Layoffs of tech giants 'not a sign of impending recession': Goldman

Goldman Sachs is backing away from the idea Layoffs that grabbed headlines of big tech companies is a sign of the looming US recession.

“Tech layoffs are not a sign of an impending recession,” Goldman Sachs chief economist said Jan Hatzius wrote in a note to clients on Tuesday.

As the year draws to a close, layoffs have boomed in the land of tech amid a terrible year for stock prices and slowing growth.

In the past two weeks alone, Meta and Amazon have unveiled combined job cuts of 21,000 jobs after weak third quarters.

Twitter cut 3,700 employees Re-appointment of the new owner Elon Musk On the business of the social networking platform.

Hatzius calculated that there were 34,000 layoff announcements from big tech companies in November (chart below).

The year of dispensing with technology.

However, the Goldman Sachs economist cited three reasons why these layoffs are not a sign of bleak economic times ahead:

Technology does not dominate the jobs landscape.

First, the technology industry accounts for a small share of total employment — for example, the unemployment rate would rise by less than 0.3 percentage points even in the inconceivable event that all workers employed in the “online publishing, broadcasting, and web search portal” industry are laid off. Immediately — so any impediment in the overall labor market should be small.”

Facebook employees gather in front of a banner displaying a new logo and the name ‘Meta’ in front of Facebook headquarters on October 28, 2021 in Menlo Park, California. (Photo by Justin Sullivan/Getty Images)

Technology is still employed.

“Second, job opportunities in tech remain much higher than they were before the pandemic, so laid-off tech workers should have good opportunities to find new jobs.”

History as a guide.

“Third, layoffs in technology have risen a lot in the past without a corresponding increase in total layoffs and historically have not been a leading predictor of broader labor market deterioration, and layoffs in other industries remain limited.”

Brian Suzy It is a comprehensive editor and Anchor at Yahoo Finance. Follow Suzy on Twitter Tweet embed and on linkedin.

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