A soft landing, cushioned by excesses, for an economy that has gone nuts.
By Wolf Richter for WOLF STREET.
The number of job openings jumped further into the astronomical zone, to a record 11.55 million (seasonally adjusted) at the end of March, up by 36% from a year ago. Compared to March 2019, job openings spiked by 57%; that’s 4.2 million more job openings in March 2022 than before the pandemic.
This data is not based on job postings, but on a monthly survey of 21,000 nonfarm businesses and government entities by the Bureau of Labor Statistics. The survey asks employers about their actual employment needs, hires, and separations.
What this shows is that employers poach workers from other employers because they cannot find enough unemployed people willing to take those jobs, and to poach a worker from another employer, they have to offer better pay, benefits, and working conditions – thereby pushing up the costs of labor across the economy. And by poaching a worker, they create a new job opening at the prior employer, for a lot of churn.
This historically tight labor market has featured prominently in recent comments by Fed Chair Powell in preparing markets for rate hikes and QT that are coming far faster than expected a year ago.
Even higher-paying jobs can’t find takers.
In Professional and Business Services, job openings jumped to a record 2.14 million, up by 35% from March 2021 and up by 61% from March 2019.
This has now become the largest category in terms of job openings and includes highly-paid jobs as classified in the North American Industry Classification System (NAICS): Professional, Scientific, and Technical Services (NAICS 54), Management of Companies and Enterprises (NAICS 55), Administrative and Support, and Waste Management and Remediation Services (NAICS 56).
Healthcare and social assistance is now the second largest category in terms of job openings – an industry that is beset by shortages of nurses and doctors. Job openings in March dipped a tad from the record in February, to 2.03 million, up by 48% from a year ago, and up by 62% from March 2019:
In leisure and hospitality, the third largest category, job openings eased further from the spike last December, to 1.67 million, but remain desperately high, up 51% from a year ago, and up 64% from March 2019:
In retail trade, the fourth largest category, job openings spiked to a new record of 1.29 million, up 34% from a year ago, and up 70% from March 2019!
Poaching workers from other employers.
When an employer hires a worker away from another employer, or when an employee leaves an employer to find work with another employer, the old employer reports a “quit,” and now needs to fill that job. There are myriad stories why people quit one job to take another job, and they usually boil down to better pay, benefits, and working conditions, and extraneous reasons such as shorter commutes, cheaper housing, etc.
Especially in the higher-paying categories, such as professional and business services and healthcare, recruiters are constantly trying to chase down candidates that they can lure to a new job. Inboxes of working people are full of these efforts.
And so the number of “quits” jumped to another record, to 4.54 million workers who voluntarily quit their jobs in March, up by 23% from a year ago, and up by 29% from March 2019. Quits is a sign of labor force churn, and it’s the mechanism by which wage increases spread across the economy:
Sure, age discrimination continues to persist. A 35-year-old boss in tech doesn’t want to hire a 60-year-old worker, no matter how qualified. That’s just how it is. Sure, there are some exceptions that get trotted out, but reality is that age discrimination is a fact of life, and even a massive labor shortage cannot overcome the aversion of a 35-year-old tech boss to hiring a 60-year-old used-to-be tech boss.
Hiring, thanks to the quits and the churn, has been brisk as well, with 6.33 million people getting hired, and hired away from other employers, up by 9% from a year ago, and up by 19% from March 2019:
Going into a recession with this overwhelmed labor market and shortages?
The Fed, after denying it and then dillydallying around for way too long and committing one policy error after another each step along the way, has now finally embarked on its efforts that are too little and too late to tamp down on this raging inflation that is out of control and has spread across the US economy, and has lit up globally.
The Fed will tighten monetary policies to rein in out-of-whack demand which will lower inflationary pressures. And given the huge demand and out of control inflation, the Fed will have to tighten by a lot, and this will likely cause a recession – and it should because that’s what this out of whack economy with all its shortages needs in order to allow everyone to catch up.
A recession is marked by a decline in demand from the prior quarter, for a couple of quarters in a row. It’s part of the business cycle. It’s typically accompanied by some loss of employment.
But with 11.5 million unfillable job openings currently, employers who now cannot find enough workers will see demand dip by some amount, and first they will cut their job openings, and together they will cut millions of job openings, and that will just bring them back to normal.
And employers that get hit harder by a decline in demand may not only stop looking to fill job openings but may also lay off some people. But there is still strong demand for labor elsewhere, given the millions of job openings that still persist at that point, and many of the laid-off workers will likely be able to find jobs elsewhere, as the churn continues.
The US has never entered a recession with this amount of excess job openings and these still large-scale shortages. What if there is a big dip in demand that mostly eliminates 5 million job openings and brings the job openings back to normal, with little loss of actual employment, and that eliminates the shortages and brings down demand to where everyone can catch up and bring the economy back into balance with supply?
It might still count as a recession, but that would be the soft landing – softened by the huge cushion of these 11.5 million job openings, the backlogs, and shortages that still persist in the economy. Even semiconductor makers might finally catch up with demand.
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This is great imho. As the environment deteriorates, the value of having free time here and now goes up a lot.
Why work a lot for when we are 65+ when it’s not clear whether the environment will be able to sustain a high quality of life by then?
Carpe Diem has never made more sense :-)
“Why work a lot for when we are 65+ when it’s not clear whether the environment will be able to sustain a high quality of life by then?”
Why not, the quality of life has gone up through the roof around the world in the last 100 years….. Speaking of 100 years ago..the 1920s and 30s were much warmer in the USA than today or maybe you haven’t read Grapes of Wrath….That was a time when California was much wetter and cooler than the Dust Bowl States……oh and Co2 was really low…. Reading history is a swine sometimes….
Anthony, old climate change deniers crack me up. Keep it coming :-)
Young ignorant virtue signalers make me puke.
Either it was so warm in the 1930’s that 15,000 people died in the USA in the 1930s of thirst (and dust) or they didn’t. Maybe the 2.5 million Americans who were forced to flee to California were just having a bad day as their land dried up. The history of science is very clear, so is the 100 year drought California had in the 1600s or the 50 year drought it had in the 1700s. They must have been feeding diesel to their horses in those days… The newspaper reports from 1929, on how the Arctic passage was open for the first time and the fear was that the ice would all be gone by 1944…. lol
You can lead the uneducated to a book but you can’t make them read….
@Anthony – Climate science is made up of 32 different disciplines, in 50 different countries, who together came to the conclude that we have about four years before the science indicates that the negative feed back loops will destroy us.
Your brilliant analysis of history leaves out the fact that we have carbon burning continually unlike in history.
Your brilliant mind also overlooked the simply fact that in history people weren’t able move and supply chain issues were localised.
But Anthony, your Mensa score must be such to be able to out think all those scientists, you don’t live in your own delusional bubble??
I agree CLIMATE CHANGES constantly
but all you GREENIES don’t get it
THE CLIMATE IS CONTROLLED 99% by thing in sky called SUN
and there is NOTHING YOU CAN DO TO CHANGE IT
Keep it coming :-)
@Markoutwest,
Yes climate change is real.
But there is no research that suggests that in 4 years the world will succumb in a fireball. The rich are still buying 100 million dollar estates in Fischer Island, you’ll know sea levels are actually rising when this stops.
Didn’t Gore and his scientists make a bunch of predictions, double down, only to fail again and again? Billions spent in policy and scare tactics. Tax payers fleeced incessantly. When will we learn.
@ Delusion Trio, it is quite simple to anyone who looks at evidence and the evidence that I rely on is the “Climate Scientists”, again which from 32 different disciplines, and the 52 countries who’s “Climate Scientists” AND their respective Governments agreed upon.
There are all sorts of lemmings in the world who will run off the cliff deluded as they talk to the other people around them how good it is. As a smart person stated that the journey from the top floor to the pave is fantastic it just the landing that was a problem.
Yeah your group Mensa scores must be enormous to reject all that evidence, you’ll be the first out the door because you’ll be the least prepared.
I’m sure if you contacted these scientists to tell them where they went wrong they would be astounded at your brilliance. :-)).
It must be great to be so smart you don’t have to reply an any evidence just your own simple brilliance. :-))
Define “quality of life”. I think we have different definitions.
Don’t forget, the plurality of scientists on the IPCC have their doctorates in political science.
That kind of thinking is what many newcomers are now realizing.
Why work hard when the greedy landlord you are renting a room inside a basement from will raise the rent accordingly when he/she finds out how much you work at your extra gig at Tim Hortons or Uber?
Why work hard when a Toronto home makes more money than a doctor in the past year?
Whole future generations have been screwed into poverty with no value for their labor! This system has broken down and when these future generations come to majority, there will be major political changes!
Same nonsense was spewed after the dot.com bubble and great recession. Those with the willingness to take risks and work hard found a way. Perhaps the problem is has more to do with the American work ethic than the American dream (opportunities)
Only if majority interests are represented in politics, which they largely aren’t.
Here in Canada, Trudeau is depending on importing millions of new serfs to pay the pensions of the home-owning retiree class. Many young people are angry in Canada. They are not happy owning nothing and to be happy.
Levi C:
When were the majority interests ever represented in politics?
Not in my lifetime.
I like reading Wolf’s blog but sometimes I question the company. Anthropogenic climate change is real, young people are getting screwed, and all the old folks better hope they pass on before the pitchforks are sharpened.
“The rich are still buying 100 million dollar estates in Fischer Island, you’ll know sea levels are actually rising when this stops.”
The rich often make stupid decisions (see: economy) and they have money to burn. When they stop buying, you won’t know it’s coming, you’ll know it’s too late. That will happen suddenly. Maybe not quickly, but suddenly.
“Same nonsense was spewed after the dot.com bubble and great recession. ”
The key here is that they said this “after.” In this case, “young people” (however this is defined) have been experiencing declines in their prospects in wave after wave, getting further and further behind (as well as “poor people,” in general). Many of us have seen the writing on the wall throughout this boom. All the unrest of recent years was before a recession. Now imagine what effect a recession will have on this environment.
Exactly! A part time gig in a LCOL gives people now a higher quality of life
Btw Climate Change speeds up the day of lifestyle upgrade IMHO. Long term gains are much more heavily discounted.
The LCOL gives people a temporary higher quality of life until all the other people move to the LCOL area.
> The LCOL gives people a temporary higher quality of life until all the other people move to the LCOL area.
Most will not move, notably the old, they will stay put even in areas that become inhabitable without water and annual wildfires. Think the Southwest.
Mobility will be kind, but mostly limited to remote workers who are on the younger spectrum.
The permafrost is melting, so I’ll not plan to sacrifice now to enjoy free time in say 2 or 3 decades. Don’t tell Anthony, he might become depressed :-)
“The permafrost is melting, so I’ll not plan to sacrifice now to enjoy free time in say 2 or 3 decades.”
Hey, wasn’t this supposed to have happened in the 1970’s? What happened?
No, Anthony. Miami was supposed to be underwater by now. Just ask ol’ Al Gore (as he flies around in his private jet preaching to the great unwashed).
By the way, RW…. I didn’t realize once affordable places like Boise were in the Southwest.
The environment has vastly improved in my lifetime. Back in the sixties, big cities were covered in sickening smog, rivers and lakes were contaminated with every kind of filth you can imagine and the landscape was covered in litter. You have no idea how much better it is now.
If you fail to plan for your later years, on such a ridiculous assumption, you do so at your own peril.
The day after today is tomorrow (aka Free Beer Day). It will come regardless of your expectations.
Not surprised about climate change deniers being mostly old. You have no skin in the game, or little
so you agree..
we hamstring our industries..
yet China and India free reign
These are the smokers in the “no smoking” restaurant…point your anger at them
I’m not surprised about young people assuming old people said things they didn’t say.
Don’t you remember when you were smarter than your elders up until the point you gained the experience and knowledge that they held and realized that they were right after all?
I do.
We (USA) exported our pollution to other countries. We didn’t fix a frickin’ thing. Just moved it elsewhere.
Para phrasing Oscar Wilde ‘I’m not young enough to know everything’.
If the world is ending due to climate change, surely all driven by CO2 emissions, then what should we be doing?
$1T would buy about 100 nuclear plants, which are safer in pretty much all respects than any other source of utility scale power, with no CO2. 2400 GWHr/day powers how many typical EVs at 10kWHr used per day? Answer: 240 million. All USA vehicle CO2 emissions gone.
To knock out the same size chunk of pollution (but a much smaller fraction of CO2), just convert the (15) largest freight ships to nuclear power. I didn’t even believe this number, until I did the math myself.
Which climate change fanatic do you see pursuing this kind of plan? You don’t. If we had spent one of the recent trillions on this it would have paid off bigly, instead of blowing up our economy. Idiots in government, elected by idiots in society, forever. If and when that changes, you can be pretty sure there is an actual emergency.
You are probably confusing “denial” with “what are the actual consequences of climate change” and even more importantly, “what are you doing individually to counter climate change “. Hint, if the answer is “I drive a Tesla “, not ” I live in an off grid cave and grow all my own food and weave my clothing from yak fur”, you are a virtue signaler and not a serious person.
As others have said, how much of this pollution was outsourced to China?
The atmosphere is all connected and we are importing it back but it takes a few days for the pollutants to make the trip. You ought to hear about the nasty stuff we get from Poland!
How many zombie companies, which won’t survive are currently posting jobs available? Just asking.
1. Enron didn’t survive either, but until it collapsed, those people who were working there had real jobs and got paid to do those jobs.
2. RTGDFA .. especially the part that is in bold in the second paragraph… these are NOT advertised job listings.
True started working at 12 years old, retired at 60 but wasn’t ready ,so worked seasonal jobs for 4 years now am fully retired,until inflation steals my pension why work.? Lost fiat in system
> Lost fiat in system
Same! Add lost fiat in future environmental conditions
Today is all we have.
Sounds like you are committed to being the change you want.
Or…..you’re 65+ plus and still work your ass off and love it, and/or you went to Berkeley in the 70’s and from high regarded prof’s heard how our asses would be frozen solid from the cold by the year 2000 or you could be my grandmother who lived till 96 and though her ass was fine, in her lifetime heard eggs being the worst thing you could possibly eat every 10-15 years and the best thing you could eat on the opposing swing
Is that called soft landing?
When an aircraft engine stops, soft landing is only possible till aircraft is moving fast enough that its control surfaces still work allowing the pilot to trade potential energy for kinetic energy.
This aircraft has slowed down and its pilot (the Fed) has delayed soft landing for too long. It will stall, go into flat spin and crash as the pilot has lost control.
Value of dollar will crash. Value of financialized assets (house, stocks, bond) in dollar terms may rise but in real terms, they will become a liability as thousands of dollars wont be enough to buy a pound of beef, forget about paying the heating / cooling bill on that 4000 sft, 6 bedroom behemoth that no one would want.
You know, I read a lot of pessimistic posts here, and I keep wondering what the pessimists are doing in their private lives to cope with the apocalypse coming down the road?
Nothing smart-ass here, just wondering what others are doing.
Going all cash? Digging a bunker? Moving to Barbados [my favorite]? Buying commodities? Which ones? Shorting the S&P 500?
I am stuck here in the PNW with my grandkids, so I don’t have any opitions. I will just have to ride out whatever happens. I won’t live another 20 years no matter what.
Anyone want to share their 10-20-40 year plan? Hopefully someone has an answer.
We are similarly situated in the saintly city part of the tpa bay area to care for family EL: don’t care to be in any city, due to limited food growing opportunities compared with HUGE gardens and groves at last place deep in flyover, that also had sufficient regular year round rain and reasonably priced land, but need to continue here, so:
Walk daily around the 144 blocks within the busy streets and talk to everyone, if only to say hello. Most folks are at work by time I walk, so only see many on weekend; there is a neighborhood meeting at community rec center monthly, and many attend, and that, ”community” is what will get folks through this one coming and other challenges.
The PM folks apparently think they will be able to buy their way, but IMHO that is not going to happen, though ”barter” will certainly help some.
Suggest proactive outreach within your community, perhaps to the extent of agreements for what used to be called ”civil defense” that many of us were part of for decades, including in my years in what were very rural area of OR.
Financially, do your best to become and STAY totally debt free, paying everything off ASAP.
10 year plan. Hope they legalize heroin.
20 year plan. Hope I’ve shuffled off the mortal coil.
40 year plan. Hope even harder that I’m dead.
On a serious note, I don’t think anyone has a real plan nor do they care. Most young people I know just make suicide jokes (hmm…) Or expect some catastrophe to happen. The root of these is the fear of a lifetime of servitude at the corporate altar. Everyone says they’ll work until they die, as if the rulers would be so kind. I know a lot of people who said that and got forced into retirement at 50-something and their world fell apart.
Yadda yadda youth is wasted on the young something something…
Sold primary large home, shorting market mid jan SQQQ SDS. slowly rebuying dividend players like Verizon with slight liquidation of the negative index ETF’s. Shorting Carvana and loving it thanks to WOLF! Stacking small amounts of cash – max 10%, no PM here, too hard to liquidate/ move. Selling family possessions from the generation above ( Lionel trains/ baseball cards while the boomers are still alive). Buying lower risk real rental estate (2018-2020) – townhomes in low tax areas that rent for high value to overall cost. (central PA/ northern MD).looking for returns of 8% after taxes (say 5% after putting 3% aside for potential capital expenditures / improvements). minimal crypto – just a game – 3-5% of total portfolio (at most). Working 7 days a week trying to bring in as much as I can income while labor market hot. Looking at overseas places to live part time – low cost – Portugal – 90 days) – ferry to Morocco 90 days. quiet small apartment – to explore , cook, read and exercise. Simplify, be mobile, avoid owning anything that doesn’t earn your income unless needed. Rule #1) build wealth. Rule #2) use wealth to become mobile and invisible.
Stagflation and hyperinflation are the good outcome. The killer would be major deflation, financial collapse and wars.
Will V and all,
You may want to consider Cuenca, Ecuador. Having just spent six months there (as well as a month five years ago) it is a very attractive place. They use the USD as their currency and have had zero inflation in the past 9 years. In a city of 600k people there are about 40k expats.
Here is what I have spent the last 8 years doing:
20 acres with pond (15 in field, 5 wooded), 150k in gold/silver, $20k cash in safe in 100s, 50s, 20s,10,000 rounds ammo, multiple guns for multiple peeps, know all my neighbors (one young man keeps cattle and hay on my property for free), meat chickens, egg chickens, 2 20×40 green houses, large raised-bed garden, natural gas full home generator, wood stove in basement, 1 yr flour/beans/rice in buckets, we jar/can, both my sons live in new houses on property mortgage free so they will never be debt slaves, I’m retired army pilot and physician assistant so have medical and emergency trauma covered, full medical suite in basement, county water with back up well.
Own 15 rental properties debt free. Passive income 4x my monthly expenses plus I still work making nearly $9400/mo take home. No money in markets whatsover, never have. One son is a police officer, the other a fire fighter. We are all very fit and in excellent health, including my wife of 25 years. My MIL and my dad live with us and are well taken care of.
A friend is moving here with his heavy equipment and my boys are going to take it over on their days off.
I had a plan to develop a profit share community, but gave it up as most people are idiots. I don’t think there is anything else I can do.
But, I would like to say: I truly believe the future is bright. There will be some serious pain, but we will come out the other side a changed nation. Focus on the good, true, and beautiful. Don’t worry what others are doing, be the change that is required. God bless.
Yes, grow stuff on your front lawns, don’t worry about keeping up with the Joneses. Don’t drink the Cool Aid.
Nature, labor, and sweat are a good combination for health and happiness, and you sleep better. Plant plenty of perennials when you’re younger and you won’t have to work as hard when you’re old.
Thanks for asking that question, the response has been delightful to read!
I’m 5 years give or take from retirement. I’m in index funds of stocks and bonds, about 50% US stocks, 25% overseas stocks, and 25% intermediate term US bonds. I also own personal real estate that accounts for 1/5th of net worth. Last year I’m down 10% or so but cumulatively am up several multiples on US stocks mostly, overseas stocks having been moribund over the 20+ year term of my savings (although the 3% dividends are very helpful). I have always been planning on living from dividends and am currently financially independent on that basis with no debt and relatively low expenses. But I fully anticipate a prolonged period of much lower stock values and potentially lower dividends. There is simply no sure thing. And anyone who says there is should not be trusted.
It’s remarkable that it is so broad based. Even Leisure & Hospitality that suffered so much from the lockdowns and presumably bankrupted many businesses have massive job openings now!
You may be right that the Fed could possibly be able to tighten quite a lot without causing a hard landing. Perhaps we are going to see much higher interest rates than anybody now thinks possible.
On the labor side yes
What about all the corporate debt that needs to be refinanced in 2022?
Give that man a cigar.
Debt can be restructured as shares…
Zombies need to die. Everyone will be better off for it, even people who lose their zombie company jobs to take better ones.
So much leveraged private equity. So many businesses with 8-10 multiple of EBITDA taken private under the assumption that floating rate unsecured debt will be less than 5% indefinitely. There will be a bloodbath.
Something interesting that I noticed in my supermarket (in the UK): In 2020 when covid started, they closed down many lanes and replaced them with self-checkout. That meant several cashiers lost their job.
But now, there are queues at the self-checkout! Why? Because they still need 1 person per 10 (or so) self checkouts and they can’t get the staff! So they are forced to switch off many of the self-checkouts.
You would think that it would be easy to find people because they made many redundant 2 years ago, but no, they can’t find staff! Where have they gone? Early retirement?
The “self check out” became a shoplifter’s dream. Now they have intrusive data that shows how long you took to place an item in the bagging area or how many times you hit “skip bagging” to avoid stuffing a 12 pack into a tiny bag. The readout has to be cleared prior to payment.
First time I experienced that was last week…….
And some places there is a scale where you bag the items. Weight increment of the bag is checked against the scanner.
I had two of the same items, one in each hand, at Walmart last week when I double scanned the left-hand item (I had two) and put both the left and right-hand items in the bag.
The machine threw a code, and the babysitter came over. She showed me the machine’s video and why it thought I was shoplifting.
I’m a Monday morning regular at this store because I grocery shop for my business so my employees can eat and drink on the company dime, and I built up a rapport with this attendant.
I’ve seen this here in the U.S. too. Self checkout is really only worth it if you’re buying just a few items. And none I’ve seen can operate totally without humans. A few McDonalds around here tried to automate their cashiers too, but they went back to real people.
There is a Walmart “neighborhood bistro” somewhere in Virginia where self checkout works as in the dream. Really nice, clean, very few apparent workers, machines work well, and theft did not seem to be a concern. I think self checkout is totally viable, but only in the right (local) society.
I live in the poor part of town and we still have self checkouts. Our Walmarts have incredible cameras. Their pharmacist once told me that their cameras can pick up an address off from a driver’s license.
Different over here. Self check out work just fine for the customer and there are a few always open shops that are unmanned part of the time, typical during late evening and night.
The front door is then locked and the customers debit card used to unlock.
There should be a face ripping rally in stocks from these levels. But too quite so far. Perhaps it rolls over again. Bought few trial puts in Airbnb; it’s one of the few not totally collapsed yet. Waiting to reload puts after big rally.
The S&P is only down somewhat over 10%. The NASDAQ and Rusell 2000 somewhat over 20% but this from obscenely inflated valuations.
Yes, agree. Down, up, down, up, but mostly down, is how I’m trying to trade it. So far so good.
I’ll take the under on any prediction for a “soft landing”.
Augustus, in the big picture of things, what is one to do financially?
Previously, I was more focused on avoiding a deflationary depression and financial asset crash. I still expect a financial market crash, but this mania has lasted a lot longer than I ever thought possible.
Now, I anticipate the worst combination of crashing asset markets and possibly extended 70’s style price inflation. It’s the opposite (mostly) of 1982-2020.
I don’t think there is safe asset class to hide to preserve purchasing power for anyone’s wealth, passively. Buy-and-hold in the stock market should be an absolute disaster. Supposed long term “investors” will find themselves indexed to a long-term unprecedented bear market mostly collecting zero or pathetic dividends. Only option I see is to do what you are doing (through trading) but most people can’t do that successfully, not consistently.
Right now, stocks, bonds and real estate are ridiculously overpriced and I believe all three will turn out to be long-term financial losers. (Real estate adjusted for price changes.)
If anyone wants to buy a home, can afford to treat it as a consumption expenditure, doesn’t mind losing a noticeable proportion of the purchase price, and can avoid buying in a location which will deteriorate badly under actual adversity, I would buy it but not otherwise. Everyone has to live somewhere but many supposedly decent areas now are going to get a lot worse when the mania ends.
Gold is historically overpriced relative to the things people actually need to buy. I’d give it a 50-50 shot of launching higher in a financial crisis but expect it to lose noticeable relative value longer term. Silver isn’t a monetary metal anymore and though it’s historically “fairly valued” or “cheap” (depending upon the comparison), the buy-sell spreads are ridiculous essentially forcing any physical buyer into a long-term hold.
Crypto is nothing, literally. It only exists and has its current value due to the asset mania. Some (like BTC) will possibly remain but most existing now will almost certainly go zero and BTC is likely to collapse with bonds and stocks.
I can write a book on this subject but can’t fit it here. No one size fits all approach as it’s substantially dependent upon each individual’s circumstances.
Due to personal reasons which I cannot completely control, I’m in cash running the “Red Queen’s Race” trying to save enough to offset price inflation. In Limbo currently.
Thanks for detailed educated reply, Augustus. Makes sense.
Hope we go from limbo to a Lambo.
Markets aren’t going to have a soft landing. But this isn’t about the markets. This is about the economy, employment, etc.
The “soft landing” narrative has become vomitous. I actually saw a rendering of Jerome Powell in a flight suit near the cockpit of an aircraft, with some sort of headline about him guiding us to said soft landing.
The fact of the matter is that we should have never been “airborne” to begin with, and that Jerome Powell is not the savior, but the perpetrator. His wings should have been clipped long ago, and he should be living in a birdcage called PRISON.
Great post
Vomitous. Pukometer. Just spitballing here.
Does the Fed still have an inflation target of 2-2.5%?
I thought they wanted to “average back” when the inflation rate was low.
So now what when it runs hot?
If year one is 8%…..certainly the new inflation target of the Fed for the next 4 years should be 0%……right? ( if we are averaging, or did that change?) Anyone want to bring that up to J Powell?
Going forward for ten years, if year one is 8% inflation, even if we dip the Fed’s “target” range of 2.5% for the next 9 years….that’s a purchasing power drop of over 30% in ten years…BEFORE COMPOUNDING.
The Fed must be held to what they have said….and that means they should have an inflation target going forward of 0%, not their made up 2-2.5%.
IMO
If they are true to their word with their symmetrical target, they will have to tighten to the point that we are going to see deflation to compensate for the massive overshoot in inflation. (Of course they won’t).
For some reason even 2.5 percent sounds accommodative to me now
Yu — Depends on your time horizon for that average….
“Well, we’ve decided to average over 20 years, 10 years past and 10 years forecast. Since our forecast calls for disinflation in the future, this 8% is well below what our models say will push average inflation over 2%.” — J Pow, sometime later 2022
Key thing to watch is the DXY. At 103, FRB potentially has up to 33 points for any future “printing”. Contrary to what I continuously read here, FRB is not going to destroy the USD voluntarily.
Those who run the Empire won’t stand for it and it’s the basis of the FRB’s power. No government is going to trade “hard power” which is partly contingent on the currency value for imaginary paper “wealth” which in the aggregate can’t even be used in the real world.
This belief is idiotic.
the value of the dollar measured to other failed currencies means little except for trade considerations
the purchasing power is the key to the issue, IMO
Did you watch Buffett interview,he let cat out of the bag ,as in one world currency
From a charting perspective, DXY may have higher to go over the next year or two (107-110 area). Then it will likely turn down and spend a decade or more on its way to the 70s.
When I look across all the charts, there is an interesting scenario playing out. It looks like we will have another year or two of “soft landing” talk in the US where fundamentals continue to erode but the stock market makes new highs, housing tops but doesn’t crash, and the unrelenting spending by the American consumer will appear to be intact.
Meanwhile Europe and the UK will be clearly in a recession. The EURUSD will come down, the GBPUSD will drop to nearly 1.0.
Then, reality will begin to hit the US economy and the actual bear market will begin. Over the following decade, EURUSD and GBPUSD will begin an ascent that will shatter historical ratios.
The mid 2020s through 2030s will likely be an ugly period for the US economy that may well become known as the “Greater Depression”.
I wonder how many people are living off of their crypto gains, home equity loans, and borrowing from their 401K?
If so, a real crash will force people back to work (I remember those days in 2000). Perhaps that is Powell’s plan to reduce wage inflation.
I don’t understand it either. How are these people surviving?
A demographic profile would show that many are older workers who are taking early retirement, essentially giving up. The Great Resignation is becoming a “great midlife crisis”, as older, more tenured people are increasingly quitting their jobs.
You also need to look at credit statistics to see how many are living on plastic. Then there’s the traditional method: living off your relatives, like a spouse or parents. A lot of women are staying home with the kids instead of working because the US, like other third-world countries, is severely lacking in daycare provisions.
A lot of disengagement is due to the fact that employers can’t find ‘qualified workers’ because Wall St. has pretty much required firms to abolish employment-based training. And the Perfect Fit is still very much in style. Further, the college route has been transformed from a clear path into something financially onerous, forcing students to take longer but also into weaker majors.
And so forth.
My step-granddaughter took a weak college major against everyone’s recommendations. Now after 4 years and a worthless degree, she makes $14/hr in a non profit cold calling for donations. She can’t afford to live in an apartment without a roommate and still need financial help from the family.
She’s not alone as she hangs with a crew that took the easy way through college.
Anthony, she did earn the degree. It may not make her any money, but you know she is a better person for it. And if you were kind you would remind her of that until she hears you.
It’s not always about the money. We are only made to think so.
unamused, we love her and she is a good kid, and she did well in college (Sam Houston State). Plus, she got through debt free by applying for grants and other funding. Her parents couldn’t afford to help her much and we helped where she couldn’t cover the costs.
I was always suggesting she become a nurse as that’s where the long term work will be for the next 20 years, but she elected to get her degree in Health Services, whatever that is.
As long as she is happy, that’s all that counts. She is dating (more than dating) a young Petroleum Engineer who works for Shell though. That’s good too!
I know a woman who manages a nice rental community with rents in the $3K-$4K/mo. range. Lots of professionals. She told me about 1/3 of the tenants did not pay rent for first 6 months after COVID and then only 25% of rent after that. So we’re talking $50-$60K cash savings in 18 months. She also said that some tenants got PPP loans on top of that. She is peeved because of all the new cars in the complex that have been popping up in driveways of people not paying rent – we’re talking Audi, BMW, etc SUVs.
I think great patience will be necessary to see how this all plays out. The tide will eventually go out, then we’ll see what’s what.
EVICTION =simple
Thefalcon
Then, add in how many are waiting for their college loans to be wiped away?
Rent forbearance, PPT, and then college debt wiped away….all federal giftings……
then the new cars in the driveways….
Then why didn’t she sell if she was getting screwed? It’s the best time ever to sell residential real estate.
The thing is the unemployment rate is pretty low too. So people have jobs, it looks like there are more jobs than workers. That definitely seems to be the way in tech.
I think that a lot of this is because it’s cheap to borrow money, and there’s a lot of private capital floating around in venture funds. So lots of startups (I’m constantly getting recruited for some startup or the other), and if you want to do something simple like open a restaurant, you can borrow the capital pretty cheaply (though less so lately). The problem is, who’s going to work there? It seems to me that this is all a sign of WAY too loose credit markets.
It’s not just a coincident when GDP comes in negative right before Powell is supposed to raise interest rates. GDP in Canada has been moving upwards since June last year. That should tell you something. All we need is a fictitious recession in America when GDP is in realty blowing through the roof. Nothing but jobs. Whoever heard of a recession when they can’t even fill jobs?
Here is why GDP came in negative: a huge spike in the trade deficit and a drop in government spending. But consumer spending, which is 2/3 of the economy, was up nicely.
https://wolfstreet.com/2022/04/28/gdp-sunk-by-trade-deficit-result-of-globalization-drop-in-government-spending-consumers-held-up-despite-raging-inflation/
Consumers are apparently maintaining their standard of living with credit cards
Still well below pre-pandemic levels:
Without massive wage growth or a period of real deflation, any soft landing will be purely for the benefit of asset holders.
In an economy where every asset has gone through a bubble, how can there be soft landing without feedback effects? There were feedback effects on the way up, so one should expect a feedback on the way down as well. IMO, all asset holders will get their asses (pardon the pun) handed to them.
It might not be a “soft landing” for everyone. People who invested in assets 5 or ten years ago might slide by.
Other, newer riders on the bandwagon might not do so well.
If a recession means one less middle aged person bragging at their minimum wage job that their home is worth a million Canadian dollars, then let it be.
Or one less “victim” of an “unfair” world.
I was talking to an executive of a large corporation that recently interviewed individuals for a 6 figure job. One individual (who happened to be “special”) wasn’t chosen for a variety of reasons.
That applicant had the audacity to contact the HR division and file a complaint against that executive because he wasn’t chosen. Unfortunately for him, that corporation uses an interview matrix that applies a weight to qualifications and experience and he came out short.
In what world does a snowflake think he’s special enough to think that he’s able to force his way into a job? You can fill in the blanks as to age and other pertinent facts.
My response to him when he told me this was “You made the right choice. Who wants a narc in the house?”
Some interview techniques offer empty promise to lure a reaction to gauge candidate default action. Then repeat with each candidate. Matrix or no matrix – no smoke without fire.
El Katz, interesting,
It seems to me that one of the changes resulting from the texting and social media world, is a lack of communication skills in the high school & college age demographic. Please correct me if this is not accurate.
Formal, professional and polite demeanor is what I would think are the desired traits sought from job applicants.
If I was in Human Resources, I would look for candidates who are serious, qualified for the job requirements, polite and know how to interact — as if it was instinctive to them to operate in a professional environment. Is that asking too much? For kids that only use texting to communicate nowadays, perhaps it is.
DanBob’s 4 rules for business:
Answer the phone
Be on time
Be honest
Be polite
These habits carry over with me to this day. As a consumer, and friendly person at heart, I make it a point to acknowledge and show gratitude and respect to the employees where I shop, And as a result, when I stroll through the grocery store, workers go out of their way to smile at me and say hi.
Simple people skills go a long way in life.
And, thanks to Dad, I am happy to be comfortably lazy and retired!
Boomer still thinks you can make a living answering phones. You probably also think secretary is a real job description. The 60s called and want their boomers back.
Wrong generation: I’m a boomer and never had a secretary, not even in the 1990s when I was running a company with 250 employees. That job was already disappearing for boomers. The prior generation had secretaries. For boomers, computers and typing the goddamn thing yourself replaced dictating, electronic appointment devices and other tech helped out, making travel arrangements shifted to DIY online, making coffee was your own damn job, and other functions secretaries used to do were being shifted to different people. And big head honchos started having personal assistants, which could be men.
Thanks for having my back Wolf.
I was a self-employed ticket broker for sporting events, mostly in the Twin Cities, from 1976 until 2020.
StubHub, before it was born, to give an idea of what I did.
Dan/Wolf/Joey-sounds to me like another example of thinking mass entertainment’s version of history is more than a very small, though possibly entertaining, interpretation of a much larger, decidedly less-amusing, more mundane reality that never made the archives of Netflix, HBO, TCM or their brethren…
may we all find a better day.
Thank you as well 91B20,
This morning in a blog that I read from a Scotsman who once worked for Ace Greenberg at Bear Stearns. Mr Greenberg was long gone when Bear Stearns went under.
This is in reflection of the current state of affairs on Wall Street.
“I reread Memos from the Chairman again last night. It’s utterly brilliant. Let me share some gems:
* Watch expenses
* Work for our clients
* Keep our feet on the ground and our heads on straight
On Work (he regocnised answering phones promptly and is critical to success)
“I conducted a study of 200 firms that disappeared from Wall Street and discovered 62.349% went bust because important people did not leave word on where they went when they left their desks …”
“A firm that has enthusiastic telephone operators starts off with a tremendous advantage over the dummies of the world.”
I think that Ace and I would have gotten along quite well!
Survey data on job openings seem fickle to me. Anyone who has worked in corporate America is familiar with open job req’s evaporating overnight due to hiring freezes spurred by the first sign of a downturn (or even a bad quarter).. The trouble will be when real layoff’s start. Even if unemployment data isn’t crazy, demand can shrink pretty damn quick as a lot of people get nervous about losing their jobs. There is still a ton of non-essential spending out there. When demand drops so does corporate earnings, with some companies suddenly swamped with inventory and under the gun from shareholders to cut costs…. then more layoff’s. I agree that a recession is necessary to recalibrate, and I hope it doesn’t screw over too many workers. We’ll find out
I would never believe a survey of job openings. While three are shortages here and there, it’s not anywhere near 11.5M jobs. Rather, that number is representative primarily of a desire by companies to expand to make more money.
Once the recession gets going, those jobs will evaporate as will existing jobs. And most importantly, who says that we’re headed for a soft landing. Wolf constantly says JPowell is leading the most reckless Fed ever, so that suggests that the opposite of a soft landing will most likely occur.
To me, the whole chatter about what comes next has to do with two things:
1) How far is the FED able to get with its balance sheet reduction? They want to go from $9T down to $6T in three years. This means that the bond market will have to absorb $2.5T ($1T balance sheet + $1.5T new debt) a year for three years. As far as I know, this is nearly unprecedented without the FED reversing course. And keep in mind this will be happening all of the world, meaning foreign governments & investors won’t be able to come to our rescue as has been in the past 40 years. What does this do to yields and the resulting interest expense on national debt, already at $545B average over the last four years?
2) Does the FED & Congress continue their FED PUT and MMT-based management of the economy.
The answer to #1 is a head scratcher in terms of how bad it could get in 12-24 months. #2 is an absolute, YES, meaning even more debt which makes the next time that much worse. Dems want to raise taxes out the wazoo. Then in about 5-6 years Congress WILL have to act on saving the SSTF, which again will be a big tax hike for the wealthy to pay for it.
And the kicker is what’s going to be an absolute explosion in Medicare costs over the next 10 years with absolutely zero Congressional apatite for austerity.
Our debt to GDP is $30.4T/$24.38 or 125% and it will most likely continue to decline more after Q1 2022.
There’s nothing about this “unprecedented” reckless scenario that screams soft landing.
As for the debt to GDP ratio, I meant to say that it will certainly rise as our debt continues to grow while we move through a recession. MY B!
The Fed is counting on money sitting in the RRP to compensate for the first 18 months of QE.
Wolf, what is your opinion of the Federal Reserve buying mortgage backed securities. Is there a good reason for that in terms of its mission statement? or for the economy in general? and do you think it should be buying them even at all? Thanks
1. The Fed should have never ever done QE, no matter what securities, not in 2008, and not since then. Period.
2. Agency MBS are government guaranteed, so they’re not too far from regular Treasuries, and I leave them in the same bucket of “the Fed should have never ever done QE.”
But they did QE, then did again, and will do again in the future. Our economy will become like Soviet Union soon but not sure how many decades would it take to collapse. USSR took 5 decades to collapse.
I wish you would be more direct with your opinions, not so damn wishwashy. Sometimes it’s hard to decipher what you mean.
Word!
Him trying his damndest to be unbiased is a huge reason most of us read his work.
Let the comments be biased and have Wolf chip in here and there.
I agree wholeheartedly.
This is a great read. The market may plummet but there should be lower layoff levels.
Question though:
Assuming the printed paper has created this overpriced stock market, where does it flush when the asset values deteriorate? Also where does this leave the horrid bonds when the fed starts unloading more? Is there enough institutional support in Japan and Europe to actually buy trillions in NIR US Bonds at deep discounts?
Policy wise they have to retrain the workforce they have, all the fancy visas aren’t going to fix that, and they need to throw open the borders, to find people to replace the people who are retrained for better jobs. The endgame is automation, or AI for middle managers. Something they should have learned is that tech learning has an expire by date, and so education has to be fast and cheap like landing a glider. You’re only going to do it once. Then perhaps all the students without jobs could be trained as teachers. For the Fed employment is like inflation, not something they can do much about. If you suppose Powell is the problem you should ask yourself, why was he nominated twice by presidents in opposing political parties? But I agree that employment numbers and inflation may fall off a cliff here soon.
1) Companies that kissed the gov ass are paying a price for their
malinvestments.
2) They are stuck with a large labor force, that cost too much, partially unionized, because they tried to please the gov.
3) Amazon dragged the Nasdaq down.
4) Disney : from $203 in Mar 2021 to yesterday low at $111.
5) Starbucks from $125 in July 2021 to $73 yesterday.
6) Will they recover for a while : probably yes, if they adjust.
7) But if we enter recession, they will pay a higher price.
8) They will trim the fake job opening, no matter what.
I would like to be poached. Just putting it out there.
Sorry. The FED menu only has scrambled.
Sunny side up for me please
I work for a large organization that had a large meeting with C-Suite and everyday employees. Inflation is hurting everyone, but they are hoping to get the board to approve a cost of living adjustment for everyone and to match raises to be 1% above inflation. In my long life I have only seen one CLA. Should be interesting if it happens.
When pigs fly
Never going to happen.
I also work for a large Fortune 500.
Privy to some of those discussions and it boiled down to “no” here’s your 3%. The folks at the top who make those decisions are largely unaffected by inflationary pressures so they see little reason to keep up.
If you look here:
https://www.bls.gov/charts/employment-situation/civilian-labor-force-participation-rate.htm
Laborforce participation rates are still below pre-pandemic levels. Lots of people are still reluctant to go back into this job market, despite the number of openings. This may be due to living off asset gains (stock market, cryptos, house values), or simply being sick of the daily grind and reducing their expenses to where a part-time job or something is enough to make do.
Regardless, this means there actually *is* a large pool of labor available. They’re just not willing to take the jobs being offered. I always find it perverse that when it comes to CEOs, people justify massive pay packages because “that’s what you need to attract talent”, as if there aren’t a hundred other people who could run Goldman Sachs into the ground as well as Lloyd Blankfein did. But when it comes to regular peons, the tune changes to “we need to induce a recession to lower demand, and then decimate their assets to force these people back into work they don’t like, for wages they wouldn’t otherwise accept. Anything to keep from paying them more to clean our stables!” What improvement in operational efficiency have our CEOs produced for the vastly inflated incomes they receive compared to their European and Asian counterparts? That part of wage inflation is never considered.
How come no one says this: That lazy bum Jeff Bezos is living off his inflated asset values and not working like a good serf. He retired early like some worthless Millenial, focusing on quality of life, and refuses to believe in doing an honest day’s work for an honest day’s pay. Let’s crash his asset values, seize his yacht, and do whatever we need to do to make him desperate enough to accept a job for $15/hr! Starving his children and throwing him out of his house(s) should suffice.
That’s basically what calling for a recession to get “those lazy bums” back to the grind is actually going to do. But apparently, sticks like recessions are reserved for the hoi polloi, while carrots like higher wages and improved job conditions are reserved for our overlords. Many of them haven’t worked in generations, living off of wealth their great-great-great grandfathers made, yet have the gall to complain about lazy people not taking their shitty jobs with menial pay.
Lune,
Inflation is an economy killer and a currency killer. This is what’s going on here. People have a RIGHT not to go back to work. Let them stay at home if they want to and can afford it. What’s your problem with that?
This is the most ridiculously overstimulated economy, and that stimulus – interest rate repression, trillions of QE, and government stimulus to consumers, businesses, and municipalities – needs to be wrung out of the system.
“Amazon Posts First Quarterly Loss Since 2015 as Costs, Rivian Stake Weigh on Results
Tech giant has seen a shopping slump and cost increases due to inflation, labor issues and supply chain challenges.”
There you have it. They raised Amazon Prime but they can only pass so much of the costs to the consumer. Now Amazon posted a 4 billion dollar loss.
I have no idea about Amazon’s other businesses. I find it very hard to believe that they’re making money on those orders in the vans with gas/diesel at $4/5. Also free shipping is everywhere now.
The loss came from the $7.6 billion write-down of its stake in EV maker Rivian whose share price collapsed. This followed an even bigger huge write-up of its stake in Q4. Without Rivian, Amazon would have made $3.5 billion in Q1. It helps to read past the headlines. Explained here in detail:
https://wolfstreet.com/2022/04/28/afterhours-massacre-as-amazon-plunges-apple-intel-tesla-even-meta-dive/
Sorry Wolf, I should have used my /sarc tag. I agree with you.
Let me make my argument more cogently:
The only form of inflation that the Fed is interested in tamping out is wage inflation, and that too, only the wages of the common person. He doesn’t care that Bezos’s wages are markedly inflated compared to CEOs from even 15 years ago, or compared to executives today in the rest of the world. That type of handwringing is reserved for when a blue collar worker manages to wring a few dollars beyond minimum wage from his boss.
Will other forms of inflation also come down due to the Feds actions? Yes, perhaps. But that’s collateral damage, not the real focus. And that’s a problem for several reasons:
1) It’s common folk who bear the brunt of a recession. While Bezos might “feel” poor because his bank balance is smaller, he won’t be selling his yacht anytime soon. Meanwhile, the rest of us will actually *be* poorer after losing jobs, health insurance, our homes, etc.
For example, studies have shown that college students who graduate in a recession year have remarkably lower lifetime earnings than people who graduate in a boom year, even if it’s just a few years difference. Because the effects of economic turbulence when you don’t have Bezos’s bank balance to cushion you can be felt for decades afterwards.
2) The Fed will stop worrying about inflation as soon as wage growth declines, and likely even go back to blowing up asset bubbles.
Put those together and that means common folk will be bearing the brunt of the recession that the Fed wants to induce, and in the end, we won’t get much benefit anyway because they won’t actually carry it all the way through and wring out the rest of the inflation that affects us.
Let me ask you this question: if we had the same amount of inflation, the same amount of job openings, etc. except the only inflation we didn’t have was in wages, would the Fed be stepping in to stamp out inflation?
You and I both know the answer to that, because that’s precisely what we’ve had for the past 40 years and no one has cared. Housing, education, health care, and energy — which together comprise the largest chunk of any family’s budget — have been through catastrophic inflation since the 70s. But since wages have stayed flat, the Fed is happy and even stokes the fires further by reducing interest rates.
It’s only at the first sign in decades that workers have pricing power for their labor, that the Fed panics.
Let me ask you another question: if we had the exact opposite situation, where there were 11 million people desperate for a job and only 2 million openings, what would the national response be? It wouldn’t be about why all these businesses are offshoring jobs to other countries, or laying people off even during record profits. No, the response would be a nonchalant shrug of the shoulders and maybe a suggestion to “learn to code”.
I agree with you that inflation in all its forms (even high wage inflation) is detrimental. My only point is, no policy maker feels that way *except* about middle class and lower class wage inflation. Which means the people about to pay the highest price for getting “inflation” under control, are the very same people who’s actual inflation issues will stay unresolved despite that sacrifice.
Hope that’s a little more clear than my previous rant :-)
Lune nailed it.
and in particular the Fed has been fueling inflation in stock market since you can’t park money anywhere else with such low interest rates. I don’t know anyone with their 401k in anything other than stock market. Meanwhile real wages have been stagnant since 70s.
Mr. Richter, If I remember correctly the number of early Boomer retirements almost doubled from 2020 to 2021. I’ve spoke with several business owners and they’ve said that they are having difficulty finding reliable qualified replacements.
Yes, many of the hated and maligned boomers have had it, and millions called it quits. Makes sense to me. But others were aged out by their younger bosses and laid off during the layoffs in 2020, and now can’t get back in because ageism is all alive and well even during a labor shortage. Some things never change. I love being my own worst boss though.
1) US GDP is down 1.4% in real terms, but UP from $24.0T in Q4 2021 to $24.383T in Q1 2022.
2) We need two quarters to enter a recession. Are we there yet : No !
3) We need two green months, after big red Apr, to reach a monthly NDX DM #13. Can we get it : easily.
4) Can SPX monthly reach DM #13 : yes, if Nov 22 2021 downturn, that cleanse enough junk, is just a stopping action. NDX & SPX will reach a new all time high.
5) A bearish option : after failing to breach the top ==> markdown.
6) A bullish option : crazy wave five is waiting for us.It will end vertically up, because we cannot stop our crazy greedy trading.
7) Do u want to miss such a trade. Are u ready to go, to beat the big guys.
There is one good thing about the upcoming recession compared to 2001 and 2008. In 2001 offshoring to China was on a huge upswing as China had just recently entered the WTO. Many of my customers responded to the Dotcom bust by sourcing things more cheaply offshore. The same was true in 2008, which an industrial recession in addition to a real estate one. I think this time we will not see more offshoring feeding the job losses, and in some cases may see more jobs coming back onshore in response to the Janky global supply chain and increasing global costs.
I hope so.
Thank you for making things in the USA. How is the new space for your operations panning out?
All the best ….
I was poached. The offer was so much better my previous employer didn’t stand a chance. Thank God! I was losing my ass to inflation.
Excellent point, Wolf. With such a surplus, a lot of job openings could disappear before cutting into the employment rate. A recession could theoretically occur without inflicting mass unemployment.
The tricky part is that too many years of too easy money has built up a lot of debt and leverage in the system and inflated asset bubbles. The bigger they are, the harder they fall. Can they deflate without inflicting mass damage? And even if the real economy escapes the worst, the financial markets look to be in for a rough ride.
Finster…
Central bankers have short circuited free markets. In an attempt to fine tune and arrange reality, they have created imbalances that eventually must be rectified.
In economics, as in physics, for every action there is an equal and opposite reaction. Central bankers seem not to know this. The BOJ is about to learn such with their .25 defense of their ten years.
Imagine if there had been a positive yield curve for the past 12 years…
that short rates stayed with the inflation rate
that 30 yr mortgages were above the inflation rate
that savers were not harmed or driven to yield chasing
a Fed that promoted moderate long rates rather than 4000 yr lows
a Fed that fought inflation rather than promoted a misleading tepid 2%
ie NORMALCY
I would never believe a survey of job openings. There are clear shortages in certain sectors but lot of ‘openings’ are with employers would are just dying to replace their employees with cheaper employees. Lots of pressure from the bosses who are in turn pressured by Wall St. which has been laser-focused on reducing labor costs since Jack Welch became CEO at GE.
This was clear after the dot-com bust when at least two million US tech workers were replaced with foreign imports. There were millions of ‘job openings’, but when they were filled tech employment did not go up by millions.
For obvious reasons it’s not something they like to talk about. It’s a class war thing.
I could write a book on how Jack Welch trashed GE but it was easier to offload it.
His policies replaced thousands of smart guys with people who didn’t know what they were doing but were a lot cheaper. Shuffling, financialization, outsourcing, offshoring – you know the deal.
I did write a book about Electronic Data Systems but it’s unlikely you’re ever going to read it.
In the early 80s Welch’s nickname was “Neutron Jack”, he’s like a neutron bomb. After he toured a building, the building was still there but the people were gone.
Rockhard, Wall St. loves nothing more than a massive headcount reduction, regardless of how it damages the Real value of the firm.
Many breach of contract suits were settled quietly after this and that company dumped the tens of thousands of people who were responsible for fulfilling the contracts. The finance guys made out really well, though. They always do.
In my previous life, I had numerous job postings that were dormant due to budgetary considerations.
I refused to nuke the jobs, even though there was no money to actually hire anyone, because it would require reams of forms and approvals to get them reinstated. So they sat there.
HR wouldn’t know that….. and if you asked the hiring manager, they would say they were active.
I worked for a company once that advertised job openings to appear as a growing profitable company.
These are NOT advertised job listings.
Hope springs eternal, if only we could monetize it we could have a chance to be remembered.
Celebrity being rammed down our throats.
In Europe the job market is not suffering the same faith of the USA because the… Refugees and Migrants. lol
The unemployment rates are falling, the jobs growing and the inflation seems now controlled.
Some countries are so surprising strong that even they are cutting quickly their fiscal deficits and public debt at amazing rates. Like… My own country: Portugal. lol
In the first quarter of the year, Portugal had one fiscal surplus:
“The budget implementation for the first quarter of this year recorded a surplus of 672 million euros, according to the statement released on Thursday by the Ministry of Finance.
This quarterly figure is an improvement of 3,071 million euros compared to the same period last year.”
The interest rates are rising but the fiscal revenues rise even more faster because the strong economy and the low unemployment rates. (More taxes paid by the people.)
No wonder the ECB is not worried with the fiscal deficits: they are disappearing because the strong economy. And they are right. The fiscal revenues are very positively correlated with the job market and so it is easy now to cut the fiscal deficits in Europe.
The current Portuguese Government is forecasting achieving 100% of the public debt on the GDP in 2025 or even before, depending how quick the economy grows and the… Jobs growth. (From 130% last year. lol)
The EZ is living one economic bonanza and, yet, outside, people like the author of this blog, ignores what is really gong on in Europe. He is poisoned by the Russian troll factory propaganda and thinks the EZ is one dead body. lol
We are living interesting times in Europe.
“the inflation seems now controlled.”
The headlines said Europe inflation was 7.5%
ECB is ready to raise rates too looks like.
The European inflation, contrary to the ECB and other “monetary experts”, is very dependent of the energy prices, starting with the oil prices.
The energy prices speed fell to 38,% because the brent prices.
But if you read the Russian propaganda and the trolls factory (like the Zerohedge PSYops to deceive the extreme-right wing morons) , the European economy is imploding and one new sovereign debt crisis is approaching. lol
We will see in some months.
I like the theme that the large amount of job openings could help in terms of unemployment if we do get a recession soon Q1 negative so far. Makes sense. As a 65 year old that has difficulty getting work the age discrimination is alive and well for me. I’m an oil engineer and completely understand why there is little interest in my skills. Much of the current work is outside of my skill sets. The Middle East and other counties have a mandatory retirement of 60 for most workers and very difficult to get a work permit approved even if the company wants u.
And then you have Mitt Romney floating the idea of increasing the Medicare and Social Security age to 70.
I hope Mittens chokes on a chicken bone. A bigger parasite is hard to find. Well, there is Al Gore…..
Apple, Rick Scott (R) wants to solve the ‘labor shortage’ by getting rid of SS and Medicare to encourage retirees to go back to work until they die.
There is a very good chance this plan will succeed on the votes of retirees who very strangely believe the plan won’t apply to them.
‘I never thought leopards would eat MY face,’ sobs woman who voted for the Leopards Eating People’s Faces Party.
How many times have you been told you’re overqualified?
It’s common for potential supervisors to view experienced candidates as potential rivals and don’t want to give their managers any ideas about replacing them.
Depending on the nature of your work you could write a tell-all book and then find somebody to pay you not to publish it.
1) ARK : Kathy Wood made a round trip to Mar 2/9 2020 gap, 0.886 of the bottom.
2) A bearish option : a lower low < Mar 2020 low.
3) A bullish option : a recovery to 90, to dma200. Perhaps to 105, to the Lazer, well below the peak.
The interesting thing is that included Tesla, which had a massive increase in price over that time and is still sky-high. Without Tesla, her portfolio was complete trash. She picked the absolute worst stocks possible.
I bet if you just looked at the median performance of her stocks it is deeply in the red.
In fairness to her, isn’t that how VCs look at their investments as well? I believe that if a VC invests in around 200 companies, they only expect 15 to become profitable, some to break even and most to lose money.
But chimps throwing darts shouldn’t be able to charge 2-and-20.
I suppose the next VC excuse is “But we know which 200…even though we don’t know which 15…”
Ahem.
We now live in an upside-down world with respect to the Fed and its goals vis-a-vie employment.
Normally the Fed intervenes by stimulating the economy to get employment moving up.
This time, in order to ‘improve’ the overall state of employment it needs to trash the economy in order to coax the participation rate up.
Max-reminding me of an old Watterson ‘Calvin and Hobbes’ panel (i paraphrase, here) where Calvin, writing a paper for school states: ‘…lords and vassals lived in a futile society…’. When downgraded for his incorrect answer, in frustration he says: ‘…i’ll never understand history…’.
may we all find a better day.
Probably off topic, I was reading a forum today about relocation, and some guy posted, “I’d like to relocate, I’m working remote and making 400K”, WTF?
If you work at a FANG or similar company with 10+ years of experience (sometimes even less), this is not that uncommon. I know plenty of people in this situation.
As usual, your literacy and graphics, allowed me to visualize the issue, process the information, and form an opinion, cognizant of the fact, that every body has one.
Tomorrow, the Fed will role out an inappropriate response and plan for monetary policy going forward.
We are about to have a front row seat to the Fed’s plan to deflate the three bubbles they have inflated, stocks, bonds, and real estate.
Phase 2 of asset repricing begins in the morning.
The question is do the markets deflate in an orderly fashion or chaotic.
When one looks at the batting average, to me, I see that 65% of the best average ever was being put out when they came to the plate. With the correct caveats a normal distribution.
It will seem chaotic to any individual investor but sorta normal too the wall street wise guys.
which makes sense. The “market” will buy or sell your asset, for a price.
America needs state sponsored banks and a national, recommitment to the ideal that we sell.
To me, the problem seems how to unwind the leveraged markets, foisting on savers, the losses as the Fed has done since QE was inaugurated.
The real problem is a supply pull inflation, price increases by an over-financed private sector, hungry for profits, who gambled on the Fed’s thinly veiled put, a sponsorship of monsters that must be slayne.
Tomorrow the Fed will finally roll out a micro step in the right direction, way too little, too late, after having made policy error after policy error to let it get this far. And it’s still dilly-dallying around.
Thus the phrase, ” an inappropriate response and plan”, the only defense for being wrong is to continue to be wrong, only louder.
And all of the speculators are now calling the FED’s rate hikes “policy error” as if allowing massive inflation and reckless bubbles is somehow shrewd and responsible. The entire system needs to collapse so we can rebuild it into something stable and sustainable.
DC-…but the endlessly-flowing punchbowl couldn’t possibly be a ‘policy error’, could it?…
may we all find a better day.
I see a ton of openings around here for low-end food and customer service jobs. I don’t see how anybody working them can make it. $11-14 per hour at best per most of the advertisements. The most egregious one was Sheetz that offers $1.50 more per hour if you work overnight, or only $12! Pre-tax! Who in their right mind would take that offer unless they were absolutely desperate? Doing that 5 days a week won’t even fill up a Jeep.
To put what you said into context ( presumptuous of me) , there are 2050 hrs in a forty hour, fifty two week year. So 20 bucks an hour is 41000 dollars per year. IMO, just enough if it also includes a good health plan.
After all, it was the average American that fought and won WW2. I’m pretty sure they can master industrial tasks if given half a chance.
Thus eliminating the unreliable Asian supply chain.
It is my current opinion that every measure of economic activity should be measured against the median. The average is so distorted by inequality. The old joke: Bill Gates walks into a skid row bar and everyone in there is a billionaire, on average.
Dang, those average Americans who fought in WWII are mostly all dead and buried now. It’s a different breed here these days.
actually for AA, perhaps my only age peer left on here and other where:
Nah, the ”breed” is still here in all the forms of humanity, and, actually in my recent experience ”EXPANDING” as the many folks coming here legally and not so legally come TO WORK, as did my ancestors for the last 400 years…
Please do NOT denigrate those who WANT to come here to USA to actually benefit from the still clear opportunity to harvest/take home more of the value of their work, no matter if that work is ”manual labor” of the base kind ( of which I have done tons) or of the now ”digital” kind (ditto in my older years)…
The challenge IMO is for our systems somehow to be able to separate those wanting to come here to work and contribute, from those wanting to come here ONLY to take advantage of the ”free ride(s)” now SO available.
WE the PEONs MUST insist that this separation is done sooner and later, and starting ASAP, or face the inevitable social calamity if not done successfully.
Lauren
That’s one reason I took the bus to work to my useless government job for so many years. Saved a lot of money especially during the 1982 recession. I am so sick of listening to all these whining dogs about gas prices. They bought those gas guzzling monstrosity, pieces of s$it. JUST PAY UP!
I did the same throughout college. However no bus option exists for a Sheetz near a rural interstate exit. And even if it did there would certainly be no schedule that would work for an overnight shift.
I agree. These are the type of jobs should be considered temporary/stepping stone before moving on to something better. Don’t trap yourself.
This is good, quality information about the number of jobs available and the areas of the economy in which these jobs can be found. However…
…any data on what these “millions” of jobs actually, you know…pay? What percent are under, say, 15 USD an hour? (70% or more, would be my guess, earning a “whopping” 30K for full time, 5 day, 50 week input) What percent come with no or few added benefits? Require over an hour’s one-way commute, on the worker’s dime?
Are there not such statistics? Also, if there are, how come we never hear about the *quality* of said millions of jobs, anywhere?
I may be wrong, but it always seems to me that the people in the media crowing about how many “millions” of jobs there are out there, never quite get around to describing the jobs’ quality, or lack thereof. Also, that they themselves are happily making huge money in the job they have, and are very expensively dressed. On the ground, meanwhile, the reality for quality job hunters is a tad bit less…euphoric. IMHO, of course.
RTGDFA all the way.
The beat goes on. Blackrock just bought another $7.6 billion dollar REIT.
They sure like Real Estate for some reason. What do they know we do not know.
OPM and fees.
Wolf in both good and bad news your graphs are increasingly appearing on Wallstreetbets. It’s great that word is getting out and people are sharing accurate data. On the other hand, get ready for a bunch of them to start commenting here. Either way, thank you for another great article!
Haha I noticed it too. I guess the mood is changing.
I can’t wait for the Wallstreetbets crowd to start shorting an empty bear market with hardly any bids, the same way as they popped GME etc last year, but then in the opposite direction. Gen-Z taking revenge.
The millions of unfilled jobs are hard for me to understand, because I struggled in my young adult years (late 60s and early 70s) to get into a “normal” wage-earning lifestyle.
Later, in my prime employability days after getting college degrees, I turned down jobs from star-wars type “defense” jobs due to bad feeling about working in the war weapons industry. But otherwise than that, I was always worried about staying employed. And hustled very effortfully when I lost a job (fired, laid off, or quit out of disgust).
High on my reading list is “Bullshit Jobs: A Theory” by anthropologist David Graber. I am halfway through with his book “Debt: The First 5,000 Years
which is a deep anthropological and theoretical dive into how money / debt developed in human social systems. It’s the first book in a long time that’s like when I was young and thought: “Wow, this is some real original thinking that provides intense food for thought.”
Human Resource departments needs to streamline their hiring processes…
The hiring process at many companies remain desperately slow.
One reason that Amazon uses the smaller sprinter vans is that anyone with a drivers license, cleaner driving record, and no felonies can start driving within a week.
Just applying for positions at many companies can be discouraging.
Create an account, fill out endless, needless information only to hit the submit button, never to see a response.
I see “we pay daily” popping up more and more. This is also a great idea for any company that truly needs employees.
“A 35-year-old boss in tech doesn’t want to hire a 60-year-old worker, no matter how qualified.”
A REAL, widespread and highly counterproductive prejudice which they have no statues to tear down about.
As someone who is approaching 60, there is also some justification for this way of thinking. Companies that hire for the long term have way more upside in a 35 year old. The people in my industry who are over 55 are a very mixed bag, some I would hire immediately, some have outdated skills and an entitled mindset with one eye on retirement. I say this as someone in that category.