Joe Biden was warned of a “world of hurt” coming for consumers amid inflation and looming layoffs. Former Walmart CEO Bill Simon warned of more potential job cuts as a “byproduct” of the “necessary medicine” to curb inflation following the tech industry’s mass firings in recent weeks.
“It’s crazy right now. We’re stuck in this loop of wage inflation, product inflation and cost inflation. And it’s just that cycle keeps going,” Simon told Fox and Friends on Sunday.
“I think, unfortunately, an inevitable byproduct of some of the Fed’s moves and as the necessary medicine we have to take to kind of cool things down and get the inflation back under control are some of these layoffs that are coming.”
The labour market has been strong in the US with low unemployment being a bright spot on the economy. However, recent tech layoffs mean that the number of jobs added in December was 223,000, the smallest in two years.
Additionally, Federal Reserve officials predict that unemployment will rise as they continue to hike interest rates to curb inflation.
Projections from the central bank’s December meeting show that they believe unemployment will rise to 4.6 percent by the end of 2023 compared to 3.5 percent currently.
When asked if the layoffs were actually a boon for the country to help keep inflation in check, Simon said that was theoretically correct, however, raising wages would likely contribute to inflation.
“Theoretically, yeah, I agree with you. But the problem is, at the same time, there’s this wage inflation that’s going on. For example, last week, Walmart announced they’re raising their minimum wage, their starting wage to $14 an hour. That’s a 17 percent increase,” Simon replied.
He added: “Food costs have gone up 23 percent in the last two years. So now, wages have gone up 17 percent at Walmart, 25 percent at Delta for pilots, 25 percent for the rail industry. And wage increases like that sort of counteract the employment layoffs that we’re starting to see. And so there’s a lot going on.”
The former Walmart CEO warned that consumers would feel the brunt of it if Biden didn’t get inflation under control.
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He added: “I think the most critical thing that’s going to happen in ’23 is we have to get this inflation under control.
“Another year of high single-digit, low double-digit inflation, and we’re going to be in a world of hurt because inflation hurts 100 percent of the population.”
Simon claimed that the inflation currently gripping the US is actually worse than a potential recession as it affects more of the population and urged the Federal Reserve to continue with interest rate hikes in order to curb inflation.
The Fed does appear to be getting a handle on US inflation which topped out at 9.1 percent in July, 2022 – the highest since 1982. The rate of inflation has been dropping for about six months.
Consumer prices dropped for the first time since May 2022 with a 0.1 percent decrease last month driven by falling gas prices.
