Sunday, 6 August 2023

UK Military’s Claims About Shrubbery Stalling Kiev’s Counteroffensive ‘Stupid’ and ‘Ignorant'

UK Military’s Claims About Shrubbery Stalling Kiev’s Counteroffensive ‘Stupid’ and ‘Ignorant'

UK Military’s Claims About Shrubbery Stalling Kiev’s Counteroffensive ‘Stupid’ and ‘Ignorant'





©Sputnik/Go to the mediabank






More than two months on, Kiev’s counteroffensive shows no sign of being successful as the Ukrainian army’s losses in men and materiel continue to increase.







Former US Central Intelligence Agency (CIA) analyst Larry Johnson has lashed out at the UK military over allegations about vegetation being a factor in stalling the advance of Ukrainian troops.


“Who knew that all the United States had to do to ensure the success of Ukraine’s counteroffensive was to provide them with a brigade of weed wackers, so they could have gone out there and cut down all the weeds,” Johnson said in an interview with a YouTube channel.


The ex-CIA analyst went on to say that he means “this is so nonsensical - you’ve got to wonder how in the world can alleged professional military people in Britain say something so stupid, so incredibly ignorant that they want to blame it [Kiev’s failed counteroffensive] on summer growth.”


He spoke a few days after the UK Defense Ministry claimed in its regular intelligence update that “undergrowth regrowing” in the southern part of the front line in Ukraine remains a likely factor “contributing to the generally slow progress of combat in the area.”


The ministry argued that arable land, which is abundant in the region, has been “left fallow for 18 months, with the return of weeds and shrubs accelerating under the warm, damp summer conditions.”


This provides extra camouflage cover for Russian defensive positions, complicating Kiev’s mine-sweeping efforts, according to the ministry. “Although undergrowth can also provide cover for small stealthy infantry assaults, the net effect has been to make it harder for either side to make advances,” the intelligence update pointed out.


On June 4, Kiev launched its counteroffensive in the vicinity of Zaporozhye, southern Donetsk and Artemovsk, using combat brigades trained by NATO instructors and armed with Western military equipment, including much-hyped Leopard 2 tanks. The advance, however, quickly came to a standstill, with Russian President Vladimir Putin stressing that the Ukrainian troops had been pushed back on all fronts as they suffered huge losses.


According to the Russian Defense Ministry, Kiev has lost over 43,000 servicemen and 4,900 units of different military equipment on the line of contact since the start of Ukraine's counteroffensive.



Scott Ritter: Who is Responsible for Ukraine's Failed Counteroffensive?



On a normal summer's day, the road to Rabotino would be empty, save for the odd combine tractor and the vehicles driven by farmers and their families as they tend to the fields of crops they had planted in spring.


The summer’s heat would reflect off the horizon, creating glimmering mirages, while the still air would echo with the chirping of birds and the buzzing of insects. On a normal summer's day, the road to Rabotino would resemble paradise.


Today, the road to Rabotino can best be described as a highway to hell: the serene landscape scarred with craters made by artillery shells, bombs, and mines. Fields that once grew crops intended to feed the world now seem to produce another crop—the torn, burned-out hulks of Ukrainian tanks, infantry fighting vehicles, and other military vehicles of all shapes and sizes.


The air buzzes not with bees, but bullets, and the sky above is torn by the sound of shells passing overhead, on their way to their intended target, often consisting of a new crop of military metal waiting to be consumed by fire. The smell of fresh soil, young crops, and flowers of the field has been replaced by the fetid stench of rotting corpses, abandoned by their comrades who fled for their lives.


The Russian Ministry of Defense has assessed that, since the Ukrainian counteroffensive began in early June, the Ukrainian Army has suffered some 43,000 casualties, with more than 4,900 pieces of equipment, including 1,831 tanks and infantry fighting vehicles (among which are included 25 German-made Leopard tanks and 21 US-made M-2 Bradley Infantry Fighting Vehicles) having been destroyed.


Russian casualties, while unspecified, have been alluded to by President Putin, who stated that the kill ratio was 10:1 in Russia’s favor. That equates to 4,300 casualties: the brutal blade of war cuts both ways.


The casualties suffered by Ukraine roughly align with the casualties suffered by German forces during their offensive operations against the Soviet Army in the battle of Kursk, fought in the month of July and August 1943. The Kursk battle was one of the largest during the Second World War.


This should give one an idea of the scope and scale of the violence which has transpired in and around the village of Rabotino, and elsewhere in the Zaporozhye and Donetsk regions where Ukraine and Russian forces are confronting one another.


When an army suffers a defeat of the scope and scale of that suffered by Ukraine near Rabotino, and in other fields and villages across the line of contact with Russia, it is normally incumbent upon the leadership of the defeated forces to ascertain the reasons why the defeat occurred, and then to undertake remedial action to correct the problems identified.


It came weeks after being on the receiving end of criticism from their erstwhile allies and partners in NATO, who provided Ukraine with both the material used to equip the Ukrainian Army, and training on how this equipment was to be used in battle against the Russians.


According to NATO, the Ukrainians were not using the tactics taught to them in Germany, France, and the United Kingdom, and as such failed to make best use of the equipment that had been provided to them for this offensive.


From the Ukrainian perspective, however, the blame is cast back on NATO for providing Ukraine with a plan of action, but not providing the tools necessary to successfully implement the plan. While the Ukrainian military did receive most, if not all (or in some cases, more) of the 300 tanks, 500 infantry fighting vehicles, and 500 artillery pieces it had said were required for a successful counterattack designed to throw Russian forces from the former Ukrainian territories of Kherson, Zaporozhye, Donetsk, and Lugansk that were annexed by Russia in September 2022 following a referendum on joining Russia—as well as Crimes, which Russia annexed back in 2014—the Ukrainians did not receive the artillery ammunition or modern F-16 fighter aircraft it had requested.


The failure of the Ukrainian counteroffensive, according to the Ukrainian leadership, was directly attributable to the inability of Ukraine to suppress Russian artillery and airpower, both of which, when combined with the extensive use by Russia of mines in preparing their defenses, prevented the Ukrainians from achieving their goals and objectives outlined for the operation, namely to break through the Russian defenses and capture the city of Melitopol, thereby severing the land bridge connecting Crimea to Russia.


But the reality is that the Ukrainian counteroffensive was never going to work, under any circumstance. First and foremost, the Ukrainian Army is not the same military force that existed when the Special Military Operation began in February 2022. That army was largely destroyed in the fighting that raged from February through June 2022.


Thanks to tens of billions of NATO-provided equipment, and billions more in financial and training support, Ukraine was able to rebuild its army, which it used to good effect in the fall of 2022, driving Russian forces out of the Kharkov region and from the right back of the Dnieper River.


But this victory came with a heavy price tag, and NATO and Ukraine were compelled to build a third army, consisting of the equipment requested by Ukraine, and some 60-90,000 Ukrainian troops who were trained by NATO. It is this army that is being sacrificed on the road to Rabotino today.


Most of the troops that comprised this new army had little or no prior military experience. They received approximately three weeks of training on military fundamentals, before being trained on the operation (and maintenance) of the new NATO weapons they would be using.


Then they spent a few weeks carrying out field exercises designed to simulate an attack on the Russian defenses using complex “combined arms” tactics taught by NATO and American instructors. After this, they were shipped back to Ukraine and sent on the road to Rabotino.


The reduction of a prepared defensive line is one of the most complicated tasks one can assign a military unit in combat. To successfully execute this mission, the assault forces need to be masters of their craft, operating as part of a combined arms team capable of suppressing enemy forces, and breaching minefields while maneuvering under fire.


This is a task that experienced units with years of training under their belts would have difficulty pulling off. For an army like Ukraine’s third-generation force, this was a mission impossible, something every NATO trainer involved in preparing the Ukrainian forces would have known.


The massacre that occurred along the road to Rabotino was unavoidable so long as Ukraine and their NATO masters believe that the conflict with Russia can be resolved through force of arms. The problem is that the disparity between the quality and quantity of forces deployed by Ukraine and their western supporters on the one side, and Russia on the other, is too wide to be bridged by any combination of training and equipment NATO might be able to provide.


There is no magic weapon available to the West that can change the reality on the battlefield in and around Rabotino. Neither F-16’s and/or ATACMS can alter this reality. Nor is there a magic wand that can be waved over the battlefield to change the qualitative issues regarding the Ukrainian soldiers, who arrive on one of the most technologically advanced—and lethal—battlefields in modern history with little or no training.


The Ukrainian generals responsible for giving the orders to the Ukrainian Army, and the NATO trainers who prepared them for battle, knew that the outcome that is transpiring along the road to Rabotino was inevitable.


The harsh fact is that tens of thousands of Ukrainian soldiers and billions of dollars of western military equipment have been sacrificed not for viable military purposes, of which there are none, but rather to assuage the political needs of Ukraine’s leaders, who needed to be seen as being willing to make use of the training and material support provided, and their US and NATO masters, who needed to be able to point to battlefield successes in Ukraine to justify the diversion of their respective national treasury and military arsenal to the Ukrainian cause.


The road to Rabotino is paved with the detritus of western hubris, manifested in the flesh and blood of the Ukrainian Army scattered amongst the destroyed material produced by the defense industries of the collective West. This battle had only one possible ending, which has come to pass.


But the real tragedy is that neither Ukraine nor the collective West have absorbed the lessons that they were taught by the Russian Army—that the conflict in Ukraine can only end in a Russian victory.


Sadly, many thousands of more Ukrainian soldiers, and tens of billions of dollars more of western military equipment, will need to be sacrificed before this lesson is finally driven home.




































































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US calls suspected Israeli settler attack terrorism

US calls suspected Israeli settler attack terrorism

US calls suspected Israeli settler attack terrorism





Mourners carry the body of Palestinian who was killed during clashes with Israeli settlers, in a hospital in Ramallah, in the Israeli-occupied West Bank August 4, 2023. REUTERS/Ali Sawafta/File Photo






Washington has condemned as terrorism the killing of a Palestinian by suspected Jewish settlers, in sharpened language that appeared to reflect U.S. frustration with surging violence in the occupied West Bank under Israel's hard-right government.







Israeli police detained two settlers in Friday's incident near Burqa village. According to Palestinians, they were part of a group that threw rocks, torched cars and, when confronted by villagers, shot a 19-year-old dead and wounded several others.


Initial findings by Israel's military cast the incident as a confrontation that escalated, with casualties on both sides. A defence lawyer said the settlers - one of whom was absent from a court hearing due to a head injury - acted in self-defence.


In their arraignment, a transcript of which was obtained by Haaretz newspaper, the state accused the settlers of "deliberate or depraved-indifference homicide" with a racist motivation.


"We strongly condemn yesterday's terror attack by Israeli extremist settlers that killed a 19-year old Palestinian," the U.S. State Department said in a statement late on Saturday, urging "full accountability and justice".


Amid increased attacks on their communities by Palestinians armed with guns, rocks or firebombs, settlers have repeatedly rampaged in West Bank villages, causing extensive property damage. Among their victims have been Palestinians with U.S. dual citizenship.


The State Department statement on Burqa was issued back-to-back with a statement condemning as terrorism a Palestinian gun attack that killed a security officer in Tel Aviv.


Prime Minister Benjamin Netanyahu's religious-nationalist government has bristled at any comparisons between Israeli and Palestinian militancy.


Far-right minister for police Itamar Ben-Gvir said on social media that Palestinian stone-throwers at Burqa "tried to murder Jews" and that he expected them to be fully investigated.


The West Bank is among areas where Palestinians seek statehood. U.S.-mediated negotiations with Israel to that end stalled almost a decade ago, boosting hardliners on both sides.


According to Israel's Army Radio, the rate of attacks by settlers or their supporters against Palestinians in the West Bank has more than doubled this year compared to 2022.


"We are faced with the evolution of a dangerous Jewish nationalist terrorism," opposition lawmaker Benny Gantz, a former defence minister, said on messaging platform X, formerly known as Twitter.


"Whatever happened at Burqa, it joins a slew of events that beset our security forces with having to pursue, rather than protect, Israelis."



Two Israelis arrested after Palestinian man killed in West Bank



Jaafar Ashtiyeh/AFP/Getty Images
Mourners carry the body of 19-year-old Palestinian Qusai Jamal Maatan, during his funeral in the village of Burqa in the north of the occupied West Bank on August 5, 2023.


Two Israelis have been arrested for questioning and five others detained following the reported killing of a Palestinian man in the West Bank, Israel Police said in a statement Saturday.


It is rare for Israeli settlers to be arrested for attacks on Palestinians in the occupied West Bank. They are almost never prosecuted, even if arrested.


A Palestinian man was shot and killed by Israeli settlers in the village of Burqa, near Ramallah in the occupied West Bank, the Palestinian Ministry of Health said late Friday.


It is the first accusation from the Ministry that settlers have killed a Palestinian villager since February, and the second this year, although both Palestinian officials and international observers regularly document violence by settlers against Palestinians.


The ministry said Qusai Jamal Maatan, 19, was fatally shot in the neck by Israeli settlers during an attack on his village. Two others were injured, according to the ministry.


Maatan was buried Saturday morning.


The IDF said in a statement that they arrived after reports of “violent clashes between Israeli civilians and Palestinians,” and that “it was reported that during the clashes, Israeli civilians shot toward the Palestinians and as a result, there was a Palestinian casualty.”


The IDF also said Israeli civilians were reportedly injured by rocks hurled at them.


There was no immediate comment from the Shomron (Samaria) Council, which represents settlers in the northern West Bank and would not normally issue a statement on Shabbat.


A legal aid group that defends settlers said Saturday that the settler who shot the Palestinian was acting in self-defense after Palestinian villagers began harassing an Israeli shepherd.


Honenu, the legal group, said the incident began when Palestinians from Burqa threatened the shepherd from Oz Zion – a settler outpost – which is illegal not only under international law but under Israeli law.


The shepherd called other settlers “to prevent deterioration,” Honenu said, after which dozens of Palestinians attacked them with clubs, fireworks and rocks.


One of the settlers was hit in the head with a rock “at point blank range and was seriously injured,” according to Honenu, and he managed to defend himself with a licensed gun he was carrying.


He is currently in intensive care following an operation at Shaare Zedek hospital in Jerusalem, and under arrest, Honenu said.


The second Israeli settler who was arrested helped transport him to the hospital, Honenu said.


Honenu attorney Nati Rom said: “My client acted according to the law, and as is required of any licensed firearm holder – to protect his life and the lives of other civilians.”


A statement released by the Israeli military said both Israelis and Palestinians threw stones in the West Bank confrontation. The army has imposed a closed military zone on the area while investigations by Israel Police and the Shin Bet security agency (ISA) are ongoing.


The US State Department qualified the incident as a “terror attack”.


In a statement released on Twitter, now known as X, it said: “We strongly condemn yesterday’s terror attack by Israeli extremist settlers that killed a 19-year old Palestinian.”


“The US extends our deepest sympathies to his family and loved ones. We note Israeli officials have made several arrests and we urge full accountability and justice.”


The Palestinian Ministry of Foreign Affairs and Expatriates strongly condemned attacks by what they referred to as “organized and armed terrorist settler militias” against unarmed Palestinian citizens in Burqa.


The ministry expressed concern over the lack of real punishment for attacks by settlers on Palestinian villagers, saying the incidents have emboldened settlers to commit further crimes. The ministry accused Israeli government ministers and their followers of incitement.


The coalition government of Prime Minister Benjamin Netanyahu includes two parties primarily supported by settlers, Israelis who live in the West Bank in order to cement the country’s hold on the Palestinian territory. Settlements are considered illegal under international law. Israeli asserts the West Bank is “disputed,” not “occupied,” and denies that the settlements are illegal.


The United Nations warned last month of a dramatic rise in West Bank settler attacks on Palestinian people and property, with nearly 600 such incidents registered during the first half of the year.


The UN humanitarian agency OCHA said it had recorded 591 settler-related incidents in the territory in the first six months of 2023, resulting in Palestinian casualties, property damage, or both.












































































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Ukrainian Drone Destroyed in Moscow Region - Russian Defense Ministry

Ukrainian Drone Destroyed in Moscow Region - Russian Defense Ministry

Ukrainian Drone Destroyed in Moscow Region - Russian Defense Ministry





©Sputnik / Alexey Maishev






No casualties or damage occurred as a result of the foiled terrorist attack, the ministry added.







A Ukrainian drone has been destroyed by an air defense system in the Podolsk district of Moscow region with no casualties or damage reported, the Russian Defense Ministry said on Sunday.


"At 11:27 a.m. (08:27 GMT) today, an attempt by the Kiev regime to carry out a terrorist attack using an unmanned aerial vehicle against facilities in the Moscow region was foiled. The UAV was destroyed by air defense forces on the territory of the Podolsk district," the ministry said. This is the second drone attack on the Russian capital in a week.


On Monday night, several drones, on their way to the Russian capital, were shot down by air defenses, but one hit a skyscraper housing government ministries in the Moscow-City business center.


No casualties were reported after the attack. The Russian Defense Ministry blamed Ukraine for the attack, adding that two drones were shot down, and the third one was suppressed by electronic warfare systems and fell on non-residential buildings in the business center. Ukraine neither confirmed nor denied the attack.


Russian Foreign Ministry spokeswoman Maria Zakharova said that Ukrainian President Volodymyr Zelensky is compromising the United States by conducting terrorist attacks against civil infrastructure, trying to blackmail the White House to receive more assistance.



Air defense systems destroy drone on its approach to Moscow — mayor



A drone has been destroyed on the approach to Moscow by air defense systems, Mayor Sergey Sobyanin wrote on his Telegram channel.


"Today at around 11:00 a.m. a drone attempted to break through to Moscow. It was destroyed on the approach by air defenses. Well done, the military," Sobyanin wrote.


Su-34 front-line bombers of the "South" group of troops destroyed the deployment points of 2 brigades of the Armed Forces of Ukraine in the area of Serebryanka and Ivanovsky with guided bombs, the head of the press center of the group Astafyev told RIA Novost.




























































































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Ukraine shells Donetsk with cluster munitions – authorities

Ukraine shells Donetsk with cluster munitions – authorities

Ukraine shells Donetsk with cluster munitions – authorities





The site of a fire in the building of the 1st building of the University of Economics and Trade in Donetsk.






Ukrainian forces have reportedly fired cluster munitions into Donetsk city, striking a private residence, a university and other civilian targets.







Four rounds of 155mm cluster bombs were fired into the center of the city on Saturday night, triggering fires in three districts, the Joint Center of Control and Coordination (JCCC) for the Donetsk People’s Republic (DPR) said. The cluster munitions reportedly exploded in the air.


The Donetsk University of Economics and Trade was on fire after the shelling, the Mayor of Donetsk Aleksey Kulemzin said in a Telegram post. Fires also were reported in apartment buildings.


The shelling comes after at least three people were killed and ten injured by a Ukrainian bombardment on Monday. The shelling killed another civilian in a nearby town, the JCCC said.


Cluster munitions have been banned by more than 100 countries because of their devastating effects on civilians. Cluster shells are typically designed to open up in midair and release tens or even hundreds of submunitions that can saturate a large area with explosives. They tend to have a high failure rate, creating risks to civilians from unexploded munitions for potentially decades after a conflict ends.


Donetsk and other Donbass cities have been under constant Ukrainian attacks which have claimed numerous civilian lives since 2014, when the region broke away from Kiev after a Western-backed coup in the Ukrainian capital. Over the years, Ukraine’s military established heavily fortified positions around the cit. The attacks intensified after the launch of Moscow’s military operation against Kiev in February 2022, leaving scores of civilians killed and delivering major damage to infrastructure.


The Donetsk People’s Republic became part of Russia last October together with the People’s Republic of Lugansk and Zaporozhye and Kherson Regions, following referendums in which the local populations voted overwhelmingly in favor of the move.



Russia Repels Drone Attack in Bryansk Region



Russian air defense has destroyed two aircraft-type drones over the Karachevsky district of the Bryansk region, governor Alexander Bogomaz said on Sunday, adding that there were no casualties.


"The Russian Armed Forces' air defense system destroyed two aircraft-type UAVs over the Karachevsky district. There is no destruction and no casualties," Bogomaz wrote on Telegram.


Emergencies services are working on the site, he added.



Kiev’s Western Allies ‘Getting Tired of Ukrainian Counteroffensive


Ukraine’s much-hyped summer counteroffensive that kicked off in early June has brought no tangible results and is unfolding more slowly than expected, a point of view that is supported even by Ukrainian and Western officials.


Kiev’s allies from the Western countries are “getting tired of the Ukrainian counteroffensive,” US analyst Johnston Harewood has argued.


In an article for an American media outlet, he noted that it is becoming “increasingly difficult” for Western officials to conceal their irritation when it comes to the issues regarding Ukraine, not least its counteroffensive, which is “not progressing as originally envisioned.”


As an example, the author cited Marcin Przydacz, head of the International Policy Bureau in Poland and British Defense Minister Ben Wallace as recently saying that Ukrainian President Volodymyr Zelensky should have been more grateful to Warsaw and London for their military aid to Kiev.


The analyst recalled in this regard that since the beginning of the Russian special military operation, the Zelensky administration has already received more than $77 billion in Western military aid alone, “which is almost half of Ukraine's GDP last year.”


According to Harewood, those foreign partners of Ukraine who previously expressed strong support for Kiev, “are gradually changing their rhetoric, backing it up with difficult decisions for the Ukrainian government."


The author again referred to Poland, which became one of the countries that had signed a declaration to extend the ban on grain imports from Ukraine, in what Harewood wrote was “a low blow” for the Ukrainian president.


“Such a reaction from partner states may indicate that the countries, if not tired of supporting Zelensky, are already very close to such a state,” the analyst pointed out.


He was echoed by former British Army colonel Bretton-Gordon, who wrote for a UK newspaper that Kiev “has unsettled its friends in rare missteps and admonishments.”


Bretton-Gordon mentioned the incident that took place on August 1, when the Polish ambassador to Ukraine was summoned to the Ukrainian Foreign Ministry over recent remarks by Poland’s International Policy Bureau head Marcin Przydacz. He said, in particular, that "it would be worth them [Ukrainian authorities] starting to appreciate the role that Poland has played for Ukraine in recent months and years."


The remarks come amid Kiev’s efforts to go ahead with its counteroffensive, which both Ukrainian and Western officials admit is going “slower than desired,” and is “behind schedule.”


Kremlin spokesman Dmitry Peskov, for his part, recently told reporters that “It is obvious that the Ukrainian counteroffensive is not working out the way it was intended in Kiev.”


"The multibillion-dollar resources that were transferred by NATO countries to the Kiev regime are actually spent pointlessly, and this also raises big questions for Western capitals (…),” Peskov added.


He spoke as the Russian Defense Ministry said that since the start of Kiev’s counteroffensive on June 4, the Ukrainian Armed Forces (UAF) lost over 43,000 soldiers and over 4,900 units of various weaponry, including 26 aircraft, nine helicopters, and 747 field artillery guns and mortars.


This followed Russian President Vladimir Putin telling the country’s Security Council meeting that Ukraine’s counteroffensive had yielded “no results” and that the UAF had suffered extensive losses, with "tens of thousands" of soldiers killed.






































































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Next job-market challenge: the Great American workers Unresignation

Next job-market challenge: the Great American workers Unresignation

Next job-market challenge: the Great American workers Unresignation





FILE PHOTO: A worker arrives at his office in the Canary Wharf business district in London February 26, 2014. Picture taken February 26, 2014.






American workers have given up on quitting. Amid last month’s financial results from Wall Street was a warning from some firms that staff haven’t exited at the rate employers expected. The U.S. economy has weathered inflation without widespread layoffs so far, but a Great Unresignation could make seemingly healthy job numbers harder to read.







Just over a year ago, the financial services industry was one of several facing a labor crunch. Job openings in the industry hit a record 499,000 in June 2022, according to the Bureau of Labor Statistics, as firms’ strong demand for workers clashed with a nationwide labor shortage. That hiring spree has since cooled. The sector added 6,300 jobs last month, nearly half the gains seen in July 2022.


But a big input in firms’ hiring plans is “attrition” – the number of workers expected to quit. Giant lender Wells Fargo (WFC.N) said on July 14 that attrition had been “slower than expected” in its second quarter. State Street (STT.N) gave the same message – one shared by other firms too, executives have told Breakingviews. That creates the problem of headcount costs remaining too high, at least for a while.


Companies generally don’t hope their staff will walk. But when interest rates are going up and workers demand higher pay, attrition 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. Wall Street’s cull last year showed that once one company takes the plunge, others swiftly follow.


The reassuringly low unemployment of the past 12 months, then, needs to be viewed carefully. It might be a sign that rising rates haven’t hurt the economy. But it might also reflect employees staying put until they’re given a shove. The Great Resignation of recent years was an example of how people can behave in surprising ways, temporarily distorting economic predictions. This season’s corporate earnings may tell whether another surprise is in the works.



CONTEXT NEWS



The percentage of workers leaving their employer in the United States fell to 2.4% in July from 2.6% in the previous month, the Bureau of Labor Statistics said on Aug. 1. The so-called quit rate in the finance and insurance sector dropped to 1.1%, well below a peak of 2.4% in April 2022.


Wells Fargo flagged “slower than expected” attrition as a driver of higher severance costs during the bank’s July 14 earnings call. State Street cited similar pressure from low attrition during its own analyst call on the same day. Citigroup also mentioned severance expenses as a reason for its 9% year-over-year increase in operating costs on July 14.


The U.S. economy added 187,000 nonfarm payrolls in July, the Bureau of Labor Statistics said on Aug. 4. The unemployment rate dipped to 3.5% from 3.6%.



Remnants of the Great Resignation Still Challenge the Fed



The cognoscenti may have been too quick to declare the end of the Great Resignation. The latest Bureau of Labor Statistics data on Thursday showed that the number of workers voluntarily leaving their jobs surged in May by the most since November 2021. On a day of strong labor reports, it might be the most consequential for the fight against inflation. The BLS’s Job Openings and Labor Turnover Survey showed that quits rose by 250,000 to 4 million, about 2.6% of the labor force. Although that’s well below the 3% peak in 2021, it’s comfortably above the highest value recorded before the pandemic.


(Source: Bureau of Labor Statistics data)


Quits, of course, are likely to get short shrift in a week filled with high-profile labor market data, but they may be among the most important. New data from the ADP Research Institute on Thursday showed that US companies added nearly half a million jobs in June, and Challenger, Gray & Christmas Inc. data showed job cuts fell to an eight-month low. But the US has experienced plenty of strong labor markets in the relatively recent past, and most of them haven’t meant much for inflation overall. What’s different now is the frequency with which workers are switching jobs, a phenomenon that has drastically increased worker bargaining power and fueled rising nominal compensation — a welcome development if you’re a worker bee but a minor nightmare if you’re a central banker operating under the logic that wages fuel inflation.


No one’s predicting a return to that degree of job-to-job mobility, but the latest data suggests that a reversion to normalcy may take a bit longer than expected — just a month after some declared the retracement complete.


The influence of quits on inflation has become better understood in the past decade, but the Great Resignation brought it into stark relief. In 2015’s “ Job Switching and Wage Growth,” Federal Reserve Bank of Chicago economists Jason Faberman and Alejandro Justiano found that the quits rate was highly correlated with wage growth. More recently, though, another group of authors from the Dansmarks Nationalbank and Chicago Fed developed a comprehensive indicator of labor market slack that combined unemployment with job-to-job flows. They found that the Great Resignation increased overall inflation by about 1.1 percentage point. In a Chicago Fed Letter last year, authors Renato Faccini, Leonardo Melosi and Russell Miles wrote the following (emphasis mine):


By applying for jobs in a different firm, employed workers can elicit wage competition between the current employer and the new candidate employer. The firm that intends to poach the worker from their current employer has to offer a sufficiently large wage to make the offer attractive. And if a worker is particularly valued by their own employer, they may be offered a pay raise that is necessary to retain them in their current job. In this context, if employed workers search more, wage competition among employers increases, leading to an increase in inflationary pressures...


Although the quits rate rate was stable in the Midwest and West, the latest report showed it climbed in the Northeast and South. Among industries, the rate rocketed higher in construction, where signs have emerged that residential activity may have recently bottomed.


Job vacancies, which were also disclosed in the BLS’s JOLTS report on Thursday, fell more than forecast to 9.8 million, a welcome sign for policymakers that leaves about 1.6 openings for every unemployed worker — the lowest since 2021 but still well above the ratio of 1.2 that prevailed before the pandemic.


But quits, I’d argue, is the more important of those metrics by a significant margin. If you run a company, you probably won’t change your compensation plans simply because a competitor posts a series of openings. If — on the other hand — the job openings go up and your own employees decamp, you’re likely to start paying attention. You’d certainly provide counteroffers to many of the exiting employees, and you might consider off-cycle pay increases for others to head off future defections. The job postings matter, but intuitively, quits matter more.


Needless to say, the picture from the labor market data isn’t necessarily bad — especially if you’re a worker. Strength in US payrolls is likely to further delay — and maybe prevent — the recession that Wall Street has been expecting for the past year. Resilient income streams will sustain consumption in a virtuous cycle. The challenge, of course, comes down the road if wage pressure translates into stubbornly high core inflation, which prompts the Fed to keep policy tighter for longer. Many of us keep rooting for the best of both worlds — a so-called soft landing with a resilient real economy and receding inflation pressures — and the definitive end of the Great Resignation would certainly have helped. Ultimately, though, it looks as if the remnants of the strange pandemic labor market are likely to linger for a while.


More From Bloomberg Opinion:


  • Central Banks Should Stop Hammering the Economy: Marcus Ashworth

  • What’s Opposite a Jobless Recovery? Jobful Recession: Justin Fox

  • Labor Market Is Not Buying Into Recession Talk: Jonathan Levin



This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.


Jonathan Levin has worked as a Bloomberg journalist in Latin America and the U.S., covering finance, markets and M&A. Most recently, he has served as the company’s Miami bureau chief. He is a CFA charterholder.
































































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