One Piece of a Frightful Economic Puzzle
On January 4, the United States Bureau of Labor Statistics released its December employment figures, causing much rejoicing in America. A total of 312,000 new jobs were created, far surpassing the estimated 176,000 jobs. Wages were found to have grown 3.2 percent over the same time last year, again beating the 3 percent increase economists predicted. That year-over-year jump tied with October for the best month since April 2009.
This was positive news for the U.S. economy, coming amid growing concerns of a global recession setting in. After a week of terrible losses, new life surged into the stock markets. Many declared that the U.S. could push aside fears of a recession.
But while the job numbers were very favorable, they are only one part of the economic picture. Add a few more pieces to the puzzle, and the real picture of America’s economy appears.
A Few More Puzzle Pieces
Here is the first piece: One underreported fact from the December job report was who is being hired. The majority were workers 55 years and older. In contrast, the number of people in the prime age group (ages 25-54) decreased by 11,000. This says a lot about America’s financial situation. More and more Americans of retirement age are returning to the workforce, most likely because they can’t afford to retire. This also explains why wages increased more than expected.
Those of retirement age lack sufficient savings for retirement, and younger Americans are not saving for retirement. Data released last year by the Federal Reserve found that 4 in 10 adults couldn’t cover an unexpected expense of $400, and would have to go into debt or sell something to cover the cost. While this is an improvement from 2013, when 50 percent of adults couldn’t spare $400, it still shows how unprepared people are for even a small financial hardship. The most recent study on the issue found that 78 percent of Americans live paycheck to paycheck, up from 75 percent the previous year.
Here is the next puzzle piece: Not only are Americans without savings, they are maxed out on debts they cannot pay. The same Federal Reserve report found that more than one fifth of adults are unable to fully pay all their current month’s bills, which means they are stuck in an ever worsening debt trap. Consumer debt in the U.S. continues to smash records. Credit card debt, along with student and auto loans, are at all-time highs.
This is a problem from the personal level all the way to the federal level. In 2018 the U.S. government added an additional $1 trillion to the national debt, bringing the total to nearly $22 trillion.
This has some people worried, like Federal Reserve Chairman Jerome Powell, who said the government will soon have “no choice” but to face this issue. But most, including President Donald Trump, seem unconcerned. On January 8, he tweeted that he longed for interest rates to return to zero percent so he could have something to “play with,” like the last administration had, implying that he would add even more to the debt.
House Democrats also appear unconcerned with reining in spending. Now that they control the House, one of the first things they did was vote to revive the “Gephardt Rule.” This rule makes debt-ceiling increases automatic each time Congress passes a budget that would blow through the debt limit. But they have made the rule even worse. As Conservative Review explained, “Obviously, Republicans control the Senate and are unlikely to cooperate with a Democrat-passed budget resolution from the House, so any Democrat budget will not become law under a concurrent resolution. To that end, for the first time in congressional history, Democrats are deeming just the House-passed resolution (without the Senate) as if the debt ceiling law was suspended for that chamber, thereby shielding their members from taking a separate vote” (January 3).
Thus, whatever budget the House approves can exceed the debt limit. It doesn’t need the Senate’s approval. With the new rules, the government need not worry about a balanced budget or having to fight to raise the debt ceiling to cover ballooning expenditures. There’s nothing to hold the government accountable for its spending. It can run up the debt as much as it wants.
Snapshots From Around the Globe
When you put these pieces together, a clearer picture emerges. Yes, jobs are being created, but that in itself doesn’t prove the nation’s financial soundness. What gets reported in the news is just a veneer of prosperity covering up a panoply of financial problems. The majority of Americans are unprepared for even a small economic crisis. The federal government isn’t ready either. The reality is that America’s economic dominance is waning, and quickly.
Consider these stories, all of which broke in the second week of January:
- A study by the Standard Chartered Bank said that China is likely to become the world’s biggest economy some time next year, surpassing the U.S. China is already the largest economy by some measures, but now it is ready to surpass the U.S. in all parameters. By 2030, it expects America to fall to third, with India hurdling into second place.
- The Bank of England’s governor, Mark Carney, shook the financial world by stating that the U.S. dollar’s status as the world’s reserve currency was about to change. He stated, “[U]ltimately we will have reserve currencies other than the U.S. dollar.” He pointed to the Chinese yuan as an alternative. While nations that could be considered enemies of the U.S. have worked to discredit the dollar, it is surprising for a U.S. ally to question its hegemony.
- Russia, which discloses financial data with a six-month lag, announced that in the second quarter of 2018 it had dumped $101 billion in U.S. holdings, exchanging it for euros and yuan. Fifteen percent of Russia’s total holdings are now in Chinese yuan, up from 5 percent at the end of the first quarter. This puts Russia’s yuan share at about 10 times the average for global central banks. Its total holdings of the currency account for about a quarter of the world’s reserves in yuan, according to International Monetary Fund data.
- At the end of December, China increased its gold holdings for the first time in two years, adding 1,853 metric tons. China is just the latest nation to begin hoarding gold. Last year, Hungary increased its gold reserves by 1,000 percent, while Poland made its biggest gold purchase in over 20 years, raising its holdings to a 35-year high.
Add these pieces to the puzzle, and a more serious picture emerges. The strength of the dollar is being questioned by America’s allies, while hostile nations are pivoting to the yuan. Meanwhile, nations are hedging their central banks with gold, a tangible asset. The U.S. dollar isn’t backed by gold. So why would these nations increase their holdings unless the see a need to return to the gold standard? The only reason for that would be if the dollar collapsed.
Look at the Cause
While the markets celebrated the December jobs report, a much bigger picture needs to be examined. America’s economy is not flourishing. In fact, it is in decline and under assault.
What is the cause of all this economic trouble? Is it just poor fiscal policies in Washington? Or are there deeper issues?
For more than 80 years, the Trumpet magazine, and its predecessor the Plain Truth, have forecast the economic ruin of the United States. Those forecasts are based on what is revealed in your Bible. Does it seem far-fetched that the Bible would have something to say about the major powers of this world? We have been proving for decades that God’s Word is inspired and accurate and is being fulfilled every day.
To understand what is soon to befall America, first read our free book The United States and Britain in Prophecy. This landmark book by Herbert W. Armstrong will prove from your Bible how America will fall, and more importantly the reason for its fall.
In this book, Mr. Armstrong pointedly asked, “Do you think so great a fall could not come to so great powers as Britain and America? Do you say, ‘It can’t happen here?’ … You need to open your eyes to the fact that Britain’s sun already has set! You need to wake up to the fact that the United States … is fast riding to the greatest fall that ever befell any nation!”
Why? Because America has rejected God and squandered the blessings that He gave to America. While Americans say, “In God we trust” and “God bless America,” they fail to obey His law, which would continue to bring blessings. As a result, God will correct the nation by stripping away the colossal, unprecedented blessings it has received.
God will halt these curses and offer escape to any nation or individual that turns to Him in repentance. This requires us to act on what He reveals. God wants us to turn from sin—from breaking His law—and live and do as He commands.
Mr. Armstrong concluded The United States and Britain in Prophecy by writing: “Most people, we know only too well, will take this serious warning lightly—put it out of mind—turn to other immediate interests of no importance by comparison! That is why a loving, just, all-wise, all-powerful God is going to take away from them these unimportant counterinterests, and apply such intensified correction that they shall, finally, come to their senses, and turn to Him and His way which will bring them eternal happiness and abundant blessings!
“But you need not have to suffer this intensified correction, greater than any trouble ever suffered by humans.
“By God’s direction and authority, I have laid the truth before you! To neglect it will be tragic beyond imagination! To heed it will bring blessings, happiness and glory beyond description!
“The decision is now yours!”