A former top corporate America executive is warning that the U.S. economy is not on a fast track to recovery, as higher inflation and more mass layoffs loom over markets.
“The general population will not be duped by this aversion to try and blame inflation on corporate America. It starts at the raw materials, it starts at transportation, it starts at energy,” former Home Depot and Chrysler CEO Bob Nardelli said on “Cavuto: Coast to Coast” Monday. “A whole host of things that are driving this up, wage increases.”
“We’re now seeing people being laid off,” he continued, “If you look at chips, they’ve laid off almost 40,000 people. We’re seeing a tremendous shift in employment out there where people are being laid off.”
In the last two weeks, companies like Cisco, Snap, Estée Lauder, Amazon, Citigroup and UPS have all announced layoffs as executives tighten their belts amid rate volatility.
The pace of job cuts by U.S. employers accelerated at the start of 2024, as a recent report from business firm Challenger, Gray & Christmas found that companies planned 82,307 job cuts in January, a substantial 136% increase from the previous month.
However, that is down about 20% from the same time one year ago. It marked the second-highest layoff total for the month of January in data going back to 2009.
“Ford laid people off because of EV[s]. GM laid people off because of the cruise program. We’re just seeing Stellantis lay people off because of the UAW wage increase,” Nardelli said. “So no, I think we’re still in an inflationary period. I think we’re not going to see a soft landing would be my prediction, but I hope I’m wrong.”
The Labor Department said Tuesday that the consumer price index, a broad measure of the price of everyday goods including gasoline, groceries and rent, rose 0.3% in January from the previous month, more than expected.
Prices climbed 3.1% from the same time last year, which also came in above the 2.9% expectation from Refinitiv economists.
Nardelli correctly predicted that Tuesday’s CPI number would rise, meaning that pressure remains to continue the Fed’s aggressive rate trajectory.
The former CEO noted that the public doesn’t truly understand how high rates “are killing” middle and lower-market companies.
“We’ve seen companies where we’ve had $2 million of interest rates now explode to $12, $13, $14 million. And the free cash flow that we generate is going to pay the man,” Nardelli explained. “We cannot afford the type of interest rates that we’re buried [in] today. I mean, you couldn’t afford it as an individual in trying to balance your budget.”
“This is all about, I think, trying to buy votes. This is all about an administration that is out of control,” he continued. “We have a strong bias towards spending versus having a conservative policy or a sustainable future.”
FOX Business’ Megan Henney contributed to this report.