Liz’s view
AI mania has given companies air cover to do something many have been itching to do since the overhiring (out of exuberance) and underfiring (out of a desire not to look heartless) of the pandemic: lay off a lot of employees. The war in Iran and its threatened ripples across global markets provide another belt-tightening excuse.
Energy prices are soaring. Abu Dhabi, Kuwait, and Iraq have already slowed oil production as tankers remain stranded in the Gulf. Odds of a recession have spiked on prediction markets. February’s job losses were ugly and extended deep into the private sector, beyond DOGE’s government cuts. The flight from private credit may be overblown, but it’s undeniably real and coming from retail investors (read: consumers) who internalize that panic by curbing spending further.
The combination of stubborn inflation and weakening employment spells trouble for any central bank. It’s a nightmare scenario for one under express pressure from the president to cut interest rates.
Sure, the US is a $30 trillion economy that has proven hard to knock off its course and investors are still holding on to a lot of that optimism. Just look at how rapidly the markets turned positive yesterday on the suggestion that oil worries may subside.
But it’s a CEO’s job to boost the company’s bottom line. And while they may use euphemisms like “uncertain macroeconomic outlook,” “financial discipline,” or “right-sizing for current conditions,” layoffs will follow not because the economic conditions demand it — but because the economic fears allow it.
Notable
- In terms of the global economy, the Gulf region matters less than many think, UK think tank Chatham House argued in a brief, accounting for around 2-3% of global GDP. Energy is the biggest concern, but otherwise, emerging economies remain the most vulnerable.