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An Entirely Too Familiar American (anti)Inflationary Anecdote

One of the more compelling aspects of the last LABOR SHORTAGE!!!!, in an outright contradictory way, was how it was made up of entirely anecdotes. Lacking data, especially wage data, the narrative was instead kept up and alive by the media hyping every…

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3 years ago

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One of the more compelling aspects of the last LABOR SHORTAGE!!!!, in an outright contradictory way, was how it was made up of entirely anecdotes. Lacking data, especially wage data, the narrative was instead kept up and alive by the media hyping every small creative innovation companies were using if only to avoid having to actually pay their workers and prospective workers the market-clearing price.



The stories have returned in 2021 already granted a similar seriousness if for those same reasons. Inflation sells, or at least the idea of it is in demand.

But the data remains ambiguous – at best. And even where this is the case, there’s more to question than to commend from the perspective of any prospective labor shortfall. Like JOLTS data released yesterday, the raw numbers appear to support the idea that companies once again aren’t willing to pay what’s required to satiate their purported overdrive for workers.

It could be a number of possible reasons but the most likely, certainly in my view (FWIW), is likely to have started with low starting pay supplemented by promises of better pay down the road. Companies, especially small and medium-sized businesses, the same who claim to be most hard-pressed to find workers, are and have been deeply hurt by the recession. Thus, the pay mis-match.

Also like 2018, but having been taken now to an extreme in the wake of the deep, damaging 2020 recession. Businesses may want some more workers but just don’t have the true capacity (or sustained optimistic vision to take risks) to pay them enough.

Or pay them at all?

Since the labor shortage has been all about anecdotes, this one’s a real doozy:

American Airlines is asking its headquarters employees to volunteer at Dallas-Fort Worth International Airport this summer as the carrier faces an influx of summer passengers due to pent-up pandemic demand…Those headquarters employees, who work in fields such as network scheduling, planning and communications, won’t be paid for the additional shifts and must volunteer outside of their normal job duties. [emphasis added]

The airline had let go about 30% of its support staff in the wake of last year’s devastating downturn – despite having been handed billions in PSP’s (Payroll Support Program under the CARES Act) generosity. With “recovery” now underway, American does appear “desperate” for workers if only in the sense they aren’t so impatient they’re willing to pay anything greater than quite literally zero.

At least the company states it won’t require existing workers to “volunteer”, not explicitly, anyway. Take this job and shove it?




This certainly doesn’t prove, conclusively or otherwise, the anti-shortage theory, but it is certainly one labor market anecdote consistent with recent data and that specific interpretation of it.

As is any number of secondary data sources, accounts like consumer credit, revolving credit, in particular. In the wake of the last big “recession” in 2008-09, revolving balances were paid down by prudent consumers increasingly aware of labor market insufficiency that in the media was always called recovery (or at least green shoots). Maybe they were still employed, yet hard pressed to ignore the real and rising possibility they could very well be next on the already-stretched unemployment line.

Employing spare cash to reduce discretionary debt rather than spend and borrow as QE/monetary policy had anticipated and counted on, it was quite understandable outside that worldview. And it repeated in the same way last year, continuing up until just recently.

According to the Federal Reserve’s figures (which are subject to big revisions at times, so keep that in mind), this systemic credit card “glut” may have bottomed out in February. There was a small rebound in aggregate revolving balances during that month ($3.1 billion) then an even smaller one in March ($1.4 billion, despite huge payroll estimate) but then another decline in April (the latest estimate for -$2.0 billion).

While it doesn’t rule out the initial stages of recovery, it doesn’t exactly paint the picture of an unambiguous start to one, either. Rather, this is at best too much like all these things posted above along with another possible unwelcome comparison adding to them – looking too much like 2011 when macro factors determining revolving credit reached that trough but failed to reignite immediately.

If the 2010-12 period was notable most for its lack of recovery (someone even termed it a “new normal” it was so unrecovery-like, a name which stuck for that reason) then to see at least a few months go sideways right now in the same way doesn’t bode well.

The same is true for the rest of the consumer credit data – exclusive, of course, of the federal government’s non-economic involvement in it. The feds lend to practically anyone at any pace according to an entirely different doctrine.


Outside of the government, consumer credit in April 2021 increased year-over-year on base effects alone. Compared to December 2019 – the last peak – total consumer credit is still down more than 3.5% which remains firmly in recession territory.

This, too, would be consistent with companies who claim to be desperate for workers as the economy rebounds but since a rebound isn’t a recovery they don’t appear to be willing (or able; see: American Airlines) to pay the rate workers want and demand which then negatively affects how consumers as workers manage their own finances (acknowledging the massive binge on goods more than balanced by the continued recession in services spending).

With COVID and the pandemic fading further into history, what’s being exposed is today an economy that may have been more damaged and susceptible than has been believed up to this point. First, in the initial days of reopening, there was the “V” explosion – if in expectations rather than reality because it never happened, nor did it last very long.

Eurodollar University’s Making Sense; Episode 11: The Terrifying V

This was followed – if first forced by last year’s “unexpected” summer slowdown – by the second try for a “V”, this other one predicated on believing government “stimulus” could comprehensively mitigate, if not better (inflation), any longer run damage. If Uncle Sam would just pay everyone, including airlines, this will all go away.

But as 2021 emerges into the light of a more likely COVID-free world, we take these first steps looking around at an all-too-familiar landscape. The economy gets knocked down and doesn’t ever want to, or is not able to, get back up again.

Inflation? Businesses that can’t pay workers, no matter how much they claim to be desperate for them, aren’t going to be able to sustain let alone achieve it. Not from this.

Bond yields. Eurodollar futures. Etc. Rinse. Repeat. Especially since mid-March (or Feb 24-25-26).

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Government

Survey Shows Declining Concerns Among Americans About COVID-19

Survey Shows Declining Concerns Among Americans About COVID-19

A new survey reveals that only 20% of Americans view covid-19 as "a major threat"…

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4 hours ago

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March 11, 2024

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Survey Shows Declining Concerns Among Americans About COVID-19

A new survey reveals that only 20% of Americans view covid-19 as "a major threat" to the health of the US population - a sharp decline from a high of 67% in July 2020.

(SARMDY/Shutterstock)

What's more, the Pew Research Center survey conducted from Feb. 7 to Feb. 11 showed that just 10% of Americans are concerned that they will  catch the disease and require hospitalization.

"This data represents a low ebb of public concern about the virus that reached its height in the summer and fall of 2020, when as many as two-thirds of Americans viewed COVID-19 as a major threat to public health," reads the report, which was published March 7.

According to the survey, half of the participants understand the significance of researchers and healthcare providers in understanding and treating long COVID - however 27% of participants consider this issue less important, while 22% of Americans are unaware of long COVID.

What's more, while Democrats were far more worried than Republicans in the past, that gap has narrowed significantly.

"In the pandemic’s first year, Democrats were routinely about 40 points more likely than Republicans to view the coronavirus as a major threat to the health of the U.S. population. This gap has waned as overall levels of concern have fallen," reads the report.

More via the Epoch Times;

The survey found that three in ten Democrats under 50 have received an updated COVID-19 vaccine, compared with 66 percent of Democrats ages 65 and older.

Moreover, 66 percent of Democrats ages 65 and older have received the updated COVID-19 vaccine, while only 24 percent of Republicans ages 65 and older have done so.

“This 42-point partisan gap is much wider now than at other points since the start of the outbreak. For instance, in August 2021, 93 percent of older Democrats and 78 percent of older Republicans said they had received all the shots needed to be fully vaccinated (a 15-point gap),” it noted.

COVID-19 No Longer an Emergency

The U.S. Centers for Disease Control and Prevention (CDC) recently issued its updated recommendations for the virus, which no longer require people to stay home for five days after testing positive for COVID-19.

The updated guidance recommends that people who contracted a respiratory virus stay home, and they can resume normal activities when their symptoms improve overall and their fever subsides for 24 hours without medication.

“We still must use the commonsense solutions we know work to protect ourselves and others from serious illness from respiratory viruses, this includes vaccination, treatment, and staying home when we get sick,” CDC director Dr. Mandy Cohen said in a statement.

The CDC said that while the virus remains a threat, it is now less likely to cause severe illness because of widespread immunity and improved tools to prevent and treat the disease.

“Importantly, states and countries that have already adjusted recommended isolation times have not seen increased hospitalizations or deaths related to COVID-19,” it stated.

The federal government suspended its free at-home COVID-19 test program on March 8, according to a website set up by the government, following a decrease in COVID-19-related hospitalizations.

According to the CDC, hospitalization rates for COVID-19 and influenza diseases remain “elevated” but are decreasing in some parts of the United States.

Tyler Durden Sun, 03/10/2024 - 22:45

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International

Rand Paul Teases Senate GOP Leader Run – Musk Says “I Would Support”

Rand Paul Teases Senate GOP Leader Run – Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump…

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7 hours ago

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March 10, 2024

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Rand Paul Teases Senate GOP Leader Run - Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump into the race to become the next Senate GOP leader, and Elon Musk was quick to support the idea. Republicans must find a successor for periodically malfunctioning Mitch McConnell, who recently announced he'll step down in November, though intending to keep his Senate seat until his term ends in January 2027, when he'd be within weeks of turning 86. 

So far, the announced field consists of two quintessential establishment types: John Cornyn of Texas and John Thune of South Dakota. While John Barrasso's name had been thrown around as one of "The Three Johns" considered top contenders, the Wyoming senator on Tuesday said he'll instead seek the number two slot as party whip. 

Paul used X to tease his potential bid for the position which -- if the GOP takes back the upper chamber in November -- could graduate from Minority Leader to Majority Leader. He started by telling his 5.1 million followers he'd had lots of people asking him about his interest in running...

...then followed up with a poll in which he predictably annihilated Cornyn and Thune, taking a 96% share as of Friday night, with the other two below 2% each. 

Elon Musk was quick to back the idea of Paul as GOP leader, while daring Cornyn and Thune to follow Paul's lead by throwing their names out for consideration by the Twitter-verse X-verse. 

Paul has been a stalwart opponent of security-state mass surveillance, foreign interventionism -- to include shoveling billions of dollars into the proxy war in Ukraine -- and out-of-control spending in general. He demonstrated the latter passion on the Senate floor this week as he ridiculed the latest kick-the-can spending package:   

In February, Paul used Senate rules to force his colleagues into a grueling Super Bowl weekend of votes, as he worked to derail a $95 billion foreign aid bill. "I think we should stay here as long as it takes,” said Paul. “If it takes a week or a month, I’ll force them to stay here to discuss why they think the border of Ukraine is more important than the US border.”

Don't expect a Majority Leader Paul to ditch the filibuster -- he's been a hardy user of the legislative delay tactic. In 2013, he spoke for 13 hours to fight the nomination of John Brennan as CIA director. In 2015, he orated for 10-and-a-half-hours to oppose extension of the Patriot Act. 

Rand Paul amid his 10 1/2 hour filibuster in 2015

Among the general public, Paul is probably best known as Capitol Hill's chief tormentor of Dr. Anthony Fauci, who was director of the National Institute of Allergy and Infectious Disease during the Covid-19 pandemic. Paul says the evidence indicates the virus emerged from China's Wuhan Institute of Virology. He's accused Fauci and other members of the US government public health apparatus of evading questions about their funding of the Chinese lab's "gain of function" research, which takes natural viruses and morphs them into something more dangerous. Paul has pointedly said that Fauci committed perjury in congressional hearings and that he belongs in jail "without question."   

Musk is neither the only nor the first noteworthy figure to back Paul for party leader. Just hours after McConnell announced his upcoming step-down from leadership, independent 2024 presidential candidate Robert F. Kennedy, Jr voiced his support: 

In a testament to the extent to which the establishment recoils at the libertarian-minded Paul, mainstream media outlets -- which have been quick to report on other developments in the majority leader race -- pretended not to notice that Paul had signaled his interest in the job. More than 24 hours after Paul's test-the-waters tweet-fest began, not a single major outlet had brought it to the attention of their audience. 

That may be his strongest endorsement yet. 

Tyler Durden Sun, 03/10/2024 - 20:25

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Government

The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While “Waiting” For Deporation, Asylum

The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While "Waiting" For Deporation, Asylum

Over the past several…

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March 10, 2024

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The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While "Waiting" For Deporation, Asylum

Over the past several months we've pointed out that there has  been zero job creation for native-born workers since the summer of 2018...

... and that since Joe Biden was sworn into office, most of the post-pandemic job gains the administration continuously brags about have gone foreign-born (read immigrants, mostly illegal ones) workers.

And while the left might find this data almost as verboten as FBI crime statistics - as it directly supports the so-called "great replacement theory" we're not supposed to discuss - it also coincides with record numbers of illegal crossings into the United States under Biden.

In short, the Biden administration opened the floodgates, 10 million illegal immigrants poured into the country, and most of the post-pandemic "jobs recovery" went to foreign-born workers, of which illegal immigrants represent the largest chunk.

Asylum seekers from Venezuela await work permits on June 28, 2023 (via the Chicago Tribune)

'But Tyler, illegal immigrants can't possibly work in the United States whilst awaiting their asylum hearings,' one might hear from the peanut gallery. On the contrary: ever since Biden reversed a key aspect of Trump's labor policies, all illegal immigrants - even those awaiting deportation proceedings - have been given carte blanche to work while awaiting said proceedings for up to five years...

... something which even Elon Musk was shocked to learn.

Which leads us to another question: recall that the primary concern for the Biden admin for much of 2022 and 2023 was soaring prices, i.e., relentless inflation in general, and rising wages in particular, which in turn prompted even Goldman to admit two years ago that the diabolical wage-price spiral had been unleashed in the US (diabolical, because nothing absent a major economic shock, read recession or depression, can short-circuit it once it is in place).

Well, there is one other thing that can break the wage-price spiral loop: a flood of ultra-cheap illegal immigrant workers. But don't take our word for it: here is Fed Chair Jerome Powell himself during his February 60 Minutes interview:

PELLEY: Why was immigration important?

POWELL: Because, you know, immigrants come in, and they tend to work at a rate that is at or above that for non-immigrants. Immigrants who come to the country tend to be in the workforce at a slightly higher level than native Americans do. But that's largely because of the age difference. They tend to skew younger.

PELLEY: Why is immigration so important to the economy?

POWELL: Well, first of all, immigration policy is not the Fed's job. The immigration policy of the United States is really important and really much under discussion right now, and that's none of our business. We don't set immigration policy. We don't comment on it.

I will say, over time, though, the U.S. economy has benefited from immigration. And, frankly, just in the last, year a big part of the story of the labor market coming back into better balance is immigration returning to levels that were more typical of the pre-pandemic era.

PELLEY: The country needed the workers.

POWELL: It did. And so, that's what's been happening.

Translation: Immigrants work hard, and Americans are lazy. But much more importantly, since illegal immigrants will work for any pay, and since Biden's Department of Homeland Security, via its Citizenship and Immigration Services Agency, has made it so illegal immigrants can work in the US perfectly legally for up to 5 years (if not more), one can argue that the flood of illegals through the southern border has been the primary reason why inflation - or rather mostly wage inflation, that all too critical component of the wage-price spiral  - has moderated in in the past year, when the US labor market suddenly found itself flooded with millions of perfectly eligible workers, who just also happen to be illegal immigrants and thus have zero wage bargaining options.

None of this is to suggest that the relentless flood of immigrants into the US is not also driven by voting and census concerns - something Elon Musk has been pounding the table on in recent weeks, and has gone so far to call it "the biggest corruption of American democracy in the 21st century", but in retrospect, one can also argue that the only modest success the Biden admin has had in the past year - namely bringing inflation down from a torrid 9% annual rate to "only" 3% - has also been due to the millions of illegals he's imported into the country.

We would be remiss if we didn't also note that this so often carries catastrophic short-term consequences for the social fabric of the country (the Laken Riley fiasco being only the latest example), not to mention the far more dire long-term consequences for the future of the US - chief among them the trillions of dollars in debt the US will need to incur to pay for all those new illegal immigrants Democrat voters and low-paid workers. This is on top of the labor revolution that will kick in once AI leads to mass layoffs among high-paying, white-collar jobs, after which all those newly laid off native-born workers hoping to trade down to lower paying (if available) jobs will discover that hardened criminals from Honduras or Guatemala have already taken them, all thanks to Joe Biden.

Tyler Durden Sun, 03/10/2024 - 19:15

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