Latest Stats on U.S. Collapse: Obama’s Speech Was One Big Lie
Jan. 15, 2016 (EIRNS)—Barack Obama’s foolish attack, in his State of the Union Address, on "anyone who says" the U.S. economy is not the strongest in the world and getting stronger, as "full of hot air," is now biting him.
As the financial mudslide on stock and bond markets continues and Federal Reserve chiefs retreat en masse from their "rate-rise schedule," the industrial core of the U.S. economy is in a year-long shrinkage in production and employment.
In Friday’s update on Obama’s economic miracle, the Federal Reserve reported that U.S. industrial production fell by 0.4% in December; the change in production in November was revised down to a drop of -0.9%. The drop in production for the year 2015 was larger, -1.8%. Capacity utilization in December fell to 75.6%, from 75.9% in November and 76.2% a year ago. National manufacturing output dropped by 0.1% in December.
And the regional manufacturing/mining survey of New York/New Jersey/Connecticut by the New York Federal Reserve Bank, issued Friday, now shows manufacturing shrinking as fast as in the Texas Fed’s area, where oil and gas production is collapsing. The New York ("Empire") manufacturing index, which was at -4.6 in December (anything below zero shows contracting), came in at -19.3 in January, just missing the Texas Fed’s most recent -20. The New York survey indicated sharp declines in new orders, shipments, employment, and weekly hours in that region of the country.
A marked "freight recession" is underway in America as freight volume shipped—by all modes (road, rail, pipeline, waterway, air cargo)—was down in November 2015 from the same month year-on-year, a big indicator of contraction in economic life. Within this are many outstanding factors. CSX reports that its coal tonnage shipped in 2015 is down over 30% from a year earlier! Less crops are being shipped, as farmers try to hold on to them, because the current price they would get is below their survival level. Freight related to oil and gas production and mining is way down, as those activities themselves are down, along with quarrying. General merchandise shipments are also down. Bank of America has a recent report out on rail traffic slowing down. "Carloads have declined more than 5% in each of the past 11 weeks on a year-over-year basis." The first week of January, it was down 10%.
Most ominous, was the big write-off of U.S. shale oil/gas "assets" by BHP Billiton, the world’s biggest mining company. Its investment in U.S. shale was made in 2011 and was large, $20 billion in acquisitions of companies/company debts, and $15 billion in agreed capital expenditures to come, by Billiton. In reporting 4th quarter results, it wrote the debt down to $16 billion and has reduced the capital expenditures plans to just $2 billion. It has closed most of the wells it acquired. The write-down would be down to $12 billion without the tax benefits Billiton carries forward from the loss.
This implies a 20-25% write-down of a U.S. high-yield debt bubble of at least $1 trillion, and a lesser write-down of $2 trillion more in investment-grade energy debt.