Monday, May 23, 2022

Mike Hosking: Job numbers are the last economic domino to fall

The saving grace, they say, as we plummet towards who knows where economically, is that we all have jobs.

Growth might be slow or non-existent, the cost of living may well be going through the roof, the debt may be piling up, and the mood may be sour, but we all have jobs. It's a global phenomenon. As bad as it is, or might yet be, we are in work.

But you might have noticed Netflix laid some people off the other day. They got rid of 150 people. They have 11,000 workers, so not exactly a massive broom through the place, but nevertheless it is the start of something.

It is the night follows day part of the equation that makes up a recession.

The reason everyone here has work is because the borders have been closed and the country has been pumped up with printed money.

It's the world of the false economy. But as the money has stopped, and the ensuing consequences have hit, the slow down, the confidence fall, the lack of spending, the rising prices, and what will happen is that some businesses won't survive.

Many businesses will survive but the profit falls, then vanishes. Then we return to the spectre of restructuring and with that, you get job losses. It is the last domino, but it's coming.

The same way Netflix was never going to be able to continue to attract all those people the way they did during Covid because they went back to work or were simply allowed out

Many other businesses will face the same problem. Sales drop because prices can't be passed on or sales drop because stock can't be supplied, or sales drop because people close their wallets because they are worried

The budget forecasts have the unemployment rate rising to 4.8%. They’ll be wrong. As we said last week, you can't have no growth, 6% wage rises, and 5% inflation without something giving.

What will give will be jobs.

You have to have growth to support work, or as we did, print money. But now that both are gone the real-world returns

Someone is going to have to pay the price for that. Up until now it's been able to be hidden, it's called debt. As long as no one cares about it we can pretend it isn't an issue.

What you can't hide are layoffs and unemployment. Where Netflix goes, many are not far behind.

Mike Hosking is a New Zealand television and radio broadcaster. He currently hosts The Mike Hosking Breakfast show on NewstalkZB on weekday mornings.

1 comment:

Fred H said...

Mike, I think you need to rethink "we all have jobs". Unemployment numbers may look relatively good but remember that there are around 110,000 working-age people who are not included in the unemployment percentage. Why ? Because they are not even looking for work but make a living feeding off the taxpayers in most cases.