Businesses are attempting to discover how to operate in a macro that makes labor and money more expensive than they've been accustom to over the last 15-20 years. u/DoughnutHole touches on another important point: businesses and capital are clinging to returns that might no longer be obtainable in this new macro (as we've been papering over reality with cheap credit and financialization for some time). What is going to break first? Who knows, first time we're someplace like this. Everyone is going to fight like hell to defend their piece of the pie (note the broad layoffs and back to hiring shortly after, as well as activist investors demanding trimming labor costs aggressively).
https://fred.stlouisfed.org/series/FEDFUNDS (Pick 10Y time scale)
https://fred.stlouisfed.org/series/WM2NS
https://www.goldmansachs.com/intelligence/pages/why-the-us-m...
If you've been eating the same for the last 20 years and you've been gradually gaining weight over the last 20 years, then it's your diet.
If you've been eating the same for the last 20 years and you suddenly gain weight, it's likely not your diet, it's something else -- exercise, illness, et cetera.
You're overfocusing on one single component of a fairly complex system. Government spending, COVID impacts (pent up demand, supply chain disruptions), a massive war in Europe impacting multiple crucial raw materials - they all have a part in the stagnation / borderline recession we're seeing. Anyone claiming it's "simple" or due to one single factor either has an agenda or doesn't understand how complex economics are.
I mean, both can be true. ZIRP wasn't made over the recessions either. Tech has been in that rush for at least 12 years now. If not longer. You mention 15-20 years after all.
We had at least one recession during your time period. It doesn't preclude another one.
>labor shortages in the post-pandemic era have led many employers to hold on to workers and hire less-skilled workers—even though they expect demand for their goods or services to weaken in the future. As a result, unemployment remains low, and labor productivity has declined."
I see this as a natural consequence to their actions, though. You require "Junior" engineers to have 3+ years of experience, discourage apprenticeships in lieu of short internship stints and headhunting acedemia, and overall try and compartmentalize engineering roles. So no surprise that labor in the Gen Z won't be as skilled as the Gen X that rose entire industries from the ground up. It's due (but not limited to):
- tech being more complex. How many people worked on Google search in 1999? How many work on search alone in 2023, let alone the other 30+ division Google has now.
- top talent more and more seeking out their own business ventures. Same questions as above. More startups and more Ycombinators to fund them. People really want to be or to fund "the next big thing" in a rate not seen since the Dot Com era.
- simply being ubiquitous. You can work in tech without being in a tech company. If you don't like the hustle of FAANG or high frequency trading, there are plenty of places who just need to maintain their website outside of tech. This won't drive growth as much, but it pays the bills.
There's many factors behind this, but I will emphasize that people requiring top talent need to invest in them. Schools don't have the same goals as employers, and schools as is are becoming more cost prohibitive as is.
The Max timescale is even more interesting. Almost every time one of those gray-shaded recessionary periods begins, it's preceded by a graph segment that looked exactly like the last couple of years.
This (and other layoffs) are a response to increased interest rates imposed to combat inflation. Companies don't have access to as cheap credit, so they're trying to appease shareholders by cutting costs to improve profitability.
This puts the brakes on the economy and may cause a recession if it goes too far. But the US economy is not currently in recession by any definition.
It's not just profitability and shareholders, although those are good indicators of whether or not you're overspending. If the cost of capital goes up, something has to give to pay for that.
The fact that they borrowed bigtime to buy this adtech company (hence the push for “if you use our ads, no fee increase!”) and are now deeply deeply underwater is forcing the issue, they have gone from losing $100-300m per year to losing $800m-1b per year. But, again, unity has literally never turned a profit in the history of its existence.
The same thing is happening across the industry where the end of free money is putting some boondoggles out of business, burning out the waste that has resulted from 2+ decades of unconstrained tech growth in a ZIRP environment. A correction was inevitable and healthy, excessively cheap money has all kinds of noxious effects on an economy.
The most prominent is xbox - I don't think anyone realized just how bad things have gotten for xbox but the FTC leaks are devastating, they reveal the xbox division has been on the ropes for quite a while. They have been in severe risk of being closed if they can't make gamepass numbers perform, and they've massively undershot the scenarios in which (two or three years ago) Phil Spencer said he'd close the division. It's entirely possible that Starfield is the last straw, and if they don't see a big bump in gamepass subscribers from it (which doesn't seem to have happened) they may spin off the game-studio side and kill xbox, or pivot it into a "nettop" that competes more with appletv and switch pro type hardware.
It’s also resulted in some businesses making some crazy pricing model changes and other things, out of a real or perceived need to get to profitability. The unity change will kill the business, and things like google business spinning off domain registry (you need to use a third party service to get a complete offering on google cloud?) are pound-foolish decisions that will/could have long-term negative consequences.
But the tide is going out and we’re seeing who’s swimming naked, as they say. There were a lot of businesses and projects that were only sustainable with 0% interest money, and companies are rightfully asking if this is worth it if they have to pay 7% or 8% interest. And that's exactly the type of unproductive work that needs to be burned out of the economy.
PS5 has won the console war, Series X's hardware advantage has been subsumed by upscaling into a meaningless "runs 840p instead of 720p input res" thing that doesn't sell consoles and Sony has actually organically built studios that pump out exclusive content that does draw in customers. Microsoft has largely failed at building that, and instead tried to buy more studios to make their content exclusive (bethesda, tried to buy nintendo and activision, etc).
Microsoft has pretty explicitly pushed all their exclusives to PC as well, meaning Series S and the Gamepass are the only interesting thing they have going. And gamepass simply hasn't been doing the necessary numbers - there was a bump in 2020/2021 from COVID, when silicon shortages meant Series S was the cheapest route to a console, and gamepass gave you this ready library. But 2022 and 2023 have been the great Going-Outside and the numbers have gone down not up.
Another problem is that all those gamepass subscribers are using the "$1/mo for 5 years" crazy promo deals too. Which is another perfect example of crazy VC growth-hacking stuff that is being rightfully burned out.
the FTC leaks are absolutely devastating and reveal a company that is so on the ropes they're looking at closing the xbox division, or pivoting it to nettop style consoles and going after appletv and switch pro (docked) market, perhaps with an upscaling-based ARM console. They are drastically underperforming the scenario in which Phil Spencer said he'd pull the plug. But it sure as fuck isn't going to be running like it currently is, in another 5-10 years, unless they get a whole lot of market traction awfully fast.
I do think it's entirely possible that Starfield was their last shot - big flagship title from a big flagship studio, and if they didn't do the gamepass numbers (and they didn't) this is the final straw. MS has very explicitly avoided weighing in on a true next-gen console (a series s/x refresh is the only thing on the radar at the moment) and maybe they pivot or kill the division off.
https://www.youtube.com/watch?v=2tJBC9zXYQ8&t=2511s
https://www.youtube.com/watch?v=OUPxytMLWzI
But it's stunning to see this (ostensibly) gaming pillar/institution fall apart like this... apparently they were swimming naked too. But I guess that's not surprising, their only real traction was during the XB360/PS3 era and every single other time it's been a money pit they dump cash into in hopes of being profitable next generation... everyone kinda knew it intellectually but without the scales of losses being broken out separately, it's just an abstract point. Xbox is losing so much cash they will probably go under shortly.
Phil's entire job is to communicate the idea that they have to acquire third-party studios to keep the business running at all. "If you don't let us buy Activision, then we'll just be forced to fold our tents, and then there will be even LESS competition. You don't want THAT, do you?"
When in reality, Microsoft's attitude toward the Xbox division has always been more like Citizen Kane. "Why, yes, we lost $100 million last year, and we're on track to lose $150 million this year. At this rate, if things don't improve, we might have to shut this place down in... let's see... 12,000 years."
"A recession is a significant, widespread, and prolonged downturn in economic activity. A common rule of thumb is that two consecutive quarters of negative gross domestic product (GDP) growth mean recession, although more complex formulas are also used."
- [investopedia]("https://www.investopedia.com/terms/r/recession.asp#:~:text=W....")
We've known this for a while BTW, I first learned about the timeline in 2014 watching the budget committee hearing on CSPAN. They showed the slide with the timeline yet no one talked about it. Austerity back then was scheduled to start by 2020 but we got stimulus, like they were steering into driving off the cliff.
This guy wrote and updated his book on the topic. https://www.amazon.com/COMING-COLLAPSE-AMERICA-BALANCE-FEDER...
Adjustment of COVID, low interest rates and Russian war.
That kind of stuff can't be solved by technology.
LLMs are phenomenal busywork generators. And as a natural consequence, if you want to stay productive, you should be suspicious of anybody that uses one.
I think you're doing standups wrong.
Do they need a cover sheet as well? Did you get the memo?
Unless you're suggesting that using an llm is just as efficient as not, but is somehow more fun?
I can confidently say that this factors in 0%. Layoffs were happening in the industry even before the LLM craze.
And a 30% overall productivity boost for a "top" developer is a massive overestimate. Your best developers aren't spending their days writing boilerplate unit tests.