SFGATE: "The U.S. economy is booming. So why are tech companies laying off workers?"


As a CEO of a company you would want to make a company more attractive to invest in. Cutting costs wherever you can does this, even at the expense of layoffs, furloughs, and firing employees. Major corporations that spend less means more profit for them. This makes public traded companies seem more profitable.

That’s also the reason companies don’t have Wall Street press releases touting a big hiring move, that kind of news is usually pushed out by local state & governments who benefit from the increased tax revenue and want to show positive results from tax incentive programs that attract businesses.

For many years tech firms hired just because they were competing for a limited talent pool, they wanted to nab resources while they could, even if they couldn’t assign them to a project at the time. So it was a hiring mania or bubble. It’s over.

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Just maybe, the economy isn’t booming as you may think or some parts of the media may say. There is a large contingency that say we could easily have a recession, even a bad one. What did the economy look like on Monday October 29, 1929?

YOU’RE RIGHT! At least 150 of the last 4 economic downturns have been predicted by those far-sighted gifted individuals with the ability to look into our financial future. :slightly_smiling_face:

I get your sarcasm. B it, the point is, no one can predict the future, but there are some solid indicators that do point to things. And, answer my question about that date.

I imagine it looked kinda like September 15, 2008. I was in the RE business on that date, I wasn’t alive in 1929.

The 2008 crisis was predictable at the time because the pace of housing prices was clearly not sustainable. Just about every person I worked with in the business could see that.

The 2008 crisis was brought about by some smart people doing some very dumb things. I do not see that happening right now, do you? If so what are those things that you feel would trigger a crisis?

Well it was all honky dory the day before the great crash. My point was the condition of today can be a bad indicator of the future. Just as right now. And it’s always people doing bad stuff. But it still the future.

There’s no real parallels in the financial market numbers we see today and the market indicators in the leadup to the 1929 crash.

In the nine years preceding September 1929 the Dow Jones Industrial Average increased in value tenfold, peaking at 381.17 on September 3, 1929.

In the same period leading up to today the Dow has barely doubled in value. In Feb 2015 it was $17,750 and today it is $38,671.

The 2008 crisis was fairly easy see coming, and if you had known what was supplying all the cheap money, it was a no-brainer to predict.

I’m not sure what your point is. I made mine and you seem to be on another track altogether. Just curious so you think under Biden the DJA went from sub 17000 to above 38000?

Anyway whatever.

You said:

Then I said:

And I went on to point out the facts of October 29, 1929 and our current market condition. ie:

How does that differ from your logic that there is a similarity between 1929 and 2024 market conditions? The fallacy in your argument is that the two conditions are not alike, the are dissimilar by a factor of more than 4X.

Even in the best of times, tech companys have many reasons to lay people off. Perhaps now they are letting go people who don’t want to come into the office. When I was in I.T. I did support from home for a while but was required to go in to the office. There is nothing like the personal interaction with co-workers. People who constantly work from home may not have a lot of overseeing and thus the boss doesn’t see them actually working. That can effect raises and performance evaluations.

Then again, as in my case, I was ‘let go’ as part of a ‘workforce reduction’ when the CEO decided to lay off 40,000 employees (1/3 of the workforce) to buy a failing company. Then the company ended up with more people than were let go. That was the beginning of the slide downward of the comapny which took quite a bit to recover from.

So there may be valid reasons or not to reduce workforce.

Tech companies are notorious for over hiring and then figuring out what they need. And, tech is so rapidly changing I think something of this nature is always going to be there. Manufacturing companies have a better chance to view trends and innovations and make adjustments. It’s a similar problem in both, but happens much quicker in the Tech sector.

Regardless of the actual condition or cause, the situation and results are similar. One day it’s “booming” the next it’s “bust.” That was the topic, not the minutia of the actual events, but the actual events are more similar than you see. There have been a number of events like the day in October ’88 or ‘89. One day it’s all Hunky-Dory and the next day it’s bust. The point is, know one knows what going to happen tomorrow and today isn’t the best indicator of what tomorrow will bring. When your booming market is being funded by the government, 60+% is government hiring and spending, and businesses are laying off people, there is cause for concern. If the economy was booming from its own production and the economy was sound from good fiscal policy, then I’d be a lot more confident in saying bc today is good, tomorrow should be good. It doesn’t matter as much what causes it, it does and has happened.

If it WAS 60% we would have something to worry about, it’s not.

In fiscal year 2023 the US Government spent $6.13T, the GDP was $26.97T, that’s not “60+%,” it’s less than 25%.

I try to ignore all news stories about the economy, because they’re all just narrative designed after the fact to fit the news, biased by the prejudices of the author. Whenever these financial reporters come up with “reasons” to fit whatever data, it’s usually garbage. I just follow the raw data and proven models… which isn’t foolproof by any means… but it’s better than being misled by someone with an agenda. Politics and investing don’t mix in a good way.

Liz Ann Sonders of Schwab recently said that customers come up to here asking for validation for these statements: “If Trump gets re-elected, isn’t the economy going to tank?”. Also, “If Biden gets re-elected, isn’t the economy going to tank?”

Recently, I like the Sahm Indicator as a co-incident indicator of recession. We are nowhere near a recession right now. It has a great track record. When it pops above 0.5, it’s means we’re actually in a recession. No false alarms (yet), though Nov 1967 got close.

Interesting, but by their own numbers the GDP was due >60% government spending and same for jobs. Most of the jobs”created” were part time jobs. But, you still haven’t shown me Joe today’s situation predicts tomorrow.

Where are you getting the information that leads you to believe that “When your booming market is being funded by the government, 60+% is government hiring and spending,

My information for FY 2023 is from the US Treasury website. It states that the total Federal budget for 2023 was $6.13T (23%) of a GDP of $26.97T.

Where do you get the “but by their own numbers” thing? Show us your sources.

I saw it on a news report by the CBO I believe.