(The Economic Collapse Blog)—For a long time, there was a lot of denial about the direction that the U.S. economy was heading. The Biden administration and the mainstream media just kept insisting that everything was just fine even though everyone could clearly see that it wasn’t. But now reality is setting in. Last week we got some numbers that Wall Street really didn’t like, and a massive temper tantrum ensued.
The panic that we witnessed on Friday was quite breathtaking, and many are concerned that it could bleed over into the new week. Investors are desperate for the Federal Reserve to cut interest rates, but so far the Fed has not moved.
On Friday, many were surprised when the employment numbers were much worse than anticipated…
U.S. job growth cooled sharply in July while the unemployment rate unexpectedly rose to the highest level in nearly three years.
The Labor Department on Friday reported that employers added 114,000 jobs in July, missing the 175,000 gain forecast by LSEG economists. The unemployment rate also unexpectedly inched higher to 4.3% against expectations that it would hold steady at 4.1%.
It marked the highest level for the jobless rate since October 2021.
Please keep in mind that the U.S. economy must produce at least 150,000 new jobs each month just to keep up with population growth. So even if we did add 114,000 jobs last month, we would still be losing ground.
But the only reason why the official figure showed an addition of 114,000 jobs last month is because the birth/death model added 246,000 jobs to the final number…
Of course, we can’t possibly forget that every jobs number is highly manipulated and rigged, and July was no difference with the Birth/Death model adding a ridiculous 246K “statistical” jobs to the unadjusted print. Which it does not translate apples to apples, one can confidently say that the actual adjusted payrolls number would be far, far smaller had it not been for this ongoing fabrication.
It isn’t difficult to get a positive employment report every month when you are “adjusting” the final number by about a quarter of a million jobs that you just “assume” are being created somehow.
In any event, even if we take the government’s report at face value, the Sahm Rule has still been officially triggered…
That’s because the rise in unemployment triggered the so-called Sahm Rule, an indicator that is used to provide an early recession signal. The rule stipulates that a recession is likely when the three-month moving average of the jobless rate is at least a half-percentage point higher than the 12-month low.
Over the past three months, the unemployment rate has averaged 4.13%, which is 0.63 percentage points higher than the 3.5% rate recorded in July 2023. The Sahm Rule has successfully predicted every recession since 1970.
Even though this indicator has successfully predicted every single recession since 1970, Fed Chair Jerome Powell insists that it may not be correct this time around…
Fed Chair Jerome Powell responded to a question about the rule at a news conference Wednesday following the Fed’s decision to keep the key interest rate unchanged. “It’s not like an economic rule where it’s telling you something must happen.” He continued, “what we think we’re seeing is a normalizing labor market and we’re watching carefully to see if it turns out to be more.”
Unfortunately, it appears to be inevitable that the unemployment rate will go even higher because large companies all over America continue to shed workers. In fact, last week Intel announced that it will be “cutting 15% of its workforce”…
Months after the federal government gave Intel $8.5 billion in grants to help bring back chipmaking to the U.S., the company said it is cutting 15% of its workforce, which translates to around 17,000 jobs.
The tech company announced the job cuts as part of a massive cost-cutting and restructuring plan.
Of course Intel is far from alone.
Businesses from coast to coast have fallen on hard times, and business bankruptcy filings have risen by more than 40 percent during the past 12 months…
Over the past year, business bankruptcy filings are up 40.3 percent, and have now reached a number not seen since the second quarter of 2020, at the peak of lockdowns. American households are following along, with total bankruptcy filings up 16.2 percent in the past year, including 132,710 new filings in the second quarter of 2024 alone.
The last time business bankruptcy filings were this high was during the lockdowns in the early days of the COVID pandemic.
But we don’t have any lockdowns to blame the current wave of bankruptcies on.
What we are witnessing now is really quite scary.
Hordes of businesses are failing, and commercial real estate values have been crashing hard…
Brookfield owned Gas Company Tower in Downtown LA has plummeted over $400M in value
The skyscraper was recently valued at $214.5M
It was appraised at $632M just 3 years ago
This is a commercial real estate apocalypse
Right now, our banks are sitting on gigantic mountains of commercial real estate loans that have gone bad. For many of those banks, it is just a matter of time before they go belly up.
But don’t just take my word for it. Recently, a number of prominent experts have been warning that a tsunami of bank failures is on the way…
The echoes began in May.
Barry Sternlicht of Starwood Capital Group predicted a regional bank failure “every day or every week.”
Days later, Newmark Chair Howard Lutnick warned, “Every single weekend a regional bank is going to go bye-bye,” and predicted 500 to 1,000 failures in 2025 and 2026 — as did alternative lenders speaking at the same event. In June, PIMCO’s head of global private commercial real estate joined the chorus.
Yes, this is really happening.
A tremendous amount of financial chaos is in our future, and most people are going to be completely blindsided by it.
There is one thing that the Federal Reserve could do to mitigate the damage.
If the Fed started cutting interest rates immediately, that would certainly help.
But so far, the Fed has refused to budge.
We are being told that the Fed “might” give us a rate cut in September. That isn’t going to do the job.
We need help now, because major problems are already starting to erupt all around us.
Michael’s new book entitled “Chaos” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.
Two Storms, One Harvest
Every food crisis in living memory has been a one-shock event. The 2008 price spike was a commodity bubble. The 2020 shortages were a logistics failure. The 2022 grain scare was a war on one exporter’s ports. Each time, the system bent, adjusted, and recovered, and each time the experts assured us afterward that global markets are simply too big and too diversified to fail.
What nobody in Washington seems eager to discuss is that 2026 is shaping up to be something the modern food system has never actually faced. Two independent shocks, one climatic and one geopolitical, are converging on the same harvest cycle at the same time. Not sequentially. Simultaneously.
Start with the weather. The Pacific Ocean is currently building toward what forecasters now openly call a record event. NOAA’s Climate Prediction Center puts the odds of at least a strong El Niño near 88 percent, with roughly two in three odds it reaches “very strong” status, the tier reserved for perhaps three or four events in the entire satellite era. Every major global model now projects a median peak in Super El Niño territory, and most of them project it exceeding the 2015-16 event, which until now held the modern record. Sea surface anomalies were already brushing the super threshold in mid-July, months before these events normally peak. The atmosphere has already shifted into El Niño mode, and the event is forecast to crest in late fall and early winter.
This is not about “climate change.” It’s about the standard cycles of weather, and the cycle we’re currently in is one that has likely devastated societies in the past. We’re better prepared as a society today, but not all Americans are equally prepared.
Serious households have started doing the quiet math on their own. Grocery bills tell part of the story, and the forecast maps tell the rest, which is why long-term food storage has moved from fringe hobby to mainstream line item in the family budget, with established suppliers like Heaven’s Harvest seeing demand from people who five years ago would have rolled their eyes at the idea. That instinct is not paranoia. It is pattern recognition, and the pattern is worth walking through carefully.
Editor’s Note: Heaven’s Harvest IS a sponsor, but the warnings of this article are real and would be written even if we didn’t have a survival food sponsor. With that said, those who take advantage of what they offer can use promo code “Patriot” for 15% off.
The Fertilizer Clock Is Already Running
While the Pacific warms, the second shock has been unfolding in the Strait of Hormuz. The conflict with Iran turned the world’s most important energy chokepoint into a contested waterway, and the consequences reach far beyond the gas pump. Roughly a third of global fertilizer trade moves through Hormuz, and the disruption sent urea prices up 86 percent year over year by March, with a 53 percent jump in a single month.
The World Bank projects energy prices rising about 24 percent in 2026 and fertilizer about 31 percent. By its own accounting, fertilizer prices ran 35 percent higher in the first five months of this year than the same period last year.
Here is the mechanism the nightly news will not explain. Fertilizer is not a grocery item. It is a time-delayed input. The nitrogen a farmer in Iowa or Punjab could not afford to apply this spring does not show up as a problem this spring. It shows up as a thinner harvest six to twelve months later.
The World Bank’s own food security brief concedes that the effects of reduced applications earlier this season “are likely to become visible only later in harvest outcomes.” Translate that from institutional language into plain English and it means this. The damage is already done, it is already in the ground, and we are simply waiting for it to arrive on the shelf.
Now check the calendar. Six to twelve months from the spring planting season lands us squarely in late 2026 and early 2027. Which is precisely when the strongest El Niño in the instrumental record is forecast to peak, bringing its signature droughts to Southeast Asia, Australia, southern Africa, northern Brazil, and South Asia, the very regions that grow the world’s rice, sugar, and oilseeds.
The World Bank warns openly that a strong El Niño “could disrupt multiple crop belts simultaneously” on top of the conflict-driven input costs. Their baseline projection assumes the Middle East disruptions ease by autumn. What in the last two years of Middle East history suggests that assumption is safe?
The System Has No Slack Left
The comfortable answer is that global markets always adjust. But adjustment requires slack, and the slack is gone. Global cereal production is expected to decline from last year’s records even before El Niño does its work. The UN World Food Programme, hardly a den of right-wing preppers, is calling this the most significant disruption to its supply chains since Covid and the invasion of Ukraine, and its supply chain director put the stakes bluntly.
Today’s supply chain challenges are tomorrow’s hunger crisis.
There is also a political dimension that markets cannot price. When food gets scarce, governments do not behave like economists. They behave like politicians. Export bans, hoarding mandates, and panic buying at the national level turned the modest rice shortfall of 2008 into a global crisis, and analysts are already warning that import-dependent nations are the first dominoes.
The 2015-16 Super El Niño, a far weaker event than what is now forecast, threw tens of millions into food stress across Africa and Asia. This one is projected to be stronger, and it arrives with fertilizer already rationed by price and shipping lanes already contested by missiles.
What Joseph Knew
Scripture does not treat preparation for lean years as faithlessness. It treats it as wisdom delivered in advance to those willing to act on it.
Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt.
Joseph did not respond to that warning with a hashtag or a committee. He stored grain during the years of abundance, and when the famine came, Egypt stood while its neighbors begged. The lesson is not that famine is certain. It is that the time to prepare is precisely when preparation still looks optional.
Nobody who filled a pantry in a year of plenty has ever regretted it, and nobody standing in an empty aisle has ever been glad he waited for certainty.
None of this calls for panic, and panic is the enemy of sound judgment anyway. It calls for the same unglamorous prudence our grandparents considered ordinary. Keep some cash margin, know your local growers, and put real food in deep storage while it is cheap and available, because the entire arc of this story is that cheap and available is a closing window.
Families looking for a straightforward place to start can visit Heaven’s Harvest and use promo code Patriot for 15 percent off long-term storable food. The forecasts may yet soften, the strait may yet reopen, and we should pray they do. But hope is a fine thing to hold and a foolish thing to eat.
