Economic and jobs news thread

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Dow slides nearly 1,000 points for worst day since October 2020

The S&P 500 erases 2.8 percent and the Nasdaq 2.6 percent amid signals the Fed will raise rates at a more aggressive clip

By Aaron Gregg
Today at 1:52 p.m. EDT | Updated today at 4:08 p.m. EDT
Stocks tanked Friday — with the Dow tumbling nearly 1,000 points — as investors absorbed increasingly hawkish signals the Federal Reserve would raise interest rates at a more aggressive clip.

The Dow Jones industrial average closed down 981.36 points, or 2.8 percent, to end at 33,811.40 and mark its fourth-consecutive weekly decline. The broader S&P 500 index shed 121.88 points, or 2.8 percent, to settle at 4,271.78, while the tech-heavy Nasdaq tumbled 335.36 points, or 2.6 percent, to close at 12,839.29.

It was the Dow’s worst day since October 2020, according to MarketWatch, bringing the blue-chip index 1.9 percent lower for the week. It’s down about 7 percent year to date. ... The S&P 500 fell 2.8 percent this week and has shed 10.4 percent since the start of the year. Nasdaq slumped 3.8 percent this week and has lost 17.9 percent year to date.
[Five charts explaining why inflation is at a 40-year high]
https://www.washingtonpost.com/business ... on-charts/
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The One Percent Move Report for April 22, 2022

https://www.morganstanley.com/content/m ... e-20220422

Introduction:
(Morgan Stanley) What Happened in the Markets?
  • The S&P (Standard and Poors) 500 declined 2.8% on Friday to close at 4,272. The index is now down 10.4% year to date. Additionally, 40% of the index's constituents are down more than 20% from 52-week highs. Furthermore, on average, the S&P 500 constituents are down 18% from 52-week highs.
...
  • All 11 S&P 500 sectors were lower, with Consumer Staples (-1.6%) and Utilities (-1.7%) outperforming the broad market while Materials (-3.7%) and Health Care (-3.6%) lagged.
  • As of the 4pm equity market close: the Nasdaq 100 dipped 2.6%, the Russell 2000 index fell 2.6%, the 10-year Treasury yield was 2.89%, WTI (West Texas Intermediate) oil was down 2.0% to $101.7 per barrel, gold traded below $1,933 per ounce, and the US Dollar Index strengthened past $101.
What to Watch Going Forward:

Monetary Policy: Hawkish global central bank commentary continued today. Futures markets are currently pricing a 100% chance of a 50 basis point hike for both the May and June FOMC (Federal Open Market Committee) meetings. Yesterday, Fed Chair Powell spoke of how the Fed's March meeting minutes showed that officials backed the potential for a half-a-percentage rate hike and stated "50 basis points will be on the table for the May meeting." Regarding the Fed's balance sheet, the March FOMC meeting minutes that were released earlier this month showed that the committee was generally in agreement on reducing the size of the balance sheet by up to $95 billion per month. The FOMC had not yet decided on when to commence balance sheet reduction, but a formal announcement could come as soon as the next FOMC meeting in May. MS & Co. Chief US Economist Ellen Zentner currently expects two 50-basis-point hikes at both the May and June meetings. In addition, on Thursday, ECB officials mentioned the potential for three total hikes in 2022, and an end to its QE (Quantitative Easing) program in July.
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caltrek
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'Widespread Debt Cancellation is Needed Immediately': Half of all Student Borrowers in U.S. Unable to Afford a Single Payment
by Jake Johnson
April 21, 2022

https://www.alternet.org/2022/04/half-s ... s-payment/

Introduction:
(Alternet) A survey out Thursday shows that more than half of student loan borrowers in the United States say they would not currently be able to make a single monthly debt payment if they were required to, a finding that comes amid mounting calls for universal student debt cancellation.

The new poll, conducted this month by the firm Payitoff, also finds that 64% of U.S. student loan borrowers say they "would not make a payment until they are legally required to do so." The average monthly student loan payment in the U.S. is $460, according to the Education Data Initiative.

The survey results were released weeks after the Biden administration announced its fourth extension of the federal student loan repayment moratorium, a freeze that has been in place since the beginning of the Covid-19 pandemic.

While advocates and progressive lawmakers welcomed the extension—which will remain in effect through August 31—they argued that continuing to push the end of the moratorium back several months at a time leaves tens of millions of borrowers in limbo and does nothing to ensure lasting relief.

"Pausing a crisis doesn't end it," the Debt Collective said earlier this month.
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caltrek
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One Percent Move Report for April 26, 2022

https://www.morganstanley.com/content/m ... e-20220426
(Morgan Stanley)

What Happened in the Markets?

• The S&P 500 declined 2.8% on Tuesday to close at 4,175. The index is now down 12.4% year to date.

• US stocks were unable to build on Monday afternoon's strong intraday reversal as the S&P 500 fell 2.8% Tuesday. While interest rates were lower across the curve today, mega-cap growth and technology stocks led the decline; perhaps investors decided to take some risk off the table ahead of the busiest week of earnings which includes a number of the large cap technology names. In today's economic data, home prices surprised to the upside while consumer confidence and new home sales came in below expectations. Oil marched back above $100 per barrel, which allowed the Energy sector to outperform - it was the only S&P 500 sector recording a gain in the session, albeit modest.

• Ten of the 11 S&P 500 sectors were lower, with Energy (+0.04%) and Utilities (-1.0%) outperforming the broad market while Information Technology (-3.7%) and Consumer Discretionary (-5.0%) lagged.

• As of the 4pm equity market close, the 10-year Treasury yield declined to 2.75%, WTI oil rallied back above $100 per barrel and gold traded above $1,900 per ounce. The US Dollar Index strengthened modestly to above $102.

What to Watch Going Forward

• Q1 Earnings: First quarter earnings season is well underway as 26% of the S&P 500 constituents have reported results thus far. 132 companies reported 1Q earnings and 130 more are anticipated by the end of next week. For the S&P 500, 81% of companies that reported have beat expectations. Blended 1Q earnings growth is running at 7.2% year-over-year including companies not yet reported, and 2.0% for companies already reported, according to FactSet. Strong earnings growth is expected from the Energy sector and a deceleration in earnings growth from the Financials, Communication Services, and Consumer Discretionary sectors. During 1Q22 earnings calls, investors are closely monitoring forward guidance as well as vulnerability of margins, earnings and valuations due to headwinds from higher input costs and deteriorating demand.
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US GDP unexpectedly contracted at a 1.4% annualized rate in Q1

Emily McCormick · Reporter
Thu, April 28, 2022, 8:31 AM · 3 min read
U.S. economic activity unexpectedly contracted in the first three months of 2022 with lingering supply chain constraints, inflation, and disruptions amid Russia's war in Ukraine weighing on growth.

The Bureau of Economic Analysis (BEA) released its initial estimate of first-quarter U.S. gross domestic product (GDP) Thursday at 8:30 a.m. ET. Here were the main metrics from the report, compared to consensus data compiled by Bloomberg:

-- GDP annualized, quarter-over-quarter: -1.4% vs. 1.0% expected, 6.9% in Q4

-- Personal Consumption: 2.7% vs. 3.5% expected, 2.5% in Q4

-- Core Personal Consumption Expenditures, quarter-over-quarter: 5.2% vs. 5.5% expected, 5.0% in Q4
{snip}

Read more: https://finance.yahoo.com/news/q1-us-gd ... 26750.html
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The Fed’s favorite inflation gauge rose 5.2% in March

PUBLISHED FRI, APR 29 2022 8:33 AM EDT UPDATED 2 MIN AGO

A measure that the Federal Reserve focuses on to gauge inflation rose at a robust pace in March, likely cementing the central bank’s intention to raise interest rates by half a percentage in May. ... The core personal consumption expenditures price index, which measures costs that consumers pay across a wide swath of items and accounts for how behavior changes in response to market dynamics, increased 5.2% from a year ago, according to the Bureau of Economic Analysis.

That was slightly below the 5.3% reading in February, which was the highest reading since April 1983. ... That was less than the 5.3% Dow Jones estimate. On a month-over-month basis, prices rose 0.3%, in line with the estimate. ... Including volatile food and energy prices, the PCE index accelerated by 6.6%, the fastest pace since January 1982. Headline inflation was up 0.9% from February, much faster than the previous 0.5% increase.

A separate inflation measure, the employment cost index, increased 1.4% in the first quarter from the previous period, according to the Bureau of Labor Statistics. The Dow Jones estimate for that level was 1.1%. ... The index, which measures total compensation cost for nongovernment workers, was up 4.5% over the past year.

Together, the data points do little to dispel the notion that inflation is running at a much faster pace than the Fed would like. Consequently, markets widely expect a 50-basis-point increase during next week’s Federal Open Market Committee, with additional increases to follow.

{snip}
Read more: https://www.cnbc.com/2022/04/29/the-fed ... march.html
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One Per Cent Move Report (for April 28, 2022) Notes Gain in S&P and Nasdaq

https://www.morganstanley.com/content/m ... e-20220428

Introduction:
(Morgan Stanley) What Happened in the Markets?

The S&P 500 rallied 2.5% on Thursday to close at 4,288. The index is down 10% year to date. This was the largest one-day gain for the S&P 500 since March 9, 2022. The Nasdaq 100 gained 3.5% and the Russell 2000 rose 1.8%.

Every S&P 500 sector was higher today, with Information Technology (+4.0%) and Communication Services (+3.9%) outperforming the broad market while Utilities (+1.1%) and Industrials (+1.1%) lagged.

1Q22 earnings reports have been the focus this week, with better than expected results in mega-cap technology. Meanwhile, GDP disappointed this morning as net trade and inventories hit headline numbers more than anticipated.

In overseas markets: inflation was reported higher than expected in Germany; Russia cut off natural gas supplies to Poland and Bulgaria in response to European sanctions; Bank of Japan doubled down on bond buying, prompting the Yen to weaken further vs the US dollar.

As of the 4pm equity market close, the 10-year Treasury yield was range-bound, as markets await a potential 50 basis-point hike at the FOMC meeting next week (May 3-4). Additionally, WTI oil was near $105 per barrel and the US Dollar Index continues to strengthen as financial conditions tighten.
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Dow tumbles more than 900 points and the Nasdaq drops 4% on Friday to close out a brutal month
Source: CNBC

U.S. stocks sunk Friday with the Nasdaq Composite notching its worst month since 2008, as Amazon became the latest victim in April’s technology-led sell-off.

The tech-heavy Nasdaq Composite fell nearly 4.2% to 12,334.64, weighed down by Amazon’s post-earnings plunge. The S&P 500 retreated by 3.6% to 4,131.93. The Dow Jones Industrial Average shed 939.18 points, or close to 2.8%, to 32,977.21.

The Nasdaq finished at a new low for 2022 and the S&P 500 did as well, with the main stock benchmark taking out its previous low in March.

Stocks closed out a dismal month as investors contended with a slew of headwinds, from the Federal Reserve’s monetary tightening, rising rates, persistent inflation, Covid case spikes in China and the ongoing war in Ukraine.
Read more: https://www.cnbc.com/2022/04/28/stock-m ... -news.html
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Crash, you fucker!!
And remember my friend, future events such as these will affect you in the future
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U.S. Companies Added 247,000 Jobs in April, ADP Data Show

-- Hiring was weaker than forecast, smallest gain of recovery

-- Other data suggest labor market robust ahead of Fed decision

U.S. companies added in April the fewest jobs in the pandemic recovery, underscoring the persistent challenges faced by small firms to increase headcount in a tight labor market.

Businesses' payrolls increased by 247,000 last month, after a revised 479,000 gain in March, according to ADP Research Institute data released Wednesday. The median estimate in a Bloomberg survey of economists called for a 383,000 advance. ... Businesses with 500 or more employees posted solid hiring gains, but those with less than 50 lost 120,000 jobs in April, the worst in two years.

"While hiring demand remains strong, labor supply shortages caused job gains to soften for both goods producers and services providers," Nela Richardson, chief economist at ADP, said in a statement. "As the labor market tightens, small companies, with fewer than 50 employees, struggle with competition for wages amid increased costs."

The weaker-than-expected advance suggests firms are making little progress filling a record number of job openings despite recent wage increases. Many businesses still desperately want to hire more workers, but a depressed participation rate continues to limit further employment growth. ... The figures precede the government's monthly jobs report on Friday, which is currently forecast to show private payrolls increased by 390,000 in April. The ADP figures don't always follow the same pattern as the Labor Department's data.

{snip}
Read more: https://www.bloomberg.com/news/articles ... -data-show
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Fed raises interest rates by half a percentage point

Updated 1900 GMT (0300 HKT) May 4, 2022

New York (CNN Business) – The Federal Reserve said Wednesday it is raising interest rates by a half-percentage point to get a handle on the worst inflation America has seen in 40 years.

It's the first time in 22 years that the central bank has hiked rates this much.

In March, it ramped up its benchmark borrowing rate for the first time since late 2018, increasing it by a quarter-percentage point.

The central bank cited high inflation, as well as the strong labor market in its post-meeting statement.

Americans are struggling with rising costs everywhere from the grocery store to the gas pump. And with the Russia-Ukraine conflict still raging, price pressures on food and energy are unlikely to abate any time soon.

https://edition.cnn.com/2022/05/04/econ ... index.html


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U.S. weekly jobless claims increase; layoffs creep up in April

Reuters

WASHINGTON, May 5 (Reuters) - The number of Americans filing new claims for unemployment benefits increased more than expected last week, but remained at a level consistent with tightening labor market conditions and further wage gains.

Initial claims for state unemployment benefits rose 19,000 to a seasonally adjusted 200,000 for the week ended April 30, the Labor Department said on Thursday. Economists polled by Reuters had forecast 182,000 applications for the latest week.

Claims had hovered below the 200,000 level since mid-February amid strong demand for workers. Government data this week showed there were a record 11.5 million job openings on the last day of March, which widened the jobs-workers gap to a record 3.4% of the labor force from 3.1% in February.

The labor market imbalance is forcing employers to increase wages, contributing to soaring inflation. Compensation for American workers logged its largest increase in more than three decades in the first quarter, government data showed last week.

{snip}
Read more: https://www.reuters.com/world/us/us-wee ... 022-05-05/
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Stocks Are Boring Again — and That's Good News
by Felix Salmon

https://www.axios.com/2022/05/05/stocks ... -good-news

Introduction:
(Axios) We've reverted to normal, and, all things considered, it's not so bad.

Why it matters: For the first time in well over a decade, it's hard to look at the stock market and declare that it's being artificially boosted by ultra-low interest rates.

• Now that rates are positive and are expected to continue to rise, some of the most high-flying stocks have fallen sharply to earth. But the stock market as a whole looks remarkably healthy.

The big picture: The S&P 500 is having a bad morning on Thursday, bringing it to a level roughly 13% below the all-time high seen in January. But it's still up 25% from the pre-pandemic high, and up 270% from the 2007 pre-financial crisis high point.

Conclusion:
The bottom line: The markets seem to be pricing in a soft landing — one where the economy remains strong, while stocks revert to being a vehicle for long-term savings rather than short-term speculation. That's a huge vote of confidence in Jay Powell's Federal Reserve.
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The 1% Move Report for May 5, 2022

https://www.morganstanley.com/content/m ... e-20220505
(Morgan Stanley) What Happened in the Markets?
  • The S&P 500 declined 3.6% on Thursday to close at 4,147. With the sell-off, the index is now down 13.0% year-to-date.
  • Stocks reversed all of the prior session's gains on Thursday as outsized weakness in technology and growth stocks drove the broad indexes lower. While markets initially took Wednesday's FOMC statement as partially dovish - prompting both bonds and stocks to rally - that sentiment appeared to sour overnight as interest rates surged, stocks tumbled and volatility surged today. The Nasdaq 100 recorded the largest daily drawdown since September 2020, and 10-year Treasury yields breached 3% for the first time since 2018. Investors will look ahead to tomorrow's jobs report, where consensus expects 380,000 jobs added in the month of April and the unemployment rate to tick down to 3.5%.
  • All 11 S&P 500 sectors were lower in the session, with Utilities (-1.1%) and Energy (-1.4%) outperforming the broad market while Information Technology (-4.9%) and Consumer Discretionary (-5.8%) lagged.
  • As of the 4pm equity market close, Treasury yields were sharply higher across the curve with the 10-year yield closing at 3.04%. WTI oil prices were virtually flat at $108 per barrel while gold was modestly lower at $1,880 per ounce. The US Dollar Index rose nearly 1%.
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The U.S. Employment Situation - April 2022

https://www.bls.gov/news.release/pdf/empsit.pdf

Introduction:
(Bureau of Labor Statistics) Total nonfarm payroll employment increased by 428,000 in April, and the unemployment rate was
unchanged at 3.6 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was
widespread, led by gains in leisure and hospitality, in manufacturing, and in transportation and
warehousing
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Post-pandemic Reset Leads to Wave of Layoffs in Tech
by Amanda Silberling and Natasha Mascarenhas
May 6, 2022

https://techcrunch.com/2022/05/06/start ... fs-in-may/

Introduction:
(TechCrunch) Ok, maybe it is a reckoning.

Over the past week, we’ve witnessed an alarming amount of layoffs across the startup ecosystem, from buzzy, big names like Cameo, OnDeck and Robinhood, to b2b platforms like Workrise and Thrasio. The common thread between most of these layoffs, according to founders, is that there’s been a shift in the market and a serious pivot in business is required. A pivot, that is, that hurts the employees that built your product up after high demand.

A pullback has been in the cards for months. It first impacted public tech companies and then slowly trickled down to late-stage deals and even their well funded early-stage counterparts. In February, Hopin cut 12% of staff, citing a goal of more sustainable growth while April included Workrise cutting staff and verticals despite a $2.9 billion valuation.

Now feels like an inflection point, in which tech unicorns are realizing that they may have overpromised a growth trajectory, over-hired, or overestimated their ability to raise that next round. They aren’t alluding to the market changing, they’re blaming it. The irony here is tough: the same workforces that helped companies meet a boom in pandemic demand, are the same workforces on the chopping block when trends change.
The article goes on to briefly discuss specific firms. The firms discussed and the number losing jobs at those firms are as follows:

Cameo - 87
Robinhood - about 300
On Deck - about 72
Thrasio - no number given
Tudum (editorial arm of Netflix) - 25
Main Street - 35% of its staff
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What's Behind Inflation? Greedy Corporate Executives
by Jim Hightower
May 4, 2022

https://otherwords.org/whats-behind-inf ... xecutives/

Introduction:
(Other Words) Today, CEOs of big corporations are playing the tricky “Inflation Blame Game.”

Publicly, they moan that the pandemic is slamming their poor corporations with factory shutdowns, supply chain delays, wage hikes, and other increased costs. But inside their board rooms, executives are high fiving each other and pocketing bonuses.

What’s going on?

The trick is that these giants are in non-competitive markets operating as monopolies, so they can set prices, mug you and me, and scamper away with record profits. In 2019 for example, before the pandemic, corporate behemoths hauled in roughly a trillion dollars in profit. In 2021, during the pandemic, they grabbed more than $1.7 trillion.

This huge profit jump accounts for 60 percent of the (increase in) inflation now slapping U.S. families! (Source: https://mattstoller.substack.com/p/corp ... lation?s=r)
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caltrek wrote: Fri May 06, 2022 8:21 pm What's Behind Inflation? Greedy Corporate Executives
by Jim Hightower
May 4, 2022

https://otherwords.org/whats-behind-inf ... xecutives/

Introduction:
(Other Words) Today, CEOs of big corporations are playing the tricky “Inflation Blame Game.”

Publicly, they moan that the pandemic is slamming their poor corporations with factory shutdowns, supply chain delays, wage hikes, and other increased costs. But inside their board rooms, executives are high fiving each other and pocketing bonuses.

What’s going on?

The trick is that these giants are in non-competitive markets operating as monopolies, so they can set prices, mug you and me, and scamper away with record profits. In 2019 for example, before the pandemic, corporate behemoths hauled in roughly a trillion dollars in profit. In 2021, during the pandemic, they grabbed more than $1.7 trillion.

This huge profit jump accounts for 60 percent of the (increase in) inflation now slapping U.S. families! (Source: https://mattstoller.substack.com/p/corp ... lation?s=r)

Seriously, what is Biden and the democratic party doing to stop them? They won't use anti-trust, they won't enforce labor laws(or even stop them from using literally slave labor from the third world) or step up to the plate. They're owned by these greedy corporations hook line and sinker!
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Seriously, what is Biden and the democratic party doing to stop them? They won't use anti-trust, they won't enforce labor laws(or even stop them from using literally slave labor from the third world) or step up to the plate. They're owned by these greedy corporations hook line and sinker!
Good point. I would add a few things:

The Republicans are no better. I know, a tired line of argument, but still worth keeping in mind.

Democrats like Elizabeth Warren are arguing strenuously for anti-trust action. The problem is that on that issue they do not control the Democratic party, much less Congress or the executive branch. Republican support for anti-trust vanished a long time ago, well after Theodore Roosevelt's days as a Republican, but well before today.

While the current administration may be reluctant to strike at the root of the problem, they are far more willing to address the negative effects on the middle class and others. Here, the problem is the sabotage by Senators Manchin and Sinema. These two Senators, in league with the Republican party, have blocked the Build Back Better initiative which has all sorts of provisions to help cope with the effects of inflation. If memory serves me correct, that includes tax hikes on the wealthy that otherwise benefit from inflation in the manner that Hightower describes. Such hikes would minimize government borrowing, which can fuel inflation, and place helpful programs on a pay as you go basis. In this case, "you" meaning the government.

Strategically, Democrats like Warren within the Democratic party need to be elected and/or re-elected. "Moderate" Democrats need to be challenged in the primaries, and firmer numerical control of the Senate is needed so that Manchin and Sinema's alliance with Republicans is not decisive. You are right in that a big problem with that is that corporate influence is too great. As I have written before, that is due to their deep pockets and the campaign contributions that flow from those deep pockets. That influence might have been held somewhat in check through the McCain-Feingold legislation regarding corporate financing of election campaigns. Legislation that was supported more by Democrats than Republicans (with McCain a notable exception). Legislation which was struck down by Republican appointees to the Supreme Court, with Democrat appointed justices in dissent.

Giving the Democrats more backbone should be done in the primaries. Withholding support from the Democrats in the general election only favors the Republicans and will continue to worsen the problem.

I know that is very frustrating, but it is also the reality of the current situation.
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Post-pandemic Reset Leads to Wave of Layoffs in Tech
https://techcrunch.com/2022/05/06/start ... fs-in-may/
More on that:

The Great Resignation, Meet the Great Reset
by Natasha Mascarenas
May 7, 2022

https://techcrunch.com/2022/05/07/the-g ... eat-reset/

Extract:
(TechCrunch) Unlike before, when startups had to lay off employees in response to the sudden shock of the pandemic, today’s tech companies are making cuts due to – more or less – their own lack of discipline. I have more empathy for a founder who was caught off guard by a pandemic than one who overspent despite knowing that the boom wouldn’t exist forever, and is now cutting the same employees that helped them soar. Whiplash, I’m hearing from some now former employees, is an understatement.

Growth is tricky, and a part of a founder’s job is to moonshot their way to scale, but we also need to remember that change was inevitable. Especially for startups that hit product market fit during a once-in-a-lifetime event.

The biggest difference between layoffs in 2020 versus layoffs in 2022 is cash, potentially a lifeline. Startups raised massive amounts of capital thanks to larger average deal sizes over the past two years; meaning that some of the capital that was once used to sweeten benefits or candidates’ offers may be pivoting to runway. Jason Lemkin, head of SaaStr, put it well on Twitter: “Many startups also lucked out and have years in the bank due to covid rounds… capital that they wouldn’t have had otherwise.”

If you’re a founder, now is the time to unlearn some of that lavish spending and focus on conserving what you do have
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