What’s In Store for The Economic Year Ahead?

Dawn J Bennett, CEO and Founder of Bennett Group Financial Services and host of Financial Myth Busting, recently wrote an article entitled, “The Year Ahead.” According to Dawn Bennett, the so-called “recovery” being promoted by the government and mainstream media is propaganda to cover failed policy initiatives from both the White House and the Federal Reserve. This year’s holiday numbers provide a good example, as consumer spending makes up 70 percent of our GDP; holiday retail sales numbers have been disappointing.

  • Black Friday sales were down by nearly $1.2 billion
  • According to AlixPartners, weak holiday retail numbers are partially a result of upper-middle class shoppers being scared by a fluctuating stock market and waiting until the last minute to shop
  • With 300 point drop in the Dow last Friday, it seems like that volatility will remain a factor for even last-minute shopping
  • Reuters reported that sales growth for the holiday season is expected to be half what it was last year at this time

“2015 has produced an S&P 500 which remains at its highest point in history, but that incredible fact is backed up by nothing,” said Dawn J Bennett. “There’s a measure called the Q ratio, devised by a Yale economist named James Tobin. To find the Q ratio of a company, you divide the market value of the company by its replacement cost. Historically, the Q ratio of the market as a whole tends to average about 0.69. Currently, it stands at 1.04, an indication that the market is sorely overvalued. The Price/Earnings ratio for the S&P 500 stands at 19, when the average in a healthy market is around 15. And the market capitalization to GDP ratio of the S&P 500 is currently 1.82. Just before the crash in 2007, it was only 1.52, and you recall what happened then. Advisor Perspectives recently revised their estimate of margin debt in the New York Stock Exchange. In real terms, margin debt is now 20% higher than it was at the peak of the dot-com bubble.”

Below are Dawn J Bennett’s predictions for 2016:

  • Prediction 1: The Fed will continue tightening monetary policy (not a one-and-done rate hike) until our fragile economy rolls over even more.
  • Prediction 2: The junk bond asset class is going to continue to liquidate. This started in August and September of this year, but really became apparent in the last several weeks. The media hasn’t given it much focus, but they should, since every major crash traditionally starts with a single asset class the first domino to fall.
  • Prediction 3: Corporate profits and revenues will continue to be weak, along with manufacturing and exports in general, pointing to the fact that we are already in a recession.
  • Prediction 4: The Fed’s rate hike will prove to be very painful. It will continue to soak up liquidity for 2016, which could be as much as $800 billion in excess liquidity taken out of an already fragile and illiquid system.
  • Prediction 5: Greece’s problems will become exponentially worse, and Europe’s along with them.
  • Prediction 6: Gold and silver have a strong potential to rise 25 to 50%.

Read more from Dawn J Bennett here: http://www.releasewire.com/press-releases/dawn-bennett-writes-article-the-year-ahead-regarding-the-economic-year-ahead-652454.htm

Fantasy vs. Reality: Who Are the Jobs Truly Going To?

The most recent biggest headline grabber that the Bureau of Labor Statistics (BLS) released was its October payroll job numbers – announcing that a remarkable 271,000 jobs were created. This number is well over the consensus expectation of 184,000. This was the highest print since December of 2014, and those new jobs dropped the headline unemployment rate to 5%, the lowest since April of 2008. The media and government are sure to focus on these two numbers. This may sound great in theory but it’s important to delve deeper into what these number truly mean.

A full 54% (or 145,000) of those jobs were added to the total because of something called the birth-death model. According to Dawn J Bennett, the author behind the article, “The birth-death ratio is a number representing the net jobs provided from newly started business vs. business closings during the reporting month. The BLS uses a rolling average to determine the monthly total based on historical averages over the past several years. That sort of math assumes an economy that is functioning normally, which ours has certainly not been for the past seven years, and so that figure of 145,000 jobs is, simply put, fiction.”

There are even more disturbing trends within the overall picture. According to the BLS, 271,000 of these jobs can be accounted for by employees age 55 or over, while males between 25 and 54 lost 119,000. Also, multiple job holders increased by 109,000. This means that that older Americans are taking part time jobs, and some of those losing full time work are taking multiple part time positions to compensate. The jobs are mostly low-paid personal service jobs such as food service, retail, temporary work, and healthcare services.

It’s not hard to see from these numbers that young people aren’t in the position to build households or plan for the future; 50% of 25-year-olds live with their parents.

Read more from Dawn Bennett here: http://www.releasewire.com/press-releases/dawn-bennett-writes-article-fantasy-and-reality-regarding-jobs-and-the-current-economy-640698.htm