The Economy Is Starting to Buckle
On the menu today: Remember how, at the end of July, President Biden and his team insisted that two consecutive quarters of shrinking GDP didn’t mean the country was in a recession? Well, companies big and small are announcing layoffs more frequently these days, indicating that we’re in a period of not-so-subtle belt-tightening. Meanwhile, the projections for energy costs ahead of this coming winter are increasingly ominous, the decline in unleaded-gasoline prices has stopped, and a long-simmering national housing shortage may be catching up with us. But hey, apparently Biden intends to tout his economic record as the midterm elections approach.
The Quiet Recession
About two weeks ago, a smart friend of mine who works on supply-chain issues observed that, “Based on what I’m hearing throughout all the industries that I work with, this month’s job report might be brutal. People are getting skinny everywhere they can, so that they don’t lose their [butts]. Unfortunately, that means huge groups of people getting fired.” (“Getting skinny” means cutting operating costs.)
And, like everything else, once you start looking for something, you start seeing signs of it everywhere.
- Related: Special House Subcommittee to Study Workforce Shortages
Meta — you know, Facebook — plans “to cut expenses by at least 10 percent in the coming months, in part through staff reductions.” Google is eyeing similar cuts, with CEO Sundar Pichai characterizing it as “being a bit more responsible through one of the toughest macroeconomic conditions underway in the past decade.” Twilio has announced plans to lay off 11 percent if its workforce, and Snap has announced plans to lay off 20 percent of its workforce.
A lot of big companies, even outside the tech sector, are announcing the elimination of executive positions. The Gap is eliminating 500 corporate jobs. Boeing has announced that it will eliminate about 150 positions in finance and accountingin October. Last month, Walmart announced that it would eliminate 200 corporate jobs.
FedEx is enacting a hiring freeze and closing more than 90 FedEx Office locations.
It’s not just big brand companies: It’s also an ice-cream plant in New York; it’s also a slew of hospitals nationwide. God help you if you work in real estate: “Some of the biggest players in the real estate industry, including RE/MAX, Redfin and Wells Fargo, have announced layoffs in recent months totaling thousands of jobs. Industry analysts are projecting the cuts could eventually be on par with what was seen during the housing crash of 2008.”
None of these individual company moves, by themselves, are likely to make a big difference in the national jobs numbers, and you can find companies announcing layoffs in any month. But cumulatively, these announcements suggest that we’re in a period of not-so-subtle belt-tightening. Businesses doesn’t know what to expect in the coming months, except higher costs to heat their facilities this winter. The stock markets are jittery. Sooner or later, those rising interest rates will reduce customer demand — which should reduce inflation, but will also lower sales, profits, and eventually, jobs.
Of course, in some people’s minds, the economy can’t be sputtering, because the guy they like is in the White House, and the party they prefer controls Congress. And the pressure to align an assessment of the economy with partisan needs is never stronger than in the final months and weeks before Election Day.
Last week, President Biden attended a Democratic National Committee event held at National Education Association headquarters — yet another sign of how those two organizations are now so symbiotic that they’re becoming indistinguishable — and took a victory lap about how well the economy is doing:
We passed the American Rescue Plan, which lifted this nation from economic crisis to economic recovery. And every single Republican voted for it. [Note: Biden meant every single Republican voted against it.] Nearly 10 million more jobs have been created since I’ve been President — the highest number of jobs in that period of time of any President of the United States of America. We have a 3.7 percent unemployment rate, the lowest in 50 — more than 50 years; a record number of new — record number of new small businesses created; and over 668,000 new manufacturing jobs in America.
The same day, White House press secretary Karine Jean-Pierre offered this remark:
This is one of the strongest job markets that we have seen on record. And, and so, what we are seeing – and I’ve said this before; you’ve heard this from Brian Deese — is a transition to a more steady and stable growth. And that’s what we’re currently seeing and in the process of moving the economy into.
That “steady and stable growth” she’s referring to is two consecutive quarters of declining GDP. The White House message is, “You’ve never had it so good.