On November 14, 2022, The New York Times reported that Amazon planned to lay off as many as 10,000 employees that week, the latest of many announced layoffs from large corporations this year. Large companies appear to be experiencing the negative effects of a turbulent economy and are taking steps to prepare for additional turmoil.
Layoffs have been on the rise.
In November 2022, large companies including Meta and Salesforce, announced thousands of layoffs, with Meta announcing plans to lay off 11,000 employees and Salesforce cutting almost 1,000 on November 7, 2022—with announced plans to lay off another 2,500. Other companies have also enacted major layoffs in 2022, notably Stripe, Twitter, Snap Inc., Credit Suisse, and Ford. Still other companies, such as Disney, have announced hiring freezes.
Consumers have begun expecting a higher jobless rate in the next year, according to the results of a survey by the Federal Reserve Bank of New York. MarketWatch reports that jobless expectations are at their highest level since the start of the COVID-19 pandemic in April 2020.
Several company leaders have recently predicted a recession.
Tesla/SpaceX/Twitter CEO Elon Musk, who in addition to laying off over 3,000 members of Twitter’s staff, predicted a “serious recession” during a November 10, 2022, meeting with Twitter employees. In an email to Twitter employees, Musk wrote, “Frankly, the economic picture ahead is dire.”
Amazon founder and executive chairman Jeff Bezos has also predicted a recession in 2023. In an interview with CNN that aired on November 13, 2022, Bezos said, “The probabilities say if we’re not in a recession right now, we’re likely to be in one very soon.” The next day, The New York Times reported Amazon’s plan to lay off as many as 10,000 employees.
If industry leaders are correct about a forthcoming recession, consumers may consider preparing their portfolios for market volatility.
Consumers may be as vulnerable to recessionary forces as companies because these factors have historically impacted stocks and other paper-based assets that make up much of consumer portfolios.
An article published by Nasdaq on November 13, 2022, states, “At a time when the economy is in recession, it is essential to diversify your portfolio. During a recession, stocks tend to be volatile. By maintaining a diverse portfolio, however, you can mitigate the effects of sharp price fluctuations.”
If companies are preparing for economic volatility, consumers may wish to do the same.
Read U.S. Money Reserve’s “Market Insider” each week for more economic and financial insights.