15 Jun Cynics and the Coffee Drinking Dog
Photo credit to: https://unsplash.com/@abbat
“‘Unlike in 2008 and prior recessions, there is still a strong labor market. Folks are saying maybe this is not going to be so bad,’ Sorrentino added. ‘And corporate balance sheets have never looked this good before prior recessions.’ Cynics may think this sounds like the popular meme showing a dog drinking coffee and saying ‘This is fine’ while sitting in a room that’s being engulfed by flames.”
Yeah. “Cynics” think that sounds like the room in flames meme because IT DOES.
I can’t speak to corporate balance sheets, but I can speak on the job market. For months and months, we’ve heard:
- No one wants to work anymore.
- X number of companies all want to hire but can’t find anyone.
- Labor shortage! Labor shortage!
- People just got paid to stay at home / sit in grandma’s basement / live with mom & dad.
- Some youngsters became crypto millionaires and left the job market.
- The Great Resignation = everyone in America quit working altogether.
We heard this ad infinitum on every news outlet for so long that many people believe it’s still happening. Nay, I say. Nay.
“The odds of more companies catching a cold appear to be rising, especially as long-term bond yields have skyrocketed this year following interest rate hikes from the Federal Reserve and expectations of even more — and larger — ones in the next few months. So although businesses are in solid shape right now, corporate debt could be a ticking time bomb if interest rates move dramatically higher.”
How are interest rates NOT gonna move higher? The Fed may raise rates again before this week is out!
“‘Companies have more of a focus on profitability and controlling costs. They’re focusing less on pure growth,’ [Gavin] Patterson said. ‘But we’re still confident.'”
-from the same CNN article above
And that quote from Gavin Patterson of Salesforce is the summary you need to acknowledge.
Corporations exist to make MONEY. They are not in business to make someone’s dreams come true or to give everyone the warm-fuzzies. Regardless of what their marketing department might tell you. On the other side of expansion (aka growth) is contraction. And we’re seeing it already in layoffs, hiring freezes, and rescinded offers. IMHO, The Great Resignation is done. Sorry to be the bearer of bad news, but it’s toast now. When you go on LinkedIn and the side panel of news is littered with layoff reports and your feed has many posts of people saying, “I got laid-off and thought I’d be hired again soon because: labor shortage, but this has gone on for weeks and I’m still not hired anywhere,” that’s not a sign of labor shortages and robust economic growth. Just sayin.
Personally, I think unemployment is higher now than what’s being reported. I also see a number of companies that may have had open roles going unfilled last year that have given up now. They see that the economy is headed into a bear market recession and they figure leaving those roles alone is better than onboarding someone.
And that speaks volumes to me.
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