The Math Isn't Mathing - Job Market + The Economy
Have you seen the latest season of "That 70s/80s Show"? You're seeing it right now in your budget and the job market..
The math isn’t mathing right now.
I know that this term has become a culturally based response to the unprecedented times we keep finding ourselves in, but it’s the appropriate response to it all.
The math isn’t mathing when it comes to the “summation” of why inflation is more than the calculation that it’s measured against. But in a recent LinkedIn post, I pointed out that it’s a combination of the cost of things/services/ goods with a compound interest of greed, gains, and gravity above the reality that Consumers (American or Internationally) are experiencing.
“Inflation Math” isn’t adding up to how the Federal Reserve showcases the economy to be seen as. We are seeing it in not only groceries but also housing, insurance, healthcare, and gas, plus some random things that shouldn’t be tied to it but somehow is. Stagflation is a silent undertone to the echo that J. Pow seems to be slowly talking about in his remarks. I’ve often said that the soft landing isn’t about the economy that we live in but the one that they protect - their wallets. The current economy is replaying economic episodes from the 70s and 80s. An element of Stagflation that many don’t think about could be the part that we’re seeing right now within a key element of the economy - the job market.
Unsure of what stagflation is? Stagflation is a period of slow economic growth, rising prices, and rising unemployment. It's also known as recession-inflation. I talked about Stagflation in detail here.
Doesn’t this sound like what’s being seen right now? A year or so ago, I stated that we would see high levels of Stagflation before a recession would appear. Not one lie or sold because the recession talk is slowly being muted while the job market is being turned up even more.
I had a different title on this edition than the one you’re reading, but felt the need to change it. If you read my words before, one of the things that I have screamed about is how the economic reports from the CPI to Job Reports don’t call out the reality that consumers are experiencing in regard to their finances. Heck, they have to go back and amend the GDP Report sometimes, but what do I know? What ticked me off was the recent Jobless Report showing that Jobless claims fell to a 9-month low of 198,000. Not many layoffs in the U.S. economy.
Not “many” layoffs in the U.S. economy? I don’t think that the media and those who are deemed economists are able to read the room, not just the reports. The reports can use the data to tell not only the decision but also the story in which they would like to be showcased. What would they consider to be “many”? Let’s take a step back to see what’s happened within the last couple of weeks - yes, weeks -
I saw this post on Facebook about GEICO laying off over 2,000 people without a warning (which honestly, all layoffs are starting to have that as a common denominator).
Also, GEICO and other carriers are starting to boost the rate of coverage in general and make it harder to insure those who have a Kia or Hyundai. But I talked about that a while ago.
Along with that situation these are the companies that have laid off employees recently (legit right at the holidays):
Nokia is laying off 14,000.
LinkedIn laid off 700
Waymo, robotaxi company, laid off more than half of employees
Google laid off recruiters
Ally, Farmers Ins, and Washington Post are executing lay offs
Banks are laying off employees silently (another common thing I’m seeing)
In tech this year - 244,342 are w/o a job, this doesn’t count for other sectors (media, medical, etc).
One of the things that I’ve always wondered about since the 2008 Recession is how reports given about the economy say one thing and in reality how it shows up for consumers looks different. In 2010, I was seeing that Unemployment Claims were down but the reality was that many were finding their benefits being exhausted due to it being hard finding a job - but is history repeating itself?
To say that the jobless claims are dropping due to low layoffs but knowing that some companies are offering a bit of severance could be the reason why the narrative about the situation isn’t clearing the smoke to show the real fire.
All this to say, if you’re finding yourself out of work due to a lay off take a read at this, but one of the things I called above was that these layoffs were out of the blue. Here’s some quick tips to prepare:
Look at your spending
Build your emergency fund (in a HYSA)
Boost your income streams
Pay down debt (lower those interest rates)
Network + increase skill set (certs, etc)
Have no fear but know how to function in the flow
(More tips here)
Please prepare, my people. We never know what company that might’ve overhired during the pandemic or prior might want to reorg or what company might dissolve randomly (this actually happened at my last job and I never received severance). I saw this from experience and as an economist per se - brace yourself and build yourself (along with your "economic moat"). I fear we are only seeing the beginning of this rerun of the 70s/80s economic show.
If you need some insights beyond my content, you are welcome to work with me to gain some context in regard to your finances. To learn about my financial planning practice, look to this link.