5 ms·

I think the tech sector was pumped up by the long period of zero interest rates and falling back down since interest rates are up, have been up for a while, and

I think the tech sector was pumped up by the long period of zero interest rates and falling back down since interest rates are up, have been up for a while, and looks like they will stay up longer than expected. Meanwhile, most of the rest of the economy didn't benefit very much from the zero interest rates - it didn't grow like crazy with huge job demand and high wages. So, it isn't as affected as much by the higher interest rates. Which makes the overall job growth look stable even though the tech sector is hurting.

delfinom 2y ago
The tech sector in general went through 2 decades of growth. Smartphones didn't even take off until just about 12 years ago. It isn't just the interest rates but the fact the entire sector was the wild west for the longest time. Now it's reaching maturity. AI is the last "growth" avenue for them to market infinite growth on but eh. There's still room for new startups and entrants in the tech sector, it just ain't going to be the wild west anymore. There's only so many variants of the same thing the market is going to support long term.
- svggrfgovgf 2y ago
  I agree that the tech sector in general went through a lot of growth in the past 20 years, with a lot of new products. But, I think the level of interest rates has a large impact on which projects are funded. With interest rates at zero (actually negative given inflation), almost anything is worth trying because you don't need a big return to come out ahead. And lots of those projects fail (never produce a product which can be sold), but while the projects are active people are employed. It's sort of like Venture Capital, but inside big companies: when interest rates are low, they run a lot of different riskier projects expecting some of them to pay off enough to make up for the failures. When interest rates are higher, a project has to have a more certain return and a higher projected return in order to get funded. So weak projects are cancelled, or not started, people are laid off and hiring becomes really slow. The mystery to me is why the rest of the economy didn't take off. Real estate did, and equities (stock market) did. But not the "main street" part of the economy or the industrial part of the economy. I think that since these parts of the economy did not take off, overall inflation remained relatively low.
  - jowdones 2y ago
    >>With interest rates at zero (actually negative given inflation), almost anything is worth trying because you don't need a big return to come out ahead You still lose the principal, geez! Like if you worked your ass off for a life time to save a million dollars and interest rate is zero, you're saying "I'll bet all my money on red in a Las Vegas casino", quoting you "because anything it's worth trying". The interest rate has very little impact on the overall risk of starting a business.

delfinom 2y ago

The tech sector in general went through 2 decades of growth. Smartphones didn't even take off until just about 12 years ago. It isn't just the interest rates but the fact the entire sector was the wild west for the longest time. Now it's reaching maturity. AI is the last "growth" avenue for them to market infinite growth on but eh. There's still room for new startups and entrants in the tech sector, it just ain't going to be the wild west anymore. There's only so many variants of the same thing the market is going to support long term.

svggrfgovgf 2y ago
I agree that the tech sector in general went through a lot of growth in the past 20 years, with a lot of new products. But, I think the level of interest rates has a large impact on which projects are funded. With interest rates at zero (actually negative given inflation), almost anything is worth trying because you don't need a big return to come out ahead. And lots of those projects fail (never produce a product which can be sold), but while the projects are active people are employed. It's sort of like Venture Capital, but inside big companies: when interest rates are low, they run a lot of different riskier projects expecting some of them to pay off enough to make up for the failures. When interest rates are higher, a project has to have a more certain return and a higher projected return in order to get funded. So weak projects are cancelled, or not started, people are laid off and hiring becomes really slow. The mystery to me is why the rest of the economy didn't take off. Real estate did, and equities (stock market) did. But not the "main street" part of the economy or the industrial part of the economy. I think that since these parts of the economy did not take off, overall inflation remained relatively low.
- jowdones 2y ago
  >>With interest rates at zero (actually negative given inflation), almost anything is worth trying because you don't need a big return to come out ahead You still lose the principal, geez! Like if you worked your ass off for a life time to save a million dollars and interest rate is zero, you're saying "I'll bet all my money on red in a Las Vegas casino", quoting you "because anything it's worth trying". The interest rate has very little impact on the overall risk of starting a business.