- Fred Smith, founder of FedEx, warned against the possibility that US labor shortages would lead to stagflation.
- Fox Business was told by him that the shortage of workers caused the pandemic-era supply crisis.
- Smith stated, “You simply don’t possess the workers to meet that demand that’s been juiced with the printing money.”
The US is currently facing a shortage workers, high easy-money-driven demand, and this is driving up the possibility of stagflation. FedExThe founder of’s warning.
Fred Smith stated in a weekend interview, that the US has low labor participation rates and will not be able to supply demand. He believes this is due to government support for the economy.
“You simply don’t have enough workers to supply the demand that has been juiced.” The printing of money“The delivery giant’s executive chairman said. Fox Business’s “Kudlow”Saturday
Smith stated, “It’s just like sitting in your car and simultaneously putting your foot down on the accelerator or the brake.”
After two quarters of declining economic growth, the combination of “tremendous demand” and a lack of labor indicates that the US is now in a stagflation phase.
Stagflation — a mixture of high inflation and a stagnant economy — is a Investors are in for a nightmareThey are left guessing as to which direction the Federal Reserve will go on stimulating or dampening growth.
Economists consider the US labor force market to be tight. The demand for workers is much greater than the supply. Unexpectedly, the number of job openings in America rose. in July, but labor force participation measures — which track how may Americans are working or actively seeking work — still lag their pre-pandemic levels.
Smith is concerned about Smith Biden’s student loan forgiveness programThis, together with other recent measures to inject money into the economy will drive consumer demand even higher.
“Over the last 15 or 16 months, there have been five separate occasions — from the American Recovery Act in March — where you had money being pumped into the economy,” the FedEx exec said.
“We are the only ones in the world that can do this.” We are the reserve currency — if we want to buy something, we just print the money.”
He said, “The problem comes when that goes head-to-head avec the lack of labor in the United States to satisfy the demand.”
Smith says that the supply-chain crisis of last year was caused by labor shortages rather than the coronavirus pandemic. Deliveries problems led to Record shortages of everyday products — and that helped push up prices and inflation.
He stated that “people misjudged it to be some kind of shipping problem in the main after correction of the pandemic.” “There was not enough labor to offload containers and distribute the items at fulfillment centers.”
Smith’s warning against stagflation comes at a time when investors are anticipating another Federal Reserve increase in interest rates after its two-day meeting. There are fears that the Fed’s aggressive rate rises to contain red-hot inflation will lead to US recession.
FedEx rattled US stock exchangesLast week, it removed its earnings guidance citing a worsening economy.
The stock — seen as an economic bellwether because package deliveries reflect demand for goods — fell 21% Friday to close at $161.02 a share. Premarket trading Monday saw it fall to $159.71, a decrease of less than 1%.
