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Comment by ganoushoreilly | Hacker News Reader

Another indicator consumer spending is dropping and costs are going through the roof. This is probably the first of a bunch of layoffs sadly. I expect Finances (Banks / Mortgage providers) are going to be aggressively reducing headcounts in the near future. One side of my family is heavily in that industry and they're all extremely nervous.

Sorry for anyone that lost their role, it's always tough to lose a job regardless of the company they worked for. I wish them all success and luck finding their next endeavor.

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This is most likely not related to cash flows. This seems to be a preemptive strategic layoff to cut costs in preparation of tougher times to raise money / higher interest rates.

Klarna’s income is tied to consumer discretionary spending which is falling off a cliff.

With COVID becoming just another disease and the uncertainty from the war in Ukraine, it will only be worse from now on for consumer spending.

A lasting peace for Ukraine needs to happen before that will change.

And with Ukraine not willing to give any territory to Russia, that peace seems very far off.

A coup in Russia could change that, but a coup seems very unlikely.

This has nothing to do with Ukraine, and everything to do with inflation and insane increases in the cost of everything.

It has a little bit to do with Ukraine, insofar as energy is having its own shortage exacerbated by the conflict on top of the massive inflation that would probably create demand destruction all on its own.

Consumer spending is continuing to steadily grow.[0]

[0] https://fred.stlouisfed.org/series/PCEC96

That seems to stop showing any data later than Mar 2022?

That’s true, it doesn’t capture data from the last two months.

The trends in market valuations have been consistent for several months now though, going back into last year. Whereas any collapse in consumer spending has yet to manifest itself for any longer than a month and a half.

Look at volumes, not just $. Volumes are down Y/Y while $ is just slightly positive due to inflation.

Or just look at Target’s Q1 results and guidance from last week.

The chart I linked is inflation adjusted.

look out for yourselves too

startups can’t exist without free vc cash that’s going to be tight soon-ish

Oh for sure, if you're not cashflow positive and are looking for Series A / Series B I expect to see the purse strings tightening up hard. Already have a few friends at firms saying they're having to be more restrictive / selective than before.

I can throw a stone to about 15 startups near where i'm at that are all in tight cash mode already, not really making a whole lot and are hoping for a big raise. None of them that I know personally have metrics that will pass the test. :(

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