"We Track the Financial Collapse For You, so You'll Thrive and Profit, In Spite of It... "

Fortunes will soon be made (and saved). Subscribe for free now. Get our vital, dispatches on gold, silver and sound-money delivered to your email inbox daily.

This field is for validation purposes and should be left unchanged.

Safeguard your financial future. Get our crucial, daily updates.

"We Track the Financial Collapse For You,
so You'll Thrive and Profit, In Spite of It... "

Fortunes will soon be made (and saved). Subscribe for free now. Get our vital, dispatches on gold, silver and sound-money delivered to your email inbox daily.

This field is for validation purposes and should be left unchanged.

The “Real Stuff” Economy Is Falling Apart

Each month one or two high-profile government reports show the US is growing, adding jobs and generally recovering from the Great Recession. But it’s not clear how that can be, when the part of the economy that makes and moves real things keeps shrinking. Here’s a chart, published recently by Zero Hedge, showing that US manufacturing has been contracting for the past year:

Factory orders Dec 15

Meanwhile, the companies that move physical things around are falling hard:

Railroad stocks drop after companies give downbeat outlooks

Railroad stocks dropped sharply Wednesday, after both Kansas City Southern and CSX Corp. provided downbeat outlooks for the current quarter at an analyst conference.

The sector’s decline helped pull the Dow Jones Transportation Average, down 2.1%, much more than the 0.9% decline in the Dow Jones Industrial Average. Kansas City Southern’s stock was the biggest loser in the group, tumbling 7.1% on volume that was more than double the full-day average, according to FactSet.

Railroad stocks

The company’s chief financial officer, Michael Upchurch, said at the Credit Suisse industrials conference in Florida, that fourth-quarter revenue would decline in the “high single-digit” percentage range from year-ago levels, according to a transcript provided by FactSet.

Analysts surveyed by FactSet were expecting, on average, fourth-quarter revenue of $622 million, which implies a 3.3% decline.

CSX slumped 3.7% in active trade, after CFO Frank Lonegro said at the same conference that domestic coal movements have declined “more significantly in the fourth quarter than expected.” As a result, he said earnings-per-share growth is now expected to be about 3%. The company had said in October that it expected full-year EPS growth in the “mid-single digits.”

Among the more-active shares of other railroad companies, Union Pacific Corp slid 2.8% and Norfolk Southern Corp shed 2.8%.

One reason for the discrepancy between overall growth and real stuff is that most of today’s economy is made up of services, and they’re doing okay (chart from Business Insider):

Service sector Dec 15

What is the service sector? Mostly software, restaurants, banks, construction companies, retailers, doctors and hospitals.

Can an economy thrive if it doesn’t make or move physical things? Intuitively the answer is no, because most of the services mentioned above either maintain the status quo (like healthcare and restaurants) or (like houses) consume rather than build capital. As for banking, in its current incarnation it’s almost certainly a net negative, draining capital from productive uses and funneling it to trading desks and political action committees.

The US, in short, is engaged in an experiment to see how long an economy can function with services growing and manufacturing contracting. As with so many of today’s monetary and fiscal experiments, no one knows when definitive results will come in. But the data so far aren’t encouraging.

52 thoughts on "The “Real Stuff” Economy Is Falling Apart"

  1. We need to immediately put a tariff in place on imported oil! Set the minimum domestic price at $50 a barrel. That is a FANTASTIC price for consumers, and lets our domestic producers survive. We still import 4 million barrels of oil every day. Our domestic producers are a Godsend! Saudi Arabia has declared economic war on our domestic producers and we are doing NOTHING to help them!
    Do you realize how productive and ingenious our domestic producers have been these last few years? It is a once in a generation story that will be enshrined forever as one of the great feats of American genius and talent.
    Did you know there have only ever been ten million-barrels-a-day oil fields in all of history – and THREE of them are in the U.S. today?
    Yet, these guys are being throttled by a foreign power – and sabotaged by leftist Luddites here at home.

  2. I am not sure taking advice from anyone who thinks Bernie Sanders is the direction this
    country should go IS A GOOD THING .I
    like many in this great country of ours had
    generations behind us who build themselves up from very little through hard
    work, commons sense and belief that the American dream exists if you’re willing
    bust your ass and use your head. My uncles and my father all passed away
    wealthy and secure. One of the things that I that sticks in my mind that my
    uncle told me was that a strong economy all starts from the earth whether its, mining,
    farming, timber, oil, gas, coal or fishing. My relatives were all self employed blue
    collar workers with white collar mentality who rather WORK HARDER AND SMARTER THEN

  3. In the last few weeks I have read several books by John Gray (not the mars guy) that provide some insight into what is going on from a macro viewpoint. Nassim Taleb refers to John Gray as the “greatest living thinker” and I would agree that his books in the last 20 years contain a great deal of insight with respect to our current predicament. I found chapter 7 of “Enlightenment’s Wake” to be particularly “enlightening.” …John… any interest in the real estate concept that I briefly described via your contact form? BTW, I hate those contact forms…

  4. You forgot to include big government, social services, insurance, finance and education and all their spinoffs in your “service” sectors. For the most part these 85 million US jobs have no multiplier effect in the economy but the confiscatory opposite. Recent testimony before the US senate indicates 200 trillion has been racked up by government to keep the cradle wrecking machine running. This is the root of the problem and why the government is waging lawless murderous wars. Its trying to keep the steamrollers wheels rolling.

    1. You give “the government” too much credit. I guarantee you that they’re not thinking about that when they go to war. They’re not even that “smart.”

  5. The Reagan experiment has turned south and the Republicans continue to endorse it. The Democrats want to pass tax bills that would help the situation but the party of the oligarchy will have none of it. Voting matters.

    1. Yeah, no oligarchs in the Democratic party. They’re all just noble citizens trying to make the country a better place. Like Marc Rich and Frank Giustra, and that fascist hypocrite, Warren Buffett.

      By the way, how much did the scumbag Clintons make in payoffs, uh, I mean “speaking fees” in the last few years? Don’t bother looking it up. It’s waaaaay over $100 million by now.

      And how is it that Al Gore went from having to tap his kid’s college fund during his ill-fated presidential primary bid in 1992 (I know his campaign chairman from this area), made a few hundred grand a year for 8 years as VP, and is now worth $300 million. Did he invent something? Add value ANYWHERE? Or is he just a weasely rent seeker?

      Sounds like an oligarch to me.

      As for voting, it matters about as much as consulting your horoscope.

      Puppet A is no different in any fundamental way from puppet B, both of
      whom are dredged up from some fetid pool of sociopaths and thoroughly
      vetted to make sure they won’t interfere with the larceny and the ever
      more aggressive power grabbing of their sponsors.

      The corporation, USSA, is wholly owned by the bankers and the rest of the military industrial complex, the 1/10th of %, which is invited to help itself to any and all of our accumulated middle class riches courtesy of the one party political cabal pretending to be two opposing parties. Hahahaha. And you’re buying the con. Hahahaha. You probably think the Democratic party looks out for the ‘little guy.” Hahahahaha.

      Where you been livin’ pal? Electoral politics is a con, a fraud, a diversion, a smokescreen. Only people with a room temp IQ have any delusions otherwise.

      Unfortunately, that makes up the bulk of the Murican electorate. And so, here we go again, on another mindless round of empty political posturing.

      Decision 2016 !!! The most important election EVER! … since 2012, which was the most important election EVER! … since the Obama / Insane McCain election. After which, exactly nothing of substance changed.

      Sic semper tyrannis.

      1. If All Gore was president we wouldn’t be in Iraq because he wouldn’t have been influenced by the Project For the New American Century who tried to get Clinton to invade it. You people are stupid. voting matters Bernie 2016

        1. That’s true, and the proof is that Al Gore called for the impeachment of George Bush if he *didn’t* stop Saddam Hussein by invading Iraq.

        2. First of all, it’s “If Al Gore WERE President” genius. Subjunctive case … WERE not WAS, but I guess you didn’t lean into grammar in school anymore than you did logic or history. I do like your spelling of his name, though.

          I notice you didn’t answer the question I posed above. How’d he get to be worth $300 million in the 15 years since he was VP if he’s not an oligarch, a crony insider, a rent seeking scumbag? Can’t answer that can you?

          The Iraq invasion was a con job and a disaster. Stipulated. You won’t get any defense of the smirking chimp from me, but answer this:

          Why is it that Bernie Sanders, who, to his credit, voted against the Iraq war resolution and has spoken up for taking care of wounded vets, consistently voted to continue to fund all the military operations there?

          And why is it that Bernie sponsored the Audit the Fed bill in the senate back in 2009 … S 604 … and then bent to pressure and watered it down, substituting the “Mel Watt” version of Ron Paul’s bill for the Senate bill? Why’d he do that Dan? Who do you think might have gotten to him? I know, but I wonder if you have an explanation for Bernie’s big sellout.

          You’re right in one sense Dan. Voting seems to matter a great deal … to morons, but to the fate of the nation, uh, no.

          But thanks for one thing …. making it a little harder for that serial criminal Hillary Clinton to waltz into office.

          1. Because he is consistent for what he stands for and no other politician can say that they aren’t taking money from the oligarchy.

          2. How is it “consistent” to vote against the Iraq war resolution and then consistently vote to fund the military adventure in Iraq thereafter? That’s the opposite of consistent. That’s hypocrisy in action. ANSWER THE QUESTION.

            And he’s the one who authored S 604; so, presumably, he liked what was in it. And then he gutted it. He sold out to the bankers. He rolled over. Where’s the “consistency” there? Why’d he do it? ANSWER THE QUESTION.

            Why is it you won’t answer direct questions? Is it because you can’t?

            Yeah, well, I feel for ya, but if you can’t back up your assertions and you can’t answer simple questions, maybe you’d better shut the hell up.

        3. People like Mao, Lenin and Stalin would vote for Sanders. Voting matters only to legitimises these criminals that have been preselected.

          1. So maybe you better turn in your SSI card so you can say see I stand for something. If you have a SSI card you are part of the Democratic socialist club. If you are getting care from the VA you are a part of the club. I could go on but you probably still wouldn’t get it because you really don’t understand socialism and especially Democratic socialism. And by the way communism in the USSR turned out to be state run capitalism similar to China has now. It failed too just like ours is from crony capitalists who claim to be libertarians and read Ayn Rand. But really they are the reincarnation of the John Birch Society but call themselves the Tea Party of all things and funded by an oligarch named Koch.

    2. Hey, Dumbazz Dan !!
      The Dems are the morons passing Barrycare, the Dems stopping oil exploration, the Dems raising taxes, the Dems paying 2 years unemployment, the Head dem overturning countries and radicalizing muslitards….. pull yer head from thy arse.

      1. Pulling your head out of your ass is what the Republican working class needs to do. The Republicans are blocking legislation that would help working class people so that CEO class could get more wealth and spend it on lobbying. Trying to kill Obama care is a loser for the middle class as 15 million people now have healthcare and they can’t deny you healthcare. So right now oil exploration is going broke in this country as there is a correction coming in that market because oil is at $40 a barrel and they need at least $80 a barrel. Do you need toilet paper to wipe your face off now?

        1. You freaking ignorant moron!! Barryacare is costing people $900 to $2,000 a month now with premiums that are out of sight. It isn’t doing anybody a damn bit of good.
          Shutting down competition for single payer is not the answer so don’t respond if you dont have a coherent argument.

          1. And yet it’s a Republican plan called Romneycare of which is working as a whole and in Massachusetts working. I wasn’t for it but since we have it it needs to be regulated price wise and a Medicare plan needs to be expanded for competition. And by the way if they did away with the anti trust exemption for health care we could create more competition. Heath care prior to Nixon was non profit but when the profiteers(Exon in Cal.) was added into the mix costs continue to rise because Congress continues to look the other way calling it a free market so you never know exactly how much health care costs unless you pay for it yourself. I suggest you read TR Reid’s book, The Healing of America to get an idea of how other countries spend less and care more, covering more people. So don’t reply until you have a better idea on how healthcare works, or doesn’t work. Health care costs have always been going up so that’s really a canard in your argument. You need to put down the Bircher book and pick up a book on US economic history.

          2. I’m not talking about Romneycare am I? Romney care applies to Massachusetts residency. It doesn’t apply to other state residents. Barrycare premiums push healthcare costs frof $900 month to over $2000 a month with a $10,000 deductible. How does that help people who are on a fixed income for who don’t have a $150,000/yr job? So it doesn’t matter what book you want me to read if I can’t freaking pay for the health ins.
            As far as oil is concerned – If we can’t put pipe lines in the ground aka trans Canada and we got the EPA crawling up everybody’s butt with needless regulations pushing up the price. $80 a barrel is a misnomer don’t believe everything you read. We currently can drill for less than $40/bbl but Barry doesn’t like that. He is doing everything he can to shutdown whole industries which pay incredible salaries to oilfield workers.

          3. Hey dumb ass the banks are backing away from the oil fields because the price of oil is dropping as it has to be at $80 a barrel to frack and make a profit. And by the way you can’t name one person who has had their premiums raised so that they can’t afford it and if it does go up they can shop on the exchange for a better price. It’s called a market of which before there was none. The exchanges were to provide a market but in the Red states they decided screw the people who don’t have any insurance so people are dying but they don’t care. The problem I have with people like you is that you only care about yourselves and your ideology and never offer anything better because you only like bitching about liberals. The Republicans have been wrong on everything and you are just another bitcher who gets off on hate.

          4. A friend of mine had the Barrycare plan – and those were his premiums. He didn’t have any pre-existing conditions – those push the premium even higher. I have a strong suspicion that you don’t participate in the Barrycare plan. You either have private healthcare or you have union health care. You don’t have to deal with any of this crap but you like to come on here and put down the rest of us will have to deal with Barry care everyday. Arguing with you libturds is like wrestling with a pig in the mud – sooner or later you realize the pig enjoys it.
            In North Dakota the frack price for profit is $28-40/ barrel so once again you don’t know what you’re talking about.

          5. The pain is coming because the banks will call in their markers…..Tell your friend he needs go to the exchange and find something more suitable. And I bet he didn’t have insurance before because he had a condition they wouldn’t cover. A while back a Republican Congresswomen asked their constituency to send her any information about problems with their healthcare and she ended with nothing. The ACA was written by the Healthcare industry and maybe you should think about that for a while. We need to get money out of politics and get a representative government that works for the people not the oil companies and insurance industry. I started my own business after I was forced to retired so now I have insurance through Medicare and everyone should have it it would be a boon to the economy because the small businessman wouldn’t have to worry about it.

          6. Dan, his estimates WERE on the exchange. Come on we’re not idiots. The problem is we need to get government out of our lives. There are too many people that advocate government to run the health care, education, retirement (the’re even talking about grabbing IRA and 401k and mandating them in the gov mira accts.) I don’t want central planning and I really don’t think you do either. You’re a smart man – I apologize for calling you a dumbass but we can’t keep doing this crap. The Federal Reserve is broke all they know how to do is print more money, devalue our currency, and then take away more freedoms through the IRS and the government. We need to stop this nonsense. Regarding oil companies – a lot of them will survive – some will go broke because they extended themselves way too deep when the price of oil was $100/barrel. A lot of them are very smart and have tightened their belt Are there some oil companies that are going to get burned? Yes. Are there some banks are going to get burned loaning money? Yes, but for all the talk about getting off foreign sources of oil its gotta come from somewhere. The fracking system is a whole lot cheaper than anybody possibly realizes. I work in the oil field and I’m damn proud to do what I do. Because every time I throw a valve to put on a load of oil and take it to market – its American oil from American soil drilled by American workers for American consumers. That’s something we can all be proud of.

          7. Cramer believes that the low price of oil will really hit home next year, because the hedges will come off for many large U.S. oil producers. Banks did not deny credit to many of the cash-strapped oil companies this year because the companies were able to figure out how to pump more oil with less money.

            Beyond that, though, many companies had hedged their production at very high prices, including prices from before the collapse in oil. So, the banks had no reason to deny them credit.

            This coming year, many oil companies will be far less hedged than before, and the prices they will be hedged against will be much lower. It’s the final count down for US oil. So I guess it’s Obama fault………….Really moron.?

          8. No I’m a capitalist you’re the wage slave…..so it sucks to be you. Get over it you and your kind are wrong on everything…….and when you think you’re not you are still wrong. I used Cramer because I thought your kind would get the picture when he’s agreeing with me. Pull the silverstake out of your ass.

          9. Obamacare was modeled after Romney care in Mass.. It was originally a plan that was introduced in around 1993 by the Republicans that would be in competition to the Hillary Clinton plan she tried to push through. So own it.

          10. Sorry Dan I’m not going to own it. I didn’t vote for it. No Republicans voted for it. A billion dollars for a website that doesn’t – still doesn’t work right. It’s a joke. Even some of the biggest health care providers have decided that this is not working and they are getting out. Should have never gotten in the first place.

          11. You’re right. The idiotic plan is modeled after Romney’s idiotic plan in Mass. and is pretty much in line with a plan the Heritage Foundation proposed, so the Republican intelligensai … f that isn’t an oxymoron … was for the ACA before they were against it.

            But what makes you think that someone who is opposed to the ACA is necessarily a Republican? Hell, Republicans in the Congress don’t seem all that opposed to it. It’s just a political talking point for the Republican “leadership.”

        2. According to the supreme court O-care is a tax and the ONLY legal leg it stands on (a wobbly leg at best). Being a tax it is enforced by the IRS. It is the most REGRESSIVE tax slammed on the back of the middle class (producing calss) to transfer wealth: crumbs to the poor and most of it to the insurance companies owned by the banking cartel who put Obama in power – you have to pay the dues to those who paid for your political campaign. Due to this tax, the middle class can not save anything for buying a house. The bulk of the money in the economy is created by the commercial banks when they make mortgages – by far the main machine of money creation. That proccess is at historical lows, therefore no money are created for the real economy. Having money deposited at the FED does not help the main street. I know it is a perverted system and I don’t agree with it; but it is the only system we have absent barter.

          Obamacare is the biggest wealth transfer tax to the super rich – the 0.01%. Use your brains for once.

    3. Voting used to matter when smart (common sense) thinkers with integrity ran for office. Even if you voted a great person in, they get usurped by the system, the system (the matrix) is powerful and the only thing that will break it is a total collapse…keep voting and believing, in several years you will see that I am right.
      Then you won’t vote no more, you will learn to be self sufficient

      1. Ya if everyone thought like you than the Tea Party wouldn’t have come to power and then was corrupted by the Koch brand of Bircherism. Bernie 2016, he’s running on the people’s money and no corporate money.

          1. Heard dat. Question SD3 … Why are we responding to a guy who’s clearly not too bright and can’t put together an English sentence?

            From what I can make out, his statement above makes no sense whatsoever. It’s gibberish …kinda backwards … and I don;t think that’s just because he wasn’t being careful. So stupid? Yeah.

            But I’m starting to feel like the stupid one for wasting my time responding to him.

            I can’t help but wonder how this clown ever ended up on this site. You think he’s a paid troll?

          2. Good lord Democratic Socialism works: When Minnesota Governor Mark Dayton was elected back in 2010, he had a Republican legislature and a state with billions in deficit. Yesterday, state officials announced that Minnesota’s budget surplus had reached $1.9 billion. But Kansas is Koch country and getting broke by the day. You people are stupid.

  6. With 87 octane gasoline prices at $1.75, the American consumer is getting a fairly significant, ongoing ‘tax’ cut, or the equivalent. Also, lower gas prices means that low wage workers can drive further to their jobs, so they have a much larger pool of employers to pick from.

    The downside side is that the reason gasoline prices are dropping is that the world’s economy is contracting and they can barely give the stuff away.

    I think that the USA will slip into a recession in the first Quarter of 2016. Then, gas prices will fall even further.

    1. Everything has gone way up except gas. That could change quick with a few cruise missiles in the oil patch. I think we will continue to stay in the depression for another ten years at least,

Leave a Reply

Your email address will not be published. Required fields are marked *

Zero Fees Gold IRA

Contact Us

Send Us Your Video Links

Send us a message.
We value your feedback,
questions and advice.

Cut through the clutter and mainstream media noise. Get free, concise dispatches on vital news, videos and opinions. Delivered to Your email inbox daily. You’ll never miss a critical story, guaranteed.

This field is for validation purposes and should be left unchanged.