$17 Trillion Cash Hoards💰, How To Quit Your Job

Unemployment in South Africa, one of the biggest economies on the continent, has hit record levels.

The new data by Statistics South Africa (StatsSA) shows that about 7.8 million South Africans were out of a job in Q2 of 2021, the highest rate since 2008. The unemployment rate now stands at a record high of 34.4%, one of the highest levels in the world, according to a Bloomberg analysis.

Highlights of the reports: 

• Unemployment rate among Black African women stood at 41%.
• Young people aged 15-24 and 25-34 recorded the highest unemployment rates at 64.4% and 42.9% respectively.
• Those aged 15-24 years, making up about 33% of the population (3.4 million) were not in employment, education or training during the period under review in the report.
• Around one third of the country depends on social grants as one of their main sources of income.

Causes:

Sustained economic disruption from Covid-19, persistent inequality, and poor government policies have all been cited as contributors to the weak numbers. South Africa’s inflows of foreign investment, a key enabler in employment prospects, also declined by 39% to $3.1 billion in 2020. Adding to this is the recent wave of unrest following the arrest of former president Jacob Zuma, which culminated in the destruction of 40,000 businesses. 

U.S. households and small businesses have stockpiled record cash of almost $17 trillion. 

This is a surprising because during the past recession in the U.S. households and businesses showed a tendency to tap into their savings thus depleting their cash reserves. It’s a sign of an unusual economy in which an awful lot of people are making money or have money, but are not spending it. 

Three factors can be seen to contribute to this trend: 

• direct government stimulus payments to individuals
• shutdown-induced savings from Americans working from home
• small-business decisions to hold onto grants or loans.

Most remarkably, the almost $17 trillion represents money that hasn’t been utilised in any investments in the U.S. or abroad. Which means, this spare cash could still come into equities, sending the stock market soaring even further. For most people though, the money is acting as a “barbell” allowing investors already in the market to avoid selling off by much. It’s also why the pattern of buying on the dips has worked so well.

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