Interpreting economic statistics to determine the current stage of the economic cycle is one of the challenges, especially in the year 2020 when the global COVID-19 pandemic caused unprecedented disruptions. The comprehensive lockdowns were unprecedented, leading to abnormal data fluctuations that left people scrambling to understand their profound impacts.
While past business cycles followed certain patterns that could be explained by theory and policies could be devised to avoid repeating mistakes, the sudden onset of a global mandatory recession affecting nearly all sectors changed everything. Observing these changes with astonishment, we are left grappling with the consequences.
In addition, we now face a seemingly new problem – data manipulation for political reasons. From GDP to employment to inflation, we see this phenomenon reflected in all major data releases. Statements in government press releases often contradict the fundamental data. Only a few truly delve into what is really happening while Wall Street merely follows the tide.
Issues with employment data are apparent to the public. Each month, we hear grand achievements in job creation, only to later discover that many of these positions are part-time and largely filled by foreign workers. Full-time jobs are shrinking as real incomes continue to decline, with a three-year consecutive decrease. Comparing and analyzing all this against the pre-COVID-19 world seems almost impossible.
The latest employment report highlights this. Before delving into the details of job positions, the headline figures appear staggering. Looking at more accurate household surveys rather than institutional surveys, we find a significant decrease of 625,000 full-time jobs and an increase of 286,000 part-time jobs. Nonetheless, this does not indicate a robust and thriving market. Yet, press releases present the decrease in (full-time) jobs as an increase.
With all this ambiguity, I contend that we have never truly shaken off the negative recession since March 2020. Everything else seems illusory. The level of disorientation is so severe that it is challenging to handle both rationally and emotionally. Despite the White House’s attempts to boost morale, the reality is that the entire country and world are much poorer than they were five years ago.
At some point, unless the government implements new policies to significantly reverse this situation, it will eventually impact the job market. Currently, this is not a pressing issue as many businesses lost employees during the COVID-19 lockdowns. The hospitality industry is now showing some degree of recovery, with suppressed demand for labor beginning to rise. People are transitioning from white-collar to service jobs and from full-time to part-time work.
An unprecedented mass event we have yet to experience is severe shortages in the workplace. However, as inflation drives up costs, including labor, this situation may now be changing. Employers find themselves reluctant to hire new staff but instead squeezing every bit of productivity from existing workers.
Consequently, job vacancies are decreasing significantly. Even now, the labor participation rate has not recovered to pre-COVID-19 global pandemic levels. For many young people, this represents a significant shift. Just a few years ago, job opportunities were abundant, perhaps not full-time or high-paying, but they were there. Seeking employment now presents a seemingly increasingly challenging market with fewer positions offered and higher job standards.
Those in stable positions are holding onto their jobs tightly, realizing now is not the time to switch or take risks. However, being stuck in an unsatisfactory job means living with tightened belts. If you held a mortgage at lower rates in the past but fear taking on new loans at higher rates, the situation gets even more complicated. People not only feel constrained by their current positions but also trapped by their own house, their cardboard palace.
Frankly, this is not the way a vibrant and thriving economy should operate. Those at the top of the food chain often deny any issues, which only adds to the sense of humiliation. Media and experts tell us every day that the economy is performing well, experiencing a robust recovery. Yet, not a single person on the street believes that.
Currently, families’ basic financial situations are heading towards disaster despite high interest rates, with credit card debt increasing and the savings rate far below pre-COVID-19 lockdown levels. This situation is simply unsustainable.
The news media constantly speculates whether our economy will experience a soft landing. However, this assertion is entirely wrong. The plane never took off in the first place. Whichever way we look, upon careful observation, we see a stagnant and inflating deteriorating economic structure. This is not a promising sign for the future economy.
Author bio:
Jeffrey A. Tucker is the founder and president of the Brownstone Institute based in Austin, Texas. He has published thousands of articles in academia and mainstream media, with 10 books published in five languages, including his latest work, “Liberty or Lockdown” (2020). He is also the editor of “The Best of Ludwig von Mises” (2019). A regular contributor to the Epoch Times, he widely covers topics on economics, technology, social philosophy, and culture.