In December 2022, American tech firms announced a large number of job cuts as they prepared for potential economic difficulties in the future.
According to a report by employment firm Challenger, Gray & Christmas, Inc., 43,651 jobs were cut in the US in December, marking a 43% decrease from November’s announced job cuts. This pace of layoffs was significantly higher than the 19,052 cuts announced in December of 2021. The report also stated that for the entire year of 2022, planned layoffs increased 13% to 363,824 job cuts.
Tech companies, many of which are grappling with weakened demand and declining stock prices, were particularly affected by last month’s job cuts, letting go a total of 16,193 employees. Tech firms also led the number of announced layoffs for the entire year, with 97,171 planned job cuts, a staggering 649% increase from the same period one year ago.
Interestingly, the sudden cascade of tech layoffs are occurring against an economic backdrop of strong job growth and a historically low unemployment rate of 3.7%, as per the Labour Department’s November data. However, the Federal Reserve predicts unemployment levels will increase in 2023 as policy makers raise borrowing costs in face of 40 year-high inflation. There are concerns that this hawkish trajectory could lead to a recession. Andrew Challenger, Senior VP at Challenger Grey, explained the paradox: “The overall economy is still creating jobs, though employers appear to be actively planning for a downturn. Hiring has slowed as companies take a cautious approach entering 2023.”
The government is set to release a report on December hiring levels on Friday, with nonfarm payrolls expected to increase by 200,000, following November’s gain of 263,000. The unemployment rate is expected to remain unchanged at 3.7%.
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Information for this briefing was found via Challenger Grey and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
