Aviation: Recession Red Flags?
Are we heading for a recession? Are there extreme times ahead for the economy and in particular the aviation industry? Or, based on what we are seeing from the mainstream and other sources things are about to work themselves out just fine?
In this newsletter series, we have discussed in great length the matter of recession and the coming economic challenges for the economy, and how this will affect the aviation industry. As we’ve said before, the aviation industry is fragile and responds severely to any economic shock. Therefore, we do our best to share every insight we can so that our readers can get somewhat prepared for what is to come. Unfortunately, for many of us, no amount of preparedness will ease the tremendous burdens that would be levied upon us as a result of extreme economic conditions.
Make no mistake, we believe we’re already in a recession. We also understand that the narrative is that we are not in a recession and things are going well. However, the underlying factors dictating whether or not we are in a recession are here, even though one has not been officially declared.
The big challenge here, however, is that we believe that where we are heading is much worse than your average recession. In fact, it could make the great recession of 2008 look like a walk in the park.
In this short issue, we share some insights into what are considered to be huge red flags that indicate that economic trouble is ahead. An understanding of these red flags and what they mean can be invaluable to those who are trying to become prepared for challenges in the economy. Particularly those who operate within the aviation industry.
For more readings on economic challenges and the aviation industry, please see also: ‘3 Ways Aviation Businesses Are Coping With Inflation’, ‘The Aviation Industry and Economic Uncertainties’, ‘Inflation: Higher costs and their effects on Flight Schools’, ‘High Interest Rates/Cost of Borrowing and Their Effects on Aviation Businesses’,’Debt: Its effects on the Aviation Industry’, ‘Economic Crisis and the Aviation Industry’, ‘Inflation and Aviation’, ‘How The Aviation Industry Needs To Look At Inflation’, ‘The Aviation Industry Must Not Mistake A Recession’, ‘Understanding Recessions’, ‘Understanding Inflation’, ‘Money and Recessions.’, ‘Breaking Down Inflation.’ , ‘Inflation: Here we go again…’’, ‘Recession: Should we still be concerned?’, ‘Stagflation: Should the Aviation Industry be Concerned?’ ‘Aviation: Producer and Consumer Prices’, and ‘Aviation: Are We In BIG Trouble?’
The mainstream media continues to tell us that the economy is in fine shape, and you can believe that if you want. But evidence continues to mount that indicates that we are headed for very serious trouble. Inflation is out of control, home sales have fallen for 12 months in a row, large corporations all over America are conducting mass layoffs, and hunger is spreading like wildfire as economic conditions rapidly deteriorate. If this is “fine”, I would hate to see what “bad” would look like. Virtually everything that normally occurs during the early stages of a major economic downturn is happening right now, and that includes an inversion of Treasury yields…
On Tuesday, the difference in the yield on 2-year and 10-year Treasury notes further inverted, with the yield on the 10-year falling 103 basis points, or 1.03 percentage points, below the yield on the 2-year yield. This dynamic has preceded each of the last eight U.S. recessions.
Please read that last sentence again.
This has happened for eight recessions in a row.
Do you think that by some miracle we won’t have a recession this time?
At this point, we are actually witnessing the deepest inversion that we have seen “since September 1981”…
The spread between the monetary policy-sensitive two-year U.S. Treasury yield (US2Y) and the 10-year (US10Y) UST yield reached the deepest inversion since September 1981, as bond-market investors priced in higher-for-longer interest rates following Federal Reserve Chair Jerome Powell’s Senate testimony earlier in the session.
1981 was more than 40 years ago.
As one analyst told his clients, this is “a big psychological level” that has just been breached…
“We are not sure that -100bps means anything different than -80bps or -90bps did, but it is likely a big psychological level that many will notice,” BTIG analyst Jonathan Krinsky wrote in a note to clients.
But don’t worry.
CNN says that everything will be just fine.
You believe them, don’t you?
Needless to say, a lot of Americans don’t believe them.
In fact, at this point the amount of confidence that Americans have that their finances will improve in the next year has dropped to a depressingly low level…
Americans’ confidence in their finances is at its lowest level in at last 13 years, as inflation and fears of a recession cast a pall of uncertainty over the economy.
In February, just 31% of Americans believed their personal financial situation would improve in the next year, the lowest figure on records dating back to 2010, according to Fannie Mae’s monthly survey released on Tuesday.
The bureaucrats in Washington can radically “adjust” the economic numbers that they are giving us in a desperate attempt to make us feel better, but they can’t hide the fact that mass layoffs are happening all around us.
For example, a historic paper mill in North Carolina that has been in business for more than a century is now shutting down and laying off all of their employees…
Union representatives with Smokey Mountain Local 507 were reportedly called to a meeting with Pactiv Evergreen officials Monday and told about the plans to close the paper mill.
It employs 1,100 people and is considered a keystone of the local economy.
The words are simply not enough,” Canton Mayor Zeb Smathers said, according to local outlet ABC15. “When I was downtown and I saw grown men with tears in their eyes, there are not words, and no one was prepared on this dark Monday to deal with that.”
What can you possibly say to those men to convince them that everything is going to be okay?
That town will never be the same again after this.
A massive economic implosion is already happening all around us, but as long as stock prices remain elevated many people will be fooled into thinking that conditions are normal.
But the financial markets are starting to show cracks too.
In fact, one expert just told Fox News that the indicators that he closely watches are pointing to “one of the highest probabilities of a crash in the stock market looking out 60 days”…
After Federal Reserve Chair Jerome Powell indicated the bank isn’t finished raising rates, one market expert has warned a crash could come in a matter of days.
“They’re playing catch up, and while they were doing quantitative easing in 2021, inflation started to rage and now they’re trying to catch up,” The Bear Traps Report founder Larry McDonald said Wednesday on “Mornings with Maria.”
“Our 21 Lehman systemic risk indicators that look at equity and credit point to one of the highest probabilities of a crash in the stock market looking out 60 days,” McDonald, who is also known for writing a best-selling book on the Lehman Brothers collapse, cautioned.
I really hope that he is wrong.
I really hope that we have more time.
But the reality of what is now taking place should be evident to everyone.
A major economic meltdown has begun, and it will eventually get a whole lot worse.
We aren’t just witnessing the end of an economic cycle.
What we are actually witnessing is the end of a deeply corrupt, deeply flawed system.
The greatest debt bubble in the history of the entire planet is starting to burst, and the whole world will soon be experiencing severe pain as a result.
About the Author: My name is Michael and my brand new book entitled “End Times” is now available on Amazon.com. In addition to my new book I have written six other books that are available on Amazon.comincluding “7 Year Apocalypse”, “Lost Prophecies Of The Future Of America”, “The Beginning Of The End”, and “Living A Life That Really Matters”.
Read the full bio here.
This article was originally published in The Economic Collapse blog on Mar 08, 2023, with the title “We Just Witnessed An Economic Red Flag That We Haven’t Seen Since 1981”. The views expressed are the author’s, and do not constitute an endorsement by or necessarily represent the views of On Aviation™ or its affiliates.