5 ms·

As far as I can tell, layoffs seem concentrated among high-earning folks - I can definitely see how anyone browsing HN would think we're headed straight for a r

As far as I can tell, layoffs seem concentrated among high-earning folks - I can definitely see how anyone browsing HN would think we're headed straight for a recession. But it seems like overall, and especially in lower-wage jobs, employment is still humming along and people are very much not getting laid off. That actually really gives me hope for a soft landing - those high-wage folks are much less likely to have serious financial problems like homes getting foreclosed (not to say it's not possible but they're much more likely to have a cushion to keep making payments). If they pull back on their discretionary spending plus stop doing things like driving up housing/car/stock prices by putting money into those things, that feels like it could be the basis for inflation slowing down without a huge uptick in unemployment and everything that comes with it.

notch656c 4y ago
I make a good wage and the first thing I'll do if I get the boot is stop buying things from the plebs. No eating out and paying the cook. No day care paying the working class daycare worker. No buying lumber for house projects paying the logger and mill worker. No cars paying the auto worker. etc, etc. Less toys for the kid meaning less trucking and shipping work. Compound that at scale and it will definitely have an effect.
- AYBABTME 4y ago
  But relatively minor, expenses don't scale linearly with income.
  - notch656c 4y ago
    True but at a minimum income I am not employing anyone and basically only paying rent (straight to the megarich) and taxes (straight to the destitute and the megarich) and food while scrounging and DIY for everything else. The portion people spend on working class worker services probably increases exponentially going from lower working class to upper middle class, which would make the effect naturally even worse than a linear one.
    - ghufran_syed 4y ago
      there is also the fact that the skewed income distribution means that there are relatively few high income people cutting back (a lot) on expenses, so while it has an effect, it’s probably a lot less than if the same proportion of low income people were losing their jobs
  - idopmstuff 4y ago
    Yep, this is it exactly. Even tens of thousands of tech workers getting laid off and cutting back discretionary spending isn't actually that impactful in the grand scheme of things, especially since much of their spending is on high-end, luxury goods.
coffeebeqn 4y ago
Even more it still seems like it’s mainly companies who doubled their headcount since COVID started because someone extrapolated the madness to last forever? I sure hope the first in line for layoffs are the people who thought that was a great idea
- oxfordmale 4y ago
  Unfortunately, CEOs have the privilege of sacking other people if they don't do their own job properly.
- P_I_Staker 4y ago
  To a lot of people it seemed like things were really heating up.
grey-area 4y ago
But it seems like overall, and especially in lower-wage jobs, employment is still humming along and people are very much not getting laid off. There will not be a soft landing. When has there ever been a soft landing and how would raising rates into a recession ever result in one? Raising rates takes 1 year to come through to the real economy - we haven't even seen the impact yet, only on stock prices which foreshadow the real economy and again are a leading indicator. They will raise till unemployment starts to rise. Unemployment is the goal of this Fed policy - that is the point - cause unemployment so that inflation goes away.
- idopmstuff 4y ago
  > There will not be a soft landing. The reality is we cannot see the future of our incredibly complex, ever-changing economy. Sure, this hasn't happened in the past, but on the other hand the economy today is vastly different than it was even fifty years ago. Not to say we couldn't end in a recession - of course that is a distinct possibility - but the reality is that we don't have a ton of history to draw on when it comes to post-pandemic recessions exacerbated by supply chain issues and large-scale war in major energy-producing countries. I wonder if you've shorted the equities markets to the greatest degree practically possible given your financial situation? If not, then I think you're phrasing things with too great a degree of absoluteness. In terms of the Fed's goal, it is reduction of inflation. Unemployment is both a driver and a signal of that, but it's not the ultimate goal. And besides, a rise in unemployment doesn't guarantee a recession - we're at 3.5% and folks from the Fed have said they see 4% as consistent with keeping inflation stable at an appropriate level. It is absolutely possible to have 4% inflation and not be in a recession.
  - notch656c 4y ago
    >I wonder if you've shorted the equities markets to the greatest degree practically possible given your financial situation? If not, then I think you're phrasing things with too great a degree of absoluteness. The equities market doesn't have great correlation with the common pleb's job outlook so it makes no sense to short the equities market based on these kind of predictions.
RC_ITR 4y ago
One interesting concept is that falling inequality will look exactly like this. Wealthy people have gotten used to increasing the gap and therefore assume that trouble at the top is much worse below. But what’s actually panning out is that Internet technology is great at replacing white collar jobs and awful at replacing blue collar jobs (I don’t think electricians are losing sleep over ChatGPT).
- themitigating 4y ago
  But technology is replacing entry level jobs Self checkout, food delivery robots, robotic waitresses, etc.
  - deltree7 4y ago
    They are not. It's easy to build an AI that write code than to build an AI that change sheets
    - pharmakom 4y ago
      I don’t think we know that yet. GPT is less capable than StackOverflow, and a service like that using cheap human labour has not yet replaced programmers. In the absence of AI that can write code or change sheets how can we know? Meanwhile, farm automation has flipped the overall percentage of labour force from >90% farm to <10%
  - RC_ITR 4y ago
    I would actually very strongly disagree with that assertion. Delivery robots are limited to certain college campuses, robotic waitresses are far from the mainstream, and self-checkout appears to still need 1-2 workers manning it for loss-prevention/general help. Meanwhile, Robotic Process Automation is gutting the "I download a PDF and transcribe it to Excel" worker category at banks.
tempsy 4y ago
total revolving consumer credit aka credit card debt is a straight line up going to hit $1 trillion soon for the first time. seems not great in face of high interest rates. https://fred.stlouisfed.org/series/CCLACBW027SBOG https://fred.stlouisfed.org/series/CCLACBW027SBOG
- rippercushions 4y ago
  And that doesn't even include the explosion in Buy Now Pay Later services like Afterpay, which are very much debt but likely don't show up in the report.
  - umeshunni 4y ago
    But those are generally shorter term loans
qqqwerty 4y ago
This is a good point that I had not previously considered. Inflation has been pretty stubborn. I assume some of that is coming from supply chain issues, but some of it also could be due to higher-earning households not being as price sensitive as they would have been in previous eras. i.e. a Google engineer is not going to really notice or care that milk is 50% more expensive. They might not even notice or care that their new car now costs $40k instead of $30k. Their annual stock options probably fluctuate by that much on a daily basis. That level of economic comfort used to be the exclusive purview of the professional class, i.e. doctors, lawyers, etc... But the tech boom has expanded that class (upper middle, lower rich?) considerably. Will be interesting to see if this is the straw that can break the inflation camel. Overall, I am getting the impression that these layoff announcements, while grabbing headlines, are not very indicative of the market at large. But it does seem like they are picking up steam, and of course, these things can also reinforce each other. For example when you let go of 10% of your staff, that means you also reduce your per-seat SAAS software spend, and that money was someone else's revenue. Anyways, I am rooting for a soft landing but still feel like these things are too hard to control. Would be nice if we could just let some air out of the more bubbly parts of the economy while keeping everything else chugging along. Previous recessions usually result in those who can least afford it getting hit the hardest, so a change of pace on that front would be welcome. Fingers crossed.
- aaa_aaa 4y ago
  Inflation mostly caused from extreme money printing.
  - ankeshk 4y ago
    Why did Japan not have the same inflation even after printing more than anyone for a lot more years?
    - aaa_aaa 4y ago
      No they did not print more than US in last 3 years. And their inflation is getting higher.
ramesh31 4y ago
>As far as I can tell, layoffs seem concentrated among high-earning folks - I can definitely see how anyone browsing HN would think we're headed straight for a recession. But it seems like overall, and especially in lower-wage jobs, employment is still humming along and people are very much not getting laid off. Shit rolls downhill. We'll see how well the service economy holds up when their client base has been out of work for 6 months.
- synu 4y ago
  Are tech workers really the basis of the service economy? And even if so, will they remain so if lower wage earners, of which there are quite a lot more, start earning relatively more?
  - ramesh31 4y ago
    >Are tech workers really the basis of the service economy? In Seattle and the SFBA, yes.
distortionfield 4y ago
[dead]

notch656c 4y ago

I make a good wage and the first thing I'll do if I get the boot is stop buying things from the plebs. No eating out and paying the cook. No day care paying the working class daycare worker. No buying lumber for house projects paying the logger and mill worker. No cars paying the auto worker. etc, etc. Less toys for the kid meaning less trucking and shipping work. Compound that at scale and it will definitely have an effect.

AYBABTME 4y ago
But relatively minor, expenses don't scale linearly with income.
- notch656c 4y ago
  True but at a minimum income I am not employing anyone and basically only paying rent (straight to the megarich) and taxes (straight to the destitute and the megarich) and food while scrounging and DIY for everything else. The portion people spend on working class worker services probably increases exponentially going from lower working class to upper middle class, which would make the effect naturally even worse than a linear one.
  - ghufran_syed 4y ago
    there is also the fact that the skewed income distribution means that there are relatively few high income people cutting back (a lot) on expenses, so while it has an effect, it’s probably a lot less than if the same proportion of low income people were losing their jobs
- idopmstuff 4y ago
  Yep, this is it exactly. Even tens of thousands of tech workers getting laid off and cutting back discretionary spending isn't actually that impactful in the grand scheme of things, especially since much of their spending is on high-end, luxury goods.

coffeebeqn 4y ago

Even more it still seems like it’s mainly companies who doubled their headcount since COVID started because someone extrapolated the madness to last forever? I sure hope the first in line for layoffs are the people who thought that was a great idea

oxfordmale 4y ago
Unfortunately, CEOs have the privilege of sacking other people if they don't do their own job properly.
P_I_Staker 4y ago
To a lot of people it seemed like things were really heating up.

grey-area 4y ago

But it seems like overall, and especially in lower-wage jobs, employment is still humming along and people are very much not getting laid off. There will not be a soft landing. When has there ever been a soft landing and how would raising rates into a recession ever result in one? Raising rates takes 1 year to come through to the real economy - we haven't even seen the impact yet, only on stock prices which foreshadow the real economy and again are a leading indicator. They will raise till unemployment starts to rise. Unemployment is the goal of this Fed policy - that is the point - cause unemployment so that inflation goes away.

idopmstuff 4y ago
> There will not be a soft landing. The reality is we cannot see the future of our incredibly complex, ever-changing economy. Sure, this hasn't happened in the past, but on the other hand the economy today is vastly different than it was even fifty years ago. Not to say we couldn't end in a recession - of course that is a distinct possibility - but the reality is that we don't have a ton of history to draw on when it comes to post-pandemic recessions exacerbated by supply chain issues and large-scale war in major energy-producing countries. I wonder if you've shorted the equities markets to the greatest degree practically possible given your financial situation? If not, then I think you're phrasing things with too great a degree of absoluteness. In terms of the Fed's goal, it is reduction of inflation. Unemployment is both a driver and a signal of that, but it's not the ultimate goal. And besides, a rise in unemployment doesn't guarantee a recession - we're at 3.5% and folks from the Fed have said they see 4% as consistent with keeping inflation stable at an appropriate level. It is absolutely possible to have 4% inflation and not be in a recession.
- notch656c 4y ago
  >I wonder if you've shorted the equities markets to the greatest degree practically possible given your financial situation? If not, then I think you're phrasing things with too great a degree of absoluteness. The equities market doesn't have great correlation with the common pleb's job outlook so it makes no sense to short the equities market based on these kind of predictions.

RC_ITR 4y ago

One interesting concept is that falling inequality will look exactly like this. Wealthy people have gotten used to increasing the gap and therefore assume that trouble at the top is much worse below. But what’s actually panning out is that Internet technology is great at replacing white collar jobs and awful at replacing blue collar jobs (I don’t think electricians are losing sleep over ChatGPT).

themitigating 4y ago
But technology is replacing entry level jobs Self checkout, food delivery robots, robotic waitresses, etc.
- deltree7 4y ago
  They are not. It's easy to build an AI that write code than to build an AI that change sheets
  - pharmakom 4y ago
    I don’t think we know that yet. GPT is less capable than StackOverflow, and a service like that using cheap human labour has not yet replaced programmers. In the absence of AI that can write code or change sheets how can we know? Meanwhile, farm automation has flipped the overall percentage of labour force from >90% farm to <10%
- RC_ITR 4y ago
  I would actually very strongly disagree with that assertion. Delivery robots are limited to certain college campuses, robotic waitresses are far from the mainstream, and self-checkout appears to still need 1-2 workers manning it for loss-prevention/general help. Meanwhile, Robotic Process Automation is gutting the "I download a PDF and transcribe it to Excel" worker category at banks.

tempsy 4y ago

total revolving consumer credit aka credit card debt is a straight line up going to hit $1 trillion soon for the first time. seems not great in face of high interest rates. https://fred.stlouisfed.org/series/CCLACBW027SBOG https://fred.stlouisfed.org/series/CCLACBW027SBOG

rippercushions 4y ago
And that doesn't even include the explosion in Buy Now Pay Later services like Afterpay, which are very much debt but likely don't show up in the report.
- umeshunni 4y ago
  But those are generally shorter term loans

qqqwerty 4y ago

This is a good point that I had not previously considered. Inflation has been pretty stubborn. I assume some of that is coming from supply chain issues, but some of it also could be due to higher-earning households not being as price sensitive as they would have been in previous eras. i.e. a Google engineer is not going to really notice or care that milk is 50% more expensive. They might not even notice or care that their new car now costs $40k instead of $30k. Their annual stock options probably fluctuate by that much on a daily basis. That level of economic comfort used to be the exclusive purview of the professional class, i.e. doctors, lawyers, etc... But the tech boom has expanded that class (upper middle, lower rich?) considerably. Will be interesting to see if this is the straw that can break the inflation camel. Overall, I am getting the impression that these layoff announcements, while grabbing headlines, are not very indicative of the market at large. But it does seem like they are picking up steam, and of course, these things can also reinforce each other. For example when you let go of 10% of your staff, that means you also reduce your per-seat SAAS software spend, and that money was someone else's revenue. Anyways, I am rooting for a soft landing but still feel like these things are too hard to control. Would be nice if we could just let some air out of the more bubbly parts of the economy while keeping everything else chugging along. Previous recessions usually result in those who can least afford it getting hit the hardest, so a change of pace on that front would be welcome. Fingers crossed.

aaa_aaa 4y ago
Inflation mostly caused from extreme money printing.
- ankeshk 4y ago
  Why did Japan not have the same inflation even after printing more than anyone for a lot more years?
  - aaa_aaa 4y ago
    No they did not print more than US in last 3 years. And their inflation is getting higher.

ramesh31 4y ago

>As far as I can tell, layoffs seem concentrated among high-earning folks - I can definitely see how anyone browsing HN would think we're headed straight for a recession. But it seems like overall, and especially in lower-wage jobs, employment is still humming along and people are very much not getting laid off. Shit rolls downhill. We'll see how well the service economy holds up when their client base has been out of work for 6 months.

synu 4y ago
Are tech workers really the basis of the service economy? And even if so, will they remain so if lower wage earners, of which there are quite a lot more, start earning relatively more?
- ramesh31 4y ago
  >Are tech workers really the basis of the service economy? In Seattle and the SFBA, yes.

distortionfield 4y ago

[dead]