The New York Times: The Morning Newsletter

Tech Downsizes.

Views expressed in this geopolitical news summary are those of the reporters and correspondents.  Accessed on 25 January 2023, 1315 UTC.  Content provided by email subscription to "The New York Times:  The Morning Newsletter."

Source:  https://mail.google.com/mail/u/0/#inbox/FMfcgzGrcFpNmgncNZxqWKXhsMFtJjWM (Latest World and U.S. News from the "New York Times").

Please click link or scroll down to read your selections.  Thanks for joining us today.

Russ Roberts (https://www.hawaiigeopoliticalnews.com).

January 25, 2023

Author Headshot

By Julie Bosman

National Correspondent

Good morning. The drumbeat of layoffs in Silicon Valley is partly a result of how the pandemic upended the economy.

Amazon’s lobby in Midtown Manhattan last year.Karsten Moran for The New York Times

Future barometer

The layoff announcements dropped one after another, accelerating throughout the second half of 2022. Amazon began laying off what will be 18,000 employees. Lyft, the ride-share company, said it would dismiss 700 of its workers, or 13 percent of its staff. The technology giants Meta and Twitter announced that they were cutting thousands of employees.

The new year brought even more bleeding in Silicon Valley: Last week, Google’s parent company, Alphabet, said it planned to lay off 12,000 of its workers, Microsoft said it would cut 10,000 employees and on Monday, Spotify said it would reduce its staff by 6 percent, about 600 people. Add up the losses and more than 216,000 tech employees have been laid off since the start of 2022, according to Layoffs.fyi, a site that tracks job cuts in the sector.

The layoffs have an ominous feel to anyone who is tracking news on the economy and the tumult in recent months relating to inflation, interest rates and the labor market. But the tech job cuts are not necessarily bad news for the economy overall, or even for Silicon Valley. (They account for about 4 percent of the tech sector’s total workers.) In today’s newsletter, I will explain what the cuts mean for the broader economy.

Boom and bust

To understand why tech companies are laying off workers now, turn back to the pandemic, when the industry was booming. In 2020 and 2021, sales spiked for companies like Amazon, as e-commerce took off and consumers who were suddenly spending much more time at home were buying goods at a record pace.

Demand for workers quickly escalated, and tech companies were competing against each other to hire talent. A virtual gold rush was on for engineers, according to my colleague Tripp Mickle, a reporter based in San Francisco who covers Apple and the tech industry.

As the pandemic waned, many companies faced a new problem: They had been on a hiring binge, but now they were confronting a possible recession — and heavy pressure from investors to scale back.

“Now, tech is in a position of resetting itself,” Tripp said. “But if you look at the fundamentals of most of these businesses, they remain pretty strong. It’s just that they went through a period of accelerated growth, and the ability to sustain that is difficult.”

Still, the layoffs contain at least one positive sign for the labor market: A lot of traditional industries need tech employees, so this is an opportunity for those companies to scoop up talent. The health care industry, the federal government, private companies in retail or manufacturing — all of them need engineers and other people with high-tech skills. What is Google’s loss could be Walmart’s gain.

But there are no signs that the layoffs will end anytime soon, especially as the Federal Reserve has suggested that it will keep increasing interest rates this year to try to cool the economy.

Google’s headquarters in Mountain View, Calif.Laura Morton for The New York Times

Early warning

Consider the tech industry’s place in the broader economy — and whether tech layoffs will spread to other industries.

One factor that makes the tech industry stand out is its dependence on valuation, since companies often raise a lot of money to pour into risky or unproven assets. Companies that are very forward looking tend to take a hit when interest rates increase, which could partly explain the waves of layoffs, Jeanna Smialek, a Times reporter who covers the Federal Reserve and the economy, told me.

The tech sector can be a leading indicator, telling us where the economy is headed before the rest of the economy goes there.

“You don’t want to dismiss tech layoffs as meaningless,” Jeanna said. “They can sometimes be the canary in the coal mine.”

But she also warned not to read too much into them. Besides being especially market-sensitive, the tech sector is a very small slice of the overall work force in the United States — about 2 percent of all jobs in the economy. Jobless claims overall remain very low, and more than 10.5 million jobs are open across the country.

For more

A MESSAGE FROM APPLE TV+

THE LATEST NEWS

Politics
Gun Violence
Monterey Park, Calif.Mark Abramson for The New York Times
War in Ukraine
Other Big Stories
Storm damage in Pasadena, Texas, yesterday.Mark Mulligan/Houston Chronicle, via Associated Press
Opinions

Alec Baldwin’s case is a reminder that if you are involved in a serious incident, it’s best not to talk to the police without an attorney presentFarhad Manjoo writes.

It’s in the best interest of the U.S. to help China develop new treatments to blunt Covid’s spreadMichael Callahan argues.

MORNING READS

Joshua trees around Avi Kwa Ame.John Burcham for The New York Times

Spirit Mountain: A sacred site near Las Vegas is finally becoming a national monument.

Top 1 percent of restaurants: There are fruit beetles on the menu. Will that type of eating last?

R.I.P.: A beloved celebrity bear in Italy has died.

Tips: You should actually follow these food expiration dates.

Advice from Wirecutter: A good ice scraper is worth it.

Lives Lived: Witty and contrarian, Victor Navasky was the longtime editor and later publisher of The Nation magazine and wrote an acclaimed book about the Hollywood blacklisting era. He died at 90.

SPORTS NEWS FROM THE ATHLETIC

Hall of Fame: Scott Rolen, a veteran of 17 big league seasons, will be the only player inducted into the Baseball Hall of Fame this year.

Hoyas snap streak: Georgetown beat DePaul last night, the Hoyas’ first win in Big East play in their last 29 games.

All-Star game: Bronny James, LeBron James’s son, will play in the McDonald’s All-American Game, an event that has hosted some of basketball’s biggest stars.

A MESSAGE FROM APPLE TV+

ARTS AND IDEAS

A scene from “Everything Everywhere All at Once.”A24

This year’s Oscar nominations

“Everything Everywhere All at Once,” the dimension-bending adventure from the directing duo known as the Daniels, was nominated for 11 Academy Awards. It’s up for best picture, best director and acting awards for its four stars, Michelle Yeoh, Ke Huy Quan, Stephanie Hsu and Jamie Lee Curtis. Among the other nominees:

  • Two big-budget action movies, “Avatar: The Way of Water” and “Top Gun: Maverick,” received best picture nominations, alongside more traditional awards-show fare like “Tár” and Steven Spielberg’s “The Fabelmans.”
  • “The Banshees of Inisherin,” a dark comedy, and the German war film “All Quiet on the Western Front” earned nine nominations each.
  • Among the snubs: Jordan Peele’s “Nope” and the action hit “The Woman King” were overlooked, and no women were nominated for best director.

PLAY, WATCH, EAT

What to Cook
Armando Rafael for The New York Times

Soup is great. These recipes prove it.

What to Read

Kathryn Ma’s new novel, “The Chinese Groove,” turns an immigration struggle into a comedy of errors.

What to Watch

The gimmick behind “Missing,” a strenuous techno-thriller, is that the directors and screenwriters frame the action on computer screens.

Late Night

The hosts talked about Pence and his classified documents.

Now Time to Play

The pangram from yesterday’s Spelling Bee was windmilled. Here is today’s puzzle.

Here’s today’s Mini Crossword, and a clue: I, for one (five letters).

And here’s today’s Wordle.

Thanks for spending part of your morning with The Times. See you tomorrow.

P.S. Anna Kodé, a Times Real Estate reporter, traveled to Nashville, Denver and Seattle to write about America’s startlingly similar-looking residential buildings.

The Daily” is about nonprofit hospitals.

Matthew Cullen, Lauren Jackson, Claire Moses, Ian Prasad Philbrick, Tom Wright-Piersanti and Ashley Wu contributed to The Morning. You can reach the team at themorning@nytimes.com.

Need help? Review our newsletter help page or contact us for assistance.

You received this email because you signed up for the Morning newsletter from The New York Times, or as part of your New York Times account.

To stop receiving The Morning, unsubscribe. To opt out of other promotional emails from The Times, manage your email preferences.

Subscribe to The Times

Connect with us on:

facebooktwitterinstagram

Change Your EmailPrivacy PolicyContact UsCalifornia Notices

The New York Times Company. 620 Eighth Avenue New York, NY 10018

Comments

Popular posts from this blog

GlobalSecurity.org Newsletter

GlobalSecurity.org Newsletter

The New York Times: The Morning Briefing