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After ChatGPT disruption, Stack Overflow lays off 28 percent of staff
(arstechnica.com)
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this post was submitted on 17 Oct 2023
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I'm afraid I don't have any good sources to back this up, but I've seen it said multiple times in other threads on similar layoffs that investment capital has dried up in tech, investors are starting to demand a return, which leads to companies doing layoffs to cut costs etc. I'm sure smarter people can come along and explain it better (if they so choose).
It's a result of the cheap (and during the pandemic, literally "free") borrowing hayday of the last few years being over (they ended around 2022, when the Fed started jacking up interest rates and banks had to also increase rates in order to cover their loaned to liquidity ratios as required by law). As such, investors and businesses can't just borrow a shitload of money cheaply, so what they choose to invest in is much more conservative and/or the ROI tantalizing.
Also, in my opinion, the frenzy to dump millions into tech is mostly kind of over. The big dogs have gobbled up all the promising start-ups and potential disruptors and then some. AI is the "new" hotness, but all the companies that really have immediately viable products/services are already heavily invested in. There isn't really anything that's poised to come in and become the next OpenAI that's not already owned by the bigger companies.
Lastly, due to the first thing I mentioned, many folks believe we're A) already in a recession or B) about to enter one in earnest. In either scenarios, investors tend to pull their funds into safer pots while they ride out bumpy economic waters.
Unemployment is low, wages are finally outstripping inflation, inflation is falling and there is huge investment in factories and infrastructure.
It doesn't appear that a recession is on it's way but rather the free money that was flowing into the IT sector is causing all these companies to become profitable fast.
Thus the lay-offs.
It's not always as simple as that, though.
https://fortune.com/2023/10/01/recession-still-likely-and-coming-soon-6-reasons-why/
And one that agrees with you:
https://www.reuters.com/markets/us/with-gallic-shrug-fed-bids-adieu-recession-that-wasnt-2023-08-16/
The truth of the matter? No one really knows. Large economies are very difficult to forecast reliably and consistently. I hope you're right and it's all continual growth for the next couple of years, at the very least. But, like the first article I linked mentions, fed hikes can have a 18-24 month lag time to see real world impacts on various industries and we're soon approaching the first of that timeframe.
The rich have way too much cash and desperately want another recession so they can buy cheap assets. Consumers, the overall job market etc. Are trending the other way and messing up the cycle of boom/bust. In this particular instance, I am fine with the layoffs... as long as they keep paying the people they laid off. Paying people whose jobs are automated should have started at least as early as the industrial revolution.
Exactly. We've been hearing "there's a recession coming, any minute now!" for YEARS, and yet every jobs report shows the economy is doing gangbusters.