The Google internal propaganda game must be crazy strong if the actual employees are believing random management explanations designed to keep people from panicking. The US just formally entered a recession, in within a week of the economic turmoil multiple companies freeze hiring...
We entered a technical recession by the "two quarters of contracting GDP" rule of thumb, but labor numbers are still strong and that second quarter contracted less than the first [1], which is not what we've usually seen when entering a recession. [2]
I've never understood how strong labor numbers negate a recession. Like sure your money is worth less because of all the inflation, and your COL keeps increasing but your wages remain the same, but hey we have lots of people working.
Maybe somebody smarter than me can explain how these two correlate lol.
When asset prices increase quickly, everything is fine, as the wealthy are benefitting. When wages increase though, that's inflation and we must tamp down hard on it!
Given the obviousness of the consequences, it's hard to imagine the Greatest Minds In Monetary Policy haven't foreseen the fact that labor is hurt and corporations are effectively subsidized when enacting such policies. So it must be intentional.
At this point it's just an argument of what constitutes a recession. The NBER definition requires a "significant decline in economic activity that is spread across the economy and lasts more than a few months."
There is lots of leeway in there for defining a recession to be whatever you want to be. However, I think a GDP contraction of 1% (and decreasing) combined with robust job growth and increased spending would not classically qualify as a recession.
It's clear that the Fed is attempting to slow down the labor market and kill demand. Combine that with ongoing supply chain issues and it's not clear to me whether we are entering a recession or that there is transitory pain from war in Europe and sudden bumps in borrowing rates.
I don't know. Are we still adding 370,000 jobs per month? What kind of GDP contraction are we talking about? 1%, 3%, 5%? Is the GDP contraction increasing or slowing from the prior quarters? If we went from -1.8% to -1.5% to -0.9% and we still had robust job growth I would probably say it's not a recession.
But again, what does it even matter? Seems like people are only arguing about this to score political points. If you think we're in a recession, you might be right. If you think this is transitory, you might be right. If it weren't an election year we might not be having this conversation at all.
Maybe not even then? GDP dropping while employment, spending, and demand increase indicates an economic expansion coinciding with a decrease in labor productivity, which is extremely weird and not at all like a conventional recession where the economy contracts. Different terminology might be required.
Additionally, with inflation at such a high level (9% or so), the last two quarter's real GDP growth estimates (-1.6% and -0.9%) are small percentages compared to the size of the error bars on the required inflation adjustment to compute the real GDP. Computing inflation is tricky and requires a lot of hand waving and boiling down different price changes across different sectors of the economy to get a single number, and if the calculation is off by even 1% (i.e. inflation is actually 8%), then the real GDP growth for last quarter would be positive at 0.1%.
This is also happening at the same time that the US dollar is getting increasingly valuable vs most foreign currencies, so measured in terms of foreign currency value the US real GDP is still increasing, which just compounds the weirdness.
Putting all of this together, I don't think the term "recession" is a good fit.
Strong labor numbers means wages would be increasing. Perhaps not for all income deciles, but at least the bottom ones (which is a good thing in my opinion since it helps close the income/wealth gap).
What would be an issue is the labor participation rate decreasing, which it is, but it may be unavoidable due to things like aging demographics. That means fewer workers supporting non workers, and hence less supply of labor to be distributed amongst everyone (assuming it is not offset by gains in automation).
I think this will be the government’s real problem, as there is no quick fix other than opening the immigration doors.
> Strong labor numbers means wages would be increasing.
Wages are increasing, that's one of the inflation drivers people are complaining about.
> What would be an issue is the labor participation rate decreasing, which it is
Not per FRED: https://fred.stlouisfed.org/series/CIVPART It's quite clearly still rebounding from the covid shock. I think you're trying to say that the long term trend is clearly downward. But the subject at hand is the immediate economic environment ("strong labor numbers", "hiring freeze", etc...).
And clearly there's nothing wrong instantaneously with either participation rate nor wages. Those numbers are in fact good, not bad.
Real wages are not increasing. The ‘Real’ part of real wages means after adjustment for inflation. See link, we’ve been going straight down in real wages. We are already back below pre-COVID wages. That means we are back to wage levels around 3 years ago. In any job if you got no raise in 3 years then you should not look at that as a good thing - and that’s what has happened to everyone, on average after accounting for inflation. https://fred.stlouisfed.org/series/LES1252881600Q
That's arguing about leading/lagging indicators, though. Wages go up with inflation, more or less by definition. Wage increases due to inflation can't be measured until after the fact, though.
Short version: "inflation" is not remotely the same thing as "recession", which seems to be the point you're trying to make. If your only evidence for an economic slowdown is prices and not production or consumption, you're likely confusing factors.
Clearly the truth is that the labor market remains strong. Most people are working. Most people have multiple choices in jobs. Most people are making more money (yes, in nominal dollars) than they were last year. Those are all signs of a healthy economy. They are not the only signs of a healthy economy, and there can be other aspects (like inflation) which are less desirable[1]
[1] Though probably 80% of the people who like to yell about it don't really understand it well. Inflation, by reducing the size of existing investments and debts (i.e. "stuff wealthier people have") relative to the economy as a whole (i.e. "wage levels for everyone"), acts naturally to reduce income and asset inequality. It's not entirely a bad thing.
You are intentionally conflating nominal and real wages, most people are not making more money. In real wages they are declining as per the link in my previous comment. If you make $100K per year and your expenses are $100K you make zero. If you make $150K but your expenses are now $150K then you have not made any increase in wages in real dollars. Wages are not flat or going up with inflation as per my link, they are actually declining significantly since COVID.
And my point, which you missed, is that this is a confounded argument. "Real wages" are an after-the-fact metric, you can't measure it in immediate data because wage growth and inflation are highly correlated.
And the other point, which you skipped, was that this was a digression anyway from the upthread discussion about whether or not the labor market indicators are "strong" or not. And they are: wages are tracking labor demand and growing at the same time participation is growing. That means the market is operating well (and, FWIW, that typical models would expect wage growth to continue to match inflation, as it generally does in functioning markets).
Both inflation and wages are lagging indicators and thus can be used together to get real wages historically. Correlation to inflation does not mean anything other than inflation and wages both increased, you can be highly correlated but not exactly correlated. Real wages demonstrate both wages and inflation in a single metric and they are not increasing at the same rate, real wages have been declining continuously since 2020. The strength of a labor market (low unemployment) just means people that are looking for jobs can find them but doesn’t measure the wages or inflation, that is determined by real wages. You can pay anyone more but if it doesn’t buy more it is still a pay decline.
If you zoom in on the FRED graph, you can see the recent rebound participation rate peaked in March, and has started a (slight) decline in the last quarter.
Don't do that. You're literally interpreting noise as signal. Look at the random wiggles elsewhere in the graph, they're the same size as the thing you're trying to interpret meaning from. Economics data just doesn't work on the timescale you want it to.
> Strong labor numbers means wages would be increasing
How can you equate these two? Couldn't strong labor numbers also be indicative of an economy in turmoil, forcing many people who no longer had to work back into a job to get by? I guess what I'm trying to say is, shouldn't we be taking a look at the data holistically instead of nabbing one good data point and using that to promote a narrative? Inflation, COL, real wages, unemployment, and many other factors all contribute to the overall picture. Why aren't we using all this data instead of focusing on unemployment only?
That’s exactly right. Real wages are not keeping up with inflation. Inflation is confusing everyone who isn’t used to seeing it. It’s ludicrous to think we are not in a recession just because more people retired in the last few years due to COVID and exited the workforce to artificially keep the unemployment rate low. Participation in the workforce declined something like 10% - I don’t have the time find the exact number. But we still have a lower overall workforce than pre-COVID. The 100K per year jobs are declining in availability but there’s millions of jobs at fast food and retail available. It’s obvious that it is purely political as to what makes a “recession.” Meanwhile lots of tech companies have lost 70-80% of their value. But the largest companies, apple, google, and Microsoft are holding up, we all know the small businesses go first.
Nope? For most people Year/Year and also over the last quarter, real wages have gone up. It is only for the most highly compensated workers (top 10% or so) that wages have not kept up with pricing. [0]
Real wages have gone significantly since 2020 when COVID hit per the below link. This inequality index website includes both labor and capital - meaning not just wages but income from stocks. Yes the stock market has gone down, the rich own more stocks, and so rich made less money. Wages, the payment for only labor has been declining in real terms due to inflation outpacing wage growth. See this link and the sharp decline.https://fred.stlouisfed.org/series/LES1252881600Q
> the stock market has gone down, the rich own more stocks, and so rich made less money
My link shows that real factor income for all but the top 10% of earners is up which includes wages and capital income.
Your FRED link will have to contend with the fact that those most likely to be unemployed at the start of the pandemic are lower earners which is going to shift up the wages for 2020.
The website you linked as I said includes capital and pretax income which is an absurd way to measure “income.” That includes stocks, 401K, houses, etc. if someone owned a house, the value went up, but if someone didn’t own a house their actual wages are still worth only about the same as 3 years ago.
Strong labor numbers are often correlated with increasing wages (if labor is in short support, wages usually go up) but there's no direct connection; labor numbers could be increasing because people are being "forced" (or deciding to go back) into the labor force because the covid subsidies have dried up; those who took time during covid to homeschool, etc.
All of this all of it is just an attempt to measure if people "feel good" about how things are going, or feel bad; and the general consensus seems to be "things aren't great but they're not horrible ... yet".
The other thing to remember is that lots of economic reporting is 'standard spherical cow' type - inflation may be skyrocketing in the exact things that do not affect you - if you work from home in a house you own on a fixed mortgage, then perhaps the gas prices aren't directly affecting you.
If you're a independent trucker renting, then they hit much harder.
> How can you equate these two? Couldn't strong labor numbers also be indicative of an economy in turmoil, forcing many people who no longer had to work back into a job to get by?
Because the other side of that is that there exists sufficient and growing demand for labor to accept the people wanting to sell their labor.
It is an economic principle that very low unemployment leads to competition for wworkers via increased wages, which help drive inflation up (as the increased labor costs lead to a more expensive output). The inverse is also true. So, central banks prefer inflation to not be zero, but not be high either (often, central banks have inflation as one of their target numbers that drives their policy).
“Real average hourly earnings decreased 3.6 percent, seasonally adjusted, from June 2021 to June 2022. The change in real average hourly earnings combined with a decrease of 0.9 percent in the average workweek resulted in a 4.4-percent decrease in real average weekly earnings over this period” [1].
I don't think looking at mean wages is the best to get an answer. Real median income is up Y/Y and the past quarter, driven by the still largely tight labor market. [0]
In fact, you are incorrect. Real wages have decreased YoY. Anything can be classified by “strong labor numbers” by people who are trying to deceive you. Remember this next time you turn the TV on or open a newspaper.
I am getting my information from experience from people who are hiring in the bottom 3 income deciles or so.
Certainly not academic, but I also do not think national statistics captures the entire picture. The nominal wage is also not the entire wage, as quality of life at work can be going up which is also a type of wage.
People can be earning $40k per year, but having to do less work in prior years, for example. Or no longer having to work weekends or evenings or nights.
Either way, the desirable changes for labor sellers would be a reflection of the change in labor supply v labor demand.
Economists have always kind of applied an "I know it when I see it, typically after the fact" sort of test for recessions (the two-quarter thing is a rule of thumb, but isn't taken that seriously). But just "there's highish inflation" wouldn't normally be considered a recession, and it is unusual to have a recession with very high employment; historically nearly all periods that ultimately get called major recessions have significant joblessness as a feature.
Demand-driven recession means there is insufficient demand which leads to decreased production and a level of slack in economy (real GDP lower than potential GDP), while unemployment is a manifestation of such slack.
If you have decline in GDP, but no unemployment, it may be due to supply issues, increase in friction and other factors (i.e. decline also of potential GDP).
Hopefully I'm not being snarky here, but if you looked at another country with a smaller economy, and then saw that they employee fewer people, would you be equally confused?
Only if you then proceeded to tell me that because less people are employed the country has a lower standard of living and is more economically unstable. As a direct example of this, Sweden's unemployment rate is 7.6% right now[0], and it's historically been quite a bit higher than the US's. But people say that it ranks #1 in terms of quality of life[1]. Additionally, their unemployment rate is not negatively effecting their growth[2].
So in answer to your question, yes it continues to confuse me when people try to equate employment numbers with the overall economic status of a country. You don't take any number in isolation, you look at the data holistically, and sometimes you have numbers that seem to be at odds with one another. When that happens, it requires a deeper investigation to see what's truly happening instead of taking the number you like better and using that to promote your narrative.
I suspect that if gas prices had started coming down earlier it would've brought inflation down enough that real GDP for Q2 would've been slightly positive.
I think a lot of people took covid as an opportunity to retire and will not come back which is reflected by low labor participation numbers. Unemployment is basically the same as it was pre-pandemic.
We are in a strong labor market in the sense that demand continues to outstrip supply (although this is weakening for higher paid workers in the top ~10-20%) but there has been a negative shock to supply from covid.
Sure, but if you consider what is causing these layoffs: anticipated weaker aggregate demand -> less demand for ads but also less demand for workers -> weakening labor market.
I mean, the Fed's goal right now is basically to slow wage growth so that average people are no longer bidding up the price of our limited supply.
Put yourself in place of a 30 year old who has only known a world where you're a highly in-demand whatever "in tech". You've never seen a day since you graduated where you're not flooded by recruiter emails. You've never worked a job that isn't 30 minutes of work and then the rest of the day is posting "day in the life of a FAANG employee" Tiktoks or being a paid activist.
What's coming is nearly unimaginable. At some level you know it's theoretically possible, but before your eyes even accept that reality you're going to go through some painful stages, beginning with denial.
I don't fault anyone, especially anyone who graduated in '10 or later for this. I just hope they are preparing for this.
This comment is setting off all of my "culture war" alarm bells that typically I do not find on HN. References to TikTok and "paid activists", "never working a job that isn't 30 minutes of work."
I'm not sure if I am supposed to take these claims seriously or whether they are exaggerations to paint a picture. Obviously this caricature doesn't describe the vast majority of engineers at Google or other "FAANG" companies.
> I don't fault anyone, especially anyone who graduated in '10 or later for this. I just hope they are preparing for this.
The '20 post-covid labor market was weaker for graduates than in '08 [0] and hiring in tech is more challenging.
Anyone from the US who graduated in '10 had 9/11 as the formative event of their childhood, followed by the Great Recession just as they reached workforce age. For almost their entire lives, the US was at war, and for every day of their lives, they watched the climate get worse. They know in their bones that they're growing up in a world worse than the one their parents grew up in, and that it's largely the fault of institutions that were morally reponsible for protecting them and failed to do so.
They've been preparing for doom since they were weaned.
Spot on. There is a huge sense of entitlement from SWEs in FAANGs right now, and from the various folks I know at FAANGs, Google is worst since mediocrity and unproductiveness are not confronted because folks are scared of being 'ungoogley'. Every company has its dead weight that others have to carry, I think Google has much more and has been getting away with it because of all its profits coming in.
Google's definition of productivity is different than yours.
In general: Code reviews are strict and long. Style and structure matters more than anywhere else I ever worked. Everything requires extensive testing. You better have a design doc / PRD, some tickets, good commenting, and unit tests.
People will happily point out and roast you for any potential bugs, race conditions, deadlocks, bad style, and sloppy work.
Mediocrity in this regard is not generally tolerated. The standard of development is much higher.
But yes, it's slow. If that's your measure of productivity, they'll fail.
Except it doesn't matter because the goal of a SWE at Google is mostly to keep the ship sailing.
Aside from the debate about 'formally*' entering a recession - if you do abide by the strict two quarters of real GDP decline rule, the economy still added ~2 million jobs during those same two quarters and the economy grew at a nominal ~6%. I don't think we're quite to the "economic turmoil" phase of things.
Decision makers are now starting to openly push for moves to increase unemployment to get wage "inflation" down.
I feel we're about to enter into a situation very similar to the early 90s, and we'll see a wave of pro-austerity politics and a lot of talk about "tightening our belts" -- slashing employee rights and social programs and cutting all kinds of social spending -- which is really about re-instilling labour discipline.
I suspect here in Canada the temporary foreign worker program is about to have the floodgates opened. Employers, especially small businesses, are really not happy about having to pay more than minimum wage, and they're very unhappy about having their authority in the workplace undermined by workers with seemingly excessive bargaining power.
The situation in the US is obviously more complicated by their messed up immigration system.
I have no idea what will happen myself, but it all feels a bit different. I think a lot of what's going on are still shocks from the pandemic, supply chains, and geopolitical stuff.
Not to mention the middle boomers are entering retirement age right now. This exact scenario of boomers leaving their jobs and creating an employment vacuum in their wake is something I've been hearing about for 30 years.
Why is it any different if the government takes out a loan to pay for work instead of someone like GE doing the same? If someone takes out a loan, and then spends the money building a plant or hiring employees, the economic activity is real..
It's the age old problem of once you choose the system of measurement, it's going to get manipulated by the people who get measured by it. GE is not going to rack up a bunch of debt for the explicit purpose of making sure the GDP number goes up. When the government creates a bunch of money just to make sure the GDP number goes up, GDP stops being as useful at telling you how things are going.
