This Hidden Risk Could Crush The Economy Within Weeks

This hidden risk will crush the economy and it's playing out right now in front of our eyes. And there's absolutely nothing the Federal Reserve or the government can do to stop it. I'm going to reveal exactly what's going on, how it will impact inflation, how it could impact the stock market and the real economy in three simple fast steps. Step number one, let's go over something called a crack spread. Now, this has nothing to do with Hunter Biden. It's actually much, much different than that. Let me explain. We start with a chart. Today's date going all the way back to 2020. On the left, we go from zero to a hundred dollars. So all jokes aside here, what is a crack spread? This is very, very important. If you have a barrel of oil and let's say right now that barrel of oil costs $90. Well, that barrel of oil is going to produce a refined product. So I'm oversimplifying here, but let's just say that this barrel of oil produces a barrel, the same amount of diesel. Well, that diesel product is going to cost more than the original oil that was refined to get that diesel product. So the difference between the two prices is a crack spread. So just to put it in simple terms that we can all understand, that barrel of oil is trading at $90 and a barrel of diesel is trading at $190. The crack spread is going to be a hundred bucks. Okay, cool. So now let's go back to 2020. Crack spreads very low, under $20. But then what happens right here when you kind of get that middle finger in the chart? Why does almost every single chart that's bad have something that looks like a middle finger? I don't know. We're living in a simulation, I guess. But what is this middle finger? This is when Russia invades Ukraine. So then things calm down a little bit. The crack spreads go down. But look at what's happened more recently. They've absolutely skyrocketed. Now this, no surprise, was in say March of this year. What happened then? We all know. That's when the United States went into Iran. We have this conflict in the Middle East that has closed, for the most part, the Straits of Hormuz. And if we go back to the chart, we can see how it's come down. This is likely when we had the absurdly ridiculous MOU. Save that topic for another video. I was not a big fan of the MOU. And then we go right back up to a point today where we're even higher, believe it or not, than we were when the conflict started. And Editor, go ahead and throw up a chart. When we look at the amount of exports of refined products, so this is taking a barrel of oil and turning it into stuff the global economy can actually use, we can see that it's down tremendously. But 75% of the decline in exports of refined products from oil is coming as a result of what's happening in the Middle East and in Russia. So why is this so important? Because you have to ask yourself the question, when are things likely going to end in Russia? And when are things, unfortunately, likely going to end in the Middle East? If the last six months in the Middle East or the last four or five years with Russia and Ukraine is any guide, it ain't gonna end anytime soon. So we should expect that the crack spreads will remain high. Well, why on earth is this a big problem? I'm sure a lot of you are asking that right now. You're saying, okay, George, well, a crack spread, I mean, I get what it is. I understand that it's extremely high. I understand that, by the way, it might be at all time highs. But how does that really impact the prices of what I pay at Walmart, Target, Home Depot? More importantly, how on earth does that impact the US economy? And how would that impact the stock market? I'm glad you asked. Let's start off by understanding that a refined product of this barrel of oil, which would be applicable to a crack spread, is gasoline, ain't just diesel. These crack spreads directly impact the amount of money you are paying at the pump to fill up. And if things stay the same, I would predict that gas prices in the United States will go up by at least 50%. And unfortunately, there are other things that could result from these crack spreads staying extremely high that would be even worse than gas going up by 50%. We'll discuss that at the end of this video. Step number two, now let's go over and see what is happening in the labor market. And I know a lot of you are probably saying, okay, George, what on earth does the labor market have to do with crack spreads and me paying six bucks a gallon for gas? It has everything to do with the economy and potentially the stock market, inflation, et cetera. And I'm gonna connect the dots for you at the end of this video in step number three. But before we get there, let's check out what is happening with the labor market. Actually, we're gonna start by going back in time, way back in time. Let's look at a chart that starts, boy, 1950. And goes all the way to 2019. And then I wanna zoom in on what's been happening more recently. So this is a chart of non-farm payrolls. Okay, and you'll notice right here in the middle, we've got zero. So anything above this line is good. Anything below this line, bad. Below the line is the no bueno zone. Above the line, we're in the bueno zone. What I want you to notice is these gray shaded areas. So these gray shaded areas represent a recession, an economic contraction. And as you would expect in these shaded areas or around these shaded areas, we have negative non-farm payrolls. So the labor market is shedding jobs. Most likely during these times, the unemployment rate is spiking. Now, if you look very, very closely, you will see times when we go negative where we're not in a recession, such as right here, December 1962. We're at negative 28,000. We were only there for one month. And then we go right back to positive, positive, positive. And then we just dip down for one month, maybe a year later. And then a couple years later, you might have another negative number. But then it just goes right back to positive. And you can see this has happened over the last 75 years in the United States. It's very, very consistent. And what I mean by that is you do get these one-offs where you get a negative number. But when you have consistently negative numbers over a 12-year span, you are almost always in or very near an economic contraction. And just as a side note, if some of you are wondering what those one-off negative numbers are, usually due to a big weather event or some sort of national strike. But now let's go ahead and zoom in on what has been happening more recently. To do this, we pull up a five-year chart of the non-farm payrolls. And let's just go back to 2025. We see a negative number there. Okay. But the good news is that's kind of a one-off. But look at what has happened more recently. Let's just say in the last year, year and a half. June 2025, we have a negative number, negative 20,000. In August 2025, negative 70,000. In October 2025, a negative 140,000. Then we fast forward to 2026. And in February, we have a negative 156,000. And the last payroll print that we had, the last non-farm payroll, it was negative 23,000, way below expectations. And by the way, that's before revisions. The bottom line here is the labor market is extremely weak. And if you look at history going back 75 years, we see that when the labor market is this weak, usually the economy is extremely weak as well. Step number three. Now let's go ahead and put all the pieces of the puzzle together. And I'm going to give you my predictions on what I think will happen to the price of gas, to the economy, to the stock market, based on everything we've discussed in this video. All right, first and foremost, let's start with this. What are these things called? I think they're called decision trees, something like that. Anyway, well, this is my version of whatever this thing is called. We start with a barrel of oil. Now we basically have three options for the price of that barrel of oil. We can either stay the same, which right now is around $91, $92 a barrel. Keep in mind, we were just at $80 last week. We can go lower, or of course, we can go higher if things escalate in the Middle East. Now go ahead and insert Hunter Biden and his crack pipe right here. And we're using him as a proxy, of course, for the crack spreads we talked about in step number one. So if you believe what's happening right now in the Middle East and in Russia isn't going to get better anytime soon, then you also must believe that crack spreads are going to remain high, if not go even higher. And I want to remind everyone, Editor, go ahead and throw up that chart that we used before, that there's a tremendous amount of refined product that isn't being exported right now. What I mean, if you just look at this chart, you can see that exports of these refined products, such as gas and diesel, are down over 6 million barrels a day. And 75% of that decline is a result of Russia and the Middle East. Okay, so going back to our crack spreads here, let's put all of this together and see what this means in terms of gas prices. So let's assume for a moment that the price of oil goes back down to where it was last week around 80. Well, if the crack spreads stay high or go even higher, you're looking at gas prices in the United States, let's take a national average, probably being between $4 and $5 a gallon, which is already a big, big tax on the economy. But let's assume things stay the same here in the low 90s, then we're looking at $4.50 to $5.50 for gas. But if oil goes even higher because things escalate in the Middle East, let's say it goes back over 100, then we could easily see gas prices at $6 to $7 a gallon very, very soon. And what makes things even worse is when you look at diesel prices. Now, I know a lot of you right about now are probably saying to yourself, well, George, I don't care what's going on with diesel prices because I don't own a diesel truck. Well, you should care because every single thing you buy at Walmart, Target, Home Depot, etc., has to be transported to that store. And it's transported to that store in a truck that uses diesel. So either Walmart is going to have to decrease their margins or they're going to have to pass through that expense to you, the consumer watching this video right now. So editor, go ahead and throw up a chart of where diesel prices are right now. And we can see they're close to $5.50. Well, that's about $1.50 higher than gas prices. So if gas prices go from $6 to $7 because the price of oil goes up and the crack spreads go even higher, then that means we should expect to see the price of diesel go up to possibly $8.50 a gallon. And this takes us straight into a doom loop, very similar to what we saw in 2008. With the help of editing here, I can explain. I'll give you a quick visual so everyone can understand exactly how this works. Now, unfortunately, I have no situational awareness. Just like Leopold. And I also failed with my drawing, although I didn't lose $40 billion. So that's good. But anyway, getting back to my drawing. As you can see, it's way too far to the left. I don't even know if I'm still in the frame. Hey, guys. But it doesn't even matter. As long as you can see my arm, that's really what counts. Okay, so we start with gas prices going higher. This puts extra strain on the consumer, the average Joe right here, because his wages aren't going up at the same rate. So I always say he's got to rob Peter to pay Paul. So if the gas prices are going up, he can't not pay that. He has to. It's very inelastic demand. He's got to get back and forth to work, etc. So if he's spending a lot more on the things he has to have, that means he's going to be spending a lot less on the things he wants. In other words, the discretionary spending goes down. So that means the money that's going to Walmart decreases. In other words, their revenues. So if the amount of money that's going to Walmart decreases, then they're likely going to start laying people off. That's all these pissed off average Joes and Janes right there, because they just got the old pink slip. So if they're unemployed, that means they also will be spending a lot less. So aggregate demand goes down. This puts downward pressure on an already weak economy. Remember the labor market that we talked about in step number two? Now you can see why it's so, so important. So at some point in time, this makes the unemployment rate spike. And if the unemployment rate spikes, that could bring down the stock market. Even if it doesn't bring down the stock market in and of itself, this type of environment would probably mean a lot less money going into AI cap X spending, which would definitely put downward pressure on the stock market. But let's remember that the whole entire economy is propped up by asset prices. So if stocks go down, that's going to put further downward pressure on the economy, which puts further upward pressure on unemployment, further downward pressure on stock markets. And this, of course, means less discretionary spending in Walmart. And then you just go right back into this doom loop. But let's not forget about the elephant in the room, diesel prices, in case I'm out of frame. So if diesel prices go up, especially, can you imagine the $8.50 that we were talking about earlier? That means all the goods that go to Walmart dramatically increase in price because of those transport costs. So they either have to reduce their margins, which means they lay off workers, or they have to pass those higher prices onto the consumer, which puts even more downward pressure on their discretionary spending, taking us right back into the doom loop or exacerbating the doom loop, putting fuel on the fire, no pun intended. And once again, I'd like to remind each and every one of you watching right now, this is exactly what played out in 2008. We had a very weak economy, very weak labor market. The price of oil went all the way up to $140 a barrel. And that was the straw that broke the camel's back. That's when the house of cards came crashing down. So now you can very easily see why those crack spreads, or Hunter Biden, whichever you prefer, are the hidden risk that if they stay this high or go higher, along with these oil prices staying high or going higher, will absolutely crush the economy. Now, I know a lot of you right now are watching this video and saying to yourself, okay, George, I get it. It all makes sense, but what do I do about it? How do I protect myself? And how do I not only protect myself, but how do I profit from all of this insanity? Well, for those of you who are asking that question, I've got great news for you. Editor, go ahead and cut to the clip. I'm doing a deep dive webinar where I'm going to reveal exactly how I'm investing for the next five years. And what I mean more specifically is how I'm investing for this late stage credit cycle. In other words, how I'm personally positioning myself to profit from the AI boom and the AI bust. Additionally, I'll be going over why everything you've been taught about investing likely will not work over the next five years. Things like buy and hold, buy the dip, or dollar cost average. I'm calling this webinar the AI Bubble Playbook. And it is Intel you're not going to want to miss. It could be the difference between catastrophic losses during this boom and bust or massive, massive gains. You can sign up right now for free at the link in the description of this video. And I would suggest signing up as soon as you possibly can, because space is limited. And this is a webinar you definitely cannot afford to miss. And, oh, by the way, in the webinar, I'm going to be revealing exactly what I own in my own portfolio. So that alone makes this AI Bubble Playbook webinar worth attending.