Do Recent Layoffs Point to Looming Recession?
By: Steve Smith
The tea leaves for trying to predict the course of the economy are numerous and scattered but there is one trend starting to emerge that will surely lead to a recession.
Economists and market watchers have been looking for signs that the slowing economy might be tipping over to a recession citing everything from the lack of inflation, minimal wage growth, a near stop in capital expenditures to purchasing managers index which recently dipped below the 50 level which indicates a contraction in the economy; the first such since January 2016.
The recent inversion of the yield curve, along with $17 trillion in negative debt, has caused the most hand wringing and loudest calls for a recession.
The one area that remains strong is consumer spending, which accounts for over 70% of the service based U.S. economy. Recent data from the Conference Board showed the consumer confidence index climbed to 138.4 in September, it’s highest level since September 2000.
The number one factor in providing and boosting consumer confidence is job security. This comes in the form of both the ability to maintain a current job or proactively being able to switch and find new, presumably better, employment opportunities.
On that front things seem to be hunky dory as not is the unemployment rate of 3.7% near a 30 year low but the JOLTS index hit a 10 year high last June. In fact one of employers’ biggest complaints is that they can’t find enough skilled workers to fill job openings.
But behind the kumbaya headlines there is developing a more worrisome trend; announcements of layoffs are appearing more frequently and impacting larger number of people and industries.
For example Uber (UBER) had two consecutive job cuts in the past week totally over 800 people or nearly 8% of its work force, as it seeks a path to profitability.
These were high paying jobs, such as engineers and marketers. And with UBER’s stock still underwater from its IPO, that adds up to…
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