The US Economy Just Broke Another Negative Record
Months ago, I predicted this would happen, but it’s happening faster than expected.
The US job openings, a key indicator of economical activity, had its 2nd-largest drop ever.
Before showing the numbers (if you want to see them directly, jump to the last subtitle, but you will lose a lot of information), it’s important to understand how we got here and why this economic catastrophe is starting to happen.
In early 2021, journalists and economists argued that we were experiencing the great resignation. While the superlative is exaggerated, multiple countries in the world had a wave of young professionals resigning.
The great resignation happened because businesses had to close or reduce staff during the lockdowns and then hire them back when the economy reopened.
Since many of these people opened their own businesses, found other sources of income, or lived off their stimulus, companies had to raise salaries during the reopening phase.
These higher salaries caused a wave of resignations inside companies that never laid off workers during covid, but kept them with the same salaries. These people quit for higher-paying jobs announced by companies that needed to rebuild their teams.
Due to low-interest rates, companies could afford higher salaries (until the beginning of 2022, the US FED interest rate was only 0.15 percent per year).
The Dragon was Awakened (I’m not referring to China here)
During Brazil’s high (and then hyper) inflation years, economists used a Dragon to illustrate the problem. The explanation was simple: just like a raging dragon burns entire villages in mythology, inflation burns our purchasing power.
The great resignation, together with people resigning from stable jobs to look for higher salaries, was one of the many ingredients that triggered the current inflationary wave. I am not saying here that it…