The health of the economy remains a key topic of concern for consumers and investors, who almost every week see another wave of job cuts by companies.
On November 30, DoorDash was the eleventh company to announce dramatic cost cuts, including the layoff of the company’s 1,250 workers. The company employed 8,600 corporate employees by the end of 2021.
“Our business is more resilient than other e-commerce companies, but we are also not immune to external challenges and our growth rate has slowed down compared to our pandemic-led growth rate. us,” said the food delivery company’s chief executive, Tony Xu. told workers.
“While our business continues to grow rapidly, given how fast our hiring pace is, our operating costs — if not decreasing — will continue to climb higher. turnover.”
dashboard (DASH) – Get a free report join a long list of companies, including Amazon (AMZN) – Get a free reportMeta . Platform (META) – Get a free reportLyft (LYFT) – Get a free report,Microsoft (MSFT) – Get a free reportTwitter (TWTR) – Get a free reportStripes and HP (HPE) – Get a free reportto cut jobs as one of the responses to the current economic downturn.
Tech companies have been hiring aggressively during the pandemic as the economy moves online. But they have seen a sharp decline in recent months, as sharp increases in interest rates have hurt consumers and undermined business.
The Federal Reserve has sharply raised interest rates in recent months, bringing the benchmark interest rate from near zero during the pandemic to around 3.75% to 4%, in an attempt to combat inflationary, the highest in 40 years. But many economists say that this positivity monetary policy will push the economy in Depression.
‘Worrying trend’
“I can tell you that the economy isn’t doing very well right now. Things are slowing down. You’re seeing layoffs in many, many sectors of the economy. People are getting laid off. slow down,” said Jeff Bezos, founder and executive chairman of Amazon. warning mid-November.
“My advice to everyone, the small business owner, is to take some of the risk off. If you’re going to buy, maybe slow down a bit,” the billionaire said.
“If you’re an individual and are thinking about buying a new big-screen TV, maybe slow down the purchase, keep that money, see what happens. Same goes for refrigerators, new cars. , anything. Take some risk when buying a table.”
Billionaire Elon Musk also shares these concerns and has just called on the Fed to immediately stop raising interest rates to avoid economic disaster.
The plea came in a Twitter thread in which a Tesla investor said he was bracing for a recession in 2023.
“I am predicting a real recession in 2023, be prepared for any macro storms ahead of us,” Vincent Yu said.
Musk, who is involved with Tesla, SpaceX, Twitter, Boring Co. and Neuralink, responded by mentioning the central bank.
“The trend is worrying,” the billionaire commented on Nov. 30. “The Fed needs to cut rates immediately. They’re massively amplifying the possibility of a severe recession.”
Musk’s call came the same day Federal Reserve Chairman Jerome Powell is set to deliver an important policy speech in Washington.
Not the first warning from Musk
Powell is plan to speak at 1:30 p.m. Eastern Time at a Brookings Institution event at the Hutchins Center. The speech on fiscal and monetary policy and the outlook for the economy, inflation and labor market changes will be followed by a Q&A session from the audience.
Powell broke with a statement agreed by the Fed earlier this month, following the central bank’s fourth consecutive 75 basis point (0.75 percentage point) rate hike. He stressed to reporters that it was too early to consider a pause in rate hikes, even if the Federal Open Market Committee clearly indicated that smaller increases, aimed at the highest rates, may be required in the coming months.
Minutes of the Fed’s November rate decision in fact showed that “the majority of participants judged that a slowdown may soon be appropriate” to “allow the Committee to assess progress made.” goal of maximizing employment and stabilizing prices”.
This is not the first time Musk has warned of the consequences of a rate hike on the economy. Last September, businessman warning that huge interest rate hikes will cause long-term deflation.
“A big rate hike by the Fed carries the risk of deflation,” said the CEO of electric vehicle market leader Tesla. (TSLA) – Get a free report at that time.
The consequences of deflation can be devastating to the economy because falling prices encourage households to delay purchasing decisions while waiting for prices to fall further.
This in turn can lead to a decrease in overall consumption and an increase in inventories at companies, making it impossible for companies to sell their products anymore. In response, they reduce production and investment.
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