Jobs Report Shows Cracks In Labor Market That Could Bring Down The Entire Economy
Cracks in the labor market and the broader economy continue to emerge. The October jobs report released Friday morning reveals that only 150,000 jobs were created last month, below expectations and well below the recent average. August and September job creation was revised down by more than 100,000, taking the sheen off the September jobs report.
The unemployment rate rose to 3.9%. While this figure is still low, there are now nearly one million more unemployed Americans than in April of this year.
Job creation continues to disproportionately occur in unproductive government jobs, which incredibly made up over one-third of all new jobs last month. Perhaps most concerning, real wages declined last month, making Americans poorer.
This jobs report is just another gathering economic storm cloud under President Biden. Inflation is up by nearly 20% since he took office, gas prices are up by more than 50%, small businesses face a credit crunch, and the deficit this year hit $1.7 trillion.
The Biden administration and Congressional Democrats deserve the blame for this economic turmoil due to their reckless spending and anti-energy policies that have driven up prices and forced the Federal Reserve to rapidly raise interest rates in response.
Anecdotal evidence suggests inflation is even higher than the 20% official number. One shopper from Bolivar, Missouri, published her Walmart receipts showing that she’s paying approximately 50% more for groceries compared to late 2020. Turkey breast and sugar are up 100%. Ground beef and chicken are up 50%. Bread is up 30%.
Small businesses also say inflation is worse than reported, with half of small businesses nationwide saying it is their top concern, according to Job Creators Network’s SBIQ poll.
“Inflation as far as product, people talking about 10-20%,”says Shawn Kraft, owner of Nonna’s Italian in Springfield, Missouri. “And absolutely not. It’s literally almost triple on a lot of things. So your base products, like your meat, went from $1.10 to $3.50. Chicken went from 80 cents a pound to $2.60 per pound. All of your to-go products went from like 12 cents a box to 50 cents a box.”
Due to this historic inflation, some small businesses have been forced to close. Saga Pastry and Sandwich in Las Vegas was forced to close due to “skyrocketing” prices, which couldn’t be passed on to consumers. The Den Smokehouse & Brewery near Fresno, California, was also recently forced to close after its meat and deep fryer oil costs doubled.
The Fed’s most recent “Beige Book” report, which takes into account the real experiences of businesses, shows that many firms are bracing for a slowdown. Small business bankruptcies so far this year have already outpaced the number of bankruptcies that occurred during all of last year.
Ensuing interest rate hikes are also hitting small businesses and ordinary Americans hard. Liz Field, who owns the Cheescakery in Cincinnati, borrowed $434,000 in 2021 to build her business from a food truck to a cafe and commissary kitchen. Due to rising rates, her monthly payment has increased from $2,400 to $4,120. As a result, she’s been forced to cut her employee hours and sell a food truck and freezer van. “That really hurts,” she says, “I’m not going to be able to open more stores until I get this big loan under control.”
Small business lending has almost completely dried up as banks retrench. “Small firms are really struggling with access to capital,” said Patrick Harker, president of the Philadelphia Federal Reserve recently.
The labor market continues to prop up America’s precarious economy characterized by high inflation, a lack of credit, and small business pain. But this pillar is weakening and won’t be able to hold it up at this rate for long. To quote President Biden, “That’s Bidenomics in action.”