11 ms·

It's not just projections or worries. Companies have real hard data, such as sales pipeline, inventories, orders etc. If your sales pipeline is down, inventory

• everdev 8y ago
  True but there's also a lot of unknowns and variables in any business and mangers have to guess sometimes. In that sense mood and atmosphere can matter if you're on the fence.
• CydeWeys 8y ago
  I think their point is that all of that hard data may be a result of self-fulfilling prophecies of other companies cutting back their business because there's a general sense that a recession might be coming.
  • mywittyname 8y ago
    I mean, if you're running a burger joint and fewer people are coming in to buy burgers, why would you continue to order the same amount of beef each week? I get that the real world more complicated than this, as forecasting can be done for months out, but businesses can't magically fix the economy by continuing to spend the way they have been because it isn't sustainable.
    • diminoten 8y ago
      The problem being pointed out is that fewer people aren't coming in to buy burgers yet, but because the store managers heard rumors of a recession, they preemptively fire employees and order less meat, which puts fewer dollars in their employees pockets, which means less spending power per person on average which means people actually do spend less, even though there wasn't actually anything wrong in the first place.
      • coralreef 8y ago
        Based on what I know about American consumer spending habits, people basically spend whenever they can (which is why consumer debt is so high). It's when they "physically" can't spend that it starts to slow down (slowing income, access to credit).
        • inuhj 8y ago
          That's exactly right. Recessions are not behavioral patterns. They happen when borrowers can no longer borrow more to pay the interest on their existing debts.
          • diminoten 8y ago
            Yes, that's the traditional understanding. We're talking about something new, something possibly different.
  • rabidrat 8y ago
    More of a positive feedback loop than a self-fulfilling prophesy.
    • cheez 8y ago
      Yay proper use of positive feedback loop.
      • olleromam91 8y ago
        Yay proper use of a positive feedback loop.
        • menzoic 8y ago
          Yay proper use of a positive feedback loop.
• fiter 8y ago
  This could leave you flat-footed when the economy picks back up or you realize it was a 'blip', so it's not an easy/clear decision to make because you see one or two numbers going down.
  • VBprogrammer 8y ago
    Not to mention, laying off people has a non-negligible impact to real peoples lives.
  • philwelch 8y ago
    This is the "bullwhip effect": https://en.wikipedia.org/wiki/Bullwhip_effect https://en.wikipedia.org/wiki/Bullwhip_effect
    • mashThemeSong 8y ago
      Sort of like Cardi B is popular because there's near zero supply of new music, so it seems as though people actually like Cardi B, when in reality, they lack choices, and yet, have terabytes of bandwidth and flash memory, and high dynamic range, sound isolating neodymium speakers to listen to former strippers brag about how much money they spend.
  • cylinder 8y ago
    It's a stupid fucking mentality pervasive amongst the American corporate MBA set. It treats people as disposable and is usually not in the company's best interests. It's a short term boost to a company with long lasting and often disastrous implications down the track.
• JustSomeNobody 8y ago
  >... it is a manager's job to lay off employees. I feel awful for those people whose lives have just been disrupted so. I’m particularly empathetic because, as a foster parent, I know very well what may happen to some of those families.
  • dba7dba 8y ago
    I've never been a manager or had any role in laying someone off. But I've been laid off myself and know plenty people who get laid off and suffer the consequences, some quite severe. So I sometimes wonder, how do these managers who lay off people sleep at night? I mean they are just doing their job so that THEY themselves don't get laid off. And next I wonder, who are these rich rich people who want more money so that they hire people to lay off other people? But I guess that's life.
    • jmvoodoo 8y ago
      I've had to lay off a decent number of people over the course of my career. The way I have always justified it is that I'm keeping the company healthy, and allowing far more people to keep their jobs in doing so. I'm sure there are cases where restructuring was done to the detriment of the business. I don't believe I've personally participated in any of those. That is part of the reason I took those jobs. Someone was going to do it, and I felt that I could do it in a way that kept the business healthy and was as respectful and careful about the humans impacted as possible (ensuring severance, having 1-1 conversations with every impacted person on my team, etc). For context I was an executive brought in to restructure software companies after they were purchased or tucked in by the LBO side of a PE firm.
      • Symmetry 8y ago
        In theory it would be better to cut everyone's pay than to lay off some people. But this brings lots of complications. https://www.econlib.org/archives/2013/09/why_dont_wages.html https://www.econlib.org/archives/2013/09/why_dont_wages.html
• kbenson 8y ago
  Regarding the yield curve tweet, I'm pretty well acquainted with that whole theory since I listen to The Indicator from Planet Money podcast, and it's a favorite topic of theirs. I was going to note that it generally signals a recession when it's inverted for a whole quarter, but then I read the Tweet. And it's about how the lower than usual rates it's currently at matter for what it says, which makes sense. Then I noticed it was Paul Krugman making the observations. Any prior points I had no longer seem worth adding now. ;)
• datavirtue 8y ago
  It's the managers job to run the company in a way that they never have to lay off employees.