Posted on 06/12/2022 9:47:12 AM PDT by Oldeconomybuyer
After a decade of exuberance, Silicon Valley start-ups, venture capitalists and established tech companies alike are cutting investment and firing workers, prompting some in the tech world to openly predict a U.S. recession is on the way.
Facebook and Amazon have slowed their frantic hiring paces, while highflying newer companies including scooter company Bird and email client Superhuman have laid off workers. Tesla chief executive Elon Musk recently told employees he has a "super bad feeling" about the economy, and venture capital firm Lightspeed Venture Partners warned in a blog post that "the boom times of the last decade are unambiguously over."
The sudden shift is giving many in the sector whiplash. Uncertainty has settled over Silicon Valley as venture capitalists, tech founders and regular employees debate whether the pessimism is overblown or if tech really is the canary in the coal mine, already suggesting a broader downturn in the U.S. economy.
Tech start-ups do serve as a "leading indicator" for the economy, said Till von Wachter, a professor of economics at UCLA. Higher interest rates can mean it's more difficult to raise money to fund new ventures - which typically take a while to turn a profit.
"They are one of the sectors that are the most sensitive to interest rate changes," von Wachter said. "They are very dependent on what we believe the future to be."
The doom and gloom from senior venture capitalists may also be part of an effort to educate the younger generation and encourage them to curtail spending in case of a downturn.
"If you're funding some 28-year-olds, they don't know a roller coaster, all they know is a rocket ship," Wilcox said. "They haven't seen what a financial winter looks like. They haven't even seen a cold spring."
(Excerpt) Read more at sfgate.com ...
And I thought they meant “decadence” as in old fashioned decadence. No, I guess their actual morals arent improving.
Anyway, I’ve been through four Silicon Valley downturns. They will turn around again, likely very fast, unless Silly Valley has become too consolidated and bureaucratic. Then it will all pop up again somewhere else. This may be the time.
Funny I don't remember the Obama years as being particularly "exuberant."
I remember a lot of MSM cheerleading about a recovery that never arrived.
I do remember quite a lot of exuberance during the last four years of the "decade of exuberance," as this article so misleadingly characterizes it.
No one in the media can hold onto a job unless they push the party line at least once in every story they write.
Or maybe they write them straight, and then some algorithm inserts party line language in a post-processing step.
They’ve finally started to figure out their buddy President Retard whom they helped install is hosing everyone over big time 🤪
They’re so smart and quick 😒
“I’ve been through four Silicon Valley downturns. “
I’d rate the 2001 Dot com bubble pop as the worst.
Possibly. It came after the most extreme bubble.
And it came after the 911 recession. Double whammy.
“openly predict a U.S. recession”
We’ve already been in a recession for a long time. A recession is a downtrend in the economy that can affect production and employment, and produce lower household income and spending. We have that, right now. The defined difference between a recession and a depression is that the effects of a depression are much more severe, characterized by widespread unemployment and major pauses in economic activity. We already have that, right now.
The unemployment rate in the United States is obtained by dividing the number of unemployed persons by the number of persons in the labor force (employed or unemployed) and multiplying that figure by 100.
https://www.britannica.com/story/how-is-the-us-unemployment-rate-calculated
So if I read that right, they are creating the labor force number by taking the employed or unemployed (part time, or seasonal) that are determined in the labor force to be in that number, so they are inflating that number.
We all know about bare shelves in the markets and the inability to repair things due to no parts in large numbers throughout the US. So what we have is not a recession but a depression. Kind of like “walking pneumonia.” It is pneumonia just like a rose by any other name.
wy69
The Obama years were a dud, as far as the general economy went. Silly Valley did rather well though, if you dont count all the consolidation and the effective death of the VC innovation churn. The big players gained a lot in market value, though “creative destruction” went away.
Much of this “tech” in my humble opinion, is not even tech.
America has poured $$ trillions into various forms of social-media, on-line finance and debt-creation, faster and more pervasive media distribution, on-line shopping and marketing, and of course, government surviellence.
Meanwhile, we are entering an energy crisis, medical costs are skyrocketing, we are facing food shortages, and the Chinese and supposedly backward Russians have, by some accounts, better hypersonic missiles than we do.
Where is the return on all this “Tech?”
The recovery was always over there on the horizon with Obama.
Will likely see a repeat of the talking points with Biden the Clown.
Where is the return on all this “Tech?”
Young people glued to their phones who refuse to work.
The labor force calculation is the fatal flaw in the unemployment rate calculations. Thats why the Fed long ago began, internally, to use the Employment Rate, or the Employment-Population Ratio, EMRATIO.
https://fred.stlouisfed.org/series/EMRATIO
As can be seen, the US is still recovering from the Covid employment crash. Part of this is because there are still lingering effects of Covid policies. Upshot is however that there are still a lot of unemployed people.
I too have been thru 4 SV downturns.
The worst was 2001 as they used it as an excuse to fire Americans and hire Indians.
A executive memo came out in 2002 saying: “Find anyway you can to write up employees for failure to meet targets”
It isn't all bad. I recently saw a narrative on a two-decade old Radio Shack advertisement. Various electronics for sale, each component going for hundreds of dollars each. Desktop computers, cameras both still and video, video recorders, radios, music tape recorders, telephones, and auxiliary components and gear to use them. Now all replaced by a single smart phone that you carry in a pocket.
According to what I read, we're in for even greater tech feats despite the bumpy economic times.
“... there are still a lot of unemployed people.”
And to liberals, unemployed people are dependent on the government and the programs they have invented to keep the sheep in the corral. The problem that I saw in the sights is that the inflation rate, artificially created, is that the inflation rate is growing faster than the increase in jobs and wages. Unemployment continues to go up while wages are going the other direction. So it is even a wider expanse between the availability of expense than that of payment. So as moving capital decreases, it has the disappearance effect of employment needs. Less employees means less business or even closure. More unemployment. Downward spiral.
Government steps in with enough to appear to do the work. And their programs like not being able to collect rent or default on loans, is an open invitation to financial failure for larger and larger sources of protection.
wy69
Extreme efficiencies. Example: Google maps, in your car. It will plot the most fuel and time efficient route to your destination, saving time and gasoline and ensuring you can find the place you want to go.
That is but one efficiency created by tech. There are thousands more.
The kicker is that the improvement in employment has flattened out after March 2022. So we probably are in a “recession” already. This may be what a recession looks like under these conditions of already recession-like sub-par employment, with declining real wages.
The unemployment rate under these circumstances is meaningless.
If we are lucky that is. We may get to layoffs, if it gets bad enough.
Amazon has slowed its frantic hiring paces. True. I have learned that an Amazon center in San Bernardino, CA, has workers standing around for long hours and sent home early without pay. Weird. Amazon has been expanding full blast since 1997, twenty five years ago.
You’re right.
If you’re in Tech, become a student of LinkedIn job postings.
If you’re in a major Tech market, regularly search for job postings that might interest you. For example, “Android Developer / Greater Boston.”
The results that LinkedIn returns will be shocking, if you’re a student of your job market.
The Tech recession is here. The next domino to fall with be US-based recruiters, followed by the Desi recruiting clowns.
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