Amazon founder is pessimistic about the health of the economy.
The economy worries consumers and investors, and the former have punished tech company stocks in recent weeks by liquidating them.
Consumers are heavily impacted by inflation, which is at its highest level in 40 years. This inflation affects the prices of almost all products and services. It urges caution. Aggressive central bank interest rate hikes to combat these price increases threaten to plunge the economy into recession, say some economists.
But for Jeff Bezos, the U.S. economy is already in recession. The founder of Amazon (AMZN) – Get Free Report is well positioned to take the pulse of the economy because the e-commerce giant is a juggernaut that serves consumers and businesses alike.
“Some people say that perhaps we are already in a recession. Do you think that we are in one?” Bezos was asked during an interview with CNN.
“I don’t know whether we’re technically in a recession economists argue over that – they have some technical definitions,” Bezos responded. “But I can tell you the economy does not look great right now. Things are slowing down. You’re seeing layoffs in many many many sectors of the economy, people are slowing down.”
Then he added: “The probability is we are not in the recession now but we are likely to be in one very soon.”
‘Take Some Risks Off the Table’
Bezos was then asked what advice he would give small businesses during these difficult times.
“My advice to people, small business owners is take some risks off the table. If you are going to make a purchase maybe slow down that purchase a little bit,” the billionaire said. “If you are an individual and you are thinking about buying a new large screen TV maybe slow that down keep that cash, see what happens. Same thing with a refrigerator, a new car whatever, let’s take some risks off the table.”
“If you are a small business maybe delay some capital purchases: do you need that new piece of equipment? Maybe it can wait a little bit, have some cash on hands; just a little bit of risk reduction could make the difference for that small business.”
When asked how long he thinks the recession would last the entrepreneur said it’s “very challenging” to make a prediction but advised people to “hope for the best prepare for the worst.”
This advice is similar to the one that Bezos had already given on Oct. 18 with the only difference that for the billionaire there is no longer any doubt that we are in a recession.
“Yep, the probabilities in this economy tell you to batten down the hatches,” Bezos posted on Twitter on Oct. 18.
This call for belt-tightening is the recipe from his company. Amazon is expected to announce this week the elimination of more than 10,000 jobs, according to media reports. These unprecedented workforce reductions affect different businesses and divisions of the group.
They come after Amazon warned on Nov. 2 that it would “pause on new incremental hires in our corporate workforce.”
“We anticipate keeping this pause in place for the next few months, and will continue to monitor what we’re seeing in the economy and the business to adjust as we think makes sense,” Beth Galetti, senior vice president of people experience and technology, wrote in a message to employees.
The company is not the only one to carry out massive layoffs to limit the damage of the current economic situation. Meta Platforms announced last week the the elimination of 11,000 jobs, or 13% of the group’s 87,000 employees. It was the first cuts in Facebook’s history since its creation in 2004.
“In this new environment, we need to become more capital efficient,” Meta’s CEO Mark Zuckerberg told employees. “We’ve cut costs across our business, including scaling back budgets, reducing perks, and shrinking our real estate footprint. We’re restructuring teams to increase our efficiency.”
Downsizing has spread across the tech and crypto sector: Twitter, Lyft, Coinbase, Stripe, Microsoft have all cut jobs recently.
Alphabet, Apple and others have either frozen hiring or are slowing down the pace of hiring.