Wharton Finance Professor Looks Deeper into June Jobs Data, Outlook Not So Good – Hours Worked Dropped Equivalent to 450,000 Lost Jobs
University of Pennsylvania, Wharton School of Business, Finance Professor Jeremy Siegel, takes a closer look at the June jobs data from the Bureau of Labor Statistics. Professor Siegel notes a .01% drop in average hours worked is the labor equivalent of dropping 450,000 jobs.
With factory demand dropping, and with inventories climbing, and with FTE’s (Full-Time Equivalents) dropping, the jobs report takes on additional context that aligns with the overall decline we feel in Main Street activity. Essentially, regardless of how many jobs are “created” within the economy, the overall economic activity -as measured by the value of products & services generated- is declining.
Additionally, as noted by Professor Siegal, the current best estimate as reviewed by the several data points, is a current drop in overall GDP in the -2% range. Seigal points this information out because the Federal Reserve is raising interest rates into an economy that has declining (demand side) consumer activity, which, correctly as he states, only makes the contraction more severe. WATCH:
The core supply side costs (all based on energy policy) continue to increase and drive consumer prices upward. Simultaneously, consumer demand is dropping because the goods and services impacted by the increased costs (most of which are unavoidable) are more expensive. This creates a downward spiral. Prices are increasing, at the same time demand is decreasing.
In this scenario there is no way to avoid a steep recession. However, the real priority of Joe Biden surrounds whether Jill will allow his favorite pudding, and if the shoes on the pancake mix keeps making sparkly rabbit noises.
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