It’s understandable if you’re completely confused about the job market and the economy. The reason you feel in the dark is because the reasons may seem counterintuitive. The Federal Reserve Bank, the entity that controls the United States’ money supply, needs the economy to get worse before it can get better.
Fed Chair Jerome Powell openly admits that the economy needs to be cooled to fight inflation. Remember Powell and Treasury Secretary Janet Yellen missed the mark The claim that inflation is only “temporary” and will abate After a while. It has not abated and has reached 40-year record highs.
The US government screwed it up
The bigger it gets, the harder it gets. One of the Fed’s only tools now is to act raise interest rates, which makes buying a home with a mortgage, using credit cards, or finding credit to start a business much more expensive. The result is that people will decline of buying houses, reduce expensesgive up starting a business and companies will lay off workers and enact hiring freezes.
The government, which flooded the economy with trillions of dollars, didn’t take immediate action to stop inflation before it raged, but left few other options for the Fed, which crashed the economy and caused high unemployment. The cold theory says that if you don’t have a job, you won’t spend and the economy will contract.
The argument against this theory is that employment is still high and companies cannot find enough workers. There are over 11 million jobs available and two roles for each person seeking a role. In a tight job market, the consumer will continue to spend and save the day. However, the recent layoff announcements are based on a house of cards.
the far reported “Two jobs open to anyone looking for a new role” is not entirely true. People assume that there is a direct match between job openings and job seekers who either have the skills required or are interested in the types of jobs available. If you’re looking for a new role as an accountant, having two bartending jobs doesn’t help much.
Another fallacy is that it is a “hot” job market. Not every industry is in demand. If you are a software engineer, you are wanted. At the other end of the spectrum, waiters, bartenders, warehouse workers, and other frontline workers are badly needed. However, many of these people don’t want this kind of job and plan to move out of their respective industries. They want roles that don’t break their backs and don’t require being on their feet all day dealing with abusive clients. That’s one of the reasons the positions are still open – people don’t want them.
The start of layoffs was with startups
At first, redundancies came for the venture-backed startups and smaller tech companies that were heavily funded but had no significant revenues and no profits. Then the The crypto industry has been crushed. Not only were there layoffs, but platforms were closed, funds were blocked for customers and bankruptcies were filed. Now comes the job cuts and hiring freezes big brand companies.
Wells Fargo and JPMorgan With the projected slowdown in home purchases, second off mortgage-related staff as the monthly mortgage payments and interest put too much of a strain on families. Microsoft, Twitter, Apple, Netflix, Ford Motors and many other large corporations are laying off employees or freezing their workforce.
As big companies lay off workers, allow for turnover and impose hiring freezes, the measures will resonate across all sectors of the economy. It’s a domino effect. Every company will cut budgets for fear of a downturn. That’s basically the Fed’s plan. As business cools, so should inflation. The worker must be sacrificed to bring the system back into balance.
The good times turn bad
Last week, the number of Americans filing for unemployment benefits rose to its highest level in more than eight months. It is a warning sign that anticipates what is to come. Jobless claims for the week ended July 15 increased to 251,000, marking the sharpest increase since the pandemic era of Nov. 13 last year, when 265,000 Americans filed for benefits. The Federal Ministry of Labor also pointed this out Employers advertised fewer jobs in May another sign of a contraction in the labor market, which the Fed is hoping for.
What is a recession?
A recently Bloomberg survey of economists pointed to the increased likelihood of a recession. A recession can be broadly defined as a prolonged period of weak or negative real GDP growth, together with a significant increase in the unemployment rate, a decline in stock and real estate markets, a loss of household spending power and, as a result, a loss of consumer confidence. The US, unfortunately, is showing all of these signs, including the recent ones consumer price index report.
A glimpse of hope?
There could be a glimmer of hope. You may have noticed when you go on vacation, go out to eat, shop at a mall or attend an event, it’s packed with people. After dealing with a pandemic for more than two years and staying mostly indoors, they are out on revenge purchases and travel. These measures could keep the economy going. However, it may inadvertently increase inflation.
Next week, the Fed is expected to hike rates for the fourth time in 2022. She expects unemployment to slowly decline from around 3.6% to 4.1% by 2024.
take care of yourself
In these challenging times, people also need to take personal action to keep their jobs and finances secure. Go to the office to be seen make yourself indispensable, so they have to keep you. Stay in close contact with your network to share notes on what’s happening and look for job leads. Find people who can give you access to companies that are doing well.
Update your resume and LinkedIn profile. Find recruiters who specialize in your field who can keep an eye out for opportunities. save your money Don’t take too much risk with your investments in stocks or cryptos. Finally, avoid variable rate debt, which could quickly escalate.