8 Signs Economic Collapse is Near
Preppers are quite naturally concerned with all the many disasters, catastrophes and man-made apocalypses that might occur, and through a lifestyle of personal readiness they hedge their bets accordingly. However, some disasters are far more insidious, and more nebulous, but no less dangerous than any tornado, hurricane, nuclear strike, or terrorist attack.
Economic collapse is one such catastrophe that has occurred in the past and will occur again in the future, over and over.
Through causes great and small the economy of a nation can break down, plunging millions of people into financial ruin seemingly overnight, and stressing the ties of society to their breaking points.
An economic collapse will only usher in a new era of uncertainty, misery and a host of secondary effects, each worse than the last.
At first glance economic collapse might seem like a problem that is so complex and so gargantuan there is nothing you truly can do to prepare for it.
But there is, and the first phase of preparation is always understanding what you are dealing with and learning to see it coming so you can avoid it or take the appropriate action to minimize the damage.
In this article we will share with you eight signs that you are likely to see when economic collapse is near.
Learning to Read the Economic “Terrain”
Every institution, pundit and agency seems to have their own notion of what constitutes an economic collapse.
Is it a “total systems failure” financial calamity like the Great Depression of the early 20th century, or might we include other significant events like the ‘Great Recession’ of 2008?
Does economic collapse necessarily entail other failures and tribulations in society, or is it merely a set of symptoms as indicated by a stalled market?
Economics majors and financial theorists are likely to enjoy arguing over the minutia of what qualifies or disqualifies a downturn from inclusion into the annals of genuine economic collapse, but since we are preppers we are concerned with the practical and not the semantic.
For us, a legitimate economic collapse is felt and experienced on a very personal, palpable level; we won’t have to argue about it as it will be obvious.
It is more beneficial to us, as preppers, to learn to read the economic “terrain”. Terrain, in our case, meaning the overall health of the economy.
There isn’t one single switch or lever that can be flipped that will plunge our economy into a downward spiral, nor is there any one mishap or ailment that can do the same overall, unless it is a very grave one.
Historically, major economic collapses have always resulted from a confluence of several factors or when an economy has suffered under a handful of factors for an extended time.
By learning to recognize and monitor the following signs we will present in the next section you’ll be able to make better informed decisions about what actions you need to take as the chances of economic collapse grow.
8 Signs Economic Collapse is Near
Stores and Manufacturers Closing Up
One of the most obvious and readily apparent signs of impending economic collapse is the increasing closure of shops, stores and manufacturers of goods. Often referred to as the retail apocalypse, it is a sure symptom of serious economic stress, barring any other obvious explanation.
When the economy starts to tank, people will have less money available for goods of all kinds but especially goods that are not of a strictly necessary nature.
With decreasing sales, businesses will start losing profits and then become unprofitable. As that keeps up, employees will be laid off until the business is down to a skeleton crew and then facing eventual closure.
With fewer businesses to sell their goods manufacturers will produce less, repeating the cycle until eventually a large local or regional employer goes bust.
These job losses, from the youngest cashier to the most seasoned factory operations manager will further fuel the economic downturn in other ways, several of which are discussed in this section.
The bottom line is that anytime you notice stores and manufacturers closing locations or even folding up entirely, you can be sure that rough times are ahead if the course is not corrected.
Spiking or Prolonged Unemployment Rates
Going hand in hand with the previous symptom, spiking or prolonged unemployment is always bad news economically. The longer people are out of work the worse the situation will become, and as previously mentioned this has a sort of snowballing effect.
People who are out of work will rarely splurge on anything except necessities and even then their purchasing power is greatly curtailed.
At least, their purchasing power is curtailed until the government swoops in with “benevolent” unemployment and stimulus packages, ostensibly intended to head off the impending catastrophe. What happens instead is that those who are out of work will be, at least in the short term, incentivized to stay that way.
As we have learned time and time again, all this does is further increase the indebtedness of a nation (due to mass uptick in handouts and entitlements), and further stress what businesses are still operating since they will have a hard time getting workers to clock in again.
Unemployment rates should only ever be going in one direction in a healthy economy, and that is down. Rising unemployment is like a glaring red light on the dashboard, indicating that things are very bad and getting worse. But even stagnant or holding unemployment levels, unless very low, are worthy of concern.
Growing Government Debt
There is one thing that all governments love to do, and that is spending money, particularly money that does not belong to them and money they do not have in the first place.
Government debt is never good, and don’t let anyone tell you otherwise. It is especially worrisome when all it ever does is grow and grow and grow…
As far as governments are concerned, they treat their personal spending account very much like an all-you-can-eat buffet with no limit.
And just like an all-you-can-eat buffet, the “all-you-can-eat” part is theoretical, not literal, since you can eventually go bust by running out of food, getting kicked out, or completely capsizing yourself through gluttony.
It works the same way with spending: as government debt increases the likelihood of economic collapse increases proportionally with it.
Don’t be fooled by platitudes from government officials, congressman and sock puppet economic experts on the government dole regarding this matter: they’ll want you to believe that they can simply start up the money machines, fiddle with rates, or do some other hoodoo and make the problem go away, but just like gravity the laws of economics are real and truly inescapable.
They can be bent, and some may be cheated, but one day the butcher’s bill will come due, and all the many citizens throughout the land will be the ones footing it, not the fat and listless aristocrats on Capitol Hill.
Steadily Increasing Prices of Commodities
At the consumer level, if you notice steadily increasing prices of everyday goods like food, water, electricity, fuel and so forth, you can generally take that as sound evidence that the economy is under stress, with any number of causes.
On its own, this symptom might seem fairly innocuous, and much of the time in the absence of other, bigger and flashier problems that’s true, but in conjunction with any of the other problems and symptoms we have listed on this list, it is troubling.
When consumers’ dollars don’t go as far for whatever reason, buying power is reduced. Diminished buying power does nothing to help the economy because it adds to the general stagnation that paves the way for ruin.
The slow creep of increasing prices on services and goods, particularly essentials, can serve as the slow drip of water that eventually unleashes a titanic flood elsewhere, economically speaking.
What often happens is that the price of goods will increase to the point where people flat out will not pay for it anymore, at any price, and that’s when you’ll see the pieces come tumbling down.
Stock Market Volatility
The stock market is often fretted over, but is rarely a genuinely informative and stable indicator of economic health.
People who invest in stocks and attendant commodities play their games and make their fortunes off of what the economy is doing, and when the stock market does impact the economy it is usually a case of the tail wagging the dog. You should not necessarily alter your plans or enact them based off of any snapshot of stock market activity.
However, we can use the stock market as a sort of weather vane for the rest of the economy in one particular and easy to recognize instance.
When stock market hustle and bustle is marked by significant volatility, particularly runaway increases punctuated by dizzying falls, you can be certain that speculators are having their own tough time reading the wind and that should give us pause.
Similarly, when the stock market seems to climb and climb and climb with no sign of stopping and for no discernible reason it usually only occurs before a major bust, and indeed may precipitate the opening phases of a serious economic downturn.
In short, when the markets are experiencing their usual ebb and flow, almost like a steady respiratory rhythm, you have little to worry about but when the “breathing” of the stock market comes in gasps, stutters and coughs it is time to get ready.
Reemergence of Subprime Lending, and Other Financial Trickery
If there’s one thing you’ll be able to always count on it is banks and other lenders taking advantage of economic stressors for their own monumental gains.
Bankers have been and will always be at the forefront of economic calamity, and the next time we experience economic ruin they will have had a hand in it one way or the other.
One of the most despicable and visible examples of this behavior was the subprime lending crisis that led directly to the Great Recession of 2008.
Unpacking that real estate apocalypse is worth a series of articles all on its own, but paraphrased it resulted directly from bankers lending money to people for the purchasing of property who could not, in any way, shape, form or fashion hope to pay that money back.
The result? A literal tsunami of foreclosures, the total collapse of the housing markets and economic ruin for millions of people.
In a sector so closely linked to economic prosperity as real estate an event like this might as well be a mortal wound in the flank of the economy.
Even today, we’re already seeing the re-emergence of subprime lending taking place, the terrors of 2008 seemingly long forgotten. This in conjunction with other trickery will only result in average Americans citizens being sold down the river for a nickel apiece.
Stagnating / Falling Household Incomes
It is imperative that household incomes increase over time in order to keep pace with inflation, and with the slow but steady (and sometimes momentous) increase in the cost of goods, services, and housing.
When household income is stagnant or, even worse, falls this is usually a sign of poor economic health overall. Sure, not everyone will be on the same sheet of music when it comes to their jobs and lives, but if you put a large cross-section of household incomes on a line graph they should be trending up, not down.
This is especially hazardous in the overall scheme of things when other symptoms of economic collapse are already manifesting.
High cost of goods, shortage and the closure of businesses will lead to emergency cutbacks among what employers are still operating in order to “save the ship”. This could see even long time employees taking pay cuts just to remain employed, and even the ones that don’t going instead without a raise or promotion pretty much indefinitely.
These two factors combine serve as a deleterious one-two punch for beleaguered consumers, and as consumer confidence and spending power plummet alongside the mandate to stretch every cent as far as it will go, sudden economic contraction is an inevitability.
Slowing New Construction Tempo / Fewer Completions
New construction is always a sign of a healthy economy. As the economy booms so too does the need for residential housing, commercial spaces and industrial sectors to produce all of the goods that grease the gears of commerce.
Wherever you see cranes, scaffolds and work sites you can be sure that the economy is chugging along healthily.
However, where you see construction slowing down or even ceasing entirely, you can be just as sure that the economy is stumbling.
Worse yet, you might see construction that was begun immediately prior to the downturn abandoned in place, leaving an eerily skeletal incomplete building behind. It is appropriate, because it best represents the wasteland that the economy is soon to become.
When you notice that many regions or even the entire country is experiencing a slowdown in construction in multiple sectors, you’ll know the economy is plenty stressed.
Barring some other explanation that is verifiable such as a mass shortage of common building materials or something of that nature there is hardly a better indicator of pending recession.
Preppers have good cause to be worried about economic collapse, but understanding all of the many and intricate interwoven forces that drive the economy might seem beyond your reach.
Don’t over think it. You don’t have to have a degree in economics just to recognize the most obvious indicators that economic health is falling.
Commit the eight signs of pending economic collapse above to memory, and then learn to judge the severity in context and you’ll always have a head start on everyone else when it comes to making preparations. Remember it is not a matter of if, but when.
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