As Singaporean Sean Foo points out below, demand is collapsing in the world's major economies, China, Japan, and the EU.
The US will be next, but the Blob will increase war spending to prop up incomes, while the Fed will maintain high interest rates well into 2024 to combat inflation. Inflation will remain elevated but global deflationary forces will prevent hyperinflation in the near term.
Remember, we have been here before regarding federal interest expense as a percentage of GDP. We were last at similar levels in 1980, as the Fed was fighting the last wave of inflation. And we entered a double-dip recession as the Fed powered on through higher rates. The brown line is the 3-month T-bill rate. Short-term rates began to fall in the 1981-1982 recession, even as interest expense as a percentage of GDP soared. Rates may descend into the fall of 2024.
The US will see defense expenditures rise in 2024 as the government uses the fiscal option to power its way through global deflation.
As in the 1980s, the US economy may experience a recessionary “hiccup.” This will be driven by the collapse of confidence that always occurs when the unemployment rate rises above its adaptation level. Read “Whither ‘animal spirits,’” to understand this effect.
A recession is not just two consecutive quarters of negative real economic growth. It involves a collapse of confidence that represents an episode of self-organized criticality that feeds upon itself until it stabilizes.
As the Bureau of Labor Statistics becomes unable to lie to the American people about job losses, unemployment will climb above 4.0% toward a crossing with the adaptation level.
Or perhaps they will continue to lie brazenly through November, preventing the collapse of confidence. This will be interesting.
In any event, the Neocon/Cabal plan for World War III will proceed after the downturn, as the US capitalizes on its geographic and demographic advantages to attempt to destroy the economies of its demographically disadvantaged primary competitors, Russia and China.
While Russia is still healthy, as Tucker Carlson saw for himself, China is in a major deflationary depression that has led the people to question the wisdom of the Chinese Communist Party. The Neocons view this as an opportunity for a color revolution. However, from all appearances, the CCP appears willing to sacrifice its population to stay in power. We are seeing the same dynamic in the West as the population is being poisoned as the Neocon Cabal positions itself to lord over a reduced population in CCP-style techno-tyranny.
China cannot survive without trade, as it must import most of its food and fuel. I expect the Cabal to continue to interrupt trade with China on the seas, through additional conflict in the Middle East, or “terrorist” attacks on shipments to China in the Mallorca Strait or elsewhere. Neocon spokesmodel Peter Zeihan likes to say that China would not survive six months of an oil cutoff.
Russia is a different story. Vladimir Putin has made it clear that Russia will defend its interests. The Neocon plan seems to be to harass Russia militarily around its borders for years to come to weaken Russia until its government fails and NATO can march in and disarm Russia, and seize its assets. This has been the Neocon dream for decades. It is a fantasy. The result will be a world war that will destroy both Europe and Russia.
The problem is that the Cabal may be fine with that result, as one of their goals is to reduce the world’s human population by several billion.
Here is the Sean Foo video, highly recommended.
Have a blessed day! Pray for peace!