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Peter Schiff: The Recession May Have Already Started

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President Biden keeps saying the economy is great. Fed officials say the economy is expanding at a “strong pace.”

Peter Schiff isn’t buying the narrative.

He says we may already be in a recession and he made a strong case in his podcast.

Peter started with a deep dive into the October non-farm payroll report. He threw cold water in the face of the “we have a strong labor market” narrative. Strong job reports have created the foundation for the “strong economy” narrative. Over the past several months, Peter has been dissecting these BLS reports pointing out the hidden weaknesses in the labor market. For the October report, he didn’t have to.

This time the report is weak from top to bottom. It’s not just superficially strong. It’s superficially weak and it’s even weaker when you get beneath the surface.”

The projection was for 180,000 new jobs. The reported number was 150,000. Only 99,000 of those jobs were in the private sector. Of all the jobs created, 34% were government jobs.

That is not strength. That is weakness. … How does the government pay for new hires? Out if its tax revenue, although now it’s not out of tax revenue, it’s out of new borrowing because the government is borrowing all the money to pay these workers, which is going to mean higher interest rates and more inflation.”

The unemployment rate went up to 3.9%. While this number is still relatively low, the trajectory is up. The unemployment rate has gone up by half a percent since last spring.

Meanwhile, we continue to see a huge increase in the number of people holding multiple jobs to make ends meet. In October, 390,000 people took on a second or third job.

That is a sign of weakness, not strength. The fact that people can no longer pay the bills with one job, the fact that you now need two or three jobs to cover the expenses that you used to cover with one job — that’s not a strong labor market. That’s a very weak labor market because the return on labor is collapsing. Workers can’t earn enough money to pay the rent or to pay all of their other bills.”

Peter said he thinks the economy may already be in a recession.

In fact, the official recession may have already started this quarter. And I think this jobs report is a good indication of the recession — the fact that only 99,000 private sector jobs were created.”

The Great Recession officially started in December of 2007, although nobody realized it at the time.

It was very similar to today where everybody was talking about how we had a great economy. In fact, they were using the same Goldilocks analogy back then as they’re using now. And all through the first half of 2008, it was the same old nonsense about how we had this great economy.”

It wasn’t until the end of 2008 when the financial crisis blew up that people realized there was a problem. Later, the statisticians went back and revised all of the numbers from early 2008 down.

We only found that out a year in. We were almost out of the recession by the time the government told us we were in it. So, I think the same thing is happening in the fourth quarter of 2023. I think they are going to go back and revise the numbers for this quarter. … The jobs numbers that we got are a pretty solid indicator that the recession has begun. Despite that, you’re not getting any real coverage of the report.”

In this podcast, Peter also breaks down last week’s Federal Reserve meeting and the FOMC’s decision to keep its finger on the rate hike pause button.

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