Tech layoffs are unlikely to trigger an immediate wave of cuts across the economy or significantly boost historically low unemployment. Only 2% of U.S. workers are employed in8% of employment), retail (10%), or healthcare (11%).
The tech industry is doing reality checks that aren’t happening anywhere else. Technology didn’t just recover quickly from the 2020 pandemic recession. The fact that so many people are stuck at home and spending more time on their devices has benefited. The desperation of Americans to find a distraction for their children by ordering toilet paper was a boon for Big Tech, and the industry responded accordingly. AmazonFor example, doubling the number of people during a pandemic, Employment surged across sectors Disappeared since the late 1990s(Amazon founder Jeff Bezos owns The Post.) Management believes the economy has changed forever and needs to win the talent wars at a time when it’s hard to find workers. Technology is undergoing adjustments now, but this is neither the end of the industry nor a big computation. It’s not like the scale of blue collar unemployment Early this century.
Tech layoffs are more concerning on two fronts. First, Wall Street welcomes job cuts. Most tech companies that announced layoffs instant bounce at their stock price. This is a signal to other executives that this is the strategy to follow if earnings start to deteriorate. these days, That herd mentality has not permeated beyond technology and media. In fact, the biggest surprise is how resilient employment is. Especially in sectors most affected by aggressive rate hikes by the Federal Reserve to combat inflation and cool the economy.nevertheless temporary job is downconstruction and real estate employment remained strong, No major layoffs so far.
A second concern is the impact of technology redundancy on consumer spending. In most cases, tech workers are highly paid and layoffs occur at the next stage. generous retirement packageThere is not much sympathy for these workers who are likely to find other jobs eventually.But for better or worse, the American economy Heavy reliance on top 20% spendingThese are workers with six-figure salaries who have the money to stop by the best restaurants and expensive seats at sports and theater events, sophisticated homes who pay for decorating and cleaning, and luxury vacations. Their spending, or lack thereof, is critical to the boom and bust of service sectors and businesses that rely on discretionary purchases such as home furnishings and appliances.
It’s not hard to see that tech industry layoffs are starting to slow elite spending. Even workers who continue to work expect smaller bonuses There will be less chance of moving forward, at least for a while. Other sources of wealth have also plateaued.house prices are pull back a little In many markets, the major stock indices are still negative the past year. Headlines declaring a “white-collar recession” only encourage a more cautious vibe at the top. What is happening to the rich now is similar to what the middle class and struggling families experienced last spring and summer. Gasoline price hits $5 And there was a depressed feeling.
It remains to be seen how much this will hit consumption.retail sales Plunge in Decemberand Morning Consult polls show the rich are getting it’s irritating: “In December, the net proportion of adults reporting an improvement in their household incomes fell significantly among the highest earners compared to a year ago.” However, according to the Gross Domestic Product report, Quarterly consumption remained strong overall on thursdayalthough that was before many of the most dramatic layoff announcements.
The latest economic data, including tech layoffs, don’t suggest a Wile E. Coyote moment is imminent. They show more towards a gradual slowdown, with consumers of all income levels becoming more cautious about vacations, dining out and home repairs. Whether it will be a formal recession this year or not remains to be seen. If 2022 was the year of “revenge trips” and outings, 2023 is likely to be the year of smart spending at home and at work.
