A landslide of new reports of industrial contraction in the U.S. economy caused the Atlanta Federal Reserve Bank to lower its tracking estimate of U.S. GDP growth to just 1.4% in the fourth quarter, and a rate of 2.1% (and falling) for all of 2015. The Institute for Supply Management reported that its manufacturing index showed contraction in October and November, following reports of regional industrial contraction in November from the Milwaukee, Dallas, and Chicago Federal Reserve Bank Surveys, and the Chicago Purchasing Managers’ Index of Manufacturing — all falling.

“Business investment across the United States is fizzling out,” reported the Wall Street Journal on its front page Dec. 1. “The gauge of capital expenditures — orders for non-defense capital goods excluding aircraft — declined 3.8% through the first 10 months of the year, compared with the same period in 2014, according to government estimates.”

The collapsing debt bubble eroding the economy got another write-up from Energy Intelligence Briefing: “‘I could see a wave of defaults and bankruptcies on the scale of the telecoms, which triggered the 2001 recession,’ Timothy Smith, president of consultancy Petro Lucrum, told a Platts energy conference in Houston last week. Much has been made about the resiliency of U.S. oil production in the face of low prices, but the truth is that many producers are maximizing their output — even unprofitable volumes — because they need the cash flow to service their debt. ‘As an industry, we’re at the point where every dollar of free cash flow now goes to paying back debt,’ Angle Capital’s Steve Ilkay told the same conference.”

Energy Intelligence includes an S&P report that 77% of exploration and production (E&P) companies have junk debt ratings, out of 153 such companies which have ratings at all. Furthermore, banks have cut their credit to the oil/oil service sector by only 10% in 2015 so far. So it’s about to happen. Their debt service share of operating cash flow is now over 85%. Forbes forecasts that the next significant oil companies to fail will be Goodrich Petroleum (GDP), Swift Energy (SFY), Energy XXI (EXXI), Halcon Resources (HK) among others. These companies have all lost more than 90% of their market value since 2014.