Mini budget applause is meaningless to young jobseekers hustling on street corners

Earlier this morning I found myself in a situation where my usual role had been reversed.

Instead of asking someone questions I was answering them. I was talking to a British podcaster called Roifield Brown who runs The Mid Atlantic. Normally they focus on British and American politics. I think I managed to convince him to spend a bit more time following things Mzansi. Simply because our story, and our stories, are so endlessly fascinating.

We were talking about the ANC and the local elections and all of the usual when we started to look at Parliament and, inevitably, the Medium-Term Budget Policy Statement (MTBPS) and government debt.

I think you already know my views on our government debt. We should pay back as much as we can as quickly as we can, even though I admit there is a strong case to put more money into social spending.

As we were talking my mind turned to my normal trip to work. I’m lucky enough to live just 10 minutes from where I start my working day. But in that short trip I pass two street corners where young men hang out, hustling.

I see the same two groups every day, holding up signs, handing out cards, just hoping that today they will get some kind of job. Some have their tools on hand, ready to build and plaster and carry.

Others promise to help with your satellite television, or just hope to be asked to help in a garden or something.

I can’t imagine that the very positive bond market reaction to yesterday’s MTBPS would excite them very much. They will know about it, they will have seen TikTok videos from the speech, I’m sure.

But why should they care?

Something quite similar, I think, is happening in the US, where there is a huge disconnect between some of the headline numbers and what is happening in what I suppose you would call “the real economy”.

While all of the news agencies will Trumpet the record highs of the Nasdaq and the S&P 500, underneath the numbers all sorts of other things are happening.

Those numbers are driven by a tiny number of AI and tech companies. If you remove names like Nvidia or Microsoft or Elon from the index everything starts to look very different.

By at least one measure, while Microsoft and Nvidia added nearly $1.5-trillion in value to the Nasdaq in July and August, 72 other stocks lost $22-billion.

On the S&P, a very large number of stocks are trading more than 20% below their 52-week highs. By some indicators that’s a bear market.

This is always the problem facing financial writers. Everyone can get very excited by the froth at the top. And you do have to report on the top headline numbers, otherwise everything else you do won’t make sense.

But just as rising inequality in the US led to the election of the Trumpeter-in-Chief and so much of the populism we see in Europe and Brazil and other places, so inequality here is the figure to look at.

Even though the major difference between little us and the big US [Editor’s note: that’s it, I won’t allow any more] is our unemployment figures, the fact is, none of the incredible work by the good people at National Treasury means anything if we don’t move that number.

This morning, President Cyril Ramaphosa made the point that we will not fix our youth unemployment by “doing what we have always done ... we need to think differently”.

To be fair to him, he has been one leader who has spoken about the situation facing young people in very direct terms for a long time.

In 2019 he said that “it keeps me up at night, the unemployment of so many young people”.

The problem is, there are so many factors in our insider/outsider economy that make it very hard to “think differently”.

I think every single one of us who drives past the corners and clusters of young people who are hustling for a job thinks: how do they survive it? And what if my child ends up on that same corner, hustling in exactly the same way?

I have a lot of sympathy for our finance minister and all the people at Treasury, who have to look at certain signals to do the right thing.

Those signals – bond markets and yields and banks and investors and all sorts of other market paraphernalia – say we’re moving in the right direction, that yesterday was a “positive” day for us.

But those young men were still on the street this morning.

And they will still be there tomorrow morning.

And back on Monday. DM