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Analysis: Job market whiplash is hitting tech and crypto hard

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CNN

Fri, Jun 24, 2022

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The good times keep rolling for the labor market — there's still nearly two open jobs for every person who's looking -— but a spate of recent headlines about high-profile layoffs may be giving "spring 2020" energy.

Elon Musk uttered the word "bankrupt" at an event and freaked everyone out, saying new Tesla factories are "losing billions of dollars." Yesterday, JPMorgan Chase let go of hundreds of staff in its mortgage division, citing rising rates that are curbing demand.

Last week, real estate giants Redfin and Compass, which flourished in the pandemic era of low mortgage rates and ravenous demand, announced major cuts.

Seeing all those household names in the headlines might make you think the economic recovery, defined as it's been by a mind-blowingly strong labor market, might be sputtering.

After all, unemployment remains near a 50-year low.

Back in March 2020, he and fellow economist Paul Goldsmith-Pinkham were among the first to accurately predict the first avalanche of nearly 3.5 million layoffs in a single week — that was nearly three times the estimate offered by Goldman Sachs.

"These are very high-class problems." LOOK AHEAD: Although layoffs are pretty much contained to industries that are sensitive to interest rate increases, even the Fed admits it may not be possible to get inflation under control without causing job losses.

Even at 4% or higher, Powell said, the labor market would "still be very strong." Some people might feel a little queasy investing in Big Oil in the Year of Our Lord 2022.

And our current economic climate — marked by high inflation and low unemployment — is just the kind of environment where these lenders thrive, my colleague Nicole Goodkind writes.

One subprime lender, Enova, said in an earnings call recently that 44% of all the loans it issued last quarter were to new customers.

But it's also easy to see why people are getting desperate: Inflation in the US is the highest it's been in 40 years.

(That number jumps to 82% among workers earning less than $50,000.) People with subprime credit scores (below 650) have a hard time getting a loan through a regular bank or qualifying for credit cards, leaving them with few options when cash is tight.

To hear the predatory lenders tell it, they're providing service to low-income communities by issuing loans to people whom traditional banks have turned away.

"There are fair and responsible lending products that have low interest rates and fees that are available and that people can use." Read Nicole's full story here

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