What Recession?

"It isn't affecting me so it doesn't exist" is a fairly elementary mistake, yeah?

My wife is currently looking for a job in Western Europe and 90% of open positios are 'fake' -- they keep previous positions open because showing that you are in a hiring freeze can impact the company's perception. Plus they want to keep collecting info so when they need to eventually hire they have a good source.

I've posted this elsewhere, but I'll repeat it.

First they send your work home, and then they send it next door.

Corporate learned during COVID that the metro premium isn't worth it any more. These layoff announcements--which have always occurred in the shadows--have three purposes:

1. Shift jobs to cheaper locales. In the US, many metro jobs are being moved to cheaper locations like the midwest. Western European labor is also relatively cheaper. Work from home works for you and your boss. I live in Raleigh-Durham. Things are on fire over here. Google, Apple, Oracle, Microsoft, and Amazon are all hiring at a rapid clip. My fiance just finished her PhD in comp bio, and she has competing offers... but last I heard, biotech is dead and some other thing about long term R&D slowing down due to rate hikes (more on why I think this is nonsense later).

2. Off set the massive over-hiring. The rush of cash during COVID and record profits lured many companies into growth-mode-at-any-cost. While they still need the head count in many cases, people were willing to cut corners in hiring and project quality (i.e. does this really have returns to justify the investment) so a cull is needed. Think about crypto for example. I have a feeling a good number of companies are regretting jumping on the crypto NFT train right about now.

3. I believe companies and the media loudly communicate layoffs in part to reduce labor's negotiating power. I can't prove this, but it seems about right. In December, Facebook was struggling to hire. It was in the news. Right now, I'm sure many people are afraid to ask for more money, but I've managed to wring out 10-20% more than what's being asked for by recruiters despite what everyone is hearing.

I know people thinking this is all Fed induced, but you have to remember, the money that was spent during COVID hasn't gone anywhere. It's still circulating. Companies also borrowed record amounts of cash during ZIRP that's due in 30+ years. Many of these companies have returns in the 10-30% band. A bump to 4-5% is no where near enough to slow down business given how much cheap money was created.

For more evidence, go look at the start up raises. In a recessionary environment, VC would be completely dead. Yes, deal making has slowed and garbage companies can't find financing, but let's be real: those companies should have never existed in the first place.

So far most of the layoffs I've seen have been for nontechnical roles at big tech.

In the 2000 crash it was still fairly easy to find a job if you could code. Even though the big tech companies of the time were doing mass layoffs and losing 95% of market cap.

Who knows what it will be like this time. But I wouldn't take layoffs at high profile publicly traded tech companies as an indicator of the whole market. In some cases these companies are still even hiring a few engineers here and there while doing layoffs.

So far as I can tell demand for software engineers may actually be slightly higher than it was a year ago in the larger market.

Companies posting job ad does not necessarily equate to companies hiring. Some of these ads may be disingenious - they still interview candidates only to have a list of desirable people to make offers to once the company starts hiring again.

And of course, on top of that there's standard recrutiment scam of "oh, sorry, this position was just filled, but may I interest you with $WORSE_JOB_FOR_LESS_MONEY instead"?

The Recession is being talked about but will be felt in the middle of the winter/spring as high energy costs start hitting the bottom line of companies//costs of war, consumers aren't spending like they used to and interest rates are higher (costs of borrowing for their consumption hurt more).

No one is saying there is a recession currently but rather that is coming down the pipeline.

From a personal perspective: I would say though as a new employee of a company - hope that they have good revenue and that you have a protected role, prove your value quickly as typically new hires have a risky position if the firm is facing layoffs.

Anecdotal, but I know of a few companies that are cutting jobs in the US and moving them to lower-wage areas including Western Europe. Huge difference between employee compensation in SF vs much of Europe, even after taxes/benefits/etc.

Without really getting into the economic nitty gritty, the current environment feels a lot like late 2007. While the broader economy was still humming along fine, but the sector (finance then, tech today) that led the growth during the expansion was going off the rails.

During that cycle, the frothiness was led by the financial sector instead of the tech sector. The mega banks like Citi, JP Morgan, and Goldman had a lot of analogies to the FAANG tech giants today. During the bull run their market caps exploded, everyone thought they were geniuses to the point that the orgs started getting complacent, and they were scooping up people left and right paying huge total comp packages. The hedge fund explosion in the mid 2000s felt a lot like the VC and startup excesses of 2021. Money was sloshing around, and basically anyone could raise a ton of funding off a pitch deck with minimal due diligence.

All that being said by late 2007 there was major distress in high finance. The structured credit markets had already basically imploded, the banks knew they were facing major imminent losses, and hiring was basically frozen. But this didn't really affect the broader economy until about a year later. It took a while for the complex credit markets on Wall Street to really impact vanilla credit markets on Main Street. But just because it was slow, didn't mean the tidal wave wasn't massive.

I don't know if history will play out the same. But my point is recessions don't happen all at once. They typically take some time to really unfold across the entire economy. We can expect that there are "leading sectors" and "lagging sectors". Probably the sectors that were really the tip of the spear during the expansion phase are generally most likely to be the canary in the coal mine during the crash. And we know that tech has been responsible for a huge amount of growth in American over the past ten years. My guess is this is very unlikely to play out as "tech gets clobbered and everything else pulls through fine" just as 2007 was very unlikely to play out as "Bear Stearns collapses but the good times keep rolling".

Oof. The last recession I remember people asking "what recession" just before everything really came tumbling down. There are moments when sentiment shifts in comments seem to portend doom, and I feel right now the way I felt back in late February 2020, when it started to sink in that the tone in HN comments was changing and I realized COVID was going to be a very bad thing.

I think the better heuristic for the state of the job market is job openings rather than headlines. There are still thousands of job openings you can find on LinkedIn. News outlets are built to grab attention and not help you build an accurate representation of reality. The news sounds alarming, but I think all it amounts to is the tech job market cooling off from being red hot, and big tech companies getting bloated because of inflated earnings during the pandemic. That being said, things can change quickly, just a year ago people were paying millions for jpegs on the internet lol.

IMO non top paying companies have been hiring more regularly, across the world. It's nice that you do not consider FAANG, but some people do just for the 2x-3x raise is income.

When the top payers do layoffs and/or stop hiring, overall the max compensation you can get goes way down

Just as an example, Stripe who just did layoffs yesterdays, pays $450k a year for a senior software engineer. How does that compare to your recent 20% raise?

The tech sector in the U.S is definitely still hiring if you're a senior software engineer who's willing to make $200k. But lots of people got used to very high compensation, and some also depend on it with loans they took out, that cutting their compensation by 50% would make them go bankrupt

A recession is complicated and may not be highly coupled to a specific field of employment.

People have been screaming about a recession for the last year now, with not a whole lot of hard data to back it up. Inflation aside, the US is doing well, and even on that metric we're doing better than most of Europe right now. Stories of doom grab eyeballs, and a bunch of people really want the US/Europe to have a bad time, so there's also a lot of wishcasting going on.

My company stopped hiring for about a month when there was a lot of uncertainty but we seem to be doing well financially and are now hiring more headcount so the mood around hiring seems to have gotten better.

Twitter might fire 3500 people this year. Headline news. SpaceX and Tesla will each hire tens of thousands this year. Not news.

The "recession" is aspirational. They will keep talking about it until investors get spooked and cause a recession.

https://theintercept.com/2022/11/04/federal-reserve-interest...

  > “We see today that there is a bit of a savings buffer still sitting for households, that may allow them to continue to spend in a way that keeps demand strong,” she said. “That suggests we may have to keep at this for a while.”

Here in the US, our recession is apparent in every day life. Various issues are causing disruptions in our supply-demand balance, which in turn has caused many essential industries and businesses to remain under staffed. Many of the skilled people I know have been unemployed or under-employed for the better part of a year. This imbalance has also caused the prices of goods and services to be inflated, making it difficult for everyone, including the properly employed, to enjoy life without worrying about finances.

Choosing to ignore news while asking why your own experience doesn't match news seems disingenuous. News like recession is not made up for political or humourous reasons.

I run email servers and one of the pulses I've been keeping an eye on over the last 2 and a half years is recruiter mail, both real and spam. I did notice early to mid 2020 the volume of this type of mail was reduced to almost nothing. But it seemed to recover to normal by the end of the year and has stayed just about that way ever since.

This is subjective - I'm basing this off of how much mail I remember seeing. I haven't ran numbers or anything like that.

We're not in a recession (a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.), at least not in the US. https://fred.stlouisfed.org/series/GDP

"We have jobs" is a very low threshold to say there is no recession

I'd be more focused on 10%+ inflation and the 0.x GDP growth rate forecasts, especially since these forecasts are known to be somewhat optimistic

> Just landed (3 months ago) on a job that pays me 20% more than the previous one.

Well that doesn't even cover the 20% food price increase and ~40% energy price increase

You've nailed it.

I bailed on a MAAMA job in the states to move back to Canada.

Salary expectations (and currency!) are generally lower here, but the job market itself is hotter than I've ever seen it here.

My theory is that USA tech companies are friendshoring like mad.

In other words, Canada is picking up the recoil from the trade war with China. Biz that used to go to China (or even India) is now going to Toronto.

And every time a US company looks at their bottom line, they will recall that, if they hire three hours north of Seattle, they'll get something like a 40%-50% discount on total comp, PhDs out the wazoo, and a convenient, well-funded federal immigration system.

It's a no-brainer. What kind of fool would start a business in a politically unstable disaster-country where some populist executive order could cut you off from your supply of H1Bs next year?

Your job is moving to Canada (or possibly Europe,) and if you're smart, you'll move with it.

Overall the unemployment rate is not bad at all

https://ycharts.com/indicators/us_unemployment_rate

and we are not in a recession yet. Certainly some firms are looking at economic trends, concerned that rising interest rates will cause a recession, and laying people off preemptively. One might fear this could lead to a recession but I think if you lose your job today you are much better off than if you lose your job a year from now and the economy gets much worse.

Normal companies are still having a hard time hiring, I think FAANG companies are bloated and not terribly efficient because they tend to be monopolists who don't have competition that would force them to be lean.

It sounds like you're describing a recession to me.

People tend to confuse "recession" with some sort of "economic armageddon". But double digit % layoffs at some companies and pulling back hiring by 66% (by your estimates) at others is a pretty huge pullback, no?

Overall unemployment and job opening numbers are still fine, at least in the US. The headlines are a handful of high-profile previous market darlings that overhired like crazy and added 20-50% headcount during the pandemic. They're not indicative of any kind of trend, just like the great resignation panic wasn't, either, and labor force participation declines overall tracked at about the same rate as they have for decades. Trend lines are bumpy, but they're still generally moving at any smoothed multiyear line as they have for a long time. The only real outlier is headline CPI inflation, but even that bumped up mostly earlier in the year and hasn't stayed high, though the way it's reported "year over year" means it'll look that way until a year after the initial shock unless prices actually go down again, which is unlikely due to ratchet effect.

Other than inflation, most of what we're seeing is just regression to the mean after a lot of shit went bonkers during the pandemic.

The "mean" for software jobs is still about the best sector job market the world has ever seen outside of the last two years of software jobs and 2005-era mortgage finance. Maybe early Iraq War oil exploration, but you had to move to the Dakotas or bumfuck West Texas if you wanted in on that.

Western Europe is in a recession. Manufacturers are shutting down: glass https://archive.ph/giBnx steel https://archive.ph/Wu9gD food packaging https://archive.ph/9xoBc take your pick. Inflation is over 10% https://archive.ph/1DSsd and way over when you stop listening to government lies. Tax takes will be down so they are talking about stealing more from energy https://archive.ph/cYBBD https://archive.ph/T2r8q https://archive.ph/OmaJS and pharma.

I chose regime media so I can't be accused of providing fake news.

Jobs like ours which are providing the circuses will matter less when the breads disappear. The regime better hope that global warming does continue to provide a mild autumn and winter.

I can share some first hand insights, the place where I work at the moment hired 3 engineers last quarter and is planning to hire another 3 within coming weeks/months.

In the same time some colleagues left because they were picked by other companies offering 30% increase (and they are already on very good pay).

I get contacted by recruiters couple of times each week, although as some already mentioned this might not be a good indicator since interviewing might not lead to hiring.

Employment is a lagging indicator.

It's not there yet, but it's coming.

There will pretty much always be job openings in large companies, as people who fill essential roles retire, move away, etc. Sounds like the companies you monitor have reduced open roles by 66-90+% which is quite significant. Most companies, before they start laying off existing workers, will simply cut their hiring and hope to shrink their business through natural attrition (hiring fewer people than are leaving), which is probably what you're seeing.

EDIT: More broadly though, we are not actually in a recession yet, it's just that there are numerous signs of an emerging global economic slowdown. It's difficult to draw any concrete conclusions about the state of the economy from traditional metrics such as asset prices, inflation, GDP, unemployment, etc, because years of loose monetary policy coupled with recent shocks such as the pandemic and the war in Ukraine have messed with those metrics.

Recession and layoffs are slightly different. I view the more proximate cause of layoffs etc is the increase in the cost of capital and more of a feeling that there might be a slowdown. Company execs, boards and investors had a different denominator in their projections about present value of cash flows in Q4 of last year (this is always an approx calc in practice, but the mechanics / views follow the equations) and now investments that might have made sense may not. People are calculating the risks of recession differently. All of this is idiosyncratic to each company. Some companies may be operating in a domain where it makes sense to invest or for larger companies based on their estimations, and in large companies you may have some bets that make sense to expand and others that should shrink.

All these people complaining about not being able to afford the price of bread. Why don't they just eat cake?

The recession(s) are fucking different demographics in different ways.

One thing that's certainly happening in London is that there's hundreds of entry-level candidates fighting for only a handful of openings.

The industry has generally become more risk-averse. Hiring less experienced people is now extra risky, as it is a bet that they'll generate some value for the company before moving on for a higher salary elsewhere. Hiring juniors is a great long-term move, especially in a 0% rates landscape and when VC funding is plentiful but if you only have 12 months cash it's pretty hopeful.

This budget is now being used to hire safer, more predictable hires: seniors (know what you're getting into) and contractors (can cut them with 28 days notice or even less, no employment contract to complicate things)

Few believe we are currently in a recession, although they can really only be identified in hindsight. There is strong belief that we will end up in one soon, with most predictions seeming to target early next year. Preemptive measures are being taken to prepare for the anticipated storm.

> many companies went from having around 1000 job offers open in linkedin on a weekly basis to having now around a third of that.

But if we want to use labour as an indicator of recession for the sake of discussion, that's a rather substantial decline. Why is that not indicative of a recession? A recession is considered a decline in business activity and if businesses are now not seeing the activity to support two thirds of that prior activity, that seems like a meaningful decline to me.

Perhaps frothy high paid jobs at the big tech companies are going, but people doing useful stuff for average salaries in Europe for companies making profits are going to be safe. I think the software eats the world > recession still, so as techie our bubble is safe. I have not had problems finding work in 20 years. Granted that is a short time and the worse economic times were probably in 30's, 70's, etc.

I think tech will be strong for the next 100+ years, as we face more and more challenges that will need tech solutions. Such as climate change. People getting 300k+ a year to code (or the equivalent?) will come and go and generally be in pockets and driven by bubbles.

I live in the UK we are defiantly in recession but there is still more tech jobs than there are people to fill them. I got two job offers in two weeks of searching both paid more than the job I am in. I nearly didn't bother looking because of all the fud.

when the black plague killed a huge portion of the workforce of Europe, GDP probably shrunk significantly. The resulting labour shortage also give the nascent guilds so much bargaining power that a significant middle class arose and the Feudal system was seriously undermined.

Covid was obviously a much smaller plague, but coupled with a lot of people retiring at once, it would probably give a modest boost to employee's bargaining power at the cost of GDP as a whole shrinking.

So I predict we'll see a period of shrinking GDP and shrinking inequality. Still technically a recession, and not great if you're investor class, but not really impacting living standards in an adverse way for the rest of us.

The financial system of today is under full control of international banks, it has levers to be anything they want at any given time, with few limitations.

The financial collapse will likely come early next year, with CBDCs being promoted and offered as a way out of it.

The labour market is very tight, but recession is not synonymous with mass unemployment It's about economic growth. It's possible (even sometimes necessary) to have a recession with low unemployment and high wage growth.

Congratulations on landing a new job! I had a misfortune of being unemployed for a number of months during and shortly post-pandemic, the job market was out of wack even then, now add inflation, energy prices, political instability, and Fed's drastic intervention... It's just wild, illogical, and doesn't make any sense whatsoever.

A note of caution on LinkedIn though: number of open positions in LinkedIn (at least in the US) means squat. The amount of fake, deceiving, spammy, outright scammy job postings is such that I ultimately stopped using it altogether, Indeed was a bit more helpful but far from ideal as well.

Looking at the US labor statistics, you'd think this was a golden age. But that 20% raise you got is only about 9% when you factor in the likely inflation taking place in your area.

The thing is that recessions start somewhere. They never hit the entire economy at once. This one started in the most highly-leveraged areas of the economy because the crisis that's brewing is all about money. More specifically, it's all about access to collateral that allows money to flow. That pipe is constricting by the day.

Sooner or later, the recession hits everyone.

I don't think demand for experienced software engineers is ever going to drop. But there's a lot more in the world than just our field.

Also, I think this recession isn't so much caused by a lack of demand, but a lack of supply. Supply chains were disrupted by the Covid crisis, and now the Russian invasion of Ukraine is causing lots of other shortages. This is causing shortages in all sorts of industries, but apparently not so much in ours. Although I would have expected that the CPU shortages would have had some impact on us.

Anecdotal, but I also just landed a job starting on November 7th that will be making the most I have made in any given role, close to $200K with base and bonus here in the US. I know people and companies are getting spooked right now, but if you can find the right niche there are plenty of profitable companies hiring out there. It took me a week from notification that my contract in the last role was not being renewed to finding this new gig, and is also the shortest job search I will have been on.

>"How did you go bankrupt? Two ways. Gradually, then suddenly."

I have a feeling that we are in a similar situation economically. I've definitely noticed prices rising at the grocery store and my insurance premiums have gone up roughly 40%, even after shopping around for a better rate. I haven't made any claims or did anything that would make me a greater risk. I feel like people have mostly managed to absorb the inflationary pressure but I don't think it will last.

Perhaps we should judge not by what is happening only with ourselves, but take a look around us ;-)

The inflation is rising, central banks in EU, UK (and US) are increasing rates to fight inflation (in a wrong way IMHO), energy prices are rising without a solution in the horizon, food prices have also increased considerably, small shops are closing, small businesses are struggling, but hey look, I switched jobs, got a 20% pay rise and can't understand why you're all complaining... :-(

Slightly flippant but I think mostly accurate explaination:

Most central banks have decided to have a recession. The fact they haven't gotten it done yet just makes it a matter of time...

The market segment I work in (tangible goods, not software) is highly subject to discretionary spend by consumers. The slowdown is already on the radar and everybody in the game is readying up for things to slow down a lot more. All business has felt like an engine revving 9k non-stop for the last two years, and from the moment it started happening nobody thought it was sustainable. It feels like we need this, but it's going to suck.

Companies need to hire after layoffs because some people they did not intend to lay off may leave and the people who they laid off may not be fitting to replace them.

"- Just landed (3 months ago) on a job that pays me 20% more than the previous one. I could have switched jobs years before, but I just got the courage to do it now"

Congrats! Your are now the new person and will be the first fired when the recession hits!

There is a recession/depression coming and I am sorry to tell you your timing is awful. Hiring can be pretty much stable or increase until a recession hits.

In the US, at least, a recession happening is possible but not backed up by actual economic trends: https://www.cnn.com/2022/08/15/economy/recession-inflation-e...

It changes from one industry to the next, some are counter-cyclical. When everything goes down, those go up.

Portable jobs, such as software, tend to remain in high-demand, because even if some companies are struggling, others are flourishing.

Niche-tied jobs have it harder, since they cannot jump industry so readily.

Sure, as long as it doesn't affect you / your industry, it doesn't exist.

You are either very naive, were manipulated into this conclusion, or you are playing naive to spark discussion (which would actually be commendable).

Breaking news: talented software engineers are recession proof. Now think about 99% of the rest of the population, and how they are doing now that every single thing costs more while the labor market is tightening.

Well the world is a bigger place than your own experience. I'm not feeling a recession quite yet but I wasn't really feeling the hiring craze in the past couple of years either.

I've talked to 3 recruiters in the last few weeks - all 3 said some variation of "yes, yes, we have open jobs. We're looking to start interviewing in 2-3 months"

Usually employment is good when inflation is high, and when Fed kills inflation it will kill employment too. I think it's called Phillips curve or something.

Lots of highly paid tech jobs relied on company stock via RSUs which have been creamed. Relying back on regular salary doesn't seem so good any more.

So your entire analysis of whether or not there's a recession revolves around anecdotal evidence of employment in a very niche sector?

If you don't mind me asking, how much is your current rate?

As I've seen a lot of offers coming up but at lower salaries than usual.

It's definitely suspicious that we've gone from 'can't find workers' to recession.

Anecdotal evidence is not helpful when trying to evaluate an economy.

For that matter, an economy is always too complicated to usefully describe in a single word. They come up with broad terms like "recession" and give them rigorous definitions in order to get some kind of handle on it, but it doesn't reflect everybody's experience. In fact, it may not reflect anybody's experience: some will do worse, and some will do better.

The definition is "less total stuff getting done". Measuring "stuff" is already hard; defining how much "less" constitutes something to be worried about is even harder.

One common definition is "Two straight quarters of declining GDP". GDP isn't a great metric, but at least it's consistent-ish.

The US had one declining quarter of GDP, at the end of last year, and it's been up ever since. Europe as a whole has not had any negative quarters, though a few countries have.

GDP isn't a great metric, and others use a more complicated metric trying to get at how people and businesses feel: the price of goods, how much they earn, etc. GDP is supposed to be the aggregate of all that, but aggregates are misleading, in the same sense as "Mark Zuckerberg in a room full of poor people means billionaires on average". Sometimes it's useful; sometimes it isn't.

It's clear that inflation is up; that's good for some people (like people who owe debts, and can now sell their goods for more money to pay off those debts) and bad for others (those with money in the bank). None of it is where economists want it to be -- even the low unemployment figures mean something is off kilter. (Too many people employed means that people who would otherwise be doing something like training or hobbies or retired are dragged into working for some reason.)

In other words... the economy is what it is. If you're doing OK, fantastic. Others are not. Others are doing better. Overall, it's not a crisis, but worrying. There are signs that it will improve, as we get past the pandemic and start to treat the Ukraine war as a baseline rather than a downturn.

Does that help clarify at all? Or just make it more confusing?

The recession isn’t happening yet. But because there’s anxiety it might happen, we are making it happen.

"A recession is when your neighbor loses his job. A depression is where you lose yours."

if you do a lay off naturally attrition also increased after. Simple instability emotion. So, yes, Hiring is always a thing after any mass lay off. Does that add jobs to the market? no.

I see... the Reddit crowd is here again posting useless trash

Let's see if this ages like wine or ages like milk.

The recession where my electricity bill quadrupled.

A lot has changed in 3 months.

Care to share your excel list for (West) European companies?

The Fed is raising interest rates to execute a deliberate policy to target aggregate demand by making the price to borrow money more expensive. However, for every borrower, there is a lender. So money is redistributed from borrowers to lenders. Secondly, the US Federal government is a net payer of interest. So, they are paying out much more in interest to Federal debt holders. This increases income, increases deficits, and stimulates demand (mostly for rich people who earn interest). Is this a vicious feedback cycle ? Nobody is really talking about it but a select few. See Argentina. Not going to well as far as fighting inflation with monetary policy over there.

I think what you're confused about is the nature of why you say "in theory we should be more screwed up than other Western countries... but:"

Because of WMDs we ought never see another war between nuclear/bio states. Ukraine doesn't matter and isn't what the war is about.

https://en.wikipedia.org/wiki/China%E2%80%93United_States_tr...

Western europe is probably going to be one of the best places to be.

But more importantly, the layoffs aren't obvious. Stripe layoffs is the current one in the HN list.

https://stripe.com/en-au/newsroom/news/ceo-patrick-collisons...

But check out the 7 pages of jobs they are still hiring for: https://stripe.com/jobs/search?skip=600

Its not layoffs in the economic sense. It's layoffs in the war sense.