There have been a number of layoff announcements by big tech firms at the start of the new year, signaling a potentially weakening labor market that could accelerate into 2024. Yet, the recent pivot by the Federal Reserve might stave off a spike in the unemployment rate and a resulting recession, should Chair Powell create a soft landing in the economy. If the Fed fails and ushers in a hard landing, brace for a layoff surge.
Let's begin with a Resume Builder survey released at the end of last year, which said nearly 40% of 900 companies surveyed warned they would have to announce layoffs this year. About half of companies said they would implement a hiring freeze.
When respondents were asked about the rationale for layoffs, half cited an impending recession as the reason.
In a separate report, Bloomberg detailed the latest big tech layoffs layoffs:
Amazon.com Inc. is cutting hundreds of workers across content-creation units, including Prime Video and live-streaming site Twitch. Alphabet Inc.'s Google is also nixing hundreds of positions in hardware and its Assistant unit. Unity Software Inc., which makes the tech that underpins popular mobile games like Pokemon Go, said it would reduce its workforce by 25%, eliminating about 1,800 jobs.
Bloomberg Intelligence analyst Poonam Goyal said the job cuts at Amazon were "likely just a move to further streamline costs and improve efficiency to increase earnings."
Despite signs of an economic downturn, the job tracking website Layoffs.fyi showed the job market could be stabilizing after 1,186 tech companies cut 262,600 jobs last year. Since the first of the year, 18 tech companies have laid off nearly 3,000 workers.
"I'd say the dust is settling — you're starting to see companies gear up to say the worst is behind us," said Bert Bean, chief executive officer of Insight Global, a staffing company.
However, Citi analysts told clients this last week: "While layoffs are still low, these early signs of a weakening labor market could still accelerate into 2024."
The analysts continued: "On the other hand, the recent Fed-induced loosening in financial conditions may also be successful in delaying a 2024 recession. Labor market data in early 2024 (after the volatile holiday period through January) will be particularly important to watch."