The Six Five team discusses Massive Downward Job Revision
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Transcript:
Daniel Newman: We are not economists, but we sometimes like to play one. We are tech analysts, and the two things are symbiotic at times. Pat, this week, the Bureau of Labor Statistics … This is not really what I would call a partisan, this is a data-driven organization … revised down the jobs by 818,000. Massive number. Largest, I think, since somewhere around ’08 or ’09 if I’m remembering this. Obviously there was a reason those revisions at that time were complicated. That was the great financial crisis, in the wake of that.
But, Pat, we’ve been hearing all year soft landing, economy is strong. We’ve had decent job reports. The market’s been stable and steady. Delays have been in lowering interest rates. High interest rates have slowed down home buying. They’ve slowed down auto loans. They’re creating a bit of a credit crunch within businesses. It’s hard to get credit if you’re a small business right now. People are spending beyond their savings now. Defaults are rising quickly. A lot going on, Pat, and now we’re finding out the job market ain’t that good either.
By the way, something you and I have been seeing and feeling. We talked about the Cisco layoffs, we talked about the Dell layoffs. The entire market of the Silicon Valley is down to 2019 or below levels. So these big companies are laying people off in droves. So basically the data has come into the market path that validates what we have been seeing and feeling and hearing, but our eyes continue to deceive us with the data that was being presented to us. Pat, this was crazy. I mean I said it’s very disconcerting to have this kind of data be able to come out, completely pivot the narrative. We’ve been told the economy’s great, everything’s fine. Turns out to be bogus.
Now we’re heading into an election and we’re being told that parties are going to fix the economy. Both parties are going to fix the economy, which I don’t understand how that’s possible because one party has created this economy and now it’s creating a security-vulnerable product and then coming out with a security product to fix it. It doesn’t make sense to me. So it’s wild what’s going on. My quick tie to tech and pass over to you is, Pat, we are actually, in my opinion, just getting the validation that we all knew was true. I think every rational person had been watching the market, seeing how many fewer jobs that were posting. Companies, our clients are telling us about tighter budgets. They’re trying to do more with less. They’re cutting back their teams. If tech wasn’t growing, why in the world would we think anyone else is?
So it’s crazy, Pat, but I think this is exactly what has been signaled for some time. But it’s kind of like when a GPS tells me to turn right, but I can see the building I’m going to in the left. But then I get stuck in this, do I turn right? Every so often I just turn right, and it feels like most of the world keeps turning right, even though the building they are going to is right over there.
Patrick Moorhead: Yeah, Dan, there are so many things to talk about in relation to this. First of all, is this a political thing or not. Interesting, the timing of this is dropped right in front of the DNC Convention. If you say out of one side of your mouth, “Hey, the good numbers were political,” I mean this dropped right in the middle of the convention. So maybe you can say, well, it’s not political. If it’s not political, maybe it’s based on the data collection that … And we debate the means and methods on CPI a lot and how this can be this off.
By the way, based at least what Yahoo Finance said, this is the biggest downward revision. They only went down to 2018, but in six freaking years, and it’s a massive one. And so, there’s that element on it. Is it just a bad methodology? When I think broader in terms of what is happening and why our economy is not doing well, it’s super clear to me. We’re spending too much money. The government is way, way, way spending more money than it can bring in and not as much investment into true longer term economy-growing things. You can short term spike growth by increasing government spend on government stuff. In fact, in the last 10 years, we’ve seen the largest increase in government workers and government spend than in the complete history before that.
Then you’re thinking, okay, well, why don’t we vote for the party who’s going to do this? I am absolutely confident that no party is going to attack this. The reason is because it will not get you voted in. I’m hearing, “Hey, we’re going to grow our way out of this,” on the Conservative side. On the Democratic side, it seems to be, “Hey, we’re going to tax our way out of this by soaking the rich.” By the way, and Steven Sinofsky had a great analysis on it, you could take all the money, literally all the money, not just the taxes from the top hundred people, richest people, out there, it wouldn’t even make a dent in the deficit, not even a mark. So you can take all of the money away, kind of like the Russians did in the 1920s Bolshevik revolution, where they came in and they took all the gold and they took all the money from all the rich people and they nationalized everything, that’s not going to help us.
So I’m not that optimistic about that. My final comment on this is that there’s also a school of thought that says, hey, as long as we’re not the worst of the G-7 or the G-10 based on valuation and currency, we’re going to be fine. Here’s the problem. At some point, we all default on our loans and we can’t pay it.
Daniel Newman: Yeah.
Patrick Moorhead: Then it’s like, “Well, hey, if we all default, then … ” It’s like, no, that’s not going to solve this long term. Yeah, I’m not optimistic, Dan. I’m really not.
Daniel Newman: Yeah, and just a stat from the Tax Foundation. Half of taxpayers pay 97.7% of the tax. And so, this idea of people … And, again, I agree that people should pay their fair share, but I think it’s always taken out of context, because people are paying their fair share and then we use it to create this populist movement against people who pay. It creates a lot of resentment from job creators, for entrepreneurs, for business leaders who, by the way, are taxed at 50 different angles of every dollar they make. I’ve got to run, but then we got this whole thing now they want to tax money you haven’t even made yet is a topic that’s come up in … I put my post out on that, Pat. Absolutely one of the worst ideas ever. I can’t believe it’s even being taken seriously right now. I don’t know. I guess I’ll join the-
Patrick Moorhead: We have two case studies, Soviet Union and China. Once you disincent entrepreneurialism and moving up the chain, you lose innovation. People lose their motivation to work. Even those two countries, even though I know it’s CCP, they very much have changed their stance. Soviet Union is no longer. It’s Russia. I mean really there’s only two communist countries, North Korea and I think maybe Angola. Sorry. And it’s like that’s it. It does not work.
Daniel Newman: I don’t know. Things are going pretty well in Venezuela.
Patrick Moorhead: Yeah, I know. They actually are. Just cut out the fat and stuff that we don’t really need, and then-
Daniel Newman: That’s Argentina. Venezuela’s a mess.
Patrick Moorhead: Oh. Okay.
Daniel Newman: No, I know where you’re going with that. I know where you’re going with that. But, yeah, listen, dude, we could jump in and dive on this all the time. We won’t do it all the time because there’s so much tech stuff to cover. But, look, a strong economy starts with a strong tech market, and it is what it is. Tech is the driver. It’s deflationary, but it’s also productivity growth out the yin-yang. That’s an official term out the yin-yang.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
