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The U.S. economy is booming. So why are tech companies laying off workers?
(www.washingtonpost.com)
this post was submitted on 04 Feb 2024
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Technology
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Money isn't free anymore and they have a lot of debt
And
Elon broke the seal on firing huge swaths of a tech workforce to make your numbers look better.
How’s it working out for Elon?
You need more upvotes.
High interest rates are here, and it's likely to be some time before we get back down to the 1% interest rates we saw during covid (or even before).
Companies are shifting either to real or imagined pressures of the stick market. And those pressures are less about chasing unlimited growth and want to see some return.
Ergo. Layoffs. Meta producing dividends.
If interest rates stay high, I'd expect to see large megacorps shift more and more to profitability over growth.
I'm old. These rates don't seem high at all. It's been higher for most of my life.
Congratulations on being old e ough to buy property when it was cheap.
For the rest of us, we all adapted to the low interest post-08 world. Now, we need to adapt to the higher interest post-21 world.
Oh, home ownership has been out of reach for me and everyone I know my age in my part of the country since before I graduated from University.
Since the vast majority of homeowners aren’t doing so with cash, the total cost of a home is the price over the lifetime of the mortgage. I’d be fine with the higher interest rates if the base price of the home was lower, or vice versa. However, the houses have gone up in price AND the interest rates have gone up meaning that the total cost has risen substantially.
Some of this is due to scarcity caused by the 2008-9 recession, people couldn’t afford homes, so the amount of new construction dropped and the workforce adjusted. Meaning that now we’re behind a few million homes from what we should have built by now, and that scarcity is driving prices up. Combine that with the high interest rates causing people to want to hold on to what they have instead of moving (so they can avoid the interest rate and housing cost jump) means we have even less inventory that normally.
I’ll probably have to move for work soon, and I’m not looking forward to swapping my mostly paid off 4% home with a more expensive higher rate one in a different area.
Don't give him too much credit, it's hardly the first time the tech sector has gone through this cycle. Elon had to do it because he massively overpaid for Twitter. The fact that his layoffs came at the front of this wave is probably just coincidence.
I wouldn't say coincidence. I'd say the others were wanting to do the same, but held back because of bad press. After Elon did it, they had an excuse that took the heat off.
I really think a lot of this is "the other popular kids are doing it" and boards and VC saying basically the same thing to the c-suite.