4.3 million quitters and me 👋
Also, a look at last week and next week
I quit two really great, stable, well-paying jobs this year.
In June, I left an awesome job as Yahoo Finance’s managing editor after a 5.5-year run. It was time to try something different. Axios had called, offering me an opportunity to focus on what I love most: writing about markets and the economy.
Everything about my first few weeks at Axios had me convinced I’d be at this company for a long time. But not long after I started, Substack called with a totally unexpected proposal to start my own paid newsletter.
It doesn’t get much riskier than starting a business from scratch with no customers. Substack offered me a modest grant, betting that I’d be successful. If some company was willing to make a bet on me, then why couldn’t I do the same for myself?
And so here I am. I am the sole revenue generator, as well as the heads of IT, HR, finance, accounts receivable, and building management.
I’ve loved it! (…so far; it’s literally day 4.) I’ve never felt more optimistic. And if it works out, I can only imagine the upside, all of which I get to keep.
That’s my story about quitting. And it’s just one of many.
4.3 million quitters
A record-high 4.3 million workers quit their jobs in August, according to BLS data released last week.
It seems the so-called “Great Resignation” is accelerating.
People are quitting low-paying jobs for higher-paying jobs. People are quitting great jobs for even better jobs. People are quitting to become their own boss. People are quitting because they don’t actually need the income.1
Not all quitters are happy about their decision. Many are quitting because of childcare issues. Many are quitting because they’re concerned about the spread of COVID. Many are quitting because they’re burned out and need some time to refresh and recharge.
Indeed, if everyone was quitting for better jobs, then there wouldn’t be many job openings. And there are a lot of job openings.
The big picture
This is great news for workers who have a lot of job opportunities and a lot of leverage to ask for more money. It’s notable that wage growth is particularly strong in low paying jobs like those in the leisure and hospitality industries.
On the flip side, this is a nightmare for employers: It can be pretty disruptive when someone good quits. And having to pay higher wages puts pressure on profit margins.
But it’s hard not to see this as bullish over the longer-term. Employers wouldn’t be trying to fill 10.4 million jobs if they didn’t think there was demand. If some of those jobs get filled by some of the 7.7 million unemployed or the roughly 4.3 million who left the labor force, then that would give businesses a lot more capacity to sell stuff while also putting money into newly employed folks’ pockets.
Stocks rallied: The S&P 500 gained 1.8% last week, its best week since July. The index is up a whopping 19.0% since the beginning of the year. For more on stocks, check out 10 Truths About the Stock Market.
Inflation is high, but: Stuff has been getting more expensive. The consumer price index climbed by 0.4% from August to September, which sounds kind of modest. But it’s up 5.4% from a year ago, which is actually the biggest gain 13 years. The price of bacon is up 19.3% in the past year, so this is obviously serious business.
If you’re concerned about inflation and you really want to understand what’s going on, Matthew C. Klein at The Overshoot has the definitive analysis (paywalled). The gist is that the jump in the consumer price index has largely been driven by categories that experienced unusual disruptions during the coronavirus pandemic: new vehicle prices are way up because pandemic-related chip shortages; used car prices have been going bananas because rental car companies have been replenishing fleets they liquidated a year ago; oil and gasoline prices have surged as drillers have been slow to invest in production after getting burned by crashing prices at the onset of the pandemic; and so on.
Much of what’s driving inflation right now should be sorted out once the world’s supply chains get back to some sort of pre-pandemic equilibrium. But that’s expected to take time: You can’t just turn off the economy and turn it back on and then expect everything to immediately work as usual.
And as you might’ve deduced from what I said about quitters, there are labor shortages everywhere that are also gumming up the supply chain. For example, the trucker shortage is so bad right now that some companies are offering 5-figure signing bonuses for experienced drivers.
(For more on supply chains, check out the new Odd Lots podcast with Ryan Petersen, the CEO of logistics firm Flexport. He’s like that college professor who articulates something complicated and sorta boring so well that you get an A in the class and decide to change majors.)
Americans will shop whether they like it or not: Retail sales unexpectedly rose 0.7% in September from the month prior.
This surprised economists who were anticipating a 0.2% decline. After all, consumer confidence deteriorated during the month “as the spread of the Delta variant continued to dampen optimism.“ Furthermore, ongoing supply chain disruptions had been limiting the options for what was available to buy.
The flip side is that Americans are sitting on a lot of cash. During the pandemic, they accumulated an estimated $2 trillion in extra savings.
And even though people may be concerned about COVID, the number of people getting vaccinated is still going up.
If people were that concerned about COVID and/or the outlook for the economy, you’d at least think they’d pull back on going to restaurants and bars.
But sales at food services and drinking places (aka restaurants and bars) actually climbed by 0.3% from August to September.
“Soft” survey data like measures of sentiment or confidence can tell you a lot about… sentiment or confidence. But they don’t always line up with “hard” data like sales and spending.
In other words, people don’t always do what they say.
Up the road
Housing market check: There’s a ton of fresh data on the housing market coming out next week including the NAHB homebuilder sentiment index on Monday, the housing starts report on Tuesday, and the existing home sales report on Thursday.
While this may be great news for homeowners and sellers, buyers and renters are feeling the pinch. And it’s starting to seep into the major inflation data.
Economists will be looking for signs that supply is improving and prices are cooling.
Corporate earnings: It’s earnings season, which means all of the big companies are updating investors on the health of their businesses. Companies announcing results next week include Johnson & Johnson, P&G, Netflix, United Air, Verizon, Tesla, American Airlines, Crocs, Chipotle, Whirlpool, and American Express.
Here I’m looking for answers to two questions:
1) How are companies managing rising costs? We know the prices of stuff are rising, which is tough for profit margins. We can also assume company managers are also raising prices while cutting operational expenses. Have these efforts led to earnings growth?
2) How has business been in late September and early October? The recent wave of COVID infections in the U.S. started in mid-July and peaked in mid-September. What’s been the impact on revenue, labor availability, and supply chains?
Almost every major challenge to the economy — labor shortages, inflation, poor sentiment — can be traced back to COVID-related disruptions. If conditions are improving, then we should hope to see some of these issues recede.