Maria’s Note: Tonight at 8 p.m. ET, Nomi is holding a special market briefing.
She says you need to be there…
Because she’ll reveal a plan to prepare for what she calls “The Fed’s Final Mandate.”
According to Nomi, the dollar is under threat.
But it’s not from China, Russia, or any foreign power. The single biggest threat is domestic – from within our own borders.
And the window to protect your portfolio and your money is closing on July 31.
Join the RVSP list for Nomi’s Countdown to Chaos for free with one click, right here.
Then, read on for this new essay from Nomi, to help you prepare for the big night…
The American consumer is being pushed to the brink.
Since the post-Covid economic recovery, consumer demand for homes, automobiles, and vacations has skyrocketed.
But it came at a cost…
Consumers and the dollar are now on a collision course.
As you know, inflation peaked at 9.1% last year. That was the highest annual increase in 40 years.
Although the latest inflation figure has dropped to 4%, Americans are still feeling significant price squeezes.
For example, the U.S. is facing an unprecedented rise in food insecurity. Groceries are 20% more expensive than two years ago. In 2022, food prices increased by 9.9%. And this year, they’re expected to go up by 6.2%.
Gas stations also saw a 33.5% price increase from 2021. Some sectors – like metal manufacturing – even saw inflation jump by about 60% or more in the past year. Furniture prices are still up 41%. Motor vehicle parts rose by 25% in the past year.
These beneath-the-headline numbers show that American consumers are feeling a pinch far greater than the 4% official inflation figure.
This same data indicates new cracks in your cost of living. And they have massive implications for the economy, the financial system, and your money.
Let me explain…
What Story Is the Data Telling Us Today?
Americans are taking on record-breaking debt just to make ends meet.
At first glance, it may not seem like it.
In March, for instance, spending on credit and debit cards per household rose by only 0.1% relative to last year. That’s in stark contrast to the over 40% growth in spending seen in March 2021 on a year-over-year basis.
In other words, Americans’ spending on new items is in a downward trend. That tells us that the hot economy of the last several years might be cooling.
But that’s only part of the story.
Consumer spending is down because prices remain high, not because demand for items has waned. Items still cost too much. So Americans are spending less overall on new things… and taking on more debt to afford what they do buy.
As I mentioned above, Consumer Price Inflation (CPI), which is one measure of economy-wide inflation, increased 4% in May relative to the year prior.
That was a slowdown from April, but inflation is still above the Fed’s target of 2%.
You can see the lingering price squeeze in the chart below. It shows inflation in May, broken up into common household categories.
Areas such as rent, food costs, daycare, electricity, and medical supplies remain elevated when compared to last year.
So, it’s no wonder that Americans are taking on more debt.
In fact, the latest data from the Federal Reserve reveals that American consumers in total have racked up nearly $1 trillion in debt this year. That’s up a massive $250 billion in only two years.
You can see this in the next chart below…
This data only counts for debt that has been issued through U.S. commercial banks. There could be more we’re not seeing.
According to research from Investopedia, which analyzes a wider data set from banks, the median rate on new credit cards as of June skyrocketed to 23.74%. That’s the highest rate in more than 20 years.
The numbers tell the story. Americans are taking on more debt. And they are paying more for it.
This is happening at a time when, according to the Fed’s 2022 Economic Well-Being of U.S. Households survey, nearly 40% of Americans can’t cover a $400 emergency expense.
All in all, the American consumer is getting the short end of the stick – twice. Higher prices and a higher cost of debt.
And things could soon take a turn for the worse…
The Fed vs. the U.S. Dollar
After raising rates 10 straight times, Fed policymakers opted to hold rates at 5-5.25% last week.
That means we’re in Stage 2 of what I call the Fed’s three-stage pivot, or a pause in rate hikes.
The Fed’s chairman, Jerome Powell, claimed that the central bank would take a “data-dependent approach” toward its policies. He noted that inflation remains relatively high.
He didn’t talk about the dollar. And yet, today, the foundation of the dollar is breaking.
For many Americans, the great distortion in the cost of money has meant a squeeze on families and household budgets.
And, on July 31, the Fed is set to unleash another attack on the dollar. I call it the “Fed’s Final Mandate.”
It will be the greatest monetary sleight of hand in the history of America… and it will mark the end of the dollar as we know it.
Tonight at 8 p.m. ET, I’m holding an emergency briefing to reveal what the Fed has in store for our financial system. During the event, I’ll also tell you all about a little-known way you can position yourself ahead of what’s coming.
Reserve your spot with one click here.
Don’t sit on the sidelines while the elites slowly erode your purchasing power. Instead, you can protect your wealth and your future – all using an asset with the potential to deliver as much as 50x profits.
I’ll see you soon.
Regards,
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Nomi Prins
Editor, Inside Wall Street with Nomi Prins