Will The Implosion Of The Tech Industry Bring Down The Entire U.S. Economy?
By Michael Snyder/Economic Collapse Blog January 11, 2023
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The tech industry has become one of the central pillars of our economy, and tech stocks led the way up during the stock market boom. But now tech stocks have been crashing and many of our biggest tech industry companies have been laying off large numbers of workers.
If the strongest sector of our economy continues to rapidly deteriorate in 2023, what will that mean for our weaker sectors? I think that the answer to that question is obvious. The truth is that we are in far bigger trouble than "the experts" realize, but most people still assume that everything will work out just fine somehow.
If economic conditions were really about to "return to normal", the tech industry would not be laying off thousands upon thousands of workers. The following comes from a CNN article entitled "Silicon Valley layoffs go from bad to worse"...
At Amazon and other tech companies, the second half of last year was marked by hiring freezes, layoffs and other cost-cutting measures at a number of household names in Silicon Valley. But if 2022 was the year the good times ended for these tech companies, 2023 is already shaping up to be a year when people at those companies brace for how much worse things can get.
Did you catch that last part?
Even CNN is admitting that 2023 will be even worse for the tech industry than 2022 was.
Of course last year was really, really bad for the tech industry. According to Challenger, Gray & Christmas, tech layoffs "were up 649% in 2022".
I was floored when I first saw that figure.
649 percent is a pretty big shift.
And one prominent private equity CEO just warned Fox Business that we could see a "bloodbath" for tech stocks during the months ahead...
In an interview with FOX Business on Friday, Eric Schiffer, CEO of the private equity firm, The Patriarch Organization, said: "Because tech is so oversold, there might be potential exits for a limited short-term bear rally, but there is a danger facing shareholders."
"Shareholders should brace themselves for a deeper brutal tech bloodbath driven by the Fed and its 'Terminator' like mission to raise rates and wipe out inflation," he warned. "Many tech companies will enact job carnage in the first quarter, with Salesforce and Amazon just the start."
The tech-heavy Nasdaq is already down by about a third from the peak of the market, and trillions of tech stock wealth has already been wiped out.
So what will things look like if we actually see another "bloodbath" for tech stocks this year?
At this point, I don't think that most Americans realize what is coming.
Mass layoffs are already starting to happen all over America, and one economist that was just interviewed by CNN believes that conditions will be even worse "by the end of the first quarter"...
"I think we're seeing an inflection point; the rate of jobs growth is slowing and a lot of these tech layoffs that we're hearing about, I think are going to start materializing across the broader economy by the end of the first quarter," John Leer, chief economist at Morning Consult told CNN's Chief Business Correspondent Christine Romans in an interview Friday.
Sadly, the truth is that the U.S. economy has been bleeding good jobs for quite some time now.
According to Fox Business, the official numbers that the government has been giving us show that the U.S. economy has been losing an average of 2,100 full-time jobs since May...
But there are more disturbing trends present in the data. The economy has been losing full-time jobs at an alarming rate: 2,100 every day since May. Employers are shifting from full-time to part-time jobs, which often occurs before those businesses stop hiring altogether. Then, layoffs arrive.
This is often what we see as our economy heads into a major downturn.
First, many employers start shifting from full-time employees to part-time employees, and then when things get bad enough they just start dumping workers.
And at this point we are already starting to see some of the wealthiest companies in America let people go. In fact, Goldman Sachs is going to be giving thousands of highly paid employees the axe starting on Wednesday...
The global investment bank is letting go of as many as 3,200 employees starting Wednesday, according to a person with knowledge of the firm's plans.
That amounts to 6.5% of the 49,100 employees Goldman had in October, which is below the 8% reported last month as the upper end of possible cuts.
Meanwhile, the cost of living continues to go even higher.
Earlier today, I was stunned to learn that natural gas bills for many residents of southern California could soon double...
Southern California Gas Co. and San Diego Gas & Electric have issued stark warnings to customers that their January natural gas bills could double, citing factors for historically high wholesale costs that include sinking inventories, supply constraints and a cold start to winter that has soaked the West Coast.
And even though the Federal Reserve has been taking extreme measures to fight inflation, food prices just continue to soar to absurd heights.
Survey after survey has shown that a solid majority of Americans are living paycheck to paycheck right now.
As the cost of living becomes increasingly oppressive, more Americans are turning to their credit cards for help...
New data released by the Census Bureau this week found that more than 35% of households used credit cards or loans in December to assist with spending needs in the past week. That marks an increase from 32% in November and just 21% in April 2021, according to the Household Pulse Survey.
The rise in credit card usage is somewhat concerning because interest rates are astronomically high right now. The average credit card APR, or annual percentage rate, set a new record high of 19.14% last week, according to a Bankrate.com database that goes back to 1985. The previous record was 19% in July 1991.
The greed of the credit card companies seemingly knows no bounds.
As I have repeatedly warned my readers, you do not want to be carrying a lot of debt during the hard economic times that are coming.
19.14 percent is the average rate on credit card balances now, and that means that half of the country has rates that are even higher than that.
Ouch!
If you are currently carrying credit card debt, I would encourage you to get that paid off as soon as you can.
Because economic conditions are only going to get harsher from here, and you definitely don't want to be financially crippled by high interest debt during the severe crisis that is rapidly approaching.
Originally published at The Economic Collapse Blog - reposted with permission.
