Reports are growing of layoffs within the big tech and entertainment industries, making it more and more difficult to ignore the reality that a recession is about to hit. When it does, the impact may change the markets forever, according to one analyst. This may have a negative impact on the otherwise strong North Carolina market.
A simple Google search for the term “layoffs” comes with several hot-off-the-press articles about large tech companies waving the white flag and surrendering to inflation and the country’s economic downturn.
There have been 137,000 white-collar workers in tech and startups that have been let go so far this year, and more are planned.
Google plans on laying off 10,000 underperforming employees or 6% of its staff. LiveMint is reporting that the reasons include a “pressure from an activist hedge fund, unfavorable market circumstances and the need to reduce expenses.”
It’s far from the only company.
We’ve previously reported that Disney, Amazon and Meta (Facebook, Instagram) have all reduced employees through layoffs. Twitter has done so through a somewhat tumultuous takeover by Elon Musk but is now in the process of rehiring employees.
Some of the other companies looking at layoffs are Warner Brothers, Discovery, which is looking to reduce about 10% of its workforce, including the layoffs that reduced its scripted unscripted and animation divisions by 26%.
Technology company Intel, which processes computer processors. The company has faced declining returns, in part due to new CEO Pat Gelsinger’s costly $60 billion factory production plan to increase its engineering capabilities. This could prove invaluable if China invades Taiwan, which procures nearly all of the world’s superconductors.
Other companies looking at layoffs are Paramount Global (CBS, MTV, VH1 and more), Comcast and Roku.
Thankfully, North Carolina has been spared the impact of most of these layoffs, and companies are still planning on offering up new jobs in the region. FIJIFILM has announced plans to build a new production plant in the Research Triangle. In addition, Apple and Fidelity, there will be a new drone firm moving its headquarters to the Triangle, and a German company is opening its new headquarters in Winston-Salem.
But this doesn’t mean North Carolina is out of the woods yet.
A recession is coming, and the state will be impacted by other companies that are struggling with the fallout of bad decisions and out-of-control government spending.
A report from Dr. Michael Walden, a North Carolina State University professor, published in May 2022 argued that the state would see unemployment rise to 5.2% before dropping to 4% by the end of 2023.
His estimate seems conservative, given the continued impact of inflation, government spending, and other economic woes. An article from Foreign Affairs has a bit more of a dire conclusion for the global economy at large.
“But rather than one more turn of the economic wheel, the world may be experiencing major structural and secular changes that will outlast the current business cycle,” said Mohamed A. El-Erian, President of Queen’s College at Cambridge University. “Three new trends in particular hint at such a transformation and are likely to play an important role in shaping economic outcomes over the next few years: the shift from insufficient demand to insufficient supply as a major multi-year drag on growth, the end of boundless liquidity from central banks, and the increasing fragility of financial markets.”
To see how these possible changes may impact the economy of North Carolina remains to be seen—however, it’s clear that more chaos is to come.
