Businesses have blamed a wave of layoffs on an uncertain economy with rising interest rates, piling up tens of thousands of jobs in the US for months. So far, job losses have been relatively subdued in technology, financial services and housing. Both of these industries experienced rapid growth during the pandemic and are now struggling to recalibrate. Zooming out, the labor market is still very tight, with the unemployment rate hovering at a solid 3.5% in March, and many employers desperate for jobs.
Lyft said Friday that chief executive David Risher made it clear to the company that “his focus is on creating great and affordable experiences for riders and improving driver earnings. This requires cutting costs and structuring the company so that the leaders are close to the riders and drivers – a difficult decision and not one to be taken lightly. It will be a much stronger and more competitive Lyft.”
of The Wall Street Journal reported The number of layoffs is 1,200, but a Lyft spokesperson declined to confirm that.
Consulting firm Deloitte said in a statement: “U.S. businesses continue to experience strong customer demand.
Financial Times and Other outlets 1,200 workers He was laid off at Deloitte, but the company declined to confirm the number.
Economists say the latest wave isn’t even one sign that the labor market is plummeting. it will stop. Rather, layoffs are a sign that the economy is finding its way into the new normal.
“Businesses are starting to tighten their belts in anticipation of compressed revenues and slowing demand,” said RSM chief economist Joe Bruce Elas. “We are not in a recession. We are slowing down.” increase.”
Over the past few years, the economy has taken many forms. remains a puzzle. Inflation has fallen since its peak last summer, it’s still too expensive. As such, the Federal Reserve has continued a strong campaign to raise interest rates. Policy makers are trying to cool the economy and lower consumer prices without overdoing it and causing pain. recession.
So far, the country has avoided such a recession. Employers are still trying to hire workers, albeit at a slower pace than last year. Consumers are still spending, and many economists expect the US economy to grow in his 2023.
But uncertainty is the reins. Jobless claims increased by 5,000 to 245,000 in the week ending April 15, signaling another softening. Last month’s banking crisis sent shockwaves through the financial system, but it’s not clear how much that episode will tighten credit conditions and make banks less willing to issue loans. At the central bank’s last policy meeting, Fed economists warned of a “moderate recession” later this year, but the message was not adopted by board members. Manufacturing output has also fallen.
“We’ve seen layoffs go through the pipeline, but now we’re starting to see delays in unemployment insurance claims,” said Diane Swonk, chief economist at KPMG. is what we’ve been waiting for…in terms of the economic slowdown and whether we can achieve a soft or hard landing.”
This ambiguous combination makes it difficult for policymakers to get a real-time picture of the economy or to know where the country is headed. For now, the Federal Reserve is betting it can continue to raise rates without going too far. The central bank also plans to raise rates by a quarter of a percentage point at its first meeting in May. In that case, the Federal Reserve’s policy rate would be between 5% and 5.25%. This is a level designed to curb demand for all types of investments, from mortgages to car loans.
If history is any clue, it will also influence how companies expand and hire new workers. But March saw his 27th straight month of strong job growth, and layoffs that rock Deloitte and Lyft, for example, are not seen as a warning sign for the economy as a whole.
