So why is the U.S. budget deficit growing at recession levels?
Peter Schiff, CEO and chief global strategist for Euro Pacific Capital, said Monday it’s proof the economy is not as strong as it seems in the Trump era.
A sovereign debt and dollar crisis now looms larger than ever.
Here’s why markets should heed his words carefully.
Peter Schiff Predicted The 2007 Market Crash
The last time Peter Schiff was this certain about a market crash, the U.S. entered the worst downturn since the Great Depression. | Photo: Gage Skidmore (CC BY 3.0 US)
Peter Schiff is notorious for never having anything nice to say about the economy. (Unless he’s talking about gold or foreign stocks and bonds.) So can we write off Schiff’s pronouncements as the doom-and-gloom shtick of a stalwart “permabear?”
From 2006 – 2007, when most economic commentators were forecasting more pie in the sky, Schiff predicted the market crash of 2007-08 that blindsided nearly everyone.
He sounded the recession alarm non-stop for two years on cable news channels. His interviews from this media tour are remarkable to watch in retrospect.
“Dr. Doom” and “The Armageddon Gang”
Is Peter Schiff smarter than the average bear? | Source: Shutterstock
The CNBC talking heads jokingly nicknamed Peter Schiff “Dr. Doom.”
In a short feature entitled, “The Armageddon Gang,” Time Magazine called him a “hectoring presence on cable-TV business shows.” It was complete with a photo of Dr. Doom himself holding a scythe like the Grim Reaper.
On Aug 28, 2006, Schiff debated Art Laffer, a Reagan Administration economist on CNBC. Schiff said a recession was coming, would last “for years,” and the American consumer would “see his home equity evaporate.”
Now he’s predicting another recession “that’s going to be worse than ’08.” Other deficit watchers agree the ballooning deficit is bad for the economy.
U.S. Budget Deficit Looks Like Trump and Congress Are Fighting Off A Recession
The skyrocketing federal deficit under Trump is very unusual. The government typically runs large deficits during recessions because of lower tax receipts. And Washington boosts spending during economic downturns for fiscal stimulus to spur recovery.
But when the economy is growing, deficits are supposed to shrink.
Graph U.S. Federal Budget Deficit or Surplus | Source: U.S. Office of Management and Budget
The last time the national deficit grew this quickly, we were battling our way out of the Great Recession. The time before that, Washington was simultaneously dealing with the Early 2000s Recession and fighting the Global War on Terror.
Despite the dangers of procyclical fiscal policies during an economic expansion, deficits are expected to remain large in the future, leaving us with less room to maneuver if there is an economic downturn.
Peterson was an American investment banker and Commerce Secretary under Nixon. His foundation assesses the deficit as risky in case of recession. Peter Schiff’s assessment is more bearish. He thinks the deficit is proof that a recession is already underway.
Disclaimer: The opinions in this article do not represent investment or trading advice from CCN.com.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
