The Wall Street Journal learned over the weekend that McDonald's is joining the fray of companies engaged in corporate layoffs. It's one of many signs that layoffs, mainly in the tech sector, are spreading elsewhere. In a memo, McDonald's asked employees "to cancel all in-person meetings with vendors and other outside parties at its headquarters." Further, they are having employees work from home for the first part of next week to deliver the news.

There's no report on the number of jobs getting cut at McDonald's or which roles are getting the ax. But as the WSJ noted in its coverage, layoffs are spreading: "Companies across industries are reducing head counts amid concerns about a slowing economy. Layoffs that began in the tech sector last year have spread to retailers and manufacturers."

Other sectors continuing to take a hit are media and entertainment. ABC News, Spotify, Salem Media, and more have announced cuts to staff. Reality continues to set into the economy that things are not well, and the era of easy money has ended. Interest rates are high, we've witnessed the wreckage of multiple banks failing, and a credit crunch is on the horizon.

Another shoe to drop.

Eswar Prasad, professor of trade policy and economics at Cornell University, told the WSJ, "It is potentially a rather perilous time for the world economy ... Piling banking-sector problems on top of rising interest rates in advanced economies' could have spillover effects across the globe.'"

The group chief economist at Capital Economics in London, Neil Shearing, added, "The real risk is there is another financial shoe to drop, and that exposes hitherto unforeseen risks in the financial system."

Everyone continues to say, "this won't be a repeat of 2008." And I'd agree with that, but that's because every recession and economic downturn is different. What triggered 2008 was different from what started the previous recession. The final trigger for our recession will look different from the previous ones.

One of the ways we know that is that no one was predicting the collapse of Silicon Valley Bank, Signature Bank, or Silvergate Bank. No one foresaw that First Republic Bank would be on the brink of collapse. One of the reasons these banks failed is because the Federal Reserve did not stress test banks for this high-interest rate environment.

Testing for the wrong problems.

In testimony to Congress, Treasury Secretary Janet Yellen blamed Donald Trump for the failure of the Federal Government to monitor these banks. She said, "when the President and I took office in January 2021, we inherited a financial stability apparatus at Treasury that had been decimated."

But what she omitted is that the number of regulators didn't matter. As the WSJ Editorial Board noted, the Fed was focused on other things: "In 2021, the Council identified three key priorities related to significant vulnerabilities in the financial system: nonbank financial intermediation, climate-related financial risk, and Treasury market resilience. In 2022, the Council identified a fourth key priority: risks related to digital assets."

That description is far closer to a depiction of ESG necessities. Meanwhile, high inflation and increasing interest rates, a phenomenon that has occurred multiple times in history, were not a focus for the regulators. This isn't some 20/20 hindsight vision saying the Feds were wrong in something. We're just asking the Feds to do basic history and check for things that always happen - not focus on climate change.

And now, the specter of increasing inflation is appearing once again. OPEC announced oil cuts over the weekend, and investors are looking at a potential repeat of inflation fears in 2021. Whether oil skyrockets or not is hard to see for now. But the pressures on the US economy continue to increase.

Recession and sobering up at the spending punchbowl.

All of the above is what is triggering increased calls for a recession. Allianz, a German insurance-to-asset management giant, released a report saying the US is "headed towards a crash landing," referring to an outcome where the Federal Reserve's monetary tightening and banks' increased wariness toward lending squeeze credit flows and set the stage for a recession." Further, "We expect the economic momentum to deteriorate during the second half of the year on the back of rapidly tightening credit conditions, exacerbated by the banking crisis."

Yellen can blame the Trump administration all she wants. I agree with the WSJ, "Ms. Yellen has presided over this era at the Federal Reserve and now at Treasury. If she told the truth, she'd have to indict her own policies."

The Federal Reserve and the Treasury released trillions upon trillions of free money into the system for fifteen years. The Federal Reserve and the Treasury inflated one of US history's largest giant asset bubbles. And it's the Federal Reserve, the Treasury, and the Biden administration that has poured trillions of new spending here at the apex of easy money to tip us into an inflation spiral.

The layoffs started in BigTech and are spreading to businesses like GM and McDonald's. The jobs reports can say whatever they want; everyone is preparing for a crash landing now. It'll be a miracle if that doesn't occur, and you won't find many people on Wall Street planning for one.