Peter Schiff, CEO of Euro Pacific Capital, says the upcoming holiday season, at least in an economic sense, can be summed up in one word: Humbug!
We’re talking recession and job cuts: the economic equivalent of Santa leaving coal in your financial stocking.
"I expect [job] layoffs to start picking up by the end of the year," Schiff told CNBC,
identifying retailers as the first victim.
"Retailers have overestimated the ability of their customers to buy their products. Americans are broke. They are loaded up with debt," he said.
"We're teetering on the edge of an official recession," and "the labor market is softening."
He said the Federal Reserve is the lone cause of the problem. “As he sees it, the central bank's easy money policies have created a bubble so big that any prick could send the U.S. economy spiraling out of control. And that makes the possibility of hiking interest rates slim to none,” CNBC reported.
But many experts feel it is much more likely the Federal Reserve will raise interest rates in December after U.S. job growth surged in October and the unemployment rate hit a 7-1/2-year low of 5.0 precent, Reuters reported.
Nonfarm payrolls increased 271,000 last month, the largest rise since December 2014, the Labor Department said on Friday. In addition, average hourly earnings rose a respectable 9 cents. The payrolls jump followed tepid gains in August and September.
The U.S. central bank, which has held rates near zero for nearly seven years, has made clear, both in its statement after its October policy meeting and Yellen's subsequent comments, that a rate hike is firmly on the table at the Dec. 15-16 meeting.
"The Fed has to talk about raising rates to pretend the whole recovery is real, but they can't actually raise them," he said. "[Fed Chair Janet Yellen] can't admit that she can't raise them because then she's admitting the whole recovery is a sham and that the policy was a failure."
Schiff said the recent rally in the dollar is "the biggest bubble that the Fed has ever inflated" and "it's the only thing keeping the economy afloat," CNBC reported.
The dollar rallied to a 6-1/2-month high against a basket of currencies as investors braced for higher borrowing costs.
Meanwhile, Morgan Stanley analysts aren't predicting a lot of cheer for retailers this holiday season, Bloomberg reported.
The bank sees holiday sales growth slowing this year despite an increase in the financial health of many consumers, according to analysts led by Kimberly Greenberger.
In a note titled "The Grinch Could Steal Christmas," they argue that while consumers will have plenty of extra pocket money this season, that won't necessarily translate into extra spending.
"We expect record levels of liquidity funded by income versus debt, along with further strengthening driven by additional energy savings, home price appreciation as well as the improved buying power of the dollar to continue to support consumer fundamentals," the note said. However, consistent with the strong though slowing pace of job gains as well as a rise in stock market volatility, we expect lower rates of spending growth in the fourth quarter," the note said.
(Newsmax wire services contributed to this report).
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