Fred Smith, the creator of FedEx Corporation stock (NYSE: FDX), foresaw the possibility of stagflation in the US due to a labor shortage. He claimed that a lack of labor caused the pandemic-era supply chain crisis.
FedEx Corporation Stock Executive Fears Labor Shortage
The FedEx Corporation stock (NYSE: FDX) executive remarked that the US suffers from a labor shortage and robust and easy-money-driven demand. This situation is increasing the possibility of stagflation for the economy.
The United States will not have enough workers to meet demand, as stated by Fred Smith. He believes the increase results from government support for the economy and low labor participation rates.
The delivery company’s FedEx Corporation stock (NYSE: FDX) chairman said, “You simply do not have the workers to match the demand that’s been juiced by the printing of money.” He compared it to driving while seated and simultaneously pressing the accelerator and brake.
Stagflation is a Nightmare for Investors
He also claimed that following two straight quarters of negative economic growth, the US is now in a sort of stagflation period due to a mix of “tremendous” demand and a labor shortage.
Stagflation, a combination of high prices and a weak economy, is a nightmare for investors because it makes them uncertain of the Federal Reserve’s future stance on stimulating or slowing growth.
The US labor market is considered tight, with worker demand significantly surpassing supply. Although the number of job opportunities in the US surprisingly increased in July, metrics of labor force participation, which count the number of people employed or actively looking for work, are still below their pre-pandemic levels.
Smith is worried that the new measures to help the economy, like Biden’s plan to forgive student loans, will increase consumer demand even more.
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Author Valerie Remorosa