The new era of layoffs, employee freezes, stocks and the cryptocurrency market crash

The United States has entered a new unknown labor market and economy. Since the beginning of 2022, the curtain has been withdrawn. In retrospect, it is clear that the booming increase in jobs, the proliferation of venture capital-backed unicorn startups, the increase in hundreds of cryptocurrencies and soaring stock markets, were all built on an illusion.

Trillions of dollars were flooded into the economy by the Federal Reserve Bank and stimulus checks. Interest rates were kept artificially low. The results from the Fed and the federal government made beginners feel that they were ingenious investors and workers so talented that they could freely quit their jobs to find new ones. It was like living in a Potemkin village. Now is the time to face reality.

The Fed announced that it must cool the economy to fight back inflation. When this happens, jobs are lost. This can be devastating for families, as the costs get out of control.

Lawrence Summers, former US Treasury Secretary and president at Harvard University, said in an interview with Bloomberg that US unemployment must rise above 5% for a long time to curb current inflation. Summers predicted: “We need two years with 7.5% unemployment or five years with 6% unemployment or one year with 10% unemployment.”

Mark Zuckerberg orders hiring stops and open to people leaving

Mark Zuckerberg, who has long been the golden boy of technology, sees his fortune change. Meta’s CEO told his staff that the United States is experiencing one of the “worst downturns we have seen in recent history.” To navigate the new treacherous waters, the social media platform must take action, including addressing employment and household resources. His goal of adding tens of thousands of jobs to build the metaverse has been significantly reduced.

He said straight to his staff: “I think some of you may decide that this place is not for you, and that self-selection is OK for me,” according to New York Times. Zuckerberg added what appeared to be a threat or warning of what was to come, “Realistically, there are probably a bunch of people in the company who should not be here.”

The stock market is plunging

The S&P 500, a widely followed benchmark index that offers the state of the financial markets and the health of the economy, plunged into a bear market. This term refers to a fall of over 20% in equities. Last week, the stock market suffered a major blow, making it the worst start to the first half of 1970, according to Wall Street Journal. Bonds and cryptocurrencies also experienced painful losses.

You may think that only the rich are affected, but the incessant dive in value affects everyone with a 401 (k) plan, IRA, pension, share plan for the company, college funds or investments.

The wealth effect in reverse

During the hectic days of 2021, people felt secure about the future. They can change jobs, throw an arrow, choose a winning stock or obtain financing for a crypto project or start-up. However, the door has been slammed shut. Banks and venture capitalists are now becoming uberconservative. When people feel that things are good, investments and house prices are constantly rising in value, and their jobs are secure, they experience the wealth effect. When they feel comfortable and safe, they will spend money freely, take lavish vacations, buy second homes, eat out and buy cars and retail products.

When they now look at their monthly investment tasks, their mood has changed dramatically. They no longer feel so safe. This leads to a reduction in expenses. When this happens on a large scale, restaurants, retailers and other sectors suffer from a lack of business. It will be a downward spiral. People are laid off, and so these people keep on spending as well.

The unruly are too becomes a little less prosperous. The richest 500 people in the world lost around $ 1.4 trillion in the first half of 2022. No one is going to hold a GoFundMe for billionaires. They also feel the pain. Tesla boss Elon Musk lost about $ 62 billion. Amazon founder and former CEO Jeff Bezos’ net worth fell by about $ 63 billion. Zuckerberg saw that his net worth was reduced by more than 50%.

Cryptos Crash And Burn

Top cryptocurrency platform Gemini laid off workers because of what is considered a “cryptocurrency winter.” Coinbase reduced, decided on layoffs and canceled job offers.

Celsius, a cryptocurrency lender, released 50 employees and suspended withdrawals from its platforms last week. Sam Bankman-Fried, a billionaire who has become the best person to rescue or wants to take over crypto companies in difficult difficulties, further gave an agreement to buy the lender.

Pointing to challenging market conditions, Singapore-based Vauld, another digital asset lender, did not allow customers to withdraw their money. The company also plans to lay off around 30% of its workers, pause the hiring of new employees and cut management compensation.

The share price of the cryptocurrency brokerage firm Voyager Digital shares fell around 30% last Friday after suspending trading, deposits and withdrawals. According to Bloombergthe crypto hedge fund Three Arrows Capital filed for Chapter 15 bankruptcy in New York.

The hype over NFTs has cooled significantly, as trading volumes are down 93% from their record highs.

What this means for you

You have to forget the past. What worked in the last year or two will no longer be relevant. The United States is now in a belt-tightening, cautious environment. Stubbornly high inflation will not abate immediately.

Companies that feel the pain will lay off workers, adopt layoffs and withdraw job offers. There may be pay cuts and demands to return to an office, as managers get nervous and want to exercise control over employees.

Costs will continue to rise due to inflation. When interest rates rise, committed by the Fed, you will pay more for mortgages, credit cards and student loans. To whip inflation, the Fed and the government will throw cold water on the economy. This will make it significantly harder to keep the job or find a new one. You need to make yourself indispensable to your boss and the company.

Do not take any drastic action. There is a chance that things can change. For example, the economy may cool down quickly, and the Fed may refrain from raising interest rates. There may also be other possible positive changes.

To play it safe, put money aside and try to diversify your income. Avoid buying on credit or making large expenses. Even if your job feels secure, keep in touch with recruiters and interviewers to secure your efforts. Remember that this is not a rare event. The economy goes through boom-and-bust cycles on a fairly regular basis. So throw yourself down, stay strong, and before you know it, the pendulum will swing back toward growth mode.