Knock the Hustle
Productivity drops, Fed crashes the market, and a looming economic decline
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It often amazes me how our perception of time changes as we age. As a kid, waiting for the next episode of Dexter’s lab was exasperating; Christmas often felt a whole lifetime away. Now, as I cross 30, time flies by so fast that I feel like I cannot keep up with how quickly culture and trends are changing.
The reason I bring this up is that it feels like just yesterday when we were all about hustle culture, the grindset, and picking up a second job. But now we are hearing about quiet quitting and ‘acting your wage’.
Well, in this case, I realized that it’s not just my perception; almost half a year back, hustling was the name of the game. Don’t believe me? Check out the rising Google Trends graph in 2021 for Gary Vee, the king of Hustle culture. Since then, we’ve done a whole 180 and are discussing work-life balance, permanent work from home, and a four-day workweek.
Decreasing productivity coupled with an overall negative market sentiment is not a good sign for the economy. So, let’s get up to speed on what went down last week.
25% of Workers are Quitting
The US productivity just posted its biggest annual drop and employers are increasingly blaming this on a new cultural phenomenon: Quiet quitting. This is where a substantial portion of employees are pushing back against the idea of going above and beyond at the workplace and are increasingly talking about ‘acting your wage’, i.e. doing only what is expected for the salary that is given and prioritizing other things in life.
There are a few key factors that are becoming sources of friction between employers and employees.
Work from home - There is a mismatch of expectations with employers expecting workers to return to offices, while employees think that they are just as productive working from home. In fact, one in four pandemic home buyers would choose to stay at their home and find a new job if they are required to return to the office.
Competition - With an ongoing labor shortage, employees are actively looking for opportunities where they have to do fewer hours and take on less responsibility.
Career Growth - Even folks who are interested in growing their career are now considering upskilling themselves and looking for new opportunities instead of going the extra mile at the workplace. Even before the pandemic, workers who switched their job every 2-3 years would make 50% more than someone who didn’t. With the rise in remote work, employees no longer feel that they are tied to a geographical location.
Overall, employers are frustrated at what they see as employees slacking off and disengaging from work. On the other hand, employees point to unreasonable requests about returning to work and soul-sucking work environments as the reason.
I want to know what you guys think about this. Have you ‘quietly quit’ your workplace already? Or is this a fad that will be forgotten six months down the line? Check out the video and let me know what you think!
Fed Crashes the Market
The latest interest rate increase by the Fed takes us to the highest levels since 2008 and has pretty much ended the era of free money. Essentially, the Fed is trying to walk the tightrope between maximum employment and price stability to help the economy grow. Despite it being almost universally expected, the rate hikes caused equity markets to drop substantially, with the S&P 500 closing at more than 4% down for the week. We are now well into the bear market territory and the Dow is at its lowest point for 2022.
With recent data showing inflation at 8.3% and the Fed setting a target inflation rate of around 2%, the biggest fear right now is that they might overplay their hand with interest rate hikes, sending the economy into a recession. Given the precarious situation this puts us in, it’s important to talk about how the Fed’s actions affect mortgage and employment rates, and whether they can deliver the ‘soft-landing’ we were promised.
Earnings Recession
Let’s face it, the economic outlook right now looks bleak. Growth forecasts have started to decline dramatically and EU banks are already discussing the ominous “Sacrifice ratio” - how much pain the banks need to inflict to lower economic growth and bring down inflation.
Mortgages have already become twice as expensive and there is lesser consumer discretionary income to go around resulting in most analysts calling for an earnings recession - where companies report lower profits than expected throughout the next few years. In this video, I discuss how the three main investment vehicles - stocks, bonds, and housing have been affected by recent events.
So that’s it for my Sunday round-up. For the new folks here: In this newsletter, I give a quick recap of whatever you may have missed over the week on Sunday, and on Wednesday, I will be doing my deep-dive article on one of these topics.
See you next week with another bunch of exciting videos!
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Graham: Years ago I was an interim manager of a 50-employee department in a public agency. I learned two important things: (1) employees love to gripe about their job--that doesn't necessarily mean anything, though it might indicate trouble; and (2) many employees were working according the "deal" they had cut, i..e., you pay me a certain amount and have certain conditions of employment, and you get this much work out of me. If you try to change the workplace, for example by what you consider to be an improvement, you are messing with the "deal." I think you've identified the symptom correctly, but it's nothing new as far as my experience goes.
Hustle to leave the hustle