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I like this narrative, but don't these charts include all non-farm jobs? From what I've read, seems like tech is being hit harder than other areas. I might be w
by blastro 3y ago
I like this narrative, but don't these charts include all non-farm jobs? From what I've read, seems like tech is being hit harder than other areas. I might be wrong about that and, at any rate, I prefer your approach over over-indexing on anecdotal data, but seems a bit rougher than necessary to depict the full picture.
- ak217 3y agoTech is being hit harder to the extent it depends more on capital financing for employee compensation. Going from 0 to 5.5% fed funds rate has enormous implications for the cost of capital and growth models. Corporate debt financing yield went from 2% to 6% (https://fred.stlouisfed.org/series/BAMLC0A0CMEY https://fred.stlouisfed.org/series/BAMLC0A0CMEY). (Before the pandemic it was 3% for a decade, except for a small blip when the fed tried to raise the rates and the market sneezed.) The hurdle rate went up accordingly. A lot of business models that worked over the past decade are on borrowed time right now. Every company and employee's situation is different and talent is still rewarded, but many pre-revenue companies are facing a very different financial reality and can sustain a much smaller workforce.