Vicious cycle of decreased consumer spending, leading to decreased economic activity, leading to decreased jobs, leading to decrease consumer spending has taken hold.
In a video posted May 1, Jeff Snider of Eurodollar University broke down the disastrous state of the economy from the perspective of job availability – a key indicator of the financial health of a society.
“American workers know that there are no jobs to go to, so they’re no longer quitting in the same fashion they had been,” Snider said. “Remember the ‘great resignation’? Yeah that’s a long-distant memory. Workers know that if they lose their job or choose to leave their job, it is very tough going out there.”
Snider discussed how statistics are being misrepresented to make the economy seem rosy when it’s actually never been more dreary.
“We get so many anecdotes and even mainstream stories about confusion over how the jobs number looks really good on paper, how the statistics come out like payrolls and suggests the jobs market is booming, labor, employment, everything is just terrific, except when you actually talk to people, especially anyone who’s been unfortunately laid off, or someone who’s looking for a job, it’s an entirely different picture,” he said.
The economic analyst discussed the dismal numbers related to the hiring and quitting of workers.
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“While the government only reports on job openings and labor turnover, the only number that anyone pays attention to is the first one, job openings, but it’s not worth your time, the one you need to focus on and pay very close attention to, that’s hires,” Snider said.
He gave some examples of mainstream news articles chronicling the tribulations of accredited and experienced workers who cannot find work anywhere, despite their credentials.
“It seems like the only places that are actually hiring, outside of maybe a state and federal government, some government agency, is waiters and bartenders, you have to go to Starbucks in order to get a job, except maybe no longer Starbucks,” he said.
The analyst then reported on the recent earnings of the big coffee chain, indicating that even the food-service giant is seeing a ‘challenging operating environment’ where customer levels are falling in the ‘deteriorating economic outlook’, according to the Starbucks earnings report Snider read.
He discussed how consumers are becoming ever more discriminating with their spending as price pressures increase.
“This is not an inflationary economy, this is an economy that is absolutely struggling, and we can feel it in so many different ways,” Snider said.
He laid out why the economy is not genuinely inflationary. He said it’s because there is not an offset of income. Rather the situation is so bad because people are not earning more, yet prices are going up in order for businesses to just stay afloat.
Snider then discussed how even the restaurant industry, an area that had been doing relatively well over the last few years, is now seeing financial trouble on the horizon. Hiring freezes, decrease in sales and potential layoffs in the near future are all taking place in the industry.
He laid out how this is not a U.S. problem, rather a global crisis that did not originate in the U.S., but has migrated here since 2020.
Snider also discussed how the economy is locked into a self-multiplying doom loop.
“Now consumers are buckling, in large part because companies are experiencing a weak environment and are having to take substantial steps in order to control their own costs, which has led to a prolonged hiring freeze already, which has only made the consumer situation even worse,” he said. “And we’re getting locked into that vicious cycle.”
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