The October jobs report and Walmart’s Black Friday 2015 ads may have everyone excited to whip out their wallets in order to buy Christmas gifts, but Peter Schiff has become the economic Grinch who stole Christmas. The investor predicts that Christmas 2015 is going to be “horrible” for many Americans since he expects many companies to start firing their employees shortly after the holiday shopping season ends. Unfortunately, Schiff’s 2015 prediction has already been proven true by at least one company, although it’s possible the Fed rate hikes are right around the corner.
In a related report by the Inquisitr, if you want to know what stores will be open and which will be closed for Black Friday 2015, then click on this guide.
Not all analysts are saying, “Bah humbug!” Many believe the United States economy has improved enough to allow for extra spending, although the National Retail Federation predicts “retailers’ sales in November and December will grow by 3.7 percent over the previous year, down slightly from the 4.1 percent increase in 2014.” Still, Americans are expected to increase the growth of the U.S. economy by 2.5 percent in the final quarter of the year based upon Black Friday 2015 sales and Christmas shopping.
“What we’re incorporating is some tailwind from lower gas prices, pretty good sentiment when it comes to the labor market, and perhaps a little bit better market outlook than a month ago,” said Michael Feroli, the chief U.S. economist for JP Morgan Chase.
Peter Schiff disagrees, saying the Christmas outlook is anything but rosy. The investor expects a potential U.S. recession to occur in the coming future right as most Americans want to be celebrating good times with family.
“I expect [job] layoffs to start picking up by the end of the year,” Schiff said, according to CNBC. “Retailers have overestimated the ability of their customers to buy their products. Americans are broke. They are loaded up with debt. We’re teetering on the edge of an official recession… the labor market is softening.”
As previously noted, this 2015 prediction has already proven to be true. Target is closing 13 stores shortly after Target’s Black 2015 shopping season is over. Other retailers are following suit. J.C. Penney is closing stores, and Macy’s announced that it would close 40 of its 800 locations within the United States.
The good news is that the October jobs report has the U.S. unemployment rate dropping down to only 5 percent. The bad news is that Schiff claims the value of the U.S. dollar is “the biggest bubble that the Fed has ever inflated” and “it’s the only thing keeping the economy afloat.”
“[The inflated dollar] is keeping the cost of living from rising rapidly and it’s keeping interest rates artificially low. It’s allowing the Fed to pretend everything is great,” Schiff said. “Eventually the bomb is going to drop out of the dollar and we are going to have to deal with reality. That reality is we are staring at a financial crisis much worse than the one we saw in 2008.”
It is possible that the investor is wrong on this count since he has long been predicting a U.S. stock market crash and the devaluing of the U.S. dollar. Based upon the October jobs report, the Wall Street Journal says that many analysts are predicting the Federal Reserve will raise interest rates in December.
“With expectations for a December rate hike seemingly at 50/50 heading into today’s report, the bounce back in job creation certainly tips expectations incrementally toward a Fed rate hike sooner rather than later,” explained Jim Baird of Plante Moran Financial Advisors. “Whether or not policy makers conclude to do so in December, however, remains to be seen. Will they still view the slowing global economy and inflation that remains below its target as sufficient reason to stand pat or will the desire to get out in front of inflation before it accelerates be enough to convince them to move?”
[Image via Breathe Easy USA]