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Signs of recession?

Article in New York Times newspaper details how low interest rates were fueling growth, but now the “easy money” days are gone.

  • “The whole tech industry of the last 15 years was built by cheap money. Now they are getting hit by a new reality, and they will pay the price
  • Carvana, the online used car retailer, was worth $80 billion eighteen months ago, but is now value at less than $1.5 billion
    • Value plunged 98%
    • Did a round of layoffs in May and another in November
  • SalesForce bought Slack (office communication tools) for $28 billion
    • Borrowed $10 billion to complete transaction
    • Now it is cutting 8,000 employees, many of them at Slack
  • Zillow, real estate firm, had $45 billion valuation in 2019
    • Now shrunk to $10 billion
    • Went from 8,000 employees to 5,500 employees
  • Study published by National Association for Business Economics
    • More businesses expect staffing reduction at their companies in the coming months
    • 33% say firm is fully staffed
    • 19% will be laying off staff in next 90 days
    • “widespread concern about entering a recession this year”
    • “fewer respondents than in recent years expect their firms’ capital spending to increase in the same period”
    • 40% say their companies’ margins have declined during past 90 days
    • Expect to pay higher wages for the workers they are holding on to
  • The Register newspaper is reporting that IBM is going to replace 80 US workers with lower cost employees in the country of India
    • Average salary for US tech developer is $109,000, which same job in India is $38,000

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