Recession Is When Your Neighbor Loses His Job…

David Reavill
4 min readJun 24, 2022


Ronald Reagan

Nearly a half-century ago, Ronald Reagan gave us this simple aphorism to describe the kind of economy we face today. During those far way 1970s, the economy back then was failing. We had gone through the supply-side shock of an oil embargo. Inflation was the highest it had been in generations. And the country was governed by an unpopular President who couldn’t seem to get anything right.

Then-President Jimmy Carter’s only solution to soaring energy costs was to drive slower (55 mph max) and bundle up with a sweater. In his campaign for President Reagan introduced this simple yet descriptive concept of recession.

Unfortunately, we’re beginning to see our “neighbors” again losing jobs because of a weak economy slipping into recession.

Since the Pandemic of 2020, most economists have focused exclusively on Job Openings. The number of available jobs that can’t find someone to fill them. Recently several CEOs have complained that they can’t seem to fill positions, and corporate performance has suffered as a result. Walmart and Amazon, two of the country’s largest employers, have aggressively recruited new workers.

But now, there seems to be a new counter-trend at work — workers losing their jobs.

There are several reasons for this. First and foremost, Walmart and Amazon are looking for workers with lower skill levels. At the same time, those who are losing jobs are highly skilled, highly educated workers.

There are a couple of other factors to consider, including geography and demographics.

There is another answer to this puzzle. These lost jobs are mainly in technology and finance. Two of the leading edge of the economy. Job loss in these sectors shows that future economic growth is at risk.

Tech has always been a high-risk field. Risk for the venture capitalists and entrepreneurs who finance and manage these companies. And risk for the people who go to work for them.

Now, these enterprises can be wildly rewarding financially if successful. But there are many failures, even in the best of times. The trouble for tech currently is that the cost of capital is rising. Those higher interest rates are the cause. And so, investors often don’t have the reserves to continue with unprofitable ventures.

In the last two years, “Layoffs.FYI” reports that over 800 tech firms, principally startups, have laid off more than 130K workers.

And it’s much the same story with Real Estate. Here too, the cost of capital, mainly in the form of mortgages, is rising rapidly, often pricing monthly mortgage payments out of people’s reach.

Earlier this week, JP Morgan Chase, the nation’s largest bank, ultimately set Wall Street back on its heels when they reported laying off 1,000 workers in their home mortgage division. The bank hopes to place up to half of those workers in other divisions. But there are no guarantees.

This move followed Wells Fargo, which has also been on a layoff tear, as that bank faces a general re-organization.

Of course, the current interest rate is much of the issue with home mortgages. 30-year fixed-rate mortgages currently stand at a whisker below 6%. Or double the rate of just a year ago.

So, there you have it. Finance and Real Estate are two leading-edge sectors of the economy in trouble. And both suffer from the higher cost of capital (interest rates). And both are seeing significant layoffs.

Oh, and let me complete that Ronald Reagan quote:

A recession is when your neighbor loses his job.
Depression is when you lose yours.
And recovery is when Jimmy Carter (Joe Biden) loses his.

Economic News

For those who were around during the Carter Presidency, you’ll remember that it was a tough time for investors. Reagan was right, and the economic recovery did not begin until after Carter left office.

Last night we saw one of the most dismal economic reports ever, as the British Consumer Confidence Survey recorded yet another all-time low. Consumer Confidence in Great Britain fell to a negative 41. And indeed, fingers point to the high costs of Food and Energy contributing to this gloom. But I remind you that their political leader, Boris Johnson, is in deep trouble. And it looks like he may lose a no-confidence vote at any time. The “no-confidence” would end the Johnson term as Prime Minister. There is nothing that consumers and investors hate more than political upheaval.

And while we’re on the subject of Consumer sentiment, the University of Michigan’s survey of our Consumer Sentiment will be reported this morning. And analysts on Wall Street are looking for one of the most significant drops ever. Look out below, as this would be a huge negative for the market.

Also, today is the latest in New Home Sales. The Street is looking for a continued slide in New Home Sales.

In earnings, just a couple of reports are on the schedule. Carmax, the used car people, have just reported their results, and there’s no change in the stock price. While Carnival Cruise Lines’s earnings have been well received, their stock is trading higher.

Have a great day!




David Reavill

David Reavill writer + finance +iconoclast + hiker + Pennsylvania #valueside daily podcast + medium + meditate