U.S. Economy Taking a Wrong Turn, Job Cuts Soaring
You think the U.S. economy is in a good shape? Think again. As it stands, things are taking a very wrong turn and it may not end well.
Don’t just take my word for it; look at the economic data yourself.
According to a job cut report published by Challenger, Gray & Christmas, Inc., American companies announced plans to cut 58,577 jobs in May 2019. This was up from 40,023 cuts announced in the month prior for an increase of 46% month-over-month.
A year prior, in May 2018, employers in the U.S. economy announced 31,517 jobs cuts. So year-over-year, job cuts this year were 86% higher. (Source: “Job Cut Announcements Jump 46% From April, To 58,577; YTD Cuts Up 39%,” Challenger, Gray and Christmas, Inc., June 6, 2019.)
Year-to-date, in the first five months of 2019, U.S. companies have announced 289,010 job cuts. In the same period a year ago, jobs cuts were 207,977. This represents an increase of close to 40%.
The top five sectors of the U.S. economy announcing job cuts so far this year are retail, industrial goods, automotive, technology, and healthcare sectors.
“The Tech sector announced the highest number of job cuts last month,” said Andrew Challenger, Vice President of Challenger, Gray & Christmas, Inc. “Large Tech firms are finding they need to move workers through the pipeline in order to become more agile. In fact, we’ve seen a number of Tech and Telecom companies offering buyouts to older workers over the last year.” (Source: Ibid.)
If the U.S. economy is in good shape, how come corporate America is cutting so many jobs?
Look at the U.S. Housing Market As Well
But don’t just stop at job cuts. Look beyond that—namely, at the U.S. housing market. After all, if the economy is good, home prices go up.
In March 2018, the S&P/Case-Shiller 20-City Composite Home Price Index, which gives an idea of the state of the housing market, said home prices in the U.S. had increased a decent 6.6%. However, in March 2019, it suggested home prices increased only 2.6%.
If the housing market is an indicator of the U.S. economy, then such a massive decline implies that things are not looking good.
U.S. Economic Outlook Looks Gruesome
There are too many indicators flashing warning signs for the U.S. economy.
Based on the current job cuts report and U.S. home prices, the possibility that the U.S. economy is headed for trouble continues to get stronger. The end of 2019 and early 2020 in particular continue to look problematic, and I will not be shocked if sooner or later there’s a recession.
And the next recession could be really difficult to get out of and would require a lot more effort from the Federal Reserve and U.S. government.