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Announcing today in Detroit, Mich. that Ford Motor Company plans to layoff 7,000 salaried employees, 64-year-old CEO James Hackett delivered the bad news, giving a different view of the U.S. economy. While the unemployment rate remains low at 3.8% by historic standards, it hasn’t translated into normal growth for the U.S. economy. Economists expect that full employment usually comes with more disposable income to feed consumer spending, accounting for about two-thirds of U.S. Gross Domestic Product, running at 3.2% in Q-1. When 66-year-old Federal Reserve Board Chairman Jerome Powell met May 1 with his Open Market Committee, he decided to leave the federal funds rate unchanged. While on the surface a good thing, markets sold-off, hoping for a rate cut. Powell and his Fed governors haven’t figured out why inflation remains under 2%.

Respected economist Mohammed El-Erian, Chief Finanial Adviser to Allianz SE, the parent company bond giant Pimpco [with $2 trillion under management], was also hard-pressed to explain today’s low inflation numbers. El-Erian thinks greater efficiencies from companies like Amazon, Google and Uber, have contributed to low inflation numbers, essentially keeping prices low. Ford’s decision today to cut 7,000 salaried jobs tells a different story, with the U.S. auto industry facing real challenges in 2019 and beyond. Calling it a “Smart Redesign Update,” Hackett put a positive spin on Ford’s anemic economic outlook. With Ford stock ending today’s session at $10.28, Ford’s been languishing for years with weak earnings. Attributing it to a change in car preferences, from sedans to SUVs, doesn’t tell the whole story of an overall auto industry running out of steam.

Ford’s price-to-earnings ratio [PE] remains at 13.23 doesn’t tell the real story with an earnings-per-share [EPS] at only $0.58, a miserable return-on-investment for shareholders. If El-Erian’s right, the U.S. auto industry should boom given the record levels of employment. Big-ticket items, like cars, major appliances and vacations, happen more regularly when employment remains high. Yet in today’s economic climate, the core inflation numbers, missing food-and-energy, remain a tame at 1.6%, not enough for the Fed to hike rates. What Ford and other automakers, including GM, are dealing with the reality that most working folks have little disposable income when you subtract out rent and health care at the end of the month. With rents and health care costs soaring, it’s no wonder average wage earners continue to hold on to their used cars, putting off new care purchases.

Hackett hopes the latest layoffs will result in $600 million in savings but has nothing to say about future earnings. At $0.58 EPS, Fords offers shareholders practically nothing, something built off future earnings. While there’s nothing wrong with reducing corporate waste, that doesn’t solve Ford’s ongoing problems going forward. “We all made significant progress in eliminating bureaucracy, speeding up decision making and driving empowerment as part of this redesign,” Hackett said, more about nothing. Slashing bureaucracy has nothing to do with building competitive vehicles or, for that matter, changing economic conditions so ordinary consumers have enough disposable income to buy or lease new cars. Cutting blue-or-white-collar jobs speaks volumes about Ford’s expectations about future growth. Scaling back domestic jobs hints at Ford’s foreign manufacturing plans.

President Donald Trump has had his go-around with Ford about moving assembly or manufacturing to Mexico or China. Trump has urged Ford in the strongest possible terms to keep building cars in the U.S. “Whenever we hear bad news about a domestic automaker, it reminds us of the fragility of manufacturing in this country and the importance of public policies to ensure we maintain a strong base in this country,” said Rep. Debbie Dingel (D-Mich.), urging Congress to get on the same page with the president about keeping U.S. manufacturing. As Ford announced cuts, General Motors announced 4,000 cuts to salaried jobs in North America. Not since the 2008 Great Recession, where former President Barack Obama bailed out of GM and Chrysler, has things looked so bleak. While Hackett makes his $18 million, Ford salaried workers get the ax.

Ford’s $11 billion restructuring plan closed several U.S. plants, focusing Ford’s future on electric and self-driving cars. Ford spokesman Daniel Barbosa already announced in 2018 that Ford would eliminate 10% of its global workforce. Barbosa claimed that Ford was losing money in every foreign division except the U.S., causing the current restructuring plan. Whether customers want trucks or SUVs, Ford and other automakers have no control over the U.S. economy. If today’s unemployment rate includes part-time workers, it’s difficult to know where the money’s coming for future car purchases, no matter what type of vehicle. As long as rent and health care spirals out-of-control, consumer discretionary spending will remain weak. CEOs like Hackett have a lot of nerve cutting jobs when he’s gets $1.8 million base pay, $12.7 million in stock options and $3.2 million in other compensation.