Source: Guoshi through train
Author: Chen Haoxing

American technology workers have had an unhappy New year.

Amazon.Com Inc announced on January 4 that he would cut 18000 jobs, making it the largest round of layoffs among US tech giants.

The number of layoffs is equivalent to 6 per cent of Amazon.Com Inc's total staff of more than 300,000. In the past year, Amazon.Com Inc shares fell nearly 50%, a number of foreign media analysts said that the current increasing number of layoffs show that the company's prospects are bleak.

High inflation, rising interest rates and other problems have not been solved, this "wave of layoffs" put more pressure on the already high unemployment rate in the United States, is the tech giant heading for recession?

The tech giant is mired in layoffs.

Not only Amazon.Com Inc, since November last year, American Internet technology giants have successively laid off staff, but the scale of the layoffs is to scare out workers in a cold sweat.

In total, US technology employers cut more than 150000 jobs in 2022, 10 times the number in 2021, according to estimates on the website Layoffs.fyi, a layoff tracker.

These figures include large employers, such as Facebook Inc's parent company Meta announced more than 11000 layoffs in November last year, Amazon.Com Inc previously announced layoffs of about 10, 000 jobs, global cloud service SaaS leader Salesforce.com Inc laid off 8000 jobs, Hewlett-Packard laid off 6000 people, and so on. The layoffs are due to the fact that the global economic downturn continues to affect the U. S. technology industry. The wave of layoffs has also affected smaller companies in the United States and overseas.

Meanwhile, social platform Twitter, online payment company Stripe and travel-sharing company Lyft cut jobs by 50%, 14% and 13%, respectively.

Why do American Internet technology giants lay off staff on a large scale?

Industry leaders have expressed different views on layoffs. Musk, the boss of Twitter, believes that Twitter is losing about $4 million a day and can't think of anything other than layoffs.

Facebook Inc founder and CEO Zuckerberg said that the layoffs are due to problems with his strategy, he failed to grasp the market environment, layoffs are helpless.

Andy Yaxi, chief executive of Amazon.Com Inc, said most of the layoffs involved Amazon.Com Inc's store and personnel, experience and technology (PXT) division, and these changes would help Amazon.Com Inc seek long-term opportunities with a stronger cost structure.

Consumer goods and retail business have become "hardest hit"

Consumption and retail were the two worst-hit parts of the technology industry in 2022, cutting a total of about 40000 jobs.

Andy Yassi also mentioned that retail stores and human resources departments were mainly affected by the layoffs. Starting from January 18, Amazon.Com Inc will begin to communicate with the affected employees.

Industry insiders believe that the gradual recovery of the world from the epidemic has become an incentive for many retail companies, including Amazon.Com Inc, to lay off staff.

In order to meet the short-term demand generated by the epidemic, Amazon.Com Inc began to expand rapidly. Amazon.Com Inc himself admitted that he hired too many workers during COVID-19 's pandemic. Amazon.Com Inc doubled the staffing of his logistics network to keep up with demand. With the deregulation of control, the American people are gradually returning to their normal offline lives, and the short-term demand generated during the epidemic has ceased to exist.

Tech giants are preparing for a prolonged downturn

In addition to mass layoffs, some small-scale project cuts have already begun. In August, Amazon.Com Inc announced the closure of his telemedicine department, Amazon.Com Inc Nursing (Amazon Care). In October, Amazon.Com Inc successively announced that he would abandon (shut down) the field testing of the company's unmanned distribution vehicle project Scout, shut down warehouse robot startup Canvas, and stop the development of online tourism product Amazon Explore.

So far, giants such as Alphabet Inc-CL C, Apple Inc, Netflix Inc and other giants have not officially announced large-scale layoffs, but there are rumors of some small-scale layoffs and slowing down and suspension of recruitment, especially for many jobs other than R & D.

The staff of the technology giants also have a strong sense of crisis. An Alphabet Inc-CL C staff member told the media: "many employees believe that Alphabet Inc-CL C will also announce large-scale layoffs this month."

Aneta Markowska, chief financial economist at Jeffery, the US investment bank, calculates that the US unemployment rate is expected to reach about 5 per cent by the end of 2023 and then continue to rise the following year.

Markowska warned that rising unemployment will be a drag on consumption and have a negative impact on income growth for many companies, further forcing them to cut more costs and lay off staff.

According to the latest forecast released by Fed officials in December 2022, the US unemployment rate will rise to 4.6% by the end of 2023, up 0.9 percentage points from the current 3.7% unemployment rate.

Analysts believe that from the median forecast of Fed officials, the Fed is likely to raise interest rates by 25 basis points three times in the first half of 2023, after which the Fed will end the process of raising interest rates and maintain the target range of the federal funds rate at around 5%. Until we ensure that US inflation continues to fall back to its target of 2 per cent.

According to foreign media reports, of the 23 large financial institutions that do business directly with the Federal Reserve, more than 2/3 of economists conclude that the United States will fall into recession in 2023. Economists at two other banks predict a recession in the United States in 2024.

At that time, business investment and household consumption will be further curbed, and the US economy will continue to decline. A recession is fast approaching, and tech giants are bracing themselves for a prolonged downturn.

Edit / Corrine