From Peter Reagan for Birch Gold Group
There are so many signals that point to the possibility of entering a near-term recession, they are hard to ignore.
Unless you choose to follow Paul Krugman’s lead and stick your head in the sand.
But let’s look at the economic situation in this country from another perspective: What if the United States is already mired in a long recession that might have started earlier?
It’s certainly possible. Especially once you factor in the reality of Biden’s job market, which doesn’t match what is being described in the corporate media outlets.
An article published on CNBC summarized the situation, but also tried to downplay it:
Nike, Mattel, PayPal, Cisco, Levi Strauss and UPS are just a few of the companies that have announced layoffs in recent weeks.
Corporate leaders have tried to show that they’re aggressively countering inflation-fueled expense increases and adjusting as consumer demand normalizes.
The word “normalizes” is how the media is choosing to spin the story to prop up Biden’s weak overall economic performance. But the job market actually appears to be “correcting” itself after a decade of Fed confusion and the recent panicked response to the pandemic.
Following is some evidence which supports the conclusion that at least some type of economic correction, most likely a full-blown recession, is underway right now…
Corporate layoffs surge (plus a major cultural shift)
Layoffs, layoffs, and more layoffs appear to be taking center stage during what is supposed to be Biden’s “strongest job-creating” market, according to him.
Let’s start by taking a look at only a few of the companies that are laying off hundreds to thousands of employees, starting with Nike:
Nike is cutting 2% of its current workforce [1,500 jobs at least] as it looks to reinvest in its growth areas and streamline its business. The sneaker giant is contending with a slowdown in consumer spending and looking to save $2 billion over the next three years as part of a restructuring plan.
So, Nike is contending with a “slowdown.” Let’s see why other companies are laying people off during an economy that features still-persistent inflation:
Former Home Depot and Chrysler CEO Bob Nardelli warns not to ignore mass layoffs.
“We’re now seeing people being laid off,” he continued, “If you look at [semiconductor] chips, they’ve laid off almost 40,000 people. We’re seeing a tremendous shift in employment out there where people are being laid off.”
In the last two weeks, companies like Cisco, Snap, Estée Lauder, Amazon, Citigroup and UPS have all announced layoffs as executives tighten their belts amid rate volatility.
That isn’t a good sign of a “strong” job market, either. According to Reuters, Paramount is laying people off, too:
Paramount Global is laying off about 800 employees or roughly 3% of its workforce, a person familiar with the matter said on Tuesday, as the media company looks to cut costs and return to earnings growth this year…
A soft advertising market and economic uncertainties have added to the pressure.
Layoffs stemming from “economic uncertainties” don’t sound representative of a strong job market.
Let’s take an even deeper look inside the Cisco layoff, which SFGate summarized nicely:
Cisco, the San Jose-based networking and telecommunications giant, is laying off 5% of its workforce.
Based on the company’s reported head count, the layoffs will hit at least 4,000 workers…
In a statement to SFGATE on Wednesday, Cisco spokesperson Robyn Blum cited “the cautious macro environment, our customers continuing to absorb high levels of product inventory, and ongoing weakness in the Service Provider market,” as reasons for the layoff.
So what are businesses saying?
- Economic weakness.
- Slowdowns in consumer spending.
- Uncertainty.
Sounds like they’re facing exactly the same economic challenges as American families right now, doesn’t it?
Keep in mind, these are just a handful of many examples, including the recent tsunami of more than 260,000 tech-industry layoffs that were recorded in 2023.
According to Inc Magazine, there’s also a major cultural shift occurring, shifting away from layoffs being seen as a “bad thing” towards them becoming more “tolerable”:
Let 2024 Be the Year to Take the Shame Out of Being Laid Off
Some of our societal stigma of being let go melted away in 2020 when Covid struck and millions of people lost their jobs. Four years later, it’s becoming even more normalized as waves of layoffs have left the tech and media industries reeling. In January alone, 6,505 workers at U.S.-based tech companies lost their jobs, while Fox Business referred to 2024’s journalism layoffs as “bloodbaths.”
Of course, “shaming” people for being laid off isn’t a good idea, and sure seems like a signal of an unhealthy society. But normalizing thousands of job layoffs is also a signal of an unhealthy economy.
Plus, any clear-thinking person could easily make the case that Bidenomics and the panicked reaction to the pandemic seriously exacerbated both of these bad signals.
In addition to that, what follows sure looks like a BIG signal that the United States is in some kind of recession right now, even if the current Administration won’t admit it…
The truth about the jobs market
You may be asking, “How is this possible? After all those amazing jobs reports we’ve been seeing month after month?”
Well, here’s the thing: Job openings are not the same as employment.
As The Wall Street Journal reported, Job Listings Abound, but Many Are Fake
A mystery permeates the job market: You apply for a job and hear nothing, but the ad stays online for months. If you inquire, the company tells you it isn’t really hiring.
Not all job ads are attached to actual jobs, it turns out.
MishTalk’s Mike Shedlock made one very relevant observation on the discrepancy between job openings and employment:
There is no cost to posting ghost jobs. And the benefits are obvious: Employers can placate overworked employees, keep them motivated, give an impression of growth, and just in case.
Earlier this month, Shedlock revealed an interesting bit of analysis on the jobs statistics that the Administration is fond of reporting on:
Payrolls are up by 5.77 million since May of 2022, but full time employment is up only 457 thousand. No amount of BLS smoothing can possibly hide this.
The principle still holds true today. In that same piece, Mish explained a critical measurement error that gets repeated every time new “job numbers” get published…
Can Both Numbers Be Reasonably Correct?
The answer is yes (discounting measurement error) because they measure different things. A person working three part time jobs counts for three jobs but only a single person is employed.
If one person is working three part time jobs to pay for goods and services that one full time job should cover, but doesn’t, that is a signal that something is seriously wrong. For Biden to tout “three jobs were created” while that same person is struggling is even worse.
That’s not a good look for Bidenomics.
For you, however, the obvious economic turmoil proven here means one simple thing…