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Comment by testemailfordg2 | Hacker News Reader

I am suddenly seeing articles about multiple US tech companies doing layoffs / pausing hiring on HN as well, not sure why and how all this relates....Has global recession started???

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The global economic situation is certainly complicated, but at least in the US growth seems healthy at the moment. My take is that most companies are taking advantage of the impression that we're in hard economic times to perform layoffs that they wanted to do anyway. There are certainly cases where companies were too optimistic (expecting a bigger post-pandemic "bounce") and over hired.

As far as the UK goes though, this is just result of multiple terrible decisions and incompetence on the part of the government (Brexit, Truss's proposed tax cuts for the rich, etc). It is almost entirely self-inflicted, and the incredibly predictable outcome of the government's actions.

> My take is that most companies are taking advantage of the impression that we're in hard economic times to perform layoffs that they wanted to do anyway.

And convince people to take a wage cut or outsource/"insource" labor.

The lay offs are driven directly by the cost of borrowing that has gone up this year. We had a decade where money was pretty much free. Now money is no longer free, companies are looking at cutting costs.

No it's not. I know this is the narrative being pushed, but this is not a real problem. Remember, the US government pumped out $3T that's still circulating, and there was record borrowing at ZIRP for bonds with 30 year duration. The Fed's hikes are an attempt to slow that down, but money is still on average cheap.

>As far as the UK goes though, this is just result of multiple terrible decisions and incompetence on the part of the government.

What is your evidence for this? It seems most countries in the euro zone are identically situated.

The government was planning to do tax cuts (further increasing demand during a period of already-high inflation) when the central bank was trying to get inflation under control. The market saw the writing on the wall and people began selling off UK currency, causing the value of the pound to plummet. The central bank had to reverse course and decrease rates to prop up the pound in the short term to stabilize the economy. Ultimately the PM fired her economic minister and then she was ultimately forced to resign herself. This situation was unprecedented anywhere globally as far as I'm aware.

Most countries in the Euro zone aren't on their third government since the summer, and didn't have one of those governments collapse in the fallout of introducing a tax cut for the rich, funded entirely through borrowing, which made their bond yields shoot through the roof.

Political turnover doesn’t really substantiate the idea that Britain is entering a recession because of bad economic choices. Again, the rest of the eurozone is in the same boat. To me, it only substantiates political discontent and a system of government where that kind of turnover is possible. I see little evidence that Britain’s current state of affairs is because of Brexit.

Most countries in the world didn't stick up a middle finger to their largest trading partner, and then failed to replace it, in a timely fashion, with alternative trade deals.

Most countries in Europe aren't also selling gas's to other countries, knowing full well they will have to buy it back at a higher price in the winter. The UK has very little gas storage compared to other EU countries.

UK seems to be in a different boat due to Brexit. While definitely suffering from the same issues as the EU, they're not in a place to bounce back. Even before the current crisis, it was looking increasingly gloom.

See also the wikipedia page on the economic effects of Brexit for reference: https://en.wikipedia.org/wiki/Economic_effects_of_Brexit

EU has its economical problems, but nothing like Britain.

AFAIR the United Kingdom is the only country whose economy still has to reach pre-pandemic levels. Our political system has been fighting over that thorny issue for 6 bloody years, and everything else has been put on hold.

The UK isn't part of the Euro Zone anymore. That's the simplest reason. The fallout from that decision will continue to drag the UK down as they continue the process of not being a Euro Zone economy. At some point things will steady, but they're not there yet.

uk never was part of the euro zone

GDP Q2 was +0.7% in EU, 0.8% in euro zone[0], 0.2% in UK[1].

It's not a huge difference, but it's sizable.

[0] https://ec.europa.eu/eurostat/statistics-explained/index.php... [1] https://www.ons.gov.uk/economy/grossdomesticproductgdp

All respect, but regarding the UK economic situation I think you meant (Freedom and national autonomy, and Truss's job builders empowerment). Yes, self inflicted but also incredibly awesome -- just depends on your view.

I'll see myself out.

> I'll see myself out.

yes, please do

While I won't object to the notion that a global recession may be on the way, the UK's particular situation is greatly exacerbated by Brexit and so might not be universal.

Don't forget the recent "mini budget" also had quite an impact on the current and future state of the UK economy!

The minibudget was horrible. The immediate economic consequences will take a while to resolve still.

It's elections season and there is about to be a shift in power. Those currently in power have been resisting labeling the current environment a recession. Expect this to change in Q1 2023 as they gaslight you into believing we're in a recession because of the new team in charge.

The recession is driven both by an economic slowdown in China and the war in the Ukraine.

The economic slowdown in China is caused by the endless Covid lockdowns.

The war in the Ukraine is resulting in a shortage of natural gas in Europe, sharply driving up energy prices resulting in double digits inflation and people naturally tightening their spending.

The USA has mostly been protected as they have their own gas and oil supplies, however, they are not immune to what happens in the world.

Don't forget about rampant inflation/currency issues.

Suddenly? I've been noticing the layoff announcements for more than a month. I work for a Fortune 100 company that has frozen hiring. That has only happened when layoffs are imminent.

> Suddenly? I've been noticing the layoff announcements for more than a month

Layoffs have been happening since ~April

Yep, that is more than a month ;-)

The US economy != tech meme stocks.

Small cap tech stocks were literally worth 10-20x their present values. They hired like crazy (chasing more of that funny-money growth). Now they'll need to cut back some since the funny-money valuations are gone.

I wouldn't try to connect the dots and come to the conclusion that doom & gloom lies ahead.

https://tradingeconomics.com/country-list/gdp-annual-growth-...

The definition of a recession is negative GDP; so who is it? You will notice those who are in recession are of a certain economic bloc, depending where you are in the world you will see them axis vs allies. Sure we should go further and look at real gdp but the point stands.

Now in terms of the USA tech companies:

https://tradingeconomics.com/united-states/gdp-growth

The USA briefly dipped into recession but pulled out.

The US tech companies doing layoffs isn't economic. It's war.

who could have guessed that governments forcing economies to shut down for months would have long term ramifications? It's not like tons of people warned about the cure potentially being worse than the disease when you factored in the long term economic damage of lockdowns

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