The Many New Indicators of an Epic Job Collapse | Hacker News Reader

The Many New Indicators of an Epic Job Collapse

bloomberg.com

54 pointspaulpauper70 comments

There is a pretty big disparity between these numbers and the optimism in the stock market. The S&P indexes are only down about 14% right now since February and were priced based fairly optimistic growth assumptions at that time.

I agree. Cue the next major correction.

I think markets here reflect the naively optimistic view of many people that everything will return to "normal" in a month or two.

At some point the reality will sink in that a bunch of companies, businesses and jobs are simply gone and demand will take a long time to return to 2019 levels even if supply was capable of 2019 levels of output tomorrow (which it probably is).

EDIT: case in point [1]:

> Americans are so nervous about the state of the economy that they are stashing cash in the bank at a rate not seen since the first year of Ronald Reagan's presidency.

> The United States government's Bureau of Economic Analysis reported Thursday morning that the savings rate surged to 13.1% in March -- up from 8% in February.

> That's the highest savings rate since November 1981. Americans had $2.17 trillion in savings last month.

[1]: https://www.cnn.com/2020/04/30/investing/savings-rate-federa...

it's a little bit optimism and a little bit just printing money inflating asset prices.

As an economist, I just want to add that money printer go brrr.

>> Americans are so nervous about the state of the economy that they are stashing cash in the bank at a rate not seen since the first year of Ronald Reagan's presidency.

Could this just be that they're spending less since there's less opportunity to do so since everything's closed down? I know I personally "saved" a lot more in April, but it wasn't because I was fearful about the economy. I'm lucky that I can work from home and have been sitting at home for 2 months, not going out, not buying things other than essentials. I don't have to spend money on transportation (Metrocard, lyft, etc), I'm not spending money at bars, I can't go out for dinner, and since I'm home all day I've been cooking instead of ordering takeout. The only "expense" that's increased is throwing money into the market and playing with options, because what else is there to do.

So yeah my savings rate definitely went up, but this says nothing about being nervous about the state of the economy.

The old indicators don't necessarily work here. Unemployment is because of the lockdown. Some of them (many of them?) will return after lockdown.

Hopefully I'm wrong but I don't believe that they will. The lockdown isn't going to just disappear, it's going to be a drawn-out process figuring out how we're supposed to live with this virus. More places may be open but the demand will still be much lower than it has been. And that will have knock-on effects through everything else. I fear we are going to see a lot more people filing for unemployment for months to come.

All of which is true, but it's too early to distinguish permanent damage from temporary inconvenience. There will be elements of both, and at the moment it's impossible to tell them apart.

We won't know the true picture until six months after the last significant outbreak. If we're lucky and there's no recurrence we'll have a clearer picture heading into winter.

If we're not and there is, there will be more damage and we won't be able to see the final picture until late next year.

I feel like commerce will figure out a way to adapt. Restaurants will build social distancing into the experience.

I work with NCR, the largest POS platform provider in the country. They didn't lay off a single person. Commerce isn't going away.

Some retailers were already struggling, I heard as many as 50% of mall retailers could close by 2021, which could cause the malls themselves to close and kick out the remaining tenants if they go bankrupt. Sure there's tons of other retailers, I'm from Dayton, where NCR used to be, so am familiar w/ the company, just because they haven't laid off yet, doesn't mean a year from now things will be as rosy.

I know for a fact in 2008 they laid off a lot, and iirc that's when they closed down the NCR/dayton facility. Didn't all happen at once, but it eventually did.

The crisis then was markets and just normal business. This is a full shut down of society followed by a period of consumer confidence issues (assuming consumers even have cash to consume with), it's not just going to bounce back.

This virus is only two months old. Companies with cash reserves don’t have to lay-off immediately... they can wait a few months and figure out how many they need to lay-off.

I agree, demand will remain low. I have been lucky enough to keep my job to date and I have discovered the joy of saving. The amount of money I have been able to keep once I stopped going out to eat and buying useless things is amazing. I can't think that I am alone in this. Compound this with the uncertainty in the job market and I think many people are going to be focused on saving for quite a while.

> They find a 30% collapse in vacancy postings, reflecting a massive decline in companies’ demand for workers.

It’s not clear how many will be able to return after lockdown, but this piece argues that those who won’t be able to return to old jobs will struggle to find new ones given the decreased demand in labor.

The situation I fear is that communities open back up but business activity remains low due to fear around viral contraction. If business is open but customers aren’t coming in, the workers who returned to those jobs might not have them for too long.

Also, those looking for a job will be shoulder-to-shoulder with 6M other people. That part won't be pretty.

> The situation I fear is that communities open back up but business activity remains low due to fear around viral contraction.

If that's true, labor demand will shift to delivery, fulfillment and online marketing.

Perhaps the US is collectively going to "move inside", but if so, that's only because there never was a lot of interesting stuff outside to begin with.

Look at Europe with its pretty cities or China with its metropolises, people are already back in the streets, they aren't so paranoid about the virus.

> people are already back in the streets, they aren't so paranoid about the virus.

Photos of crowds are one thing - economic stats tell the real story. It’s too early to tell how people’s behavior has changed.

> If that’s true, labor demand will shift to delivery, fulfillment and online marketing

Delivery and fulfillment are not good paying jobs, and it can take years to development expert-level marketing skills to earn top dollar. Lots of people are going to struggle with this kind of transition.

> Perhaps the US is collectively going to "move inside", but if so, that's only because there never was a lot of interesting stuff outside to begin with.

This is completely subjective, based on personal preference, and a position that I completely disagree with.

And Italy is still locked down for another week, at which point they’ll slowly begin reopening. Wuhan has reopened but we won’t know the full economic impact of their reopening for a while.

> Delivery and fulfillment are not good paying jobs, and it can take years to development expert-level marketing skills to earn top dollar. Lots of people are going to struggle with this kind of transition.

I didn't say it was going to be easy or that everyone would maintain their level of income. I'm saying there will still be demand for labor.

Also, any of those service-sector jobs that have or will be lost weren't good paying either.

> This is completely subjective, based on personal preference, and a position that I completely disagree with.

What is there to go outside for in your average US city? The mall? Even those were already half-dead before COVID-19.

Maybe if you live in one of the better cities there's at least a little bit of urban space that is not cookie cutter wasteland. Those places will survive.

> And Italy is still locked down for another week, at which point they’ll slowly begin reopening.

Perhaps, but in Sweden it's pretty much life as usual, in Germany the streets and parks are filled and even in Spain people are back outside. As soon as businesses reopen, people will visit them.

> What is there to go outside for in your average US city? The mall? Even those were already half-dead before COVID-19?

Really? Bars, Clubs, restaurants, concerts, museums, art gallery's, and gyms off the top of my head. Street fairs, parties, festivals, conventions, sporting events, school concerts and events if you count less commercially driven events. That's only things that exist primarily in large cities, national parks, city parks, hiking trails, fishing, hunting, and boating outside of the city. There are literally hundreds of other things to go out for. If someone choose to stay inside that's clearly because they choose to ignore the large amount of things to do or they can't afford to in money/time terms.

> Bars, Clubs, restaurants, concerts, museums, art gallery's, and gyms off the top of my head.

Yes these things exist, sort of, at least in some places. Besides restaurants, none of these are given much attention by the average American consumer.

> That's only things that exist primarily in large cities, national parks, city parks, hiking trails, fishing, hunting, and boating outside of the city.

The point I am making is that the cities in the US are largely so uninteresting that you might as well stay inside and take your business there.

Bars are packed, concerts sell out, museums are busy, and plenty of gyms do a large healthy business just prior to the CoronaVirus outbreak. In what world do you live that American consumer's didn't go to these places? Here on the East coast (Northeast for sure) that is NOT true at all. I doubt it's true anywhere. I understood your point I just think it's poorly made and not at all backed by reality.

I do not know what to tell you. Just compare American and European cities. American cities are depressing.

Of course existing bars and gyms have visitors, otherwise they would be out of business. Yet, the average American is overweight to obese and certainly not a bar hopper.

I'm not this optimistic. I suspect lots of small businesses aren't coming back and larger ones are going to continue to run "lean" (read: overworking their employees) for as long as possible. After 2008, it took like four years for hiring to pick back up.

To be fair, the 08 recovery was deliberately hamstrung by the lack of government stimulus. Congress approved basically nothing after the first round of QE. Hopefully we won't repeat the mistake this time.

I agree that the fiscal stimulus, under the control of Congress, was much less that it should have been. However QE is monetary stimulus under the Fed’s control and as I recall there were several rounds of it, in addition to other programs.

Edit: reading your comment again, and I think you mean that Congress didn’t do any further fiscal stimulus after the Fed did QE1, which seems right to me. Leaving my comment up for clarity.

It was shocking how fast some corporate players went "lean". Almost as if they were waiting for a viable excuse to do so without blowback rather than out of actual necessity. They know they have the upper hand. People are deathly afraid of being unemployed, something that was just starting to fade away after 2008.

On the other hand, if your cash flow generation stops because sales stop, employees are often the largest remaining expense. And you can't delay paying employees, unlike vendors. So you have to be decisive, or else you can go from having a healthy company to financial insolvency in the span of a few weeks.

To me this feels a little like the situation around 2000 and 2001. A lot of fundamentals were out of whack but things kept moving. Then 9/11 happened which shouldn’t have derailed the economy by itself but it triggered the unraveling. So the lockdown may just be the trigger that will pop the bubble that has been building since 2008.

My prediction is that measures will be taken to reinflate the bubble which will then go on for another ten years so we will probably have an even bigger collapse around 2028-2030. And every time more wealth will get moved to the top x percent.

I think they'll try, but I honestly think we've got a perfect storm coming.

Now's the best time ever for automation to take off. There's also going to be more big businesses eating little businesses and consolidation.

Globalization's biggest leaders will come out ahead, and thrive as always - but a LOT less workers are going to be needed in general from here on out thanks to ML/AI/Etc...

It's first step towards post-scarcity, except for the millions who will be hurt if govt's don't create repurposing plans to give people a purpose for existing and enough $ to eat and live.

Also, I personally won't step foot in a sit-down restaurant or movie theater for at least 2-3 years, or until there's a viable vaccine. I'm sure I'm not the only person boycotting crowds.

Real estate analysts estimate that 50%+ of mall retailers will close their door by q4 2021. that's a shit ton of jobs gone forever.

I was starting to get skeptical of the claim that 40% of jobs would be gone by 2030, but 2020 definitely is showing it's highly possible. What do we do w/ 40% permanent unemployment?

> What do we do w/ 40% permanent unemployment?

This assumes that somehow people cannot be re-trained to do other things, if those jobs really all disappear, which they probably wont.

There's always more work to do, things to improve, people to help. It will be like that forever.

The question is, who allocates labor? Perhaps the kind of market system we have has run its course, perhaps this time it's over.

I predict that the market will recover, just like it always has, but feel free to disagree.

> I predict that the market will recover, just like it always has, but feel free to disagree.

What are the public policies that will help the market recover? (assuming that you mean the “job market” or “market economy” in general, and not the stock market which is another topic)

Are those policies pursued or likely to be pursued in the next few years?

It seems politically untenable in the US to break from the “socialism for large business/the wealthy, free market for everyone else” slate of policies. And this is with either political party.

Whenever there has been epochal change and recovery in the US economy during the 20th century there have been substantial policy changes: the New Deal in the ‘30s. The Military-Scientific spending in the 40s-60s.

The market recovers on its own, because it reflects the wants and needs of the population. The most important thing the government can do is to maintain the stability of the currency as well as law and order.

Whenever there has been a government response to market crisis, it is hailed as "the solution" in retrospect by the powers that be. The alternative history where the intervention never took place doesn't play out and can't be judged on its merits.

> The market recovers on its own, because it reflects the wants and needs of the population.

What does a successful recovery look like?

There are a large number of market-distorting policies in effect today. I'm talking about both policies that predate the crisis and those that went into effect during the response (these are mainly monetary - the fiscal ones seem temporary at this point).

> The most important thing the government can do is to maintain the stability of the currency as well as law and order.

To get to this point, the government would need to undo interventions that are currently in place throughout the economy. If the government were to "do nothing" (really, "change nothing") starting today, then this would in no way be some kind of "free market" like you're implying should exist.

Do you think that the government should undo interventions across the economy? Or apply new ones? Or leave the existing alone? I'm genuinely curious

> Do you think that the government should undo interventions across the economy?

It can't undo them, so that point is moot. The government shouldn't have been injecting so much liquidity that wasn't really needed for all these years - but now is certainly not the time to remove that liquidity.

The big question is, is the dollar going to collapse under that weight?

If so, then there's nothing that can be done now that makes a difference, so we might as well stay course for the time being.

Pollyanna thinking.

We'll have what, 30M unemployed people? Who mostly can't be retrained to be engineers, even if we needed that many engineers which we don't.

No, we're entering a post-scarcity economy. Never mind Marxism or Socialism or Capitalism - when Labor has nothing left of value to offer, where do they go? What leverage do they have?

"It'll be like that forever" flies in the face of history. When weaving machines came in 1760, the weavers didn't just get reeducated or reallocated - they starved and died, along with their families.

I always feel sad at the oft-repeated theme "We'll just get everybody working again!". In the 1950's, lots of philosophers and writers imagined a future of robots lifting the yoke of labor from our shoulders, freeing us for lives of leisure. Now that it's happening, all I hear is schemes to make people work again. The old Puritan ethic - if you're not working, your a waste of breath.

Seems pretty pollyannaish to think we're heading into post-scarcity anything, for anyone. Where is that idea even coming from? Or is "post-scarcity" just a nice way of saying "massive social stratification built on the exploitation of an effectively permanent underclass"?

> Who mostly can't be retrained to be engineers, even if we needed that many engineers...

I didn't say they will become engineers. A low-class worker will stay in low-class work, but there will still be demand for it. Even if the market doesn't demand it, the government is there as a buyer of last resort.

Again, there's always something to do. There's always something to improve, to build or to repair. Where do you think work came from before capitalism?

The argument for capitalism is that it's generally more efficient than government at allocating resources and creating wealth. If that fails, we can still fall back to something else.

> Never mind Marxism or Socialism or Capitalism - when Labor has nothing left of value to offer, where do they go? What leverage do they have?

They can riot.

> When weaving machines came in 1760, the weavers didn't just get reeducated or reallocated - they starved and died, along with their families.

If this was a historical fact and not a figment of your imagination, it would be repeated at every opportunity where "the dangers of automation" were discussed.

How can government give folks a purpose? I always assumed that in our strange age purpose is up to the individual, but now I am curious how a nation-state could foster `a purpose-driven life`.

Nation states tried to do that in twentieth century, with very disappointing results.

The US economy entered a recession in March 2001, which it exited in November 2001. So 9/11 was shortly followed by a recovery, not an unraveling.

s/November 2011/November 2001/

Thanks, fixed.

I agree. Just look at what is happening right now. Tens of millions losing their jobs and the stock market collapsed. This allowed rich people with money to buy stocks for cheap. Government pumped money into the financial markets and directly into companies allowing stocks to rally. Rich people got richer. It happens like this over and over again. Meanwhile tens of thousands of people are spending hours waiting in lines just to get food.

The system is designed to move money from the masses to the top.

Are we going to go back in time and manufacture all the goods and services we didn't make this year?

No. But that's another point: there should be a burst of demand initially. Delayed service appointments; postponed repairs and replacements. It seems temporary, and may only cause a roller-coaster effect but we'll see.

The initial burst will exist but only for essential items I think. No need to get a new car if the old one will do.

Sure but then repairs/maintenance will have a bubble. Rent or buy, folks will be able to get out and do transactions that've been put off.

Recently I took all our vehicles for service. Got an appointment the same day. They were essentially idle.

I agree about repairs/maintenance. Dentists too.

It's not just a demand shortage, there's a supply shortage.

Let's assume demand shoots back up. We still will have spent 3-6 months or more not making stuff. What is everyone going to buy?

Sounds like a recipe for prices spiking. It's going to be a rough ride.

I think you would be surprised how many people have still been making stuff in the mean time. They closed down non-essential stores here but many companies have still be producing stuff.

Also, no need to make more car tires when the demand is 0 and they have stock, but the guys at the yeast company were running 100%.

Just as demand comes back production ramps up and the existing stock will take care of it in between.

Most of your local small businesses have already closed permanently. We haven't even gotten to the next contractionary wave where state and local governments lay off millions of people.

It's conceivable to imagine a world where government response prevented almost all of this pain but that's not the world we live in.

Citation? Because its not true in my town.

Landlords have forgiven rent; businesses have put employees on unemployment. But the plan is, to restart afterward. Nobody has abandoned their business or fled.

I don't know about most, but I'm seeing local gyms, fitness studios, restaurants, retailers, etc. announcing permanent closure on pretty much a daily basis. Many landlords are refusing to forgive or decrease rent, and pretty much any path forward involves a small business taking on additional debt while having zero revenue for an indefinite period of time.

The situation in Seattle does not support this view, and I know many small business owners here. Sure, some businesses are exactly as you describe but that is very far from all businesses. Many businesses have permanently closed their doors, and just as importantly, all of their capital was destroyed in the process so they no longer have the means to start a new business. The financial structure of many types of business intrinsically cannot absorb a couple of months of shutdown, it literally makes that investment a total loss to the owner. Many of these small business owners have almost all of their net worth in these businesses, it isn't like they are independently wealthy.

You are seriously underestimating the scale of the destruction of capital that has occurred in the small business community. People without capital cannot afford to open a new small business. Most of them are not FAANG engineers, they don't have hundreds of thousands of dollars lying around to try again.

State and local governments: you know all the talk from Mitch McConnell about state and local governments using bankruptcy rather than receiving federal assistance? It’s because the budgets of many of them, which rely heavily on gas, property and sales taxes, have been blown apart while they are spending money left and right on the crisis. Seattle alone has a $300M budget gap as of now.

Fortunately my state revolves around agriculture. The tractors are still going (you're alone out there in the field) and half the corn crop is already in (mild spring weather).

> Nobody has abandoned their business or fled.

Curious where you are? Here just within walking distance in my neighborhood in Chicago there have already been "a lot" of local stores announcing permanent closures. If I had to estimate, something around 5-10% so far out of a couple hundred. But it's only April, and I fully expect most who are not re-opening to have either not realized it or not announced it yet.

I also expect quite a number to re-open their doors only to be disappointed with 25% of their usual business. Conservative "boring" businesses I expect to survive for the most part (e.g. family owned laundromat), but anything in the niche retail or food and beverage sector I suspect will be at extremely high risk of going under very quickly.

Landlords here are also not (at least from my limited network of business owners I'm friendly with) reducing or forgiving rent. The most I've heard of anyone getting is a forbearance where they simply tack on the extra months to the end of their lease, which certainly is better than nothing but not exactly forgiveness.

Also if you pay attention to used commercial equipment markets, the markets are so far signaling a massive glut of used equipment coming into the pipeline via business liquidators. And this all just started in earnest this month. I suppose good for me in a sense since I've been really lusting over a commercial-grade deli slicer, but the massive impact it's already having on small businesses is quite sobering to me.

Midwest, Iowa. College town.

Depends if the business is still there.

Demand will be way down after as people recover from lost income. Others will take that whole "have [3/4/6] months of expenses in an emergency fund" thing seriously and reduce spending for as much as a year. Restaurants and such are likely to have reduced capacity.

Lower demand, lower need for workers. I think unemployment will remain high (though probably not as bad as it is now) for a while.

[EDIT] and of course higher unemployment will suppress wages, further reducing demand. Yaaaaay.

I suspect we're going to come out of this with about 12% unemployment, I'm suspecting like 8% of jobs are just going to evaporate as part of this.

>There are two main reasons: First, trillions of dollars of stimulus money from the Fed and Congress come with an implicit guarantee that the government will limit investors’ risk no matter how bad it gets.[1]

When more people learn details about how much the Fed is pumping to keep the stock market afloat, there may be a revolt.

Investors/retirement account holders can't continue as before with 30 million (and counting) out of work.

1. https://www.nytimes.com/2020/04/29/business/stock-markets.ht...

Why would they revolt?

They’ve lost their jobs and homes and can’t feed their families. Then they are told there is no help forthcoming from the government as they watch that same government point the money cannon at large corporations.

Why wouldn’t they revolt?

If the Fed does this right the truly massive spending will be when businesses reopen and will place money directly into consumers' wallets to restart demand. Otherwise businesses will have nothing to be open for and layoffs will continue and the downward spiral will steepen.

It will be difficult to time the reduction of business subsidies as consumer demand gets supported. Get it wrong and business feel no price pressure as Fed money overpowers the market signal of resource misallocation while consumers lack the ability to pay 'old' prices or change the goods and services they desire.

The way this is heading, and given that that point is probably, realistically, quite far out – I guess there the very real possibility that a lot of people will find themselves homeless and/or greatly and permanently impoverished in the US. I fully agree with you, but even if they get that exactly right, lots of markets will probably have pretty much disappeared and lots of companies won't have a chance to make it. This feels like with all the pessimist views pretty much everyone might still underestimate the sheer size of the tsunami that is rolling in.

The economic collapse we’ve been waiting for since the 70s is here. Repent sinners.

shame, shame, shame

[throws rotten apple]

I think if we avoid heavy handed government intervention to "save the economy" things will return to normal fairly quickly. OTOH, I expect gov to jump in as always to create a self fulfilling prophecy.

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