. It was the third straight monthly drop and the first time the US economy has seen three straight months of declining retail sales since 2012.
Sales fell 0.1% in February. Analysts had expected an uptick of 0.3%. According to CNBC, households cut back on purchases of motor vehicles and other big-ticket items, pointing to a slowdown in economic growth in the first quarter.
So, why is this happening? Peter Schiff offered a simple reason in his latest podcast.
Americans are broke.
There was another sign of trouble. Inventory numbers also indicate people aren’t buying what’s on the shelves. According to the Commerce Department, business inventories rose 0.6% on the heels of a 6% rise in December.
Of course, on Friday, we got the “too good to be true” Goldilocks jobs report. Peter said this doesn’t make sense.
So why didn’t any of those million people take their paychecks and spend them at a retailer? I mean, Trump is talking about all the great jobs, and all the raises that people have, and all the tax cuts. Why are retail sales down for three months in a row?”
Again, the most obvious and simple explanation is Americans are broke.
Retail sales were pretty hot during the last months of 2017, before falling off in December. But we also saw Americans running up record high levels of debt at the same time.
Last month, the New York Fed released the latest data on US household debt, revealing it has grown to a record $13 trillion. So yes, Americans have been spending, but they’ve been putting a lot of it on plastic. Credit card balances grew by $24 billion in the last quarter of 2017 alone. Could it be that Americans have maxed out the plastic?
At some point, a house of credit cards will collapse.
Peter also noted that the Atlanta Fed has once again lowered its GDP forecast for the first quarter of this year. Remember earlier in the year when they were talking about 5.4% growth? Well, now they’ve lowered that bar all the way down to 1.9%.
To continue reading: Peter Schiff: Americans Are Broke