The US Labor Department has revised the jobs numbers down nearly every year for over a year. Now the government admits to inflating the jobs numbers by reducing the jobs numbers by up to one million over the past year.

Many American consumers are supplementing their living expenses with debt. Credit card balance is at an all-time high. Credit card defaults are at the highest level since 1991.

A recent Piper Sandler analysis states 2024 looks reminiscent of 1970 and 2021 recession years. The American consumer has more debt and less savings than in 1970 and 2021.

Consumer weakness could lead to a sharper decline than 1970 and 2021, according to Piper Sandler.

The Shiller cyclically-adjusted price-to-earnings ratio (CAPE), is a 10-year rolling average of the 12-month trailing PE ratio.

The CAPE ratio has a remarkable ability to predict future returns. The CAPE ratio predicted the S&P500 returns over the following decade with 90% accuracy between 1995 – 2010, according to an analysis by The American College of Financial Services.

The Shiller CAPE ratio currently predicts annualized returns of about 3% over the next decade.

I believe the economy will get worse before it gets better. We are in for a rough ride.

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