opinion
Don't believe your lying eyes; At least, that's what the Biden administration keeps telling Americans. By touting great jobs numbers and low inflation and unemployment, the White House continues to claim that all is well for the American worker and employer.
However, other indicators beneath the surface of the numbers cited by the White House paint a very different picture. As usual, the people most negatively affected by poor economic conditions are small, or in this case, small and medium-sized businesses.
But the storm is coming for big business, and what that means for the nation is a bleak future for everyone.
Disaster flows
Interest rate hikes by the Federal Reserve have raised financing costs for businesses across the country. This led to a decline in private companies' profits and profit margins, eventually leading to the bankruptcy of many of these companies.
While larger companies have mostly weathered this storm, medium and small companies are teetering on the brink of ruin due to rising financing costs and subsequent declining profits. Unfortunately, this will actually affect larger companies because many of these small companies are their suppliers.
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If we look into a crystal ball, it is easy to see one of the resulting domino effects – supply chain disruption. Andrew Milgram, Managing Partner of Marblegate Asset Management, explains why these trends are important:
“The water looks good from the beach but what's happening below the surface is a very turbulent and very dangerous environment.”
Essentially, Mr. Milgram is describing the idea that looking at the surface of the economy as the Biden administration prefers allows for a false sense of security because, digging deeper, things are not stable and could quickly get worse.
Under the surface
If we dig deep enough, it's easy to see that the numbers show a worrying economic environment for the average American worker. Last year, layoffs increased by 98% compared to 2022, with relatively large companies, including Hasbro and Spotify, implementing layoffs.
The industry with the largest number of layoffs was the technology industry, where more than 191,000 employees were laid off. The companies that cut the most technology employees are Amazon, Alphabet, Microsoft, and Meta.
This year doesn't bode much better, with more than 200 tech workers laid off since January 1. This increase in technology layoffs is due to the increased use of artificial intelligence (AI).
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Challenger Outsourcing explains:
“The technology sector will continue to be affected by the onset of artificial intelligence, mergers and acquisitions, and the realignment of resources and talent.”
Replacing human technology workers with artificial intelligence takes us back to the time when machines replaced human car assemblers. Linking this trend to the funding pressure on companies, it's no wonder many are cutting hiring costs in favor of cheaper AI capabilities.
Great year?
Last week, President Joe Biden issued a statement:
“…2023 has been a great year for American workers.”
The administration's economic ignorance and refusal to expand its economic measures will spell ruin for already suffering American workers. Spend just ten minutes on LinkedIn, and you'll find plenty of posts by former employees of all stripes lamenting their layoffs and struggling to find work.
Do these workers over-express their concerns about their economic and employment situation? The answer is it doesn't matter.
When it comes to money and economics, perception is reality. It is difficult today to provide for a family, advance a career, and maintain a business as it was before President Biden took office.
Last year, bankruptcy filings rose more than 250% compared to 2022, with most bankruptcy filings coming from small businesses. This year, more layoffs are on the horizon, with companies like BlackRock, Duolingo, and Xerox already signaling layoffs in 2024.
Last year wasn't great for American workers and business owners, and 2024 looks set to be just as bad.
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