The “Strong Economy” Narrative Is Greatly Exaggerated
On the surface, some of the economic data that came out this week seemed to indicate that the economy is in better shape than the bears believe. In his podcast, Peter Schiff dug into consumer confidence and labor market data. He concluded that the strong economy narrative is greatly exaggerated. In fact, the data reveals a dysfunctional economy.
Consumer confidence improved in August. Falling gas prices likely made consumers feel a bit better and there is hope that inflation has possibly peaked. Some Americans might also be buoyed by the prospect of student loan forgiveness. But Peter called it a “false confidence.”
Ultimately, consumers will come to realize that their confidence is misplaced. But I think it would be a mistake to look at this number and conclude that the economy is strong just because consumers are foolish enough to have more confidence that it’s getting better when it simply means that they’re going to be surprised when it gets worse instead.”
Peter said he doesn’t put a lot of stock in what consumers think given their lack of understanding of the economic fundamentals. And the same goes for investors.
Job openings also increased in August, giving optimists more hope that the economy indeed remains strong. There are now nearly two job openings for every unemployed worker. According to Wall Street, this means we have a really strong economy because people who are out of work can easily take those jobs and everything will be fine.
Except they’re not taking those jobs and everything is not fine.”
Despite all the job openings, people aren’t getting hired. The ADP private sector hiring data bears this out. Private employers filled just 132,000 jobs in August. That was less than half the 300,000 expected. It was the lowest number since Jan. of 2021. As Peter pointed out in a tweet, actual hires are far more meaningful than unfilled job listings.
The fact that hiring continues to shrink as job openings continue to grow, to me, that’s not a sign of a strong labor market or a strong economy. To me, what that means is that employers have jobs available but they can’t find workers who have the skills to qualify for those jobs. So, the jobs are just out there. Or alternatively, employers want to hire low-skilled workers, but they can’t find low-skilled workers willing to take the jobs for pay that makes sense economically for the employer.”
How does this signal a “strong” labor market?
Just because there are all these available positions that people aren’t qualified for or don’t want doesn’t mean anybody is going to get hired. And, in fact, people aren’t getting hired.”
Peter said there is a lot of noise in the numbers that indicates that it’s not a strong labor market. It is a dysfunctional labor market.
The bottom line is I don’t think this data means anything. We have had all of these unfilled jobs month after month after month. Everybody is pointing to the JOLTS numbers. This is a remarkable economy! Look how great this economy is! There are two jobs for every unemployed worker! Yes, but if there really were two jobs for every unemployed worker, nobody would be unemployed. The reason there are so many jobs, yet so many people still unemployed is because the people who are unemployed either don’t want or don’t qualify for those jobs. So, that’s not a strong labor market. That’s either a weak labor market or maybe a dysfunctional labor market.”
Peter said the fact that companies can’t seem to fill open positions will continue to hurt production. That will exacerbate supply issues and put even more upward pressure on prices.
In other words, the inflation problem is going to get worse.”
Peter goes on to talk about the fact that many in the mainstream, including Jeremy Seigel, Becky Quick and Joe Biden, along with the Fed, don’t understand inflation. He also talks about idiotic virtue signaling by Los Angeles liberals.