Can you feel it too? Over the past few weeks, I have heard from so many readers that are deeply troubled about economic conditions where they live. In some cases, sales are way down. In other cases, it seems almost impossible to find a decent job. It is almost as if a tremendous chill descended upon the U.S. economy as the second quarter of 2024 began. Yes, economic conditions have certainly not been good for a few years, but it appears that an absolutely enormous economic shift of historic proportions is now taking place right in front of our eyes. Other than the early stages of the pandemic, we haven’t seen anything like this since 2008 and 2009.
Let me give you an example that will illustrate what I am talking about. A reader that lives near Seattle recently wrote me about the horrible downturn that she is witnessing in the tech industry, and she said that I could share this information with all of you…
I live in the tech corridor outside of Seattle and practically no one can find a job in tech. Apparently the costs of AI processors and servers are so expensive that large tech companies are laying off workers to accommodate for the increased infrastructure costs. I would estimate that 50 percent of the people I know in tech are unemployed including myself and my spouse. In addition they are laying off both FTEs and contractors and not backfilling the positions. The problem is exacerbated if you’re over 40 because they don’t want to compensate for experience. In fact experience seems to be working against people. Not to mention AI taking over roles like technical writing and marketing communications. It’s getting really bad out there and the large companies play along with the media. I’ve met with several ex colleagues who have had their entire teams laid off and former FTEs who have had to take major pay cuts as contractors. I’ve also heard of more rounds of layoffs coming up. I went over to Microsoft the other morning to have coffee with an ex colleague and it’s a ghost town. No one in conference rooms or offices. Maybe people are working from home but it sure felt very different.
That email resonated with me so strongly, because she is right.
Vast hordes of tech workers have already been laid off, and more will be hitting the bricks soon.
But the tech industry is supposed to be one of our economic bright spots.
If things are this bad for the tech industry, what does this say about the economy as a whole?
Most of the jobs that are still available at this point pay very little. Jobs that actually pay enough to support a middle class lifestyle have been disappearing, and millions of white collar workers find themselves on the outside looking in. The following comes from a Business Insider article entitled “Welcome to the white-collar recession”…
Over the past year or so, pretty much everyone who’s looked for a job has told me the same thing: The job market is brutal right now. They’ve applied to dozens if not hundreds of openings, only to get one or two callbacks. No one’s hiring, they tell me. I’ve never seen it this bad.
Yes.
I have heard the same things over and over again too.
And it is getting worse with each passing day.
On Wednesday, we learned about even more layoffs at Google…
Google fired approximately 200 employees and relocated some of the jobs overseas – the latest sign of a long-running effort by the Big Tech firm to cut costs and restructure itself.
The job cuts — announced internally on the eve of Google’s blowout first-quarter earnings report — targeted members of Google’s “core” team, which works on the “technical foundation behind the company’s flagship products” as well as the online safety of users and its global IT infrastructure, according to its website.
At least 50 of the roles were based at Google’s headquarters in Sunnyvale, Calif. Google is expected to hire replacement workers for the roles in Mexico and India, CNBC reported, citing a review of internal documents.
Large companies all over America are looking to “trim the fat”, and that often means giving the axe to expensive older workers.
There is very little loyalty in the corporate world today. You may have given 20 years of your life to a company, but the moment you become expendable they will dump you like a hot potato.
Millions of small businesses are really struggling right now too.
During the month of April, 43 percent of all small business renters in the United States were not able to pay their rent in full. The last time we witnessed anything like this was during the lockdowns that were instituted during the early stages of the pandemic…
A significant number of small businesses across the nation are struggling to pay rent due to skyrocketing costs, a recent study by business networking platform Alignable found.
The company’s latest Small Business Rent report, published on Friday, found that 43 percent of small business renters in the U.S. were unable to pay their rent in full and on time in the month of April. Such a high delinquency rate hasn’t been reported in the U.S. since March 2021, at the height of the COVID-19 pandemic, when it reached 49 percent.
The delinquency rate was also four percentage points higher than in March, making it the largest month-over-month surge in over a year, according to data analyzed by Alignable.
We don’t have a disease to blame this time around.
Sadly, conditions are only going to get tougher for small businesses in the months ahead as sales dry up.
Meanwhile, the total number of retail stores in the U.S. closed so far in 2024 is up to nearly 2,600…
US retailers confirmed another 169 closures last week – bringing the total so far this year up to almost 2,600.
Stores that announced the shuttering of locations included Express, Outfox Hospitality, Shop ‘n Save, Urban Outfitters and Walmart.
We are in the midst of another retail apocalypse.
Why aren’t we hearing more about this?
On top of everything else, Chicago PMI is dropping at the fastest pace that we have seen since the collapse of Lehman Brothers in 2008….
After miraculously surging to two years highs in Nov 2023, Chicago PMI has plunged for five straight months, with the last four months seeing the MoM declines accelerating. Against expectations of a rise to 45.0 (from March’s 41.4), April’s PMI data printed 37.9
That is the worst five-month collapse since Lehman…
With everything that is going on, how in the world can anyone possibly claim that the economy “is in good shape”?
Economic activity is slowing down, mass layoffs are happening all over the country, and the cost of living is absolutely crushing the middle class.
More people are falling out of the middle class every day, and at this point there are tens of millions of Americans that are either considered to be either living in poverty or among the ranks of the “working poor”….
Over time, higher costs and sluggish wage growth have left more Americans financially vulnerable, with many known as “ALICEs.”
Nearly 40 million families, or 29% of the population, fall in the category of ALICE — Asset Limited, Income Constrained, Employed — according to United Way’s United for ALICE program, which first coined the term to refer to households earning above the poverty line but less than what’s needed to get by.
That figure doesn’t include the 37.9 million Americans who live in poverty, comprising 11.5% of the total population, according to data from the U.S. Census Bureau.
Collectively, the two categories discussed above now comprise more than 40 percent of the total population.
And if you think that things are bad now, just wait until you see the suffering that will happen during the tremendous chaos that is dead ahead of us.
It took decades of very foolish decisions to get us here, and now we are at a historic tipping point.
Our economy is literally breaking down right in front of our eyes, and the path before us is going to be filled with so much pain.
Michael’s new book entitled “Chaos” is available in paperback and for the Kindle on Amazon.com, and you can check out his new Substack newsletter right here.