Rates went up and changed where businesses put their money.

Let's say your company has an idea that they are pretty sure can make a 2% return each year. If they can borrow money at 1% interest, it makes sense to borrow money to fund that project. When rates go up and loans now have 6% interest, borrowing money to fund that project no longer makes sense. On top of that, if they can park money in something like bonds and get a guaranteed 4% return, it actually makes more sense to just shut that project down and put the money in the bank since that's a higher return with lower risk.

The company in the scenario will actually make even more with less people since parking money in the bank doesn't require employees to get a return.

That's a super simplified version of what has happened. When the safe assets give small returns it makes sense to take risks because the alternatives pay so little. When safe assets give big returns appetite for risk goes down and money flows to safe investments.

To put this another way, if you put one million dollars in the bank for 10 years at 1% interest, you'll have a little over 1.1 million dollars at the end of ten years. That same million dollars at 6% interest will be worth just under $1.8 million after ten years. To justify taking that money out of the bank you've gone from needing a 10% return to an 80% return.

I'm at one the companies that issued layoffs. It was dictated by VCs that there had to be a significant reduction in cost before they gave out additional funding.