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Comment by digdigdag | Hacker News Reader

1. The federal interest rate is nearly at 5%. Any business operating depending on lines of credit are going to hurt (Source: https://www.federalreserve.gov/releases/h15/)

2. Consumer spending is down (Source: https://www.bea.gov/data/consumer-spending/main).

So you have the producers spending more to operate, and consumers spending less. This leads to an inevitable contraction in the economic output.

Also known as recession.

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This is the correct answer. The Fed rate is the main driver for these layoffs. The fed is trying to cause a slowdown in the economy (including layoffs) in order to temper inflation.

This isn't an explanation. The job market has been red hot over the past year, and the total of tech layoffs comprise a small fraction of overall job growth in the US. HN users think there is a recession because they are only focused on their particular industry, and refuse to look at what the actual economy is doing.

Employment usually peaks just before a recession, along with denial of course.

The real economy is not doing well globally, inflation is a serious problem, and the impact of the rate hikes will take about 10 months to show up (so should hit this year).

I've been reading these predictions on HN for almost a year now, and so far they've been false. If people keep repeating them, eventually we'll witness a recession and they'll be right, but that doesn't make their analyses correct, it just makes them a broken clock.

So whatever the outcome, they are wrong and you are right?

They're giving a broad time frame for recession to hit, and they keep moving it back, so eventually they will necessarily be right. In other words, they make predictions that are so vague, they necessarily can't be wrong. This is why their predictions are useless.

I don't think HN posts are why most people feel like there is a recession.

Fed reps are on record as saying interest rate hikes are to get a pullback in labor market, and that’s expected to affect lower paid industries, but with the relationship with investments, it can make sense to see it in tech

Specifically the Fed is trying to wrestle away the monetary power that Labor has, quoting a "wage-price spiral". In other words, the Fed is trying to cause a recession in order to fend off inflation, at the cost of Labors current economic power.

Yes, it's a brutal calculus, but inflation is also really corrosive for labour, since wage rises tend to take a while to respond to inflation and... cause more inflation.

They are stuck on the horns of a dilemma they created 10 years ago with 10 years of sustained QE and ZIRP, which led to the asset bubble we now see deflating.

I agree that they are stuck in a bind, for sure, and they are definitely causing a recession in order to stave off the larger dragon/danger of inflation.

Also agree it's largely due to QE! I think the only thing I find weird enough to pause and think "huh, that's weird" is the timing. Labor gets market power and oh wow, we better fight inflation.

Maybe it just all happened at the same time and COVID caused it to bubble over. Just seems weird timing to me.

The tech sector didn't start layoffs early last year because they forsaw a possible recession more than a year ahead. Moreover, layoffs are still contained within tech. It's time for a new theory.

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