For the life of me I cannot understand how every single layoff notice talks about "macroeconomic factors."
Inflation and interest rates are up - okay. But real GDP growth (in the US at least) has been positive. Why is everybody acting like unemployment is at 8%, GDP growth is sharply negative, and consumer spending is way down?
At least with crypto stuff it makes sense that these companies are losing shitloads of money but with so many companies it seems to be "we expect to be making less money next year so we are cutting staff now."
*Growth* is down in certain sectors. Many companies were staffing to support and capture possible future growth. When next year is expected to look like this year, a lot fewer people are actually needed.
Most companies are to some extent financed with debt. When interest rates go up and loans need to be rolled over they will pay a higher interest rate. The result is a deleveraging (companies taking on less debt) but also reducing expenses (layoffs). The relationship between interest rates and inflation is also usually not linear - ie. inflation is 8% on average, you can charge 8% more for your products but your interest payments might very well double (going from 4% to 8% p.a.).
The current layoffs are concentrated in the tech sector because that sector experienced huge growth when everybody was stuck at home. With that now over, it’s just a regression to the mean and employment trends are going back to being in line with the rest of the economy.
Inflation and interest rates are up - okay. But real GDP growth (in the US at least) has been positive. Why is everybody acting like unemployment is at 8%, GDP growth is sharply negative, and consumer spending is way down?
At least with crypto stuff it makes sense that these companies are losing shitloads of money but with so many companies it seems to be "we expect to be making less money next year so we are cutting staff now."