The Corporate Layoffs Have Started And Leftist Big Tech Is Leading The Pack
There are two major forces at work within the US economy today that pull in different directions but end up in the same place: These forces are price inflation caused by central bank stimulus along with supply chain instability and recession triggered by rising interest rates. Immense corporate and consumer debt also play a role, but this ties in directly with the interest rate issue.
In other words, we are looking at a classic stagflationary scenario amplified by years of fiat dollar printing by the Federal Reserve. The only element that has been missing is rising unemployment, until now.
The word “recession” is being used liberally lately and there is a good reason for this – It is vague and gives the public little to no idea of what to expect or how bad the economic downturn could get. It is also a convenient distraction from the much more dangerous issue of rising prices. If a “recession” is on the way, won’t this mean prices will fall? Not necessarily, at least not anytime soon.
With high retail prices leading to less purchasing power among US consumers and less spending, corporations are going to have to cut costs somewhere. They can only raise prices so high for goods and services before they will inevitably turn to mass layoffs to gain breathing room. And, the first companies that are going to have to face the music are the most frivolous business models that don’t produce necessities (i.e. Big Tech).
At least 143 US tech companies have laid off around 24,000 employees this year and this is just the beginning.
There are the more publicized layoffs at streaming services like Netflix which fired around 500 regular workers and canceled operations with numerous contractors. The company lost 200,000 subscribers in the first quarter of this year and expects to lose 2 million more subscribers in the near term. It’s another case of “Get Woke, Go Broke,” but it’s also a reflection of the changing tech environment as inflation in necessities strangles consumer wallets. There is no doubt Netflix will see continued layoffs through the rest of this year.
Then there are the more quietly publicized employment issues at social media giants like Facebook and Twitter. Twitter announced mass layoffs were in the works last week as uncertainty over the company’s acquisition by Elon Musk grew. Now that it is clear that Musk will not be buying the platform, they face serious decisions on cuts in order to remain afloat as their stock price tanks. So far, Twitter has laid off over 30% of its talent division and announced a hiring pause.
In a recent leaked memo, Facebook executives have informed managers that “low performance” employees have no place at the company and will need to be cut, indicating that a philosophy of meritocracy is returning to the otherwise woke world of social media.
Facebook has been bleeding money for years now and in February it’s stock prices plummeted after it announced that it has lost subscribers for the first time in its 18 year history. The shares have collapsed by 50% since February and are still dropping. Mark Zuckerberg personally lost at least $32 billion in stock holdings in February alone.
Multiple Big Tech and high concept companies that rely heavily on tech have announced hiring freezes or layoffs in the past month, including Apple, Uber, Lyft, Snap, Hopin and Coinbase.
Financial problems at proto-news websites like Buzzfeed and Vox have been well known for months as the venture capital artificially propping up these companies has finally run out. But extensive losses have been felt throughout the corporate media and leftist web media in particular. Even CNN is floundering with its abrupt cancellation of streaming service CNN+ and the layoff of staffers. Most or all of these corporations represent peripheral digital products and services that the vast majority of Americans have no use for and which serve no core purpose.
A moderate recession might actually be useful is separating the wheat from the chaff within the current corporate climate, and with inflation rising there is the good chance that the Federal Reserve will not choose to step in to pour more stimulus dollars into dead companies that are dragging the economy down. Just because they did it in 2008/2009 does not mean they will do it now. However, it’s unlikely that the downturn will remain limited and merely clean out bad business. The word “recession” is misleading; what we are really facing is a historic breakdown of the system which will affect the majority of the public.
If the current stagflation trend continues, layoffs will accelerate into the end of this year and into 2023, likely on a scale similar to 2009. Yet prices on most necessities will remain high and it will be the worst of both economic worlds. Big tech companies will only survive with extreme changes to their customer and performance models as advertising dollars dry up completely. Either that, or they will require some kind of government assistance beyond what they have already received, though this will only expose them to more consumer scrutiny and more losses in their user numbers.
It is perhaps the one bright spot in an otherwise dismal economic forecast; that some of these platforms which have politically abused their customers for so long will finally suffer some karma.
Thu, 07/14/2022 – 21:20