Americans Just Blew $850 Billion on Christmas But Here’s Why That May Not Actually be a Good Sign

Wednesday, December 26, 2018
By Paul Martin

by Daisy Luther
TheOrganicPrepper.com
December 26, 2018

(Dec. 26, 2018) The preliminary numbers are in and it appears that Americans exceeded last year’s shopping frenzy with an even more extravagant one this year. Mastercard says that spending was up 5.1% over last Christmas, which brings us to an astronomical $850 billion spent between November 1st and Christmas Eve.

Of these shopping sprees, online sales increased by nearly 20%, which means that we could soon see another wave of brick and mortar closures, just like last year. Amazon pretty much owned Christmas, with a “record-breaking” holiday season, reporting one billion items delivered for free.

Three times as many purchases this year were handled by Alexa, too, which means buyers didn’t even have to type in a credit card number. “Alexa, find me a bankruptcy attorney.”

So, even though Americans blew through $850 billion dollars at Christmas, this may not actually mean that the economy is on the upswing. All the problems there before the holiday didn’t just go away.

All this spending is good news for the economy, right?

Wrong.

Before you get too excited thinking that all the negative predictions are just hogwash, Zero Hedge puts the spending binge into alarming but unsurprising perspective.

But though analysts might be tempted to cite holiday spending as an example that consumption is stronger than the hard and soft data would suggest, and that the mighty US consumer just might come through and save the US economy from a late-2019 or early-2020 recession, there is one thing to consider: As the latest raft of spending data revealed, spending outpaced incomes once again in November, sending the savings rate lower, suggesting that this latest consumption binge was largely fueled by debt.

In other words, analysts who interpreted these strong holiday sales as one last binge before the end of the business cycle might soon be vindicated. (source)

So, in reality, what seems like a bunch of prosperous people going out and treating their families to well-deserved gifts and holiday joy is just the opposite. This Christmas was most likely an example of people who couldn’t afford to spend saying, “to heck with it” and maxing out credit cards that they may never be able to pay off.

All of those problems from before Christmas didn’t just disappear.

Right before the holiday, I wrote an unpleasant article about 8 worrisome signs for our economy. These things didn’t magically disappear because it was Christmas and people blew their budgets. After the article, the stock market plunged even further, making it the absolute worst Christmas Eve in market history. We’re talking Great Depression-era lows.

What’s more…and this should keep you up at night…President Trump had Treasury Sec. Steve Mnuchin summon heads of the 6 largest banks in the country for emergency calls on Christmas Eve.

Brian Moynihan of Bank of America, Michael Corbat of Citigroup, David Solomon of Goldman Sachs, JPMorgan’s Jamie Dimon, James Gorman of Morgan Stanley, and Tim Sloan of Wells Fargo were all contacted.

According to The Street, it’s all good and there’s no need to worry.

U.S. Treasury Secretary Steven Mnuchin said Sunday that he held individual calls with CEOs of the nation’s six largest banks, all of whom said their institutions had ample liquidity for lending to consumers, businesses and all other market operations despite the recent market turmoil.

The unusual statement, issued via the Treasury Department’s verified Twitter feed, also noted that Mnuchin would chair a meeting of the President’s Working Group on Financial Markets, which includes the Board of Governors of the Federal Reserve system, the Securities and Exchange Commission and the Commodities and Futures Trading Commission.

“We continue to see strong economic growth in the U.S. economy, with robust activity from consumers and business,” Mnuchin said in a statement. “With the government shutdown, Treasury will have critical employees to maintain its core operations at Fiscal Services, IRS and other critical functions within the department.” (source)

The Rest…HERE

Comments are closed.

Join the revolution in 2018. Revolution Radio is 100% volunteer ran. Any contributions are greatly appreciated. God bless!

Follow us on Twitter