The recession has begun. The worst is yet to come.

In the U.S., its service industry, which accounts for nearly 70 percent of Gross Domestic Product, fell from 51.9 in April to 50.3 in May, according to data released yesterday by the Institute for Supply Management’s non-manufacturing PMI. Barely in positive territory, a reading above 50 indicates growth. 

Again, as we have long forecast, the higher the Federal Reserve raises interest rates, the deeper the economy will fall. And, as we have made very clear since they started raising interest rates last March and pushed them up 500 basis points since then… it would take time before these hikes hit economic growth. As the data keeps adding up, that time is now. 

The ISM readings in March, April, and May registered their weakest numbers since January 2010… the height of the Great Recession.

TREND FORECAST: Simply stated by the facts and indisputable data, the higher the Federal Reserve raises interest rates, the deeper the economy and equities will fall. Therefore, although consumers spend more on services, consumer goods orders fell for three months in a row, hitting its lowest level since last February.  

As the Commerce Department reported yesterday, factory orders were up just 0.4 percent in April, down from 0.6 in March. Not only is this a key indicator signaling an economic slowdown, when military orders were taken out, factory orders were actually down 0.4 percent for the month… which equals recession.

Therefore, with weakening numbers, according to CME Group’s FedWatch Tool, the guess on The Street is that there is a 80 percent chance that the Federal Reserve will not raise interest rates next Wednesday. 

Should they hold interest rates where they are, it will be positive for both equity markets and gold prices. And as we had forecast last November, since the S&P 500 went up some 16.3 percent following U.S. midterm elections over the past 60 years, the trend would continue. To date the S&P, up 12 percent this year, is nearing its peak. 

The Worst is Yet to Come

As Trends Journal subscribers well know, when the COVID War was launched in January 2020 and the work-at-home trend began, we had forecast in March 2020 that there would be an office building crisis.

With people being forced to stay home as a result of political science and the draconian dictates of politicians, after months of working from home, workers realized how costly and life consuming it was to commute to work. Thus, when the COVID War ended, many refused to return to work full time. 

And, with more people working from home, office building tenants realized they could get what they needed from their remote workers and save a lot of money by renting less office space. The result of this would be a real estate crisis unseen in modern history. See:

Now, over three years later, the so-called business media that have ignored our forecasts, are reporting on the office building bust dangers and how it will hit the banking system.  

This is the front page headline story in today’s Financial Times

US banks braced for losses in rush to exit teetering commercial property

Some US banks are preparing to sell off property loans at a discount even when borrowers are up to date on repayments, in a sign of their determination to reduce exposure to the teetering commercial real estate market.

The willingness of some lenders to take losses on so-called performing real estate loans follows multiple warnings that the asset class is the “next shoe to drop” after the recent turmoil in the US regional banking industry.

It will be more than just a dropping “shoe,” it will hit the banking system hard as office building owners default on their loans.

Again, this is just the beginning of a mega-trend that will become much worse since many of the office building owners have floating loan rates. Thus, the higher interest rates rise, the more it costs to service its loans at a time when their rental revenue is sharply dropping. 

How’s this CNBC headline today that indicates that the worst is yet to come?

World Bank sees major economies growing at much slower pace thanks to higher rates and banking stress

The U.S. is projected to grow 1.1%, while the euro area and Japan are projected to see GDP growth of less than 1% in 2023. U.S. GDP growth is expected to decelerate in 2024 to 0.8% amid the higher rates.

The bank estimates overall global growth will decelerate to 2.1% in 2023, down from 3.1% last year. Emerging and developing economies are forecast to see a slight uptick in gross domestic product to 4%, up 0.6% from the bank’s projections made in January 2023. However, World Bank chief economist Indermit Gill said excluding China, growth in developing economies would be less than 3%.

This marks “one of the weakest growth rates in the last five decades,” Gill told reporters Tuesday.

Yes, the damage of the COVID War, as we had long forecast, is incalculable. It has destroyed the lives and livelihoods of billions across the globe, the implications of which will continue to spread across the socioeconomic and geopolitical spectrum.

Yesterday, the investment firm Park Hotels & Resort Inc. defaulted on a $750 million loan on its Hilton Union Square and Parc 55 hotels in San Francisco. Thanks to the geek-heavy San Francisco tenants that started the trend by forcing their employees to fight the COVID War by working from home—as we had forecast, and is now reality—crime and mental illnesses would rapidly rise. Indeed, as Gerald Celente warned: “When people lose everything and have nothing left to lose, they lose it.” 

And lose it they have in crime-and-homeless-land San Francisco that is suffering from a 30 percent office vacancy rate. And according to Savills real estate firm, San Francisco will have the most surplus office space in U.S. cities.

Again, as we had long forecast but just now is making the mainstream news, this trend is global and the socioeconomic devastation will spread far and wide.

Half of the biggest global companies plan to cut office space. US cities will suffer most

London CNN — Around 50% of major global companies will need less real estate in the next three years, with American cities — led by San Francisco — most exposed to empty offices, new research has found.

Half of firms with more than 50,000 employees plan to prune office space, with most anticipating a reduction of between 10% and 20%, according to a survey of 347 companies around the world by Knight Frank, a UK-based real estate firm.

The survey, released Tuesday, highlights changes underway in the commercial real estate market, which is under strain from waning demand for office space following a rise in homeworking after the pandemic, as well as from falling property values and rising interest rates.

There are fears that a rise in delinquencies as a result of the downturn could cause significant losses at banks, which finance many commercial real estate deals.

London, Berlin, Madrid and Hong Kong were also forecast to have a large amount of excess office space.

TREND FORECAST: Again, as we had long forecast, this trend is global. CNN notes that “London, Berlin, Madrid and Hong Kong were also forecast to have a large amount of excess office space.”

Yet read CNN, the Cartoon News Network’s final analysis: “There are fears that a rise in delinquencies as a result of the downturn could cause significant losses at banks, which finance many commercial real estate deals.”


How about reality?

We maintain our forecast that office occupancy rates will top out at around 60 percent and that the office building bust will bring down small and regional banks that hold most of the office building loans.

Indeed, again, three years too late but on it now, The Wall Street Journal reported today that, “Interest-Only Loans Helped Commercial Property Boom. Now They’re Coming Due,” and that “Landlords face a $1.5 trillion bill for commercial mortgages over the next three years.”

Old news to Trends Journal subscribers, WSJ repeated a warning that we had long forecast:

“Interest-only loans as a share of new commercial mortgage-backed securities issuance increased to 88% in 2021, up from 51% in 2013, according to Trepp.

Typically, owners pay off this debt by getting a new loan or selling the building. Now, steeper borrowing costs and lenders’ growing reluctance to refinance these loans are raising the likelihood that many of them won’t be paid back. 

Many banks, fearful of losses and under pressure from regulators and shareholders to shore up their balance sheets, have mostly stopped issuing new loans for office buildings, brokers say. Office and some mall owners are facing falling demand for their buildings because of remote work and e-commerce. Interest rates have more than doubled for some types of commercial mortgages, analysts and property owners say.” 

Thus, by the data, the banking crisis that began in March and the three banks that have failed since registered a bigger loss than the 25 that crumbled during the Panic of ’08, will greatly worsen as more lenders are forced to take over highly devalued office buildings.

And despite the media hype of converting the empty office buildings into apartments and condos, also as we have noted, office buildings constructed over the past 50 years, according to data, are not suitable to be converted into apartments.


News that Republicans in Congress and president Joe Biden had agreed on spending cuts to avert a government debt default gave the Dow Jones Industrial Average its best day of the year, sending it up 700 points on Friday, and powered the NASDAQ to a 52-week high.

The boost let the Dow turn in a positive week, rising 2.95 percent. The NASDAQ rocketed up 3.96 percent to notch its sixth consecutive weekly gain. The Standard & Poor’s 500 index was up 3.04 percent over the five-day trading span.

The Cboe Volatility Index, a gauge of investors’ nervousness, fell on Friday to its lowest since 2020.

Also, the week’s news that the economy sprouted another 339,000 jobs spurred investors back into stocks across the spectrum of sectors.

The strong hiring report was balanced by essentially flat wage growth and an uptick in unemployment.

With the economy posting another robust month of job gains, investors see a greater likelihood that the U.S. Federal Reserve could raise rates again this summer and keep them higher longer than markets have thought.

The yield on the two-year treasury note, a bellwether of the outlook for interest rates, rose to 4.501 percent Friday from 4.339 the day before.

The futures market’s odds that the Fed will raise rates this month fell to 28 percent Friday after reaching 66 percent a week earlier.

Whatever the Fed does at its June meeting, “investors know we’re in the latter innings of the [rate-raising] game,” Lazard’s chief market strategist Ronald Temple told The Wall Street Journal.

“The risk of recession has definitely gone down in the last four to five weeks,” he added.

Gold’s price rose less than 0.01 percent through the week to $1,947.40 at 5 p.m. U.S. EDT on 2 June.

Brent crude oil ticked down 1.7 percent for the week, trading at $76.24 at 5 p.m. U.S. EDT on 2 June. West Texas Intermediate oil, which benchmarks U.S. domestic prices, slipped 2.1 percent to $71.74.

Prices jumped on news that Saudi Arabia will cut its oil output by one million barrels a day, but quickly slipped back into the mid-$70s. (See “Saudi Arabia Cuts Oil Output After Fractious OPEC+ Meeting” in this issue.)

Bitcoin ended the week 2.5 percent lower as equity markets rallied on the debt deal, trading at $27,065 at 5 p.m. U.S. EDT on 2 June. 

Abroad, stocks closed the week up on Washington’s resolution of the debt crisis.

The London FTSE grew by 0.48 percent. The all-Europe Stoxx 600 eked out a 0.12-percent gain.

Japan’s Nikkei edged up 0.43 percent. The KOSPI in South Korea rose 1.54 percent.

In Hong Kong, the Hang Seng was up 0.65 percent. China’s CSI Composite was flat and the tech-centric SSE Composite added 0.32 percent.


The Dow Jones Industrial Average was down 199.90, or 0.59 percent, to 33,562.86 and the S&P 500 shed 8.58, or 0.20 percent, to 4,273.79. The tech-heavy Nasdaq Composite was down 11.34, or 0.09 percent, to 13,229.43. 

The Institute for Supply Management announced that its non-manufacturing PMI fell to 50.3 in May—which is just slightly above what is considered growth in the services industry, according to Reuters. The index is closely watched because it accounts for more than two-thirds of the U.S. economy, the report said. (See our trend forecast and analysis in this issue’s ECONOMIC UPDATE above.)

Elsewhere, London’s FTSE was down 7.29, or 0.096 percent, to 7,599.99 and the STOXX 600 was down 2.22, or 0.48 percent, to 459.93.

In Asia, Nikkei 225 rose 2.20 percent to 32,217.43 and Hong Kong’s Hang Seng gained 0.72 percent to 19,086.9. South Korea Kospi was up 0.54 percent to 2,615.41. The Shanghai Composite rose slightly to 3,232.44 and the Shenzhen Component was down 0.48 percent to 10,946.08.

TRENDPOST: It is worth pointing out that the political gamesmanship running up to the debt ceiling deal was always a joke. Gerald Celente distilled the debt deal to Washington saying, “Fuck the people, we’re a crime syndicate, we make up any God-damn thing we want and you the plantation workers of Slavelandi must follow our orders.”

Celente said: “There’s no debt ceiling. They just keep raising it to any made-up number they want. Who could get away with this? You’d be out of business.”

The real crash will come when commercial property landlords can no longer pay their interest-only loans of which we noted that landlords face a $1.5 trillion bill for commercial mortgages in the next three years.

“What we’re seeing is the unfortunate collision of the most rapid increase in interest rates in a one-year period and the realities of how people work,” Gregg Williams, principal receiver at Trident Pacific, a receivership firm for defaulted commercial mortgages, told the paper.

OIL: Brent crude futures fell 23 cents, or 0.3 percent, to $76.48 a barrel and West Texas Intermediate was down 25 cents, or 0.4 percent, to $71.90 a barrel. 

It was a choppy day in the oil market and Brent prices were up $2.60 in Early trading after Saudi Arabia announced that it will cut supply by 1 million barrels a day in July, based on demand.

Traders are considering recent economic data out of China, which is expected to account for more than half the world’s oil demand growth in 2023, according to Beijing’s purchasing managers’ index fell last month to a five-month low of 48.8, which was a “sharper-than-expected contraction in factory activity.”

TRENDPOST: The global economy is continuing to suffer and OPEC+ is trying to figure out how to contend with Russia selling its oil for about $56 a barrel, which is causing strain between Moscow and Riyadh.

Economies in Europe and China are slowing, which means bad news for oil-producing countries.

Gerald Celente said last week, “It takes time for interest rates to damage the economy, and that time is now.” 

GOLD: Spot gold was up 0.6 percent to $1,958.89 per ounce on the growing feeling on The Street that the Fed will pause rate hikes during its next meeting. 

The dollar also weakened slightly during trading hours, which makes the yellow metal more attractive for overseas investors. 

TREND FORECAST: Gold will reach $2,200 because when interest rates go down, the U.S. dollar will also lose steam and the precious metal will rise because investors will be attracted to the safe-haven asset. 

BITCOIN: The world’s most popular crypto hit its lowest level since March yesterday after the U.S. Securities and Exchange Commission announced charges against Binance, the world’s largest crypto exchange. 

Bitcoin traded as low as $25,636.60 yesterday after the government agency accused Binance of operating an illegal trading platform while misusing funds, The Wall Street Journal reported.

“This will be a landmark case,” Kurt Gottschall, a partner at Haynes and Boone and former head of the SEC’s Denver office, told the paper. “The SEC appears to be very concerned about the commingling of customer funds.”

TRENDPOST: The Trends Journal has long stated that one of the biggest risks to cryptos will be government crackdowns. And the U.S. seems to be moving. CNBC noted that the Securities and Exchange Commission has charged Kraken, Genesis, and Gemini Trust with offering unregistered securities to investors. The agency has also warned Coinbase of potential securities charges.

And it is also important to note that bitcoin has remained at a solid $25,000 per coin for several months, so it is still on solid ground. And considering it started from pennies in 2010, those who invested early have made a lot. 


The Dow Jones Industrial Average gained 10.42, or 0.03 percent, to 33,573.28 and the benchmark S&P 500 was up 10.06, or 0.24 percent, to 4,283.85. The tech-heavy Nasdaq Composite 46.99, or 0.36 percent, to 13,276.42.

Minus a wild card event, the guess on the Street is that there will not be much market activity until the Fed’s interest rate announcement next Wednesday. 

Elsewhere, the European markets were in the green today, with London’s FTSE up 28.11 points, or 0.37 percent, to 7,628.10 and the benchmark STOXX 600 up 1.75, or 0.38 percent, to 461.68.

Asian markets were mixed, with Tokyo’s Nikkei up 289.35, or 0.90 percent, to 32,506.78 and South Korea’s Kospi was up 14.05, or 0.54 percent, to 2,615.41. Hong Kong’s Hang Seng was down 9.22, or 0.05 percent, to 19,099.28. In China, the Shanghai Composite shed 37.10, or 1.15 percent, to 3,195.34 and the Shenzhen Component was down 172.63, or 1.58 percent, to 10,773.45.

TRENDPOST: Gerald Celente has long said the worst is yet to come for the economy that has suffered for years under COVID-19 lockdowns and now the Ukraine War. The Wall Street Journal reported that 286 companies filed bankruptcy this year through May, which is the highest clip since 2010.

“Higher interest rates and a slowing economy are pushing many companies over the edge,” S&P analysts wrote, according to the paper.

OIL: Brent crude was down 73 cents, or 0.93 percent, to $75.99 and West Texas Intermediate was down 69 cents, or 0.96 percent, to $71.46.

TREND FORECAST: Minus a wild card, such as war in the Middle East, as goes the global economy, so goes oil prices. Thus, with Germany officially in recession and the World Bank announcement today that global economic growth has slowed sharply because of high interest rates, rampant inflation and the consequences of recent bank failures, oil prices are expected to fall along with economic growth.

And, the higher interest rates rise, the deeper economies will fall.

GOLD: The precious metal was up $4.70, or 0.24 percent, to $1,979.00 an ounce as investors say gold is in “wait and see” mode.

TRENDPOST: Watch for new fluctuations in the gold market next week as the Fed announces its next steps to combat inflation. The Street is guessing an 80 percent chance that the U.S. central bank will hold interest rates on June 14th. The current federal fund rate is 5 percent to 5.25 percent. Now, some analysts are forecasting a .75 percent increase in U.S. interest rates by year’s end.

Therefore, the higher interest rates rise, the stronger the U.S. dollar will get and the deeper gold prices will fall. However, when high interest rates severely damage economic growth and the Office Building Bust accelerates, gold prices will sharply rise.

The Trends Journal remains bullish on gold long-term. When interest rates fall, which we forecast the Feds will do in the run-up to the 2024 Presidential elections, that, in addition to increasing geopolitical tensions, will push gold prices above $2,220 per ounce this year.

BITCOIN: The world’s most popular crypto started the in the red, but jumped $1,233.60, or 4.79 percent, to $26,983.50 as of 3:51 p.m. ET, despite the Securities and Exchange Commission announcing a lawsuit against popular platform Coinbase.

The platform is accused of trading at least 13 crypto assets that fall in the category of a security and should have been registered with regulators before issuance, The Wall Street Journal reported.  

TREND FORECAST: As we have been noting for over five years, a major factor in forecasting the future price of bitcoin and other crypto currencies is dependent upon government regulations. While prices jumped today, we expect a bumpy road while the SEC continues its crackdown.

Skip to content