THE UNITED STATES LABOR RECESSION STARTED ON 9/8/23 AND IS 15 MONTHS ALONG AND COUNTING. The country also remains in a housing recession and manufacturing recession but an overall US recession continues vacationing with Godot. 2024 is the Year of the Godot Recession (it has not shown-up yet).
The US economy used to be dominated by the housing and auto sectors. When they go into recession, the whole country would drop into recession. 100 years ago, the railroads ruled the roost. Housing and autos/manufacturing are now second tier players in the recession prediction game. Semiconductors are the new sheriff in town and the chips are now the dominant influence on the stock market and economy. Think about it. Nearly every product you buy nowadays has a chip in it.
Despite the lousy labor, housing and manufacturing industries, the Godot Recession occurs (the recession has not yet arrived). This is because semi's now rule the roost and are the most important metric. The AI hype has only served to bolster this top-spot, king-of-the-hill position. In addition to the chips holding up the markets and economy, so are the wealthy class that have benefited greatly due to the last 15 years of Federal Reserve money-printing.
The top 20% of Americans, the have's, made filthy rich by the Federal Reserve's obscene money-printing that sends asset and stock market prices higher, account for 50% of the consumer spending in the United States nowadays. The other 80% of have-not's account for the other half of spending and they are not buying another vacation home, or yacht, or rare diamond bracelet, or brand new Mercedes convertible.
One-half of Americans do not own one single share of stock and did not make millions effortlessly via the Fed's money-printing. It is crony capitalism filth. Be glad it is in its last throes. The have-not American peons are buying food, diapers, baby formula, and necessities; consumer staples. They wonder how they will pay rent or the mortgage with the car and home insurance rates going through the roof. They are exhausted from working two jobs and watching their savings vanish as they listen to the upper classes brag about their new cars, clothes, jewelry and homes, courtesy of the Fed of course.
So 2024 is a tale of the have's and have-not's. Even the wealthy cannot spend limitless. They only need one $15,000 freezer, $2,000 wine rack and $40,000 cement driveway. After that it is time to kick back and enjoy life.
The unemployment rate increases on Friday, 12/6/24, from 4.1% to 4.2%. The 8/2/24 jobs number was 4.253% rounded up to 4.3% while the 9/6/24 number is 4.221% rounded down to 4.2%. The 10/4/24 number was 4.1%.
The low prints were a 3.4% rate in February 2023 and May 2023 precursors to the start of the labor recession, and rising unemployment rate, in September 2023. The US unemployment rate is now 0.8% to 0.9% above the lows last year almost one whole percentage point; not good.
The blue line is diverging up and away from the red line which means trouble ahead and it is time to watch your wallet. Over the coming weeks and months, some of you will be called into the boss's office that will tell you to clear your desk drawers, pack up your family pictures, house plant that needs watered, and change for the coffee machine, and get the Hell out. Oh yeah, hand in your badge and door card since you are no longer allowed in the building. Now get out. Beat it.
Young adults under 40 years old will learn a lot about yourselves and the people around you as the country slides into recession. You lived through the pandemic recession but that was an oddball animal in its own right. In an economic recession, you or your significant other will likely lose your job, maybe both of you, so obviously you should already be planning for such an outcome. Also understand, that if you think it is easy to get another job now and you are not worried, you are living a false reality. In a recession, hundreds of other folks will now want the same available job and the guy that told you to call him anytime you wanted to work for him now does not even take your phone calls.
For the next Jobs Report on 1/10/25, the unemployment rate, now at 4.2%, can be 4.0% or higher for the US labor recession to continue. The rate would need to drop to 3.9% or lower to nullify the labor recession indicator after 15-plus months and instead point towards a labor recovery and steadier growth pattern ahead. With the rate at 4.2% now, remaining in an uptrend, it is hard to imagine that a 3.9% print will occur in 4 weeks; it is very unlikely. It is easier to envision the rate remaining above 4% going forward and actually expanding higher back to the 4.3% and higher. The unemployment rate for blacks is up to 6.4% and the U-6 rate increases to 7.8%.
Keystone will educate you a little bit on Management 101. Layoffs. Decades ago, you could get sh*t-canned from your job a few days before Thanksgiving but companies started receiving cold-heart reputations so managers got smarter. Typically, if you need to trim the herd, you will layoff employees before Halloween, October 31, because then you will not get accused of throwing families out into the street during the holidays. Thus, if you are still employed after Halloween, your boss likely plans to keep you around until the new year.
However, January is round two. After the holiday fun is over, many companies begin new budgets in January and guess what? You are persona non grata. You are on the layoff list and get sh*t-canned in mid-January as the company charts the new year forward. Thus, continuing the discussion above, it is more likely that the unemployment rate will move higher since some folks, maybe you, are going to get sh*t-canned from your job a month from now. You will plead with the boss stating that he/she told you last week that the company cannot survive without you. The boss will laugh and say you dumbsh*t, we tell all employees that to get more work out of you; now pack your bags and get out.
The tech and semiconductor stocks are likely topping-out as the initial AI hype wears thin. The rich are still spending money but that should lessen going forward. Holiday spending is important since it is propping-up the economy. The weakness in the chip sector going forward, and the wealthy folks tightening-up their spending, will join the ongoing labor, housing and manufacturing recessions, to finally welcome Godot that will arrive with the overall US recession. Happy New Year.
Note Added Friday, 1/10/25: The unemployment rate drops to 4.1% from 4.2%. The labor recession is now 16 months along. The 2/7/25 Jobs Report is far more important than today's report since it will begin reflecting layoffs. Remember Keystone's Management 101 lesson above. If you are a worker and made it into November into Thanksgiving, a company will keep your sorry arse around until the first of the year. That party is over. Today there were likely management meetings at nearly every US company. Department managers bring their layoff lists to the executive conference room and they decide who is on the chopping block first. Boss's will begin calling employees to their office on Monday to sh*t-can them. Now through the end of the month will likely be a lot of layoffs as companies set sights on a healthy year ahead. Now it is time to cut dead weight, like that Keystone character that keeps making trouble. If your company does not have much of a backlog of work, and you have been doing some administrative tasks, charging your time to overhead, you will be laid-off in the days ahead. But Keystone, you told me I was the best employee here and the place could not survive without me. Managers tell all workers that same thing to get more work out of you, you are dumber than I thought, now get an empty cardboard box from the copy room, and pack up your potted plant that needs watered, and your family photos especially that one with your family on the beach last summer, and your change for the coffee machine in the top desk drawer, and get the hell out. And give your door key card to Betty on the way out. For the 2/7/25 Jobs Report, the labor recession will continue if the unemployment rate is 4.0% or higher but the labor recession will end if the rate drops to 3.9% or lower.
Note Added Tuesday, 1/14/25: Meta announces plans to cut 5% of its workforce. Some analysts put the number at 3.600 employees that are sent packing. The fired workers can moan and complain about losing their jobs on Facebook, Instagram and WhatsApp (Meta platforms). It is January and time for layoffs; time to trim that dead wood. Now take your Tupperware from the refrigerator in the breakroom, your graduation certificate from a self-improvement class that is hanging on your cubicle wall, and your mug that sports the company logo (the company that is now sh*t-canning you), and get the hell out. And do not forget to give your door key to Betty on the way out. After today, you are not permitted inside the building again. It was good working with you, now get the hell out. Brown-Forman, the bigtime whiskey and spirits maker, cans 12% of its workforce. Do not let the door hit you on the way out and here is a complimentary bottle of whiskey to drown your troubles and water down the worry of losing your job, albeit only for a few hours. Media company Alamo Drafthouse fires workers. Microsoft announces plans to layoff thousands of workers. Amazon and Washington Post are sh*t-canning employees. Happy New Year. BlackRock is laying off workers. It is January and the smell of layoffs is in the air. Wayfair, Pandion and Icon say adios to employees that will now seek unemployment compensation. Aqua Security, Altruist, SolarEdge and Level call workers in on the carpet telling them that their services are no longer required. What will these folks say to their spouses and children when they get home and have nowhere to go tomorrow morning? How will they explain that they lost their job? Will they feel like they let their spouse and children down? It starts to sink in that you lost your job and then worry begins about how you will find another. The mind races imagining negative thoughts and outcomes. A lot of you young folks under 40 years old are going to learn a lot about yourself, your loved ones, and others around you, over the next couple years. Keep your head down if you work in the office because the boss is dressed in a black robe, carrying a scythe, walking up and down the hallways. If you walk around the office, always carry a piece of paper because it makes you look like you are doing something. Years ago, Keystone would walk around with a blank sheet of paper in his hand, stopping at peoples offices to bull-sh*t and goof-off all the time, and when he walked down the hall everyone automatically thought he was busy because he was carrying some type of document. Do what you can to look busy, and make sure your time card is all billable hours if in that type of business, because the managers are revising their layoff lists daily. Anyone working and charging time to overhead will be canned. If you make money for the company, they will keep you around.
Note Added Wednesday, 1/15/25: Oil giant BP announces plans to cut thousands of permanent and contractor jobs. Clear your desk and get out within 15 minutes, otherwise, security will escort you out. Oh, yeah, thanks for your service, we will call you if we get busy again, now get the hell out, your job is over. Spirit Airlines pushes 200 employees out of a moving airplane telling them their positions are eliminated. Don't you feel foolish that you got down on your knees in front of your boss to accept the mandatory mRNA COVID-19 vaccine injection into your body to keep your job, and now the airlines dropkick you across the tarmac into the dumpster.
Note Added Thursday, 1/16/25: Amazon cuts 200 heads at its North American sales unit. That must have been a bunch of dead weight. Don't let the door hit you in the arse on on the way out.
Note Added Friday, 1/17/25: Banking giant Citigroup is cutting more jobs to reduce operating expenses. The firings of managing directors and data analysts are part of a bigger goal to eliminate 20,000 jobs by 2026. 23% of Harvard MBA graduates, 1 in 4, cannot find jobs. Other colleges report similar placement data. Graduates finding positions are tempering their expectations. Why does everyone keep saying that the labor market is hunky-dory?
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