The labor market crisis has affected technology and cryptocurrencies severely

The good times in the job market continue — there are still nearly two jobs open for everyone looking — but a torrent of recent headlines about high-profile layoffs may give “Spring 2020” energy.

Seeing all of these household names in the headlines might make you think that an economic recovery, defined by an astonishingly strong labor market, may be faltering.

But labor economists warn that it is too early to tell if all this is a harbinger of broader turmoil. After all, unemployment is still near a 50-year low.

“The batch of press releases from dozens of companies is still just a very small part of the workforce,” labor economist Aaron Sojourner told me recently. “We’ve seen fast, consistent job growth…so there’s a lot of reason to expect a slowdown – whether it turns negative is not yet clear.”

Sojourner is in a unique position to find out. Back in March 2020, he and fellow economist Paul Goldsmith-Pinkham were among the first to accurately predict the first collapse of nearly 3.5 million layoffs in one week — nearly three times the estimate given by Goldman Sachs.

So far, he sees no evidence of a broad pattern that the labor market is slowing. It’s not a promise that it won’t change, he says, but he remains optimistic.

He was warning bearish watchers to keep in mind that a lot of our economic problems stem from things being too good to be true. “People complain that consumers have too much money, they spend too much and they raise prices…everyone is working and wants to work,” he says. “These are very high class problems.”

Look Ahead: Although job layoffs are largely confined to industries sensitive to interest rate increases, the Fed acknowledges that it may not be possible to control inflation without causing job losses.

“There is a risk that the unemployment rate will rise,” Federal Reserve Chairman Jay Powell said during a hearing before the House Financial Services Committee today.

The central bank does not have ‘microtools’, which means we could see job losses on a larger scale.

The unemployment rate was just 3.6% in May, down from about 15% in the spring of 2020. Even at 4% or higher, Powell said, the labor market would “remain very strong.”

Today’s tally: $529 million

Some people might feel a little anxious about investing in Big Oil in our Lord 2022. Because of all, you know, the catastrophe of global warming, air pollution, and the god-awful catastrophe all over the world that is the fossil fuel industry.

Not Warren Buffett. Oracle of Omaha’s Berkshire Hathaway doubled its energy investment, dropping nearly $529 million on 9.6 million shares of Occidental Petroleum last week. If you can get past the immorality of all of that, that’s a pretty solid bet: Occidental Petroleum’s shares are up 92% this year, while the S&P 500 is down more than 20%. So, yeah…suck it up, hippies, let’s get rich.


Most people are somewhat angry with the high prices for gas, food, and just about every basic item you can think of.

However, there is at least one industry that is dancing on the grave of our consumer income: stalwart payday lenders.

Here’s the deal: Payday loans, also known as cash advance loans, are the kind of short-term bridge that can feel like a lifeline when you live from paycheck to paycheck. But it does come with criminally high interest rates, often over 500%, depending on credit and income. My colleague Nicole Goodkind writes that our current economic climate – characterized by high inflation and low unemployment – is just the kind of environment in which these lenders thrive.

Subprime mortgage lender Enova said in a recent earnings call that 44% of all loans it issued in the last quarter were to new customers. It is amazing.

But it is also easy to see why people despair:

  • Inflation in the United States is the highest in 40 years.
  • Gas hovers around $5 a gallon, which is 60% more expensive than it was a year ago.
  • Presidents across America are calling on workers to return to the office, which means more leadership.
  • Meanwhile, the federal minimum wage still stands at $7.25 an hour, where it has been since 2009.
  • One survey found that about two-thirds of Americans live from paycheck to paycheck. (This number jumps to 82% among workers making less than $50,000.)
  • People with high-risk credit scores (below 650) have difficulty getting a loan through a regular bank or qualifying for credit cards, leaving them few options when cash is scarce.
  • To hear predatory lenders tell it, they are doing a service to low-income communities by issuing loans to people who have been rejected by traditional banks. Higher interest rates are necessary due to the risk of default.

Consumer advocates call BS.

“There are 18 states and the District of Columbia that have banned payday loans and have held off just fine without predatory lending products,” said Nadine Chabrier, senior policy advisor at the Center for Responsible Lending. “There are fair and responsible lending products with low interest rates and fees available that people can use.”

Read Nicole’s full story here.
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