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Ask HN: Isn't recession just mass hysteria ? Layoffs leading to more layoffs leading to the entire economy slowing down ?
More like a long overdue correction in tech.
Some of these businesses have been around for nearly 15 years and haven’t had a single year of consistent profits. It was about time that markets humbled them.
With all the massive scaleups, companies were becoming bloated as hell. They also became fairly sloppy with their money.
Time to pay the piper.
But unlike some bubbles, there's a real industry, here (like in the 'oughts). It's a return to a [still pretty decent] baseline, as opposed to an implosion to nothing.
In the early Web days, the money started to become silly, and people were thronging to the industry, despite having no qualifications, and no passion for the tech. They just wanted money.
Basically, they were expensive, and they sucked (sound familiar?). Most were Web developers, or around the process of creating and maintaining Web presence.
Also, some people were very, very good, and some marvelous tools came of it.
This is like the Late Devonian extinction. The table needed to be cleared off, to give rise to the new.
The company that I worked for, had survived being fire-bombed during the war, a major depression, and multiple recessions. They were absolute tightwads.
At one point, they started making a whole lot of money, and got silly.
Piper, meet company.
They have basically contracted back to what they were. Everyone is writing them off, but I'll bet they come out of the scrum, OK.
Same with the tech industry.
Ask HN: Isn't recession just mass hysteria ? Layoffs leading to more layoffs leading to the entire economy slowing down ?
Yes! Both the bubble and the crash are almost purely psychological. It's greed and fear coming in waves. There can be technical fundamentals, but to take the example of Bitcoin, you don't need any technical fundamentals. Humans can create and destroy value on top of a very complex random number generator.
Or 1. Convince people stocks are going to go down. 2. Mass sell-off. 3. Now stocks really are going down.
I think this is just a self-fulfilling prophecy where business leaders convinced themselves a slowdown is coming, causing them to take actions that will result in a slowdown. A lot of what happens at the CxO level is looking around at your peer companies and imitating what they are doing.
Earlier quoted context omitted.
> Powell complained about the labour market being tight No, he didn’t [1]. He justified a rate rise in a faltering economy by pointing to the labor market’s strength. Were the labor market weaker we’d be in stagflation and monetary policy would have no room to manoeuvre. [1] https://www.federalreserve.gov/mediacenter/files/FOMCprescon...
Powell has previously said that he wants higher unemployment. He believes this is the only way to decrease demand and bring down prices. > The labor market continues to be out of balance, with demand for workers substantially exceeding the supply of available workers. The labor force participation rate showed a welcome uptick in August but is little changed since the beginning of the year. FOMC participants expect su…
He has not. I am open to being corrected with a credible source. But every time I see this conspiracy theory, it’s based on summaries of Fed statements unsupported by the statements themselves.
> is why the market goes down when low unemployment numbers are released
Because the market is anticipating rate hikes. When inflation is low strong employment boosts the market. We just went through a decade of that.
This is what the other side of a hiring blitz looks like. On the ascent, company after company speculatively hired extremely expensive workers - because the surface economic signals were misleading people who should have known better. There was so much money to throw at employees that offers were being extended just to keep candidates away from competitors. This went on so long and with such fury that employees, cand…
By 2024, the steady drip of fresh CS graduates is going to turn into a flood.
An entire generation of teenagers saw the tech boom, the crypto boom, and the SPAC/IPO mani. Its going to color college major choices for years.
In short: downward pressure on programmer wages.
Earlier quoted context omitted.
Slowdown in inflation due to wage component of inflation falling. What, didn't you hear that the Fed was very interested in pulling on that lever? Just yesterday Powell complained about the labour market being tight, guess businesses heard him all right.
> Powell complained about the labour market being tight No, he didn’t [1]. He justified a rate rise in a faltering economy by pointing to the labor market’s strength. Were the labor market weaker we’d be in stagflation and monetary policy would have no room to manoeuvre. [1] https://www.federalreserve.gov/mediacenter/files/FOMCprescon...
Ask HN: Isn't recession just mass hysteria ? Layoffs leading to more layoffs leading to the entire economy slowing down ?
Anyone that was around for the "Turn of the Century Crash" may find this familiar. With all the massive scaleups, companies were becoming bloated as hell. They also became fairly sloppy with their money. Time to pay the piper. But unlike some bubbles, there's a real industry, here (like in the 'oughts). It's a return to a [still pretty decent] baseline, as opposed to an implosion to nothing. In the early Web days, th…
Cause this "crash" is surely like that – it has to be the most "expected and talked about" one in modern times...
Earlier quoted context omitted.
> Powell complained about the labour market being tight No, he didn’t [1]. He justified a rate rise in a faltering economy by pointing to the labor market’s strength. Were the labor market weaker we’d be in stagflation and monetary policy would have no room to manoeuvre. [1] https://www.federalreserve.gov/mediacenter/files/FOMCprescon...
I don't see how what you posted contradicts what I said. I guess it all depends on how you interpret what Powell says, but him saying the labour market is overheated is a signal to the market that unless the labour market stops overheating the Fed pivot is not becoming more likely(which is all that market participants care about as of today with regards to the Fed meeting, i.e when is the pivot coming).
The labor market isn’t being targeted. We have had tight labor markets with low inflation before. The Fed doesn’t spike them for the sake of it.
What’s targeted for reduction is inflation. Labor market tightness permits the Fed to respond to it, which is why it’s constantly talked about. If you are on a road trip and decide you can take a detour because you have ample gas, it wouldn’t be correct to say you took the detour to burn gas.