Job cuts are rolling in as recession fears rise Tesla, JPMorgan, Netflix, Redfin and Coinbase are among companies that are cutting jobs. While layoffs are contained to the hottest parts of the economy, there's fear they could spread elsewhere.

Job cuts are rolling in. Here's who is feeling the most pain so far

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A MARTINEZ, HOST:

Fear of a recession is leading to layoffs. And a few companies have already announced job cuts.

RACHEL MARTIN, HOST:

JPMorgan Chase is one of them. Netflix also just did a second round of layoffs. And Tesla is slashing its salaried workforce by 10%.

MARTINEZ: NPR's David Gura is here to talk about what's going on. David, we named a few companies. But how widespread are these cuts. And actually, what's causing them?

DAVID GURA, BYLINE: Yeah. So far, layoffs have been confined to parts of the economy that experienced high growth in recent years. Just think about the companies you mentioned. They're in entertainment, in technology, in finance. You know, they thrived for years when interest rates were low and borrowing was cheap. But in the last six months, things have changed dramatically, as the Federal Reserve has started hiking rates aggressively to fight high inflation. Other companies that have had layoffs recently did really well during the pandemic. You know, when gyms were closed, people got Pelotons. There were millions of people stuck at home who started trading stocks with Robinhood. But here we are. Gyms are back open. Robinhood just cut 9% of its staff. So the bottom line, A, is a growing number of companies recognize the winds are shifting and that they may need to pare down.

MARTINEZ: You know, I'd have sworn we were just talking about how hot the job market is, you know, people quitting their jobs at record rates and everyone's talking about the great resignation. So what happened?

GURA: Absolutely. There was this pent-up demand to do stuff. As we came out of the darkest days of the pandemic, people were spending. Many of them had stimulus money from the government. And employers just couldn't find enough workers. Then all of a sudden, workers were demanding higher pay. The outlook for the U.S. economy has changed rapidly. Prices are rising at their fastest annual pace in more than four decades. And the Fed is trying to force companies to spend less. Higher interest rates are slowing down the housing market, which has led to layoffs in real estate. Those cuts at JPMorgan, we're talking about hundreds of jobs in the bank's mortgage business. Andy Challenger is with the firm Challenger, Gray & Christmas. It tracks layoffs nationwide. And he says there's going to be less hiring.

ANDY CHALLENGER: Even if the Fed achieves the perfect soft landing, it's still going to mean an increase in layoffs.

GURA: And, Challenger adds, if the Fed does tip the economy into a recession, it's likely we'll see broader layoffs and even deeper cuts.

MARTINEZ: All right. So that's terrible news for people who've lost their jobs. How worried should we be, then, about the rest of the jobs market?

GURA: Well, Fed Chair Jerome Powell told lawmakers recently the Fed's goal here is not to kick-start a recession. But it does want to remove some froth from the economy.

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JEROME POWELL: There's more job openings than there are - by a factor of 2-1 than there are unemployed people looking for work.

GURA: Again, if you look at where job cuts have been so far, they've been in these frothier, more speculative parts of the economy. Crypto is a great example. The cryptocurrency exchange Coinbase just laid off more than a thousand workers. And what's tricky is the Fed has these really blunt tools to try to fight inflation. And it takes time to see if they're working. On top of that, there's a lot happening right now that the Fed just can't do much about. It's not going to find a solution to the war in Ukraine, for instance. Or it won't be able to unclog global supply chains.

MARTINEZ: So what are the risks of this? I mean, what should be watching out for?

GURA: Well, a big risk is that this could be kind of self-fulfilling. Companies so worried about a potential economic downturn cut jobs early, thereby accelerating an economic downturn. And there's a risk that they could cut too much. If job losses get broader, as Andy Challenger said, of course, more people would be out of work, without any money to spend. The U.S. economy runs on consumer spending. And something we'll watch for, A, is if these cuts start hitting the rest of the economy, where most people work.

MARTINEZ: NPR's David Gura. Thanks a lot.

GURA: Thank you.

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