Amazon's Jeff Bezos in economy warning: 'Batten down hatches' | Hacker News Reader

Amazon's Jeff Bezos in economy warning: 'Batten down hatches'

bbc.com

49 pointspigtailgirl99 comments

Its important to note that every leader of a strong company has a financial interest in saying this, regardless of its validity. Growing companies need to "leave the hatches open" (so to speak) to, well, continue to grow; hire, attract talent, invest, raise pay, etc; which is exactly what strong companies don't want them to do. They benefit from pushing the narrative that the times are tough, from the privilege of having hatches to batten, because it hurts competitors, and lowers attrition even in the face of reduced pay raises.

I'm not asserting that the economy will be fine and dandy over the next six to twelve months; just that you can't trust a word these snakes say. After all; isn't it strange that Amazon aims to add more seasonal operations jobs to account for the holiday surge this year, than they did last year? [1] [2]

[1] https://www.retailtouchpoints.com/topics/store-operations/wo...

[2] https://www.retailbrew.com/stories/2021/09/20/breaking-amazo...

That or fluffing up hedge funds looking to exit bearish positions where Mr. Bezos may or may not have some of his massive wealth parked.

At some point the only way to continue growth is to buy a 24 hour news outlet and start letting the air out of everyone else's tires. Ask Microsoft.

To me msnbc felt like it was a play to get ahead of the antitrust narrative.

Why would Bezos invest in hedge funds?

He's so wealthy he could lose 99.99% of his net worth and still live a life of complete luxury, safety and comfort.

Spot on, and the recent press around Amazon's warehouse churn tells you everything you need to know about how they view labor. They're legitimately at risk of churning through their entire candidate pool in some job functions within the next few years and they don't care at all.[0]

0: https://www.theguardian.com/technology/2022/jun/22/amazon-wo...

Perhaps that explains the increasingly frenetic attempts from AWS recruiters to contact me.

The person you're responding to is talking about their warehouse workers, though it's possible something similar is happening with their engineers.

Something must be going on with their engineers. People who other FAANGs wouldn’t touch with a 20ft pole can get Amazon recruiters in their inbox.

It's an open secret it's a rough place to work, even as a programmer.

The Seattle Times and others have articles about it. No shortage of people talking shit on Reddit, either; NDAs don't last forever.

It's not just the low-skill warehouse workers and delivery drivers; everything I've read about their IT/tech jobs sounds like an absolute horror show, along with an enormous amount of churn.

I mean, the main outcome of a weaker economy for me is less spending on AWS and at online stores.

I'd also imagine that Amazon must be quite exposed to the current mismatch between the US demand and China's supply given their business model (I mean so's all of retail, but Amazon really amps it up to 11).

Retail is getting hammered and a lot of industries have a glut of supply, esp. after COVID threw off global logistics.

Demand went up like crazy for some items, and they went hard manufacturing em, and now that the world is mostly back to normal the demand dropped and inflation is crushing spending.

Are you suggesting that Bezos believes growing competitors will voluntarily stop growing because he recommends they do so? I don’t buy it.

I think what they're saying is if you tell people there's an economic downturn, and they believe you, that creates the downturn. Employees will be reluctant to switch away from a stable big company job for fear of layoffs at startups. Investors will play it safe and avoid risky bets of the kind that could disrupt Amazon's businesses. And so on.

Jeff may as well be saying "our competitors are uninvestable" but that would be too obvious and be discounted.

By the same account Bezos wouldn't say anything if an economic crisis is coming so their competitors wouldn't stop spending money and have less liquidity.

Nothing can “grow” with this kind of inflation and federal spending.

Remember when you have 1T company you don’t think like a typical employee.

I’m losing money by keeping it in a savings account. I’m losing money by keeping it in a brokerage account. I don’t want to change jobs to get a higher salary because I fear getting laid off.

When there is no winning move, it definitely feels like a recession.

Depending on your time horizon, I-bonds could be good.

$10k cap

per year*

Yeah, $10k/year adds up. Can be a good place to put your dry powder. Also there’s ways to invest more:

1. Family 2. Tax return 3. LLC

Is there a limit to the number of LLCs you can open and buy i bonds with in a given year?

Trust is easier than LLC and many people should probably have a trust anyway.

You can also get your US tax refund in I-bonds, up to a max. that's separate from the $10K purchase max.

You can buy I-bonds up to $5k with tax refund.

https://www.treasurydirect.gov/savings-bonds/buy-a-bond/

A married couple with no kids can buy 40k. 10k each. And 10k as gifts to each other.

However each person can only redeem/cash out 1/4th each year. So it’ll take 2 years to cash it out.

10 year treasury bonds looking good. The last time it was at 4.2% was in 1998

Stocks are almost certain to be a better investment over a 10 year period. Not risk free of course.

> When there is no winning move

That is the interesting thing, yes all assets are falling in value, but wages are rising. Its bringing back equality after years where hoarding assets was a great move.

Is it increasing equality, or is it just making everyone poorer while preserving relative inequality?

It makes you poorer and increases inequality.

If assets held by the wealthy fall in value and wages increase, that decreases inequality, and everyone is getting poorer in real terms because inflation sucks.

The fed raise interest rates, so the rich just buy bonds and lend money.. they get that sweet sweet interest.

Wages are not rising as fast as prices unfortunately

They’re still rising faster than any investment asset class, so inequality is shrinking.

That's an interesting way to put it.

It does seem possible that a growing economy creates greater differences, as not everyone can succeed to the same degree, whereas a shrinking economy levels the playing field.

It’s the default

Ally saving account rates are > 2%. You are not "losing money" in that your total account value is going up, but your purchasing power is going down as it's lower than inflation.

yes, that is in fact what people mean by 'losing money'

If only Ally allowed non-citizens and non-Green Card holders to open accounts. I've got my emergency fund in Robin Hood. They pay 3% on cash in the brokerage account.

and in exchange all they ask is that you don't expect FDIC insurance

> With the brokerage cash sweep program, the uninvested cash in your brokerage account (cash intended for investing but that you have not yet invested or spent) is swept to program banks, where it becomes eligible for FDIC insurance up to $1.5 million or $250,000 per program bank,

Robinhood requires a $5/month subscription to go from 1.5% to 3% interest. Only starts being relatively worth it at $7k cash, assuming ~40% marginal tax bracket. And since others are paying 2.3% currently, really it's only worth it at like $15k. Like another commenter said though, 3-month US treasuries are paying 4% and exempt from state tax.

Why do that when treasuries are over 4% and exempt from state income tax?

Because they locked in for 3 months*

* You can sell early but you might take a hit.

You are thinking of i-bonds. I'm referring to straight up Treasury bills, notes, and bonds.

I’m losing money by keeping it in a savings account.

You are losing in real terms but not nominal

But this depends on your consumer preferences and cost of living. You are only losing 7%/year in CPI is your expenses are concentrated in food, energy , or used cars.

High inflation is tough because it means everyone loses in real terms. Nowhere to hide.

What about assets? At least if the asset prices go up you can recoup.

Asset prices go down when interest rates go up. Equities, real estate, even bonds (refer to bond funds getting decimated over the last year). Safe havens are cash or paying down debt with an interest rate over inflation.

(not investing advice, educational purposes only)

Is there precedent for being sued for giving unlicensed investing advice in an anonymous, two-sentence Web forum comment?

> … paying down debt with an interest rate over inflation.

In a stagflation scenario though, wouldn’t paying down debt on any vehicle carrying a rate over what you can yield on the market still net out better for you overall?

Short answer, likely. Long answer, it depends.

The thing about inflation and higher interest rates is that only successful businesses that actually have inflation adjusted revenue streams benefit. Not any random company.

And here people are losing jobs going, yup, recession is real. Perspective is everything. If you have a job and continue to make your same salary, the recession isn't nearly the same thing to you. To know people are actively losing jobs and bitching about not become richer as fast as you were yesterday just comes across as very tone deaf.

Currently working for a US company but living abroad and getting paid in a local currency, which is getting hammered compared to the USD. This has had a weird side effect in that I've become a lot cheaper to hire recently. I was told this has made us the least likely to get laid off and we've avoided it so far.

Many people I know who are getting paid in USD have been rubbing it in quite hard lately, honestly I'm happy for them but it's also kind of unfair their mortgages have been greatly reduced while mine hasn't changed at all.

There is always a silver lining...

For a couple of years now, I've been threatening to live abroad while still remotely working for US companies and getting paid in USD. Taking the digital nomad show international so to speak. You could move around to your advantage where the USD is strong. I have one attachment that is keeping from doing it, otherwise, I'd be typing this comment from a beach on the other side of the globe.

That's good for you, but the company who is paying you in USD isn't getting you cheaper. In my situation it makes better economical sense to keep my employed over someone getting paid in USD.

Why does the company get me cheaper? My value is not dependent on my geographic location. My value is what knowledge/skill/experience that I bring to the company. This has always been a remote gig, well before pandemic made it chic for everyone to be remote. The assumption that my compensation has anything to do with location location location is solely on you.

Not switching jobs is probably a mistake... The job market is incredibly tight, so it's the perfect time. Once the layoffs start it'll be harder to find work.

When layoffs start, the lazy companies use a last-in-first-out approach, so switching jobs now likely makes one a higher risk to be laid off.

The stock market is down, which makes it a good time to start buying

Outside the US it's worse because of the strong dollar.

I’d love to see the set of economic leading indicators that Amazon has at its fingertips, price drops, purchasing behavior changes, inventory trends, etc…

> Growth in the US has already contracted for two quarters in a row, a milestone that in many countries - though not the US - is considered a recession.

this again :lol:

It isn't a recession unless it is from the recesso region of France, otherwise it is just a sparkling downturn.

Any other Chief executive and they would be getting roasted and hit in the news with Recession news and articles. But the current one for some reason, has less stickiness than "the Teflon Don."

Imagine Bush (shudder) or Clinton or Obama or Trump not getting roasted with Recessionary news... They all would have been at the receiving end of the bad news.

At least with Clinton the budget was balanced and even ran at a surplus.

Thanks to Newt Gingrich.

I was enraged when all hope of paying off the debt was cut off at its knees by the Bush tax cuts.

He was truly our worst president, despite Obama claiming they're friends --what a sell-out.

The "Clinton surplus" was an accounting gimmick where money stored in various government "trust funds" was loaned to the Treasury in exchange for Treasuries, but was counted as normal revenue. If "intragovernmental debt" were properly accounted for, Clinton never had a surplus (indeed, the national debt increased every year of his presidency, just like his predecessors and successors).

No reason to want that in the absence of inflation. A country is not a household and a budget surplus is the same thing as the money supply getting smaller, which is bad business if the number of people in the world who want to use your currency is increasing.

He's not in trouble for causing a recession cause he hasn't. The statement in the article is debatable even if you want to use a technical definition.

Real GDI, which is supposed to be the same thing as real GDP, hasn't decreased: https://fred.stlouisfed.org/series/A261RX1Q020SBEA

Which suggests dips in GDP are actually due to measuring it incorrectly since the economy is so unusual right now.

Also, people dislike inflation more than they dislike the unemployment rate going up a little. That's because inflation hits everyone, while unemployment only applies to a few people. That's more or less why the Fed is trying to cause a minor recession in 2023.

He "hasn't" only because they (many economists and reporters) abandoned the de facto/practical definition which had been used in previous Recessions in favor of a more strict definition to define it away, or rather postpone the inevitable.

In previous recessions they’d be reporting about mass job losses, but instead we have the lowest unemployment in 50 years.

They have been reporting about high gas prices, which people care a lot more about than GDP/GDI.

Biden hasn't done anything to cause a recession. His party has done the opposite, if anything (although that's complicated and debatable).

The Fed, on the other hand, is trying to move toward recession, or at least lower employment, by raising interest rates. They see low inflation as being preferable to high employment and rising prices.

There is no good outcome when global supply chains and investors have been shocked by a pandemic and then a major land war.

all recessions are inevitable. It's a feature of the business cycle for a trough-shaped period of time to occur.

https://en.wikipedia.org/wiki/Business_cycle

Ray Dalio does a great video on it too: https://www.youtube.com/watch?v=PHe0bXAIuk0

really interesting! thank you for sharing.

Their severity can be lessened however by not printing utterly outrageous amounts of money in the upturns.

Always ask: what is in it for him to say this.

He’s not saying it to earn less money.

Yes it's a good question, what's in it for anybody who proffers an economic analysis or prediction?

Maybe I’m just lucky, but I’ve been reading a lot more about how we’re headed into a recession (since March 2020) than I’ve actually been feeling it, or even seeing it. I’m starting to think people just want one. “It’s not my failure, it’s the economy!”

I sense this is another one of those “Slowly, then suddenly” kinds of things. My grocery bills have slowly crept up, but remain manageable.

That being said, I have noticed a few shocking things this last month. The contract on my electricity service is due to renew and the rate has increased by 30%. My insurance premium has gone up by 45%, and I haven’t gotten into any accents or made any claims - I’m told this isn’t unique to me and the industry is seeing 30-50% increases as common this year.

Truth be told, I think things are continuing to build up and we haven’t had a Lehman Brothers moment yet.

Corps are boiling the frog slowly. The counter narrative is that this inflation is about corporate profiteering. Wages haven’t grown to increase demand to justify prices.

Does anyone really care about what a mega billionaire, particularly one who has been at the forefront of turning customers into statistics, driving products and prices to the bottom dollar and lowest common denominator, and pouring fuel on consumerism, thinks about anything?

> As the US central bank raises interest rates to fight rising prices

Can someone explain their perspective on this? It seems it just helps those at the top fight rising prices.

Is there a term for the phenomenon where a supremely powerful person can comment on some event that may happen, perhaps innocently, and the fact they said it makes it more likely to happen?

In many ways, the health of an economy is a state of mind and emotional. Bezos has millions of people following his every word; many worship him and believe he has the keys to success (could also say the same about Musk & Gates). A pessimistic statement like this, regardless of merit, can/will cause others to be pessimistic.

In a vacuum I would be very interested in Bezos's thoughts on this topic - he's clearly super-intelligent. But I don't think I could get past his powerful position and the many reasons why he may want to sway opinion.

How do individuals/families batten down the hatches, wrt investments?

I'm no financial expert, but lower your spend (kill useless subscriptions, live frugal), shop smarter (cheaper brands, less indulging in things like eating out), invest only if you feel like dollar cost averaging will pay off in the long run (blue chip companies).

Honestly, we should do this anyways in order to become the millionaire next door, assuming accumulating wealth is a long term goal regardless of the economic situation. Harder to do in practice of course.

These are the sort of austere cutbacks that CEOs are trying to induce. They are trying to create economic panic and raise the unemployment rate. They are desperate to raise the unemployment rate.

In case anyone wasn't paying attention in the past fifteen years, execs have been saying "Times are tough" ever since 2008. Whether or not it's true doesn't matter to them; they just don't want to pay you more.

It seems like these sorts of statements have to be self-fulfilling to some degree (but not completely). Big companies battening down the hatches slows down other companies and humans, which in turn leads to more battening. I hope companies aren't too short sighted (though obviously in some ways they are prone or even obligated to be).

Wages need to double, just like everything else has. A new house costs a million, yet some people are forced to strike to get a $3 wage increase.

By a new house do you mean "a new house on land you own", "an old house and the land it's on", or "a new house and the land it's on"?

new house on a new lot in Ontario even in smaller communities now goes for 1 million. Small lot with, a normal house, two car garage, standard obs construction. New house will often require tons of additional finishing after purchase. With interest it's actually 2 million to pay off. While many professional people, like educational support workers are still stuck in the 50k a year pay bracket for the last decade are getting offered tiny raises in pennies

>A new house costs a million

This is what you get for having a car-based society with no walkability and so much wasted space. The chickens are coming home to roost and it's time for you to pay the piper.

wouldn't you assume by spreading out it costs less to build since more land can be used for building. the increase is actually exponentially more land... pie r squared.

No, because not all land is desirable. You can save money by moving 500km away to an uninhabited place, but now you have a full-day commute in each direction, so you can't go to work any more. How is that useful? People live close together because there's physical benefits to doing so, and the more you spread out, the more travel time increases. And because of the 2-dimensional nature of roads, you get a greater-than-linear increase in travel times as the city expands because of gridlock.

You're also assuming there's lots of land in places that people want to live. There's plenty of empty land in the frozen tundra, but no one in their right mind wants to live in places like that. The places that have nice weather where people like to live also happen to be the places that are best for growing food.

So he will fly his several private jets a dozen times less per month, to compensate? No? Thought so.

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