The Saddest Recession Indicator I Ever Heard Of

A Mystical, Magical Recession Indicator is Now Flashing Red

Bullion.Directory precious metals analysis 28 February, 2024
By Peter Reagan
Financial Market Strategist at Birch Gold Group

Yes, the numbers are important because we have to know objectively what we’re looking at in order to make intelligent decisions instead of knee-jerk emotional mistakes.

But the effects of economics and of bad economic policies is felt by everyday people, maybe especially those who don’t understand the numbers.

Take a tragedy that I read about today that, if you think more deeply about it than the surface borderline cuteness of the topic, really speaks to what has been going on in our country. Kelly Tyko with Axios writes,

Even the tooth fairy is pinching pennies these days.

The average value of a single lost tooth declined by 14% from $5.84 to $5.01, according to the survey of 1,000 parents of children ages 6 to 12.

The big picture: For the second year in a row, an annual Delta Dental survey found the tooth fairy is paying less for lost teeth than the year before.

The Tooth Fairy? Really?

Yes, really. But keep reading, because…

The Tooth Fairy is important (and not just to kids)

If you have kids, then you know that you would do almost anything for them, anything within your power.

Especially when they’re little and still caught up in the magic of Santa Claus, the Easter Bunny, and, yes, the Tooth Fairy (not to mention still watching the claymation Rudolph the Red-Nosed Reindeer with you every Christmas to help you to indulge that secret pleasure from your childhood).

Parents will work extra hours, buy the cheaper coffee, cut corners in other areas just so that they can get their kids that one brand of apple sauce that their child adores…

… because it makes the little one happy.

Listen, parents don’t reduce the amount that they give their kids from the Tooth Fairy unless they just don’t have the money.

So, that begs the question…

What’s going on?

The short answer: we’re still dealing with the fallout of the last four years of terrible economic policies and the Keynesian policies that most administrations have pursued since the turn of the century…

And the fallout is going to continue for a while longer.

But if you’re like me, you probably want details, so, let’s get into those.

For exhibit one, we have how the housing market is struggling. Mike Shedlock at MishTalk writes:

The number of [multi-family home] units under construction is rapidly falling. It’s down from 1.71 million to 1.41 million, a decline of 17.7 percent.

In the Great Recession, the number of completed units topped at 1.42 million. So, this is a very elevated number.

It’s not just multi-family units (duplexes and apartments), though.

Back to Shedlock:

New Home Sales: Sales of new single-family houses in January 2025 were at a seasonally adjusted annual rate of 657,000. This is 10.5 percent below the revised December rate of 734,000 and is 1.1 percent below the January 2024 estimate of 664,000.

So, multi-family home building is worse than it was during the Great Recession, and new home sales are worse than when in the middle of dealing with the horrible inflation during the last administration.

These are not good signs.

Also, as you likely know, home sales, including multi-family units, is a key indicator of economic health and growth for the overall economy. If people aren’t buying new homes or if property developers aren’t building new apartment complexes, the only reasons are because either the builders can’t get the financing or because…

People can’t afford to move to a bigger house or new apartment!

In other words, people don’t have much money.

Another disturbing statistic

While some people will want to blame this next statistic on both Donald Trump and Elon Musk, if they’re being honest, they can’t.

That doesn’t change the fact that it doesn’t signal good things. Mike Shedlock writes:

In the week ending February 22, the advance figure for seasonally adjusted initial claims was 242,000, an increase of 22,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 219,000 to 220,000.

The 4-week moving average was 224,000, an increase of 8,500 from the previous week’s revised average. The previous week’s average was revised up by 250 from 215,250 to 215,500.

But before we start pointing fingers:

Initial claims for [unemployment insurance] benefits filed by former federal civilian employees totaled 614 in the week ending February 15, an increase of 1 from the prior week. There were 353 initial claims filed by newly discharged veterans, a decrease of 46 from the preceding week.

So, these figures are before the DOGE layoffs of federal workers.

This is mostly (if not exclusively) private sector employees who are signing up for unemployment assistance. So far.

Although a recent U.S. News article warned that as many as 300,000 federal workers and another 450,000 government contractors may lose their jobs in the months ahead. One analyst’s grim perspective:

“These firings likely add up to the biggest layoffs in the history of the United States. Economic pain is contagious, so it is likely that the federal layoffs will cause more economic hardship.”

Not good. Not good at all.

Incoming tariffs will push the cost of living higher

Understand, I firmly believe that Trump’s policies will help the U.S. economy over the long term.

In the short term, though, there’s going to be even more economic pain as Trump’s efforts kick in.

Take tariffs, for example. The Wall Street Journal notes,

A new analysis… estimates that a 25% tariff on the U.S. neighbors would increase the cost of a full-size SUV assembled in North America by $9,000 and a pickup truck by $8,000. The cost of an electric-vehicle crossover would increase by $12,200. 

That’s $8,000-$12,000 per vehicle that most of us don’t have! Most families are already cutting back on their Tooth Fairy budgets, for goodness’s sake.

Most of the tariffs we’ve been promised have yet to materialize – so far. On Thursday, one Bloomberg story really captured the confusion nicely:

And future tariffs are still far from certain – today, for example:

…Mexican officials were willing to raise tariffs on Chinese goods and find ways to buy more from the U.S. in a bid to avoid duties threatened by President Donald Trump.

What’s going to happen next?

No idea. And that very uncertainty undermines business confidence, possibly contributing to the rise in layoffs we discussed earlier.

All this to say, our economic stress isn’t over, yet, folks.

What you can do?

There is something that you can do, though, to make sure that you and your family are on better footing (by far) than the average American.

What is that? You can take a cue from that claymation Rudolph that we mentioned earlier by taking Yukon Cornelius’s advice: get silver and gold. Diversifing your savings with inflation-resistant investments can protect your purchasing power, regardless of the broader economic forces at work.

power so that you can weather whatever storm comes your way, and a good place to start your research into precious metals investing is right here.

This article was originally published here

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