5 ms·
1. The federal interest rate is nearly at 5%. Any business operating depending on lines of credit are going to hurt (Source: https://www.federalreserve.gov/rele
by digdigdag 4y ago
1. The federal interest rate is nearly at 5%. Any business operating depending on lines of credit are going to hurt (Source: https://www.federalreserve.gov/releases/h15/ https://www.federalreserve.gov/releases/h15/)
2. Consumer spending is down (Source: https://www.bea.gov/data/consumer-spending/main https://www.bea.gov/data/consumer-spending/main).
So you have the producers spending more to operate, and consumers spending less. This leads to an inevitable contraction in the economic output.
Also known as recession.
- SantalBlush 4y agoThe tech sector didn't start layoffs early last year because they forsaw a possible recession more than a year ahead. Moreover, layoffs are still contained within tech. It's time for a new theory.
- grey-area 4y agoThis is the correct answer. The Fed rate is the main driver for these layoffs. The fed is trying to cause a slowdown in the economy (including layoffs) in order to temper inflation.
- beardedetim 4y agoSpecifically the Fed is trying to wrestle away the monetary power that Labor has, quoting a "wage-price spiral". In other words, the Fed is trying to cause a recession in order to fend off inflation, at the cost of Labors current economic power.
- grey-area 4y agoYes, it's a brutal calculus, but inflation is also really corrosive for labour, since wage rises tend to take a while to respond to inflation and... cause more inflation. They are stuck on the horns of a dilemma they created 10 years ago with 10 years of sustained QE and ZIRP, which led to the asset bubble we now see deflating.
- beardedetim 4y agoI agree that they are stuck in a bind, for sure, and they are definitely causing a recession in order to stave off the larger dragon/danger of inflation. Also agree it's largely due to QE! I think the only thing I find weird enough to pause and think "huh, that's weird" is the timing. Labor gets market power and oh wow, we better fight inflation. Maybe it just all happened at the same time and COVID caused it to bubble over. Just seems weird timing to me.
- SantalBlush 4y agoThis isn't an explanation. The job market has been red hot over the past year, and the total of tech layoffs comprise a small fraction of overall job growth in the US. HN users think there is a recession because they are only focused on their particular industry, and refuse to look at what the actual economy is doing.
- grey-area 4y agoEmployment usually peaks just before a recession, along with denial of course. The real economy is not doing well globally, inflation is a serious problem, and the impact of the rate hikes will take about 10 months to show up (so should hit this year).
- SantalBlush 4y agoI've been reading these predictions on HN for almost a year now, and so far they've been false. If people keep repeating them, eventually we'll witness a recession and they'll be right, but that doesn't make their analyses correct, it just makes them a broken clock.
- grey-area 4y agoSo whatever the outcome, they are wrong and you are right?
- SantalBlush 4y agoThey're giving a broad time frame for recession to hit, and they keep moving it back, so eventually they will necessarily be right. In other words, they make predictions that are so vague, they necessarily can't be wrong. This is why their predictions are useless.
- _justinfunk 4y agoI don't think HN posts are why most people feel like there is a recession.