As families around the country take their last road trip of the summer to drop their college seniors back to campus, the job prospects for these youngsters are frighteningly grim.
Many companies are holding out on making returning offers to interns who slogged through the summer trying to impress. The reason? An uncertain economy.
The worst offenders are companies in industries that rely heavily on a steady supply of young and talented knowledge workers – tech, financial services, and consulting.
For several weeks, McKinsey partners have been calling rising seniors to say that while the elite strategy firm will visit campuses for recruiting events, hiring will be limited to enlisting interns for next summer. Current seniors will never get a chance to appear for full-time interviews. The same applies to other consulting firms, including BCG, Bain, and the technology-based Big-4 consulting firms, such as EY, PwC, Deloitte, and KPMG. These firms are just not hiring; if they are, the hiring numbers are way down from prior years.
The big banks are doing the same – and college seniors are seeing doors shut in various banking sectors, including commercial, housing, dealmaking, and M&A. Credit the situation to the anxiety in banks’ corner offices, what with the Fitch downgrade of US debt and the Moody’s downgrade of the banking sector (including banks that are too big to fail).
A recent NY Times report showed that many Commercial Real Estate (CRE) loans are coming due before 2025 and can’t be refinanced because landlords find the interest rates too high and occupancy rates too low. Although companies are tightening Work From Home policies and requiring employees to return, the model is more hybrid than full-time at the office.
Meanwhile, residential mortgage rates hit 7% last week, the highest in over 20 years. So, thanks to leaders at the Treasury who refused even to acknowledge that inflation was raging (remember transitory inflation?) and helped pass trillion-dollar deficit bills, the Fed has had to tighten the money supply significantly. With money so dear and expected to be tight through December 2024, the big builders are scaling back on developing new housing projects when America faces an acute housing shortage. And why wouldn’t they scale back? They wouldn’t want to risk having unsold homes in inventory when the average American can’t afford a mortgage. According to the Mortgage Professor, a 30-year $500,000 loan at 7% will cost a household $3,362 a month in mortgage payments (not including taxes, insurance, and maintenance) thanks to the Biden economy.
The immediate casualties are young college seniors who have had their experiences bookended by two terrible disasters over which they had little control. Many in the Class of 2024 began their first year at home due to college lockdowns from the pandemic. And now, they face an uncertain future, with many forced to accept temporary jobs or even consider graduate school to ride out the market. Going to graduate school has its own set of difficulties: assuming more debt on top of existing undergrad loans that have reset to higher interest rates.
In an economy that is not growing as fast, the best hope for the average college senior is that existing company employees resign or retire so that new openings are created. But with inflation so high, many in the labor force cannot afford to resign or retire, preferring to hold on to each paycheck as though it could be their last.
Reuters made this point in a Breakingview article earlier this month.
When interest rates are going up, and workers demand higher pay, attrition (the number of workers expected to quit) feels like a painless way to bring down wage bills. That’s not so easy anymore since the so-called quit rate – the percentage of the workforce leaving their employer – has sunk back to its low levels from before the pandemic. One response is for companies to hire less, and the financial sector’s ratio of job openings to current employees has fallen to its lowest since September. If that doesn’t work, layoffs do. The rate of those is edging higher. Companies have an incentive to defer the moment of wielding the ax though, for fear of seeming more troubled than their rivals.
If it is bad enough for seniors who just completed an internship, it is much worse for those who tried for an internship and never got one this summer. Forbes considered their plight and concluded thus:
As layoffs plague companies from technology and banking to entertainment and healthcare, hiring is being halted and scaled back, affecting summer internships for students, too. In Silicon Valley, Meta and Google hired fewer interns this summer; the decreased numbers are part of larger efforts to trim the size of their workforces and slow hiring, the tech giants told Forbes.
The Biden economy has been a complete disaster for college students. Gen Xers are generally a liberal, righteous bunch, but they should help throw Washington insiders out of office the next time they go to the polling booth.
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Zelenskiy said Ukraine is developing a democratic society and needs systems to stop corruption.
Earlier this month, Zelenskiy moved against corruption by dismissing all the heads of Ukraine’s regional military recruitment centers. Ukraine ranks 116th out of 180 countries on Transparency International’s 2022 Corruption Perceptions Index.
2. Russia Says Genetic Tests Confirm Wagner Chief Prigozhin Died In Plane Crash – Reuters
Russian investigators said that genetic tests had confirmed that Yevgeny Prigozhin, chief of the Wagner mercenary group, was among the ten people killed in a plane crash last week.
Russia’s aviation agency published the names of all ten people on board the private jet that crashed in the Tver region northwest of Moscow on Wednesday. They included Prigozhin and Dmitry Utkin, his right-hand man who helped found the Wagner group.
3. Zelensky Says Allies Will Not Back Ukraine In Hostilities On Russian Soil – WION
President Zelensky said that the international coalition or its allies supporting its efforts against Moscow’s invasion would not provide support if the country initiated hostilities within Russian borders.
“I believe that this is a big risk; we will definitely be left alone,” the Ukrainian president reportedly said during an interview. The Ukrainian president made these comments when questioned if it was time for Ukraine to move into Russian territory.
4. Factory Strikes Flare Up In China As Economic Woes Deepen – Nikkei Asia
In recent months, a flurry of worker protest videos have surfaced on Douyin, the Chinese version of TikTok, as slowing demand and supply chain shifts heap pressure on the country’s factories.
China’s manufacturing sector is a vital source of employment, but slowing demand and shifting supply chains leave many workers vulnerable.
5. Founder Of Apple Supplier Foxconn To Run For Taiwan President – Reuters
Terry Gou, the billionaire founder of major Apple Inc supplier Foxconn, said he was entering the race to be Taiwan’s next president as an independent candidate.
Gou stepped down as Foxconn chief in 2019 and made a presidential bid that year but dropped out after he failed to win the nomination for Taiwan’s main opposition party, the Kuomintang KMT, which traditionally favors close ties with China.
Democratically governed Taiwan will hold the vote in mid-January.
6. China’s BYD Buys U.S. Jabil’s Mobility Unit For $2.2bn – Reuters
Electric vehicle maker BYD said its unit struck a deal with U.S.-based manufacturing company Jabil’s Singaporean division to buy its mobility business in China for 15.8 billion yuan ($2.17 billion).
The deal will expand BYD Electronic’s (BE) customer base, product portfolio, and its business of smartphone components and boost its growth as it looks to capture the potential growth in the sector.
7. France To Ban Wearing Abaya Dress In Schools: Minister – Al Jazeera
France will ban children from wearing the abaya – the loose-fitting, full-length robe worn by some Muslim women – in state-run schools, the education minister said ahead of the back-to-school season.
France, which has enforced a strict ban on religious signs in state schools since 19th-century laws removed any traditional Catholic influence from public education, has struggled to update guidelines to deal with a growing Muslim minority.
8. North Korea Criticizes European Countries For Sending F-16 Jets To Ukraine – Yonhap
North Korea criticized a recent decision by the Netherlands, Denmark, and Norway to provide F-16 fighters to Ukraine in its fight against Russia as an “anti-peace act,” the North’s state media.
Claiming the move shows the “sinister intention” of the United States and European countries to defeat Russia, the commentary said the U.S. is the “arch criminal” pushing Europe to the brink of a “horrible nuclear war.”
9. Removing Fukushima’s Melted Nuclear Fuel Will Be Harder Than The Release Of Plant’s Wastewater – A.P
“The best way to eliminate the contaminated water is to remove the melted fuel debris,” said Tokyo Electric Power Company Holdings spokesperson Kenichi Takahara.
But Takahara said the scarcity of information inside the nuclear reactors makes planning and developing the necessary robotic technology and a facility for the melted fuel removal extremely difficult.
10. Indian PM Modi Calls For African Union To Join G20 – AFP
Indian Prime Minister Narendra Modi called for the African Union to be made a G20 member while pitching his country as the solution to supply chain woes ahead of next month’s bloc’s summit in New Delhi.
The Group of 20 major economies consists of 19 countries and the European Union (EU), making up about 85 percent of global GDP and two-thirds of the world’s population – but South Africa is the only member from the continent.
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12. Taliban Ban Women From Visiting Afghanistan National Park – NDTV
In another regressive move, the Taliban have banned women from visiting one of Afghanistan’s most popular national parks, BBC reported.
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The statement came as fighting between the RSF and the army entered its 20th week with no side claiming victory.
The UN has warned of a “humanitarian catastrophe of epic proportions,” with rising hunger, collapsing healthcare, and wrecked infrastructure.
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Republished with permission from TIPP Insights
