In his final state-of-the-union address, President Obama famously accused anyone who dares to question the strength of the US economic “recovery” of “peddling fiction.”
Shortly thereafter, we learned that the US economy grew at a paltry 0.69% in Q4. Below estimates.
Perhaps the most disturbing thing about the state of the economy – well, besides the fact that healthcare spending is essentially driving “growth” – is that the labor market has becoming a waiter and bartender creation machine. That’s come at the expense of manufacturing jobs, where skilled workers can actually earn a decent living.
Here’s what the disparity looks like since 2007:
No fiction “peddling” there. Just numbers.
Additionally, we’ve noted the fact that foreign born workers account for the vast majority of job creation in America since the crisis:
Last Wednesday, United Technologies decided to reinforce both of these trends all at once, when the company announced it would be eliminating 1,400 jobs at a Carrier plant in Indianapolis in favor of hiring some new “foreign-born” employees – only these “foreign-born” workers will be hired in Mexico.
“Two Indiana plants that make products for the heating, ventilating and air conditioning industry are shifting their manufacturing operations to Mexico, which will cost about 2,100 workers their jobs,” The Indianapolis Star reports. “Carrier is shuttering its manufacturing facility on Indianapolis’ west side, eliminating about 1,400 jobs during the next three years [and] United Technologies Electronic Controls said that it will move its Huntington manufacturing operations to a new plant in Mexico, costing the northeastern Indiana city 700 jobs by 2018.”
Watch below as 1,000 soon-to-be Donald Trump voters react to the announcement:
Economists called the move “highly unusual.” “Today’s surprise announcement was without warning,” the mayor said.
Actually, it’s neither “highly unusual” or “surprising.” Here’s why (again from The Star): “Carrier’s workers are separated into a two-tier wage system. A quarter of the workers make about $14 an hour, or about $30,000 a year. The rest make about $26 an hour, or about $55,000, but make well above $70,000 a year with overtime.”
Something tells us labor costs will be “slightly” lower south of the border.
Who’s “peddling fiction” now?
• source: zerohedge.com
What will happen to Cardone plants as 1,300 jobs leave?
Less than two years ago, Cardone Industries invited Philadelphia City Council members Marian Tasco and Bobby Henon to company headquarters at 5501 Whitaker Ave. to announce a $3.4 million grant from the city…..
The Whitaker Ave. plant will remain open, and home to Cardone’s corporate offices and warehouse, even as Cardone prepares to scale back its Brakes Division at 5670 Rising Sun Ave., end more than 1,300 Philadelphia jobs (including workers represented by the Service Employees International Union Local 252) and move production to Matamoros, Mexico, over the next two years, spokesman Kevin Feeley says.
• source: philly.com
698K Native-Born Americans Lost Their Job In August: Why This Suddenly Is The Most Important Jobs Chart
The chart is the following, showing the cumulative addition of foreign-born and native-born workers added to US payrolls according to the BLS since December 2007, i.e., since the start of the recession/Second Great Depression.
• source: zerohedge.com
HP Dumps 30,000 Jobs, But Still Cranking Up H1B Guest-Workers
Hewlett Packard Enterprise (NYSE: HPQ) announced on Tuesday that the company will cut about 10 percent of its 300,000 member workforce, but appears to be moving “forward” with expanding its use of H1-B foreign work visas…..
The new job slashing is in addition to the 54,000 job layoffs already taken by HP and are expected to mostly hit workers in North America, according to Bloomberg.
• source: breitbart.com
Intel Lays Off American Workers While Lobbying for More H1B Visas
The company is complicit in laying off American workers from their posts while advocating for an increase in H1B visa workers……
Intel is among the top five technology companies, including Microsoft and Facebook that has lobbied for comprehensive immigration reform in addition to pushing lawmakers to support these increases……
• source: breitbart.com
Obama Economy: Thousands of Americans Losing Their Jobs as Factories Shutter, Move to Mexico
If you’re an American worker, Barack Obama is not your friend, especially as 2016 gets underway. Just this week, companies across the American landscape announced they were slashing hundreds jobs, one company is even moving those jobs to Mexico.
- On Wednesday, Cardone Industries, an auto parts manufacturer based in Philadelphia, announced it would cut over 1,300 employees from its two Philadelphia facilities.
- Southwestern Energy, based in Houston, Texas, is cutting 1,100 jobs; the company reported in 2014 that it had 2,780 employees. On Thursday, Southwestern reported to the government that none of its drilling rigs were in operation in 2016 and it expected its drilling activity to plunge.
- On Thursday, U.S. Steel reported that roughly 700 Lone Star Tubular Operations employees would be temporarily laid off.
- Most egregiously, on Wednesday, the Mondelez bakery in Chicago announced that it would lay off 277 more workers in Chicago, following its July announcement that 600 of the 1,200 jobs at the bakery would be cut while the company shifted its operations to Salinas, Mexico. On Tuesday, Laurie Guzzinati, a Mondelez spokeswoman, stated, “As the investment/transition progresses, we expect there will be additional impact to the Chicago bakery.”
• source: breitbart.com
Mass Layoffs To Return With A Vengeance
Remember the mass layoffs of 2008-2009? The US economy shed millions of jobs quickly and relentlessly, as companies died and the rest fought for survival.
Then the Fed and the US government flooded the banks and the corporate sector with bailouts and handouts. With those giga-tons of liquidity sloshing around, as well as taking on massive amounts of new cheap debt, companies were able to finance their working capital needs, hire workers back, and even buy-back their sharesen mass to make themselves look deceptively profitable. The nightmare of 2008 soon became a golden era of ‘recovery’.
Well, 2016 is showing us that that era is over. And as stock prices cease to rise, and in fact fall within many industries, layoffs are beginning to make a return as companies jettison costs in attempt to reduce losses.
Since January 1st, here is but a subset of the headlines we’ve seen:
- Johnson & Johnson to slash 3,000 jobs
- Wal-Mart pulls plug on smallest store format, shuts 269 stores
- GE plans to cut 6,500 jobs in Europe
- BP to slash thousands more jobs in face of oil downturn
- Macy’s to cut 3,000 jobs, close 36 stores
- Sprint cutting 2,500 and closing call centers to cut costs
- Canadian Pacific Railway plans to cut 1,000 positions
- Brazil economy shed 1.5 million payroll jobs in 2015
- Pearson to cut 4,000 jobs in latest restructuring
- Barclays to slash about 1,000 investment bank jobs worldwide
- Southwestern Energy to lay off 1,100 workers amid oil slump
- Major banks are making cuts: Bank of America, Citi Group and JPMorgan Chase are trimming jobs and branches.
- Autodesk to cut 10 pct of workforce
- Caterpillar closing 5 plants, cutting 670 jobs
- VMware posts higher-than-expected revenue, announces job cuts
- AIG to cut jobs in sweeping overhaul
- Monsanto to slash 1,000 more jobs, total planned cuts at 3,600
- Instacart layoffs may be a sign of things to come
- EMC plans layoffs as it cuts annual costs by $850M
Note that nearly all of these companies are in the Energy, Finance and Tech sectors — the three biggest engines of growth, profits and market value appreciation within the economy over the past 7 years.
What will the repercussions be if those three industries go into contraction mode at the same time?
This topic has particular relevance to me today, as my former employer Yahoo! just announced that it’s cutting 15% of its workforce (1,700 jobs) and considering putting itself up for sale……
As Warren Buffet famously quipped: Only when the tide goes out do you discover who’s been swimming naked. Well, with the collapse of the Asian stock markets last year and the entire global market so far this year, the tide is fast receding and the rot at Yahoo! is now plainly visible to all. How much rot? During its earnings call yesterday, the company announced it’s taking a write-down of $4.5 billion. That’s nearly as much as it made in top-line revenue for all of 2015!
…..And that’s just Tech. As Chris(Martenson) has been warning us loudly, something is deeply amiss in the Financial sector. It’s mind-boggling that the biggest of the “too-big-to-fail” banks, like Citibank and Bank of America, have lost 25% of their market value in a little over 1 month(!). Deutsche Bank has lost over 33% over the same short period. All while the general market is down about 8%.
What these prices are telling us is that something big, ugly and damaging is happening within the banking sector. We just don’t know exactly what yet. And if you remember your history, this is eerily similar to how things went south so quickly in 2008. The banks started catching the sniffles, and soon after, Hank Paulson was on his knees begging Congress for the authority to stave off a full meltdown of the banking system.
And then there’s Energy. Can it be that the price of a barrel of oil was over $70 just 10 months ago? And over $100 five short months before that? Yesterday it was below $30. As we’ve been warning about here at Peak Prosperity, the carnage that collapse in price is going to wreak across the highly-leveraged companies in the Energy sector is going to be biblical. Not to mention the many other sectors that service the energy industry (trucking, housing, retail, infrastructure development, etc). We are just beginning to see the very early-stage ramifications…..
All the stimulus and intervention undertaken by the Fed et al gave us five pleasant years (2010-2014) of rising stock, bond and home prices that allowed us to pretend that the 2008 credit crisis was a one-time event.
2015 proved to be the year that reality intervened. The rocket ride we were on hit its zenith, and things hung precariously there.
2016 is fast proving to be the year that the laws of physics are starting to matter again, and our rocket is now beginning its descent back to Planet Earth. How far we fall this year vs next is still unknown, but the direction of the trajectory is becoming increasingly hard to dispute. And as we lose altitude, we’re going to start losing jobs along with it.
• source: peakprosperity.com
Buffett Bloodbath: Kraft Heinz Laying Off 10% Of Workforce
In short, Kraft Heinz said it would lay off 700 workers at Kraft’s corporate headquarters in north suburban Northfield, part of a cost-cutting plan that would slash the combined entity’s headcount in the U.S. and Canada by 2,500 jobs.
Well, on Wednesday we got more of the same with CNBC reporting that Kraft Heinz will close seven plants and lay off 2,600 employees. The company is also reportedly moving Oscar Mayer to Chicago from Wisconsin.
• source: zerohedge.com
Chevron To Cut Workforce By 6,000-7,000
Chevron, the second-largest U.S.-based oil producer, slashed its 2016 capital budget by 25 percent and said it would lay off roughly 10 percent of its workforce, one of the most-drastic reactions to date to the plunge in crude prices.
• source: cnbc.com
J.C. Penney Lays Off 300 in Plano, 9% of its Headquarter Jobs
The 9 percent reduction is part of an ongoing effort to cut costs as Penney tries to become profitable again.
• source: dallasmorningnews.com
GM to cut 500 jobs, eliminate shift at small-car plant near Detroit
General Motors Co (GM.N) will cut 500 jobs as a shift is eliminated at a plant near Detroit that makes weak-selling small cars…..
• source: reuters.com
Microsoft has reportedly cut another 1,000 jobs
Last year, Microsoft announced the largest round of layoffs in its history, cutting 18,000 jobs from its worldwide workforce. In July of this year, the company revealed a massive restructuring of its phone business unit, with the loss of another 7,800 jobs, following its acquisition of Nokia’s devices and services business.
But alongside the publication of its latest quarterly financial results, Microsoft has reportedly laid off a further 1,000 employees today. According to The New York Times, these latest cuts are ‘fresh’, rather than being part of any previously announced layoffs.
• source: neowin.com
Biogen cuts 11% of workforce in restructuring
Biogen’s 11 percent reduction amounts to about 880 employees off its 8,000 base.
• source: cnbc.com
….and on and on