[chassis]

How are companies reporting strong Q2 earnings and affirming full year revenue forecasts, as they are, if supply chains are anything except for getting more supportive, or at worst not getting less supportive?

[Our03z4]

Originally Posted by chassis

How are companies reporting strong Q2 earnings and affirming full year revenue forecasts, as they are, if supply chains are anything except for getting more supportive, or at worst not getting less supportive?

Price gouging. Heck I'm up 10% compared to last year and I'm not even sure how. I haven't raised my pricing other than the extra I'm being charged. I think we've just been cutting costs so well and working like crazy thinking it's worse than it is. Supplies stock suck and I've noticed a huge drop in quality as well. Think about it though. Companies are charging so much they don't have to have much volume and can reduce labor costs causing them to hit numbers.

[XutvJet]

Originally Posted by dreamingat30fps

I don't know much about China, however I've never heard anyone talk about how amazing they are to their people and how well treated their workers are. Which brings the question why do they have all these lock downs? Surely it's not for the safety of their employees?

I'm an environmental consultant and my work colleagues in China are some of the best I've dealt with. Few American colleagues compare to their work ethic.

With that said, the whole "Zero COVID" approach in China is almost entirely political. President Xi has is aiming for reelection and has pulled wool over many Chinese citizens eyes for a number of years that Zero COVID was the right approach and the West's approach was terrible. That sell is what he's banking on. The reality is EVERYONE will get COVID over and over again and due to the constant lockdowns, he's only prolonged the inevitable and wrecked the Chinese economy as well as some of the global economy. His goal is to get reelected and stay in power. Mark my word, once he's reelected later this year, COVID will magically become less dangerous in China. With that said, the population is getting increasingly less tolerant of the lockdowns. I give it 10 years or so before the communist government is toppled by the younger generations wanting a form of democracy. The communists party actions regarding COVID will be the tipping point.

[XutvJet]

Originally Posted by chassis

How are companies reporting strong Q2 earnings and affirming full year revenue forecasts, as they are, if supply chains are anything except for getting more supportive, or at worst not getting less supportive?

Because they've screwed all of us by raising prices on top of inflation to maintain high profits. The majority of working Americans suffer as companies continue to profit significantly. The company I work for is no different. An economic day of reckoning is coming soon for companies and it will impact us all. Lots of layoffs will happen. I'm hopeful that it will be short-lived. The massive expansion of the economy during COVID made absolutely no sense. I think what we'll see is a somewhat equivalent contraction over the next 12 or so months and then a slight upturn.

[F30lolz]

So this dealership thinks that they have gold.

[TheWatchGuy]

Originally Posted by XutvJet

Because they've screwed all of us by raising prices on top of inflation to maintain high profits. The majority of working Americans suffer as companies continue to profit significantly. The company I work for is no different. An economic day of reckoning is coming soon for companies and it will impact us all. Lots of layoffs will happen. I'm hopeful that it will be short-lived. The massive expansion of the economy during COVID made absolutely no sense. I think what we'll see is a somewhat equivalent contraction over the next 12 or so months and then a slight upturn.

While we have seen "record" profits this last year with rising prices, its important to note that a lot of these "records" are just in total $ amounts, not profit margins. Its common sense to expect as the price of raw goods, transportation, wages, etc. go up, the price of the product will go up to maintain the profit margin. If you normally made 10% on 100 mill in revenue, and then cost of the product went from 90 mill to 180 mill and you made 10% still, youd double your profit and have a "record" profit of 20mill, but its still only 10%.

This is why the people that say raising wages or raising taxes on businesses wont have an affect on the price you pay need to step away from any discussion regarding economics.

We will probably see a wave of layoffs, but its not going to be because of a day of reckoning at the start. Its going to be companies looking to be more efficient or moving to automation in an effort to save on the wage increases that have gotten out of control in some industries.

[wtwo3]

Originally Posted by F30lolz

So this dealership thinks that they have gold.

Well they DID mention that it's going to sell soon.

[wtwo3]

Originally Posted by TheWatchGuy

We will probably see a wave of layoffs, but its not going to be because of a day of reckoning at the start. Its going to be companies looking to be more efficient or moving to automation in an effort to save on the wage increases that have gotten out of control in some industries.

Not to derail the thread.... but it's always been perplexing to me that people don't seem to realize that minimum wage hikes end up hurting the very people they're intended to help, in the form of layoffs.

But that's another topic for another time....

[AmuroRay]

Originally Posted by ASAP

So uhhhh... who is creating these fake supply issues? Because there is no reasonable understanding at this time why there are shortages... i've heard every excuse now including aliens.

Mayor Pete, and the WEF forum.

[AmuroRay]

I never understood the obsession with what other people do at work. Keep your head down and mind your own business. :shrug:

[ASAP]

I think we will see layoffs but it will be for companies that grew too fast with free money or are simply overstaffed. The tech companies are the best examples of this. As interest rates rise (which I will put money on right now will slow soon as powell will panic).

Healthy companies with a strong base and revenue core will be OK as long as there is not a massive drop off in revenue... luckily I work for a few man show lol.

[Chick Webb]

Originally Posted by TheWatchGuy

While we have seen "record" profits this last year with rising prices, its important to note that a lot of these "records" are just in total $ amounts, not profit margins.

Yeah, companies report "nominal" numbers, not inflation adjusted numbers. It stands to reason that if you raise your prices you're going to see an increase in the "top line" number. We have seen many companies report record top line revenues, but it's profit margins that you need to look at, and they have not gone up much or are going down.

The same is true for consumer consumption, BTW, in the sense that when they say "the consumer is still spending at record" levels, that's reflective of increases in the prices of goods, and not necessarily an indicator of the health of the consumer. Consumers, particularly at the low end, are being crushed by inflation. Inflation is likely to prove very sticky, since a lot of it is being driven by energy input costs, which are not going down substantially any time soon. It's only a matter of time before those chickens come home to roost. That might help the supply chain issues, but it won't be good news.

[Alfisti]

I am a fervent capitalist but will argue all day that minimum wage rises do not result in layoffs, history shows us that. What it does result in is inflation which yes, hurts those on minimum wage more than anyone else.

[dreamingat30fps]

Higher minimum wage, higher corporate taxes, higher taxes for the "rich".

Don't forget the golden rule... whoever has the gold, makes the rules!

[RickFLM4]

Originally Posted by Alfisti

I am a fervent capitalist but will argue all day that minimum wage rises do not result in layoffs, history shows us that. What it does result in is inflation which yes, hurts those on minimum wage more than anyone else.

Look no further than the trend for labor concentrations in fast food restaurants as an example. Right now they are all moving towards apps and kiosks to reduce reliance on labor, which is difficult and expensive to maintain. This trend to reduce labor has been going on for at least a decade or two. Same for self checkout lines in supermarkets and lack of knowledgeable help in big box stores like Home Depot. You may not believe it, but it’s been happening and will continue to happen.

[Chick Webb]

Originally Posted by Alfisti

I am a fervent capitalist but will argue all day that minimum wage rises do not result in layoffs, history shows us that.

Not the minimum wage, per se, but wages in general most definitely do. That's just Econ 101.

Whenever a businessman is trying to solve a production problem, the cost of doing so is a consideration. When the cost of production using labor is higher than the cost of doing it with capital equipment, then it'll be done with less labor and more capital. That's why we don't build roads with picks and shovels anymore, for example.

This article, from 1878, discusses it in some detail and illustrates the timeless nature of this force - The Relations of Labor and Capital

[Alfisti]

Originally Posted by Chick Webb

Not the minimum wage, per se, but wages in general most definitely do. That's just Econ 101.

Whenever a businessman is trying to solve a production problem, the cost of doing so is a consideration. When the cost of production using labor is higher than the cost of doing it with capital equipment, then it'll be done with less labor and more capital. That's why we don't build roads with picks and shovels anymore, for example.

This article, from 1878, discusses it in some detail and illustrates the timeless nature of this force - The Relations of Labor and Capital

I understand your argument but that only applies in a static economy or super high wage growth. I have led teams of 400+ front line staff for 20 years so i keep a close eye on these things from a macro perspective.

If the economy is expanding you won't see net layoffs, you just see inflation. Now, the reverse also applies right, as in the proponents of huge wage increases, especially at min. wage, rattle on about employees will then likely stick around longer and be better employees, is total BS, still a great swathe of absolutely shit house employees that will always be shit house.

[Captain Blood]

Originally Posted by RickFLM4

Look no further than the trend for labor concentrations in fast food restaurants as an example. Right now they are all moving towards apps and kiosks to reduce reliance on labor, which is difficult and expensive to maintain. This trend to reduce labor has been going on for at least a decade or two. Same for self checkout lines in supermarkets and lack of knowledgeable help in big box stores like Home Depot. You may not believe it, but it's been happening and will continue to happen.

A decade or two? Try a century or two or three.

[Alfisti]

Originally Posted by Captain Blood

A decade or two? Try a century or two or three.

WHich is kinda my point, business has been trying to cut labour since the year dot, and it has, but the economy expands........

[dmatre]

Originally Posted by wtwo3

Not to derail the thread.... but it's always been perplexing to me that people don't seem to realize that minimum wage hikes end up hurting the very people they're intended to help, in the form of layoffs.

But that's another topic for another time....

How can they lay off minimum wage earners, when all of the local fast food places are drive through only because they can't hire enough minimum wage workers?

[wtwo3]

Originally Posted by dmatre

How can they lay off minimum wage earners, when all of the local fast food places are drive through only because they can't hire enough minimum wage workers?

You're talking about a very specific period of time vs a general statement.

[RickFLM4]

Originally Posted by Captain Blood

A decade or two? Try a century or two or three.

Originally Posted by Alfisti

WHich is kinda my point, business has been trying to cut labour since the year dot, and it has, but the economy expands........

Yes industry has always looked to use technology to be more efficient. But focus on the lowest wage jobs I mentioned has accelerated in more recent times. BK used to prepare burgers as they rolled off the grill conveyor belt. Yes, they tried to find ways to make it efficient, but then they took a big swipe at labor (and energy) efficiency by preparing in batches and storing them until needed. Same is happening now throughout the industry with apps and kiosk ordering to reduce and eventually eliminate counter help. Some brands are experimenting with locker type pick up to get rid of drive thru help. Some are researching and investing in robotic food prep. Would these migrations happen anyway - probably over time. But making cheap labor more expensive accelerates the pace at which it happens because it makes the technology investments more appealing faster.

Maybe that’s the answer society wants but it sure as hell results in an elimination of low wage jobs. Not in the form of 10,000 layoff type announcements, but permanent subtle erasures from the workforce that may go unnoticed by some.