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Ask HN: Isn't recession just mass hysteria ? Layoffs leading to more layoffs leading to the entire economy slowing down ?
Where are we heading if every company drop 10-20% of their staff?
All these companies have vastly overhired. Think of your own peers and colleagues. How many are a) utterly useless or b) competent but don't have anything to do so they spend time working on mostly pointless projects to improve their CV?
Earlier quoted context omitted.
In this case, rising interest rates have a very direct negative impact on new investments. As new investments contract, demand shrinks for services across the industry. As demand shrinks, fewer employees are needed and companies need to reduce headcount to avoid overspending relative to revenues. There is a cascading effect, but it would be a mistake to attribute it all to a big psychological mistake. When demand goe…
> avoid overspending relative to revenues. Most companies are already making a shit ton of money. Firing people won't keep their stock prices from going down if a recession actually hits. It's moot.
Earlier quoted context omitted.
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…
> Powell will continue to raise rates until the labor market cools. This is entirely different from "complaining that the labor market is too tight." The Fed has nothing against a tight labor market so long as we don't have high inflation. Imagine you're a doctor and you're telling your patient that you're going to administer chemotherapy to a child until either the cancer goes away or they get too sick. Then you see…
Where are we heading if every company drop 10-20% of their staff?
All these companies have vastly overhired. Think of your own peers and colleagues. How many are a) utterly useless or b) competent but don't have anything to do so they spend time working on mostly pointless projects to improve their CV?
I suppose you could make the argument companies are both over-working their employees and over-hiring if you're willing to concede these companies are poorly managed... which I think has a kernel of truth to it.
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…
1. What did it feel like day to day as a person working in the industry during that time, and did it differ from the "bubble" period prior or more "normal" period immediately following?
2. How long after the bottom before the recovery felt "real" to you, and did you see companies / people change their behavior?
Ask HN: Isn't recession just mass hysteria ? Layoffs leading to more layoffs leading to the entire economy slowing down ?
(Thought stolen from Alan Watts)
Earlier quoted context omitted.
No, that's not what Powell is saying. Read this quote again: > So I will answer—I will answer your question directly, but I want to start here today by saying that my main message has not changed at all since Jackson Hole. The FOMC is strongly resolved to bring inflation down to 2 percent, and we will keep at it until the job is done. So the way we’re thinking about this is, the overarching focus of the Committee is…
Would it be correct to say the Fed's goal is to lower economic growth? I don't think so. It's trying to lower inflation and predicting negative, possibly necessary, side effects. But if you read that quote as saying the Fed is trying to raise unemployment, then it's also saying the Fed is trying to lower growth, which is an odd reading to say the least.
Let's say I have a goal of running a marathon, so I decide to start jogging every day. Is my daily jogging a side-effect of my goal to run a marathon? I wouldn't say so. Rather, jogging every day is an explicit course I've set out on with the hopes of achieving my main goal. Daily jogging is a sub-goal of the main goal, if you will. This logic can be applied to the Fed. The main goal is to lower inflation, and the chosen course of action (i.e. the sub goals) are to lower economic growth and to increase unemployment.
A side-effect would be something akin to knee pain. I can't jog without hurting my knees, but having pain in my knees isn't something I explicitly set out to do.
A side-effect of Fed policy would be something like the gilt crises in the UK. Higher US rates increase yields on UK bonds indirectly. But that isn't something the Fed is actively setting out to do.
Ask HN: Isn't recession just mass hysteria ? Layoffs leading to more layoffs leading to the entire economy slowing down ?
In this case, rising interest rates have a very direct negative impact on new investments. As new investments contract, demand shrinks for services across the industry. As demand shrinks, fewer employees are needed and companies need to reduce headcount to avoid overspending relative to revenues. There is a cascading effect, but it would be a mistake to attribute it all to a big psychological mistake. When demand goe…
Earlier quoted context omitted.
All these companies have vastly overhired. Think of your own peers and colleagues. How many are a) utterly useless or b) competent but don't have anything to do so they spend time working on mostly pointless projects to improve their CV?
I strongly disagree. Many companies (maybe not tech companies) are posting very strong profits. Employee surveys also show people feeling the pressure of being given additional responsibilities due to labor shortages. I suppose you could make the argument companies are both over-working their employees and over-hiring if you're willing to concede these companies are poorly managed... which I think has a kernel of tru…
If 10-20% of the employees in an org pretty much stop working completely, then it's pretty natural that the remaining 80-90% are going to feel overworked making up the slack. Also explains why companies are laying off the dead weight resuming hiring almost immediately (like Tesla).