What Could Go Wrong?!
Companies have been holding office space and employees for a future that never materialized because they were drunk on Easy Money.
Now it has become time to pay the piper.
The layoff announcements rippling through tech and social media companies are special. They’ve been coming on a daily basis for months. Lots of big tech and social media companies, lots of startups and crypto outfits, have announced layoffs. Among the biggest ones: Alphabet, Meta, Microsoft, Amazon, Salesforce, Cisco, HP, Twitter, etc., hundreds of companies, some of them five-digit layoff announcements, meaning a company firing 10,000 employees and more.
And these other businesses are seeing that some of the labor market pressure has now subsided and that they can actually hire tech workers. It's still difficult because a laid-off Meta employee who was earning $220,000 a year in salary, stock-based compensation, and a ton of benefits, including the ability to work from home, isn't eager to work in an office for the tech division of an industrial company doing something actually useful for less. It would therefore take some getting acclimated to that move.
This absurd period of making decisions with brains reduced to mush by the money-printing virus is now finished. That is done. There is now some sort of reckoning, primarily a purging procedure. The effects will be felt across the economy.
Whatever happens, one thing is certain: Easy Money encouraged poor commercial judgment and miscalculations. Now there is a cost to be paid.
GDP Report Reveals Ominous Warning
According to the Bureau of Economic Analysis's most recent figures, the U.S. economy expanded by 2.9 percent in the fourth quarter of 2017 and 2.1 percent in 2022. The White House might want to pause before taking full responsibility for the nation's economic situation. Not trumpets, but warning bells should be ringing in response to this most recent study.
That is as a result of slower economic growth. Even those regions that made a good contribution to the GDP are not always prosperous. For instance, the fourth quarter's growth in corporate investment was only 1.4 percent, but that growth was nearly exclusively in inventory. A significant factor in future economic growth, nonresidential investment increased by just 0.7 percent.
As a result of customers being unable to pay the trifecta of high housing prices, high loan rates, and declining real incomes, residential investment plummeted, plummeting 26.7 percent. It seems sense that homeownership affordability has reached its lowest point in the history of that indicator.
The increase in inventories, which made about half of the GDP growth in the fourth quarter, is also not encouraging. It arises from companies' inability to offload present stockpiles at the going rate. Lower profits from selling that inventory at a loss will hinder future expansion.
The decline in real disposable income, which decreased by almost $1 trillion in 2022, is the most alarming finding in the GDP report.
As consumers continue depleting cash reserves and borrowing costs are rising, the growth in consumer spending will keep slowing. Since that accounts for roughly two-thirds of GDP, this doesn’t bode well for the economy. - Fox Business
For some time now, I have predicted a shift into a monetary tightening policy.
The US is currently experiencing a recession, according to statistics that the St. Louis Fed has quietly released. This revelation was made public just before the new year, obviously to avoid receiving more press coverage.
The announcement also comes just after the Philadelphia Fed reduced its expectations for labor growth in the second quarter, removing a staggering 1 million jobs from their initial projections.
