This week’s Bygone Relics will be much like the news, all over the place. In last week’s LBLF we briefly hinted at the coming federal job cuts. Up to 200,000 federal jobs are to be cut and that is just the start. If we go to dailyjobcuts.com we can see just how extensive this layoff month will be aside from the federal government. Many of these are due to the funding cuts of the government so it isn’t just fed jobs but fed adjacent jobs. This is in the last week, JSI research out of Boston, 1100 due to funding cuts, FAA hundreds of layoffs, Electric Aircraft Developer Eviation lays off most of its staff, the CDC 1,300, Waste Management 5,000 positions by the end of the year, HUD 4,800 jobs, National Nuclear Security Administration 35 jobs, Blue Origin, 1,400, Porsche 1,900, Redfin 450, Chevron 15-20% of its staff up to 8,000, Boeing 400, Lloyds Banking Group 6,000, Meta 4,000, Kroger hundreds of jobs at HQ, Unity Technologies 1,800, and Mass General Brigham hundreds of layoffs. This is plenty bad but it is also bad on the front of companies just closing down: Big Lots going out of business, Joann Fabrics closing 500 stores, Gamestop 19 locations in Illinois this month, Fort Worth school district considers closing 20 campuses, Denny’s is closing dozens more restaurants, 7 NYC Catholic Schools closed in the past month, 24 Daily Queens in Texas, Fontbonne University to close, US Foods closing its West Sacramento location with 118 jobs lost, and International Paper is set to close 4 plants resulting in 674 layoffs.
This is in the last 4-5 days folks. If this doesn’t slap you in the face like a freshly harvested deer liver then I don’t know what to do to you. Let you know that we have had 4 plane crashes since Trump took over office, he fired hundreds of people in the Federal Aviation Administration today and Monday a Delta flight from Minneapolis to Toronto landed on its roof? It did, I kid you not. Watch next week for more layoffs and hopefully no plane wrecks. Layoffs will accelerate from here as everyone is stampeding out the door of the club because it is on fire. Michael Kantrowitz is the No.1 ranked investment strategist on Wall Street and I like to read his work. He utilizes a hope framework. HOPE standing for housing, orders, profits, and employment. That is the order of the business cycle. Housing has already went, it has been frozen for two years with interest rates still hovering at 7%, homebuilders desperately starting to cut prices in Texas and Florida and apparently in the DC area in the last 30 days. Orders have been slowing as the PPE fraud money has stopped flowing into small businesses, the stimulus money has been used up by consumers, and everyone is starting to wonder where the growth is going to come from. Profits are starting to decline for the same reasons, we peaked 18 months ago, and now Nvidia has less of a backlog, restaurant are discounting to stay in business, and with Trump and DOGE taking a flamethrower to the government spending the discretionary spending will drop sharply. That leaves employment, the E.
I must detour a bit north for some context here. Every year since 1917 there is a tradition on the Tanana River in Alaska about when the ice flows will breakup on the river and start flowing down river. This is the unofficial start of spring in Alaska. It is like Groundhog Day if you will. The Nenana Ice Classic continues this tradition where people from all over Alaska bet on the exact time and day when the ice breaks. Last year’s winner was Esther who won $210,155 as she and she only guessed the correct time of April 27 5:18am. Now why am I giving you some history of the frozen north you may ask, because when the ice begins to flow down river, it can become jammed up at key areas causing large pools to form behind it, but keep in mind the ice is melting all the time. When the ice dams break it can cause huge flash floods at very unpredictable times and areas. That is what is happening with the jobs market right now this week. There will be huge layoffs occurring due to the funding of some program that has been secure for 50 years and now the funding is gone, and the jobs are adios, Sayonara, Ciao bella.
The unemployment is the coinciding factor with recessions. When the layoffs come, then the recession comes. If we have learned anything from Americans for the last 15 years, if they have a job they will spend. They damn sure won’t save unless they are rich and can’t spend much more. This is why the double dip of job losses and tariffs will be very hard on the very people that voted in Donald Trump. He promised them a better America and he might deliver, but that doesn’t mean that the American people might not have to do an Andy Dufresne. He was the main character who escaped from Shawshank prison by crawling 500 yards, the distance of 5 football fields, through a sewer pipe. Spoiler alert, actually if you haven’t watched that movie by now its on you. This is the why this is happening so fast. Musk and DOGE has supposedly found a bunch of fraud in social security. They are going to cut it out and it could be another $100 billion a year or more. That is wonderful news, except to the person that was receiving it. They were then spending that money somewhere, supporting businesses or stocks, or mistresses or military spending or some such thing. That money spigot gets turned off and $100 billion gets sucked out of the economy.
This is why I find myself in a moral dilemma Randall, I have Elon Musk doing the cutting, the man whose very company is built on fake videos of cars without the technology promised, $8 million in government contract money every day, loans from the Chinese, billions of dollars in tax credits earned by green energy credits, and grift that would make a snake oil salesman blush. On the other hand, I want government spending cuts so I am forced to cheer for Musk to do the cutting hoping that he isn’t taking people’s private data to use as he pleases, hoping that he doesn’t abscond with the US Treasury’s money, and hoping that he doesn’t get into one of his penis shaped rockets and literally fly into outer space like Dr. Evil. I’m in a bit of a cheering section quandary here.
However, I will take the spending cuts despite the messenger if we can get them done quickly enough. I feel like Buckner walking back into Shea, but what choice do I have? The answer is none. We are almost 300 episodes into this cooperative and I have been hoping for an answer to out of control government spending, runaway deficits, and some semblance of normalcy out of our government. Well this is a good start. It was always going to be messy, as this is a breakup for lack of a better analogy. It’s not you it’s me. That’s what everyone always says right? No, this time the Trump team is saying, no its not me its you. They are going to be proven right on a lot of fraud, corruption, and malfeasance. This has been an open secret in government like Bill Cosby was a rapist for a decade before someone said should we actually look into this and prosecute the man. Well, the pudding man is going to jail and by pudding man I mean the bloated government enterprise.
Here comes the hard part. That bloated enterprise was part of the 70% of consumer spending that has kept this economy afloat. Government spending is the private sector income. NGO jobs are private citizen’s income provided by taxpayer money or debt creation. Non-profit funding is going to dry up like a woman that took a kid of the teat. This river of money being channeled from the government deficit into the private sector will be felt far more than I think anyone can anticipate. It’s everywhere. If 20% of Washington DC loses their jobs, what will happen to the restaurants, the bakeries, the hotels, the commercial real estate, the housing market, etc etc etc…
Folks, the great financial crisis peaked at about a 6% dip in GDP, this could be well worse than that at least regionally. I don’t hear very many people talking about this possibility. We have talked about the pickle that the state of Maryland finds itself in, Illinois is constantly on the precipice of ruin, and California is $70 billion in debt and just had one of the worst natural disasters in our nation’s history hit their largest city. During Covid, the states went hat in hand to Congress and said, bail us out now. Congress Trump’s and Biden’s both did so. Will that happen again? Trump has been told he won this large mandate which I poopooh-ed after showing how close the election truly was. He has two seats edge in the house and three seats in the Senate. If you don’t think that Congress will turn on Trump to save their jobs you do not understand the modern day politician. That leaves us with Trump using executive orders, Congress trying to possibly bail out their representative states, and the justice department trying to figure out what the hell is going on? One liberal judge halts something, another conservative judge allows something, and it will be a mess. I truly think that when the economy goes south that it will be amongst the most contentious days in American history. We will have the blue broke states lined up against the less broke flyover red states. That concerns me greatly as a citizen, but I don’t know how else it shakes out. Like DOGE through the US budget, I think it will move with lightning speed. I think in two weeks we will have much bigger fish to fry than just unemployment. I think entire departments will be eliminated, all the jobs lost, GDP expectations falling, unemployment rising, and social media on fire. But I am an optimist so who truly knows…
Sincerely Yours,
C Thomas Printer
Also born on this date… the man who is quickly approaching the greatest to ever do it, the Joker, Nikola Jokic.
Thank you for listening today and you can find all of our articles and more on our website cthomasprinter.com.