recession warning signs
It’s helpful to remember that a Recession is classically described as two consecutive quarters of negative GDP. It might also be helpful to note that 9% of our GDP is bound up in the Tech Sector and five Big Tech companies make up almost all of that share.
We’ve been flooding the tech sector with money since COVID and steadily, often rapidly, inflating a debt bubble under all of these big firms. The P/E ratios on these companies - particularly Tesla - are incredibly bad.
This, after a long stretch of promising “automation” and “AI will take all your jobs”, then watching the tech sector itself hemorage hundreds of thousands of jobs since the start of the year.
To say we’re seeing “warning signs” is an understatement. For Silicon Valley, the only thing keeping a textbook recession at bay is the flood of federal money for security spending. And since that’s all going to companies that think they can do their jobs without an actual labor force…
The post-2001 Bush Economy was often called the “Jobless Recovery” because so much of our growth was in financial speculation rather than real economic activity.
I’m not looking forward to what the Trump Era Tech Sector repeat will end up like.
This, after a long stretch of promising “automation” and “AI will take all your jobs”, then watching the tech sector itself hemorage hundreds of thousands of jobs since the start of the year.
As someone in the tech sector, I have a feeling a lot of those jobs never existed at all. It’s purely an economy of bullshit. And I’m not even talking about Google employing “the best and the brightest” to slightly change the Youtube UI every quarter or rewrite something in a new framework with zero improvement. I’m talking of completely pointless busywork with no actual result.
I think monopolies are what led to this, Wall Street and Big Tech stifled innovation since nobody could make their own Google anymore, the best to hope for was to be acquired by Google. The only way to make a tech company is through VC funding, since otherwise you’ll get beaten by competition that doesn’t have to show profits for decades, but also if you’re on VC money you have to show irrealistic user growth. If you don’t want to participate in the cycle of enshittification, your idea will not get made, people can’t work on it.
So you end up with 5 companies employing everyone while doing less and less, and AI can “automate” so much because in a lot of these jobs nobody would notice if it didn’t get done. Also why a lot of managers wanted RTO, if nobody did busywork, a lot of people would have any work at all. The even bigger problem is CEOs are also stupid, and AI is not actually that much of a breakthrough at automation. So when CEOs downsize and fire people because they have to because AI, they do so pretty much randomly. So you end up with unemployed people and struggling companies.
This is going to be one for the history books.
