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Ask HN: What Recession?

121 points| danwee | 3 years ago | reply

So, I'm reading a lot these days about lay-offs in tech companies and how many HN users (mainly from US?) are having a hard time finding top-level paying jobs.

I work on Western Europe, and in theory we should be more screwed up than other Western countries... but:

- Just landed (3 months ago) on a job that pays me 20% more than the previous one. I could have switched jobs years before, but I just got the courage to do it now

- Keep seeing the same amount of job offers on Linkedin. Now, I have the tendency to keep a list of companies that hire on an Excel file, so I can come back to it later and compare past and current situations of such companies. I have over 200 companies that operate in Western Europe (but not exclusively) that I consider "top-level" (at least from my point of view). The effect of the recession? Well, it has had one, but somehow very poor: many companies went from having around 1000 job offers open in linkedin on a weekly basis to having now around a third of that. Sure, they are not hiring like crazy anymore, but they are still hiring!

- A company that announced a 14% lay-off back in May, is now hiring again (the same pattern as before: when they were offering thousands of jobs before, now they are offering a few hundred)

Now, I have no idea how FAANG is doing in Western Europe (I never cared to track them) because I have no plans to work for them. But all the other non-FAANG companies over here are hiring. So, I don't feel the recession (yet). Touching wood.

212 comments

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[+] ergonaught|3 years ago|reply
"It isn't affecting me so it doesn't exist" is a fairly elementary mistake, yeah?
[+] lake_vincent|3 years ago|reply
Well, technically, it's only a recession if it comes from the Rècession region of France.

What OP is referring to is called bubbly fiscal agony.

[+] CyanLite4|3 years ago|reply
“A recession is when you hear about your neighbor losing their job, a depression is when you lose your job.”
[+] kubami|3 years ago|reply
I think the implied question was "It isn't affecting me, here is the data I see around myself. That data is incongruent with the headlines, can you offer an explanation and show me what I am missing?"
[+] sangnoir|3 years ago|reply
OP has a great point: most recessions have low job numbers (because of weak demand).

Speaking for the US: This 'recession' is weird because consumer demand is strong, job openings are high, the unemployment rate is near record lows, and GDP grew in the last quarter. So, to echo OP - what recession? A drop in the stock market does not a recession make.

It almost seems as if some quarters are willing a recession into being, but consumers are not having it. Granted the federal reserve is trying to curtail consumer spending to curb inflation, so I get why businesses would predict a recession. In all, it feels like the twilight zone.

[+] melling|3 years ago|reply
We aren’t in a recession yet.

Companies are starting to see the slowdown, so they are taking preemptive action so as earnings contract, P/Es will hold up better.

The politically minded readers of Hacker News refused to listen to those who said 2 quarters of negative GDP doesn’t necessarily mean a recession.

It would be really nice if we could take a deeper dive into economics, markets, etc and all learn but …

[+] apozem|3 years ago|reply
The internet commenter's fallacy: I can only interpret things that happen to other people through things that have happened to me.

To some degree, this is just the human condition, but it is especially common (and annoying) in internet comments.

[+] mgh2|3 years ago|reply
Same can be said in the reverse: "It is affecting me, so it does exist". Bias on both ends, qualitative data is often not reliable.

Last election: "If my social circle thinks we are going to win, then it is a given". Both share a pattern: a tech bubble (pun intended)

Some data (need more) https://news.ycombinator.com/item?id=33453819

[+] danielvaughn|3 years ago|reply
The "works on my machine" for the economic world.
[+] ianai|3 years ago|reply
And any non random sample of a much larger population is almost certainly biased.
[+] szemy2|3 years ago|reply
My wife is currently looking for a job in Western Europe and 90% of open positios are 'fake' -- they keep previous positions open because showing that you are in a hiring freeze can impact the company's perception. Plus they want to keep collecting info so when they need to eventually hire they have a good source.
[+] NickC25|3 years ago|reply
I've seen this lately. Recently, I've done interviews with multiple companies over product-related roles. They all get back to me weeks later saying "we ended up hiring internally" or "we ended up eliminating the role completely".

But if you look on LinkedIn, Indeed, etc... these companies are still keeping job postings up and adding new ones all the time. It seems kinda fraudulent IMO

[+] mgkimsal|3 years ago|reply
Just spoke to a company with a booth at a conference a few days ago.

"We've got 1000 job openings right now! What are you looking for?"

Yet... I don't actually think even if they found 1000 perfect fits tomorrow they'd all be hired.

[+] ozim|3 years ago|reply
Yeah having job postings is not free but I think too many people believe that "companies put job offer only when they have an opening".

Ideally in a company one should have job ads all the time and if someone valuable drops CV only then reply - if you catch someone who is specialist and good burning couple thousands for an ad will still be worth it.

[+] fny|3 years ago|reply
I've posted this elsewhere, but I'll repeat it.

First they send your work home, and then they send it next door.

Corporate learned during COVID that the metro premium isn't worth it any more. These layoff announcements--which have always occurred in the shadows--have three purposes:

1. Shift jobs to cheaper locales. In the US, many metro jobs are being moved to cheaper locations like the midwest. Western European labor is also relatively cheaper. Work from home works for you and your boss. I live in Raleigh-Durham. Things are on fire over here. Google, Apple, Oracle, Microsoft, and Amazon are all hiring at a rapid clip. My fiance just finished her PhD in comp bio, and she has competing offers... but last I heard, biotech is dead and some other thing about long term R&D slowing down due to rate hikes (more on why I think this is nonsense later).

2. Off set the massive over-hiring. The rush of cash during COVID and record profits lured many companies into growth-mode-at-any-cost. While they still need the head count in many cases, people were willing to cut corners in hiring and project quality (i.e. does this really have returns to justify the investment) so a cull is needed. Think about crypto for example. I have a feeling a good number of companies are regretting jumping on the crypto NFT train right about now.

3. I believe companies and the media loudly communicate layoffs in part to reduce labor's negotiating power. I can't prove this, but it seems about right. In December, Facebook was struggling to hire. It was in the news. Right now, I'm sure many people are afraid to ask for more money, but I've managed to wring out 10-20% more than what's being asked for by recruiters despite what everyone is hearing.

I know people thinking this is all Fed induced, but you have to remember, the money that was spent during COVID hasn't gone anywhere. It's still circulating. Companies also borrowed record amounts of cash during ZIRP that's due in 30+ years. Many of these companies have returns in the 10-30% band. A bump to 4-5% is no where near enough to slow down business given how much cheap money was created.

For more evidence, go look at the start up raises. In a recessionary environment, VC would be completely dead. Yes, deal making has slowed and garbage companies can't find financing, but let's be real: those companies should have never existed in the first place.

[+] someweirdperson|3 years ago|reply
> 3. I believe companies and the media loudly communicate layoffs in part to reduce labor's negotiating power.

I thought this was to make share holders happy. Fewer employees, more money for the owners. But to improve negotiation seems useful, too.

[+] randomdata|3 years ago|reply
> Corporate learned during COVID that the metro premium isn't worth it any more.

I'm quite sure they were realizing it before that. Here in Canada, Statistics Canada data was already showing stronger job markets away from the large urban areas during the mid-2010s, which continues today, and the 2016 census showed a meaningful decline in large urban areas with communities of 1,000-29,999 seeing the largest growth. The 'counter-urbanization' moment was already well underway.

It is fair to say that COVID sped things up. There was, and still is, a lot of friction involved in making that transition, but COVID no doubt provided a lot of grease.

[+] mgkimsal|3 years ago|reply
> Shift jobs to cheaper locales. ... I live in Raleigh-Durham.

Me too. Moved here 17 years ago. It's becoming far less a 'cheaper locale', much like many of the other formerly cheaper locales. Housing here is one of the areas still going up while other areas are cooling off, though I've just started seeing some cooling and price reductions in the past month or so. I'm not even sure what counts as 'cheaper' any more.

[+] f0e4c2f7|3 years ago|reply
So far most of the layoffs I've seen have been for nontechnical roles at big tech.

In the 2000 crash it was still fairly easy to find a job if you could code. Even though the big tech companies of the time were doing mass layoffs and losing 95% of market cap.

Who knows what it will be like this time. But I wouldn't take layoffs at high profile publicly traded tech companies as an indicator of the whole market. In some cases these companies are still even hiring a few engineers here and there while doing layoffs.

So far as I can tell demand for software engineers may actually be slightly higher than it was a year ago in the larger market.

[+] badpun|3 years ago|reply
Companies posting job ad does not necessarily equate to companies hiring. Some of these ads may be disingenious - they still interview candidates only to have a list of desirable people to make offers to once the company starts hiring again.

And of course, on top of that there's standard recrutiment scam of "oh, sorry, this position was just filled, but may I interest you with $WORSE_JOB_FOR_LESS_MONEY instead"?

[+] boringg|3 years ago|reply
The Recession is being talked about but will be felt in the middle of the winter/spring as high energy costs start hitting the bottom line of companies//costs of war, consumers aren't spending like they used to and interest rates are higher (costs of borrowing for their consumption hurt more).

No one is saying there is a recession currently but rather that is coming down the pipeline.

From a personal perspective: I would say though as a new employee of a company - hope that they have good revenue and that you have a protected role, prove your value quickly as typically new hires have a risky position if the firm is facing layoffs.

[+] runako|3 years ago|reply
Anecdotal, but I know of a few companies that are cutting jobs in the US and moving them to lower-wage areas including Western Europe. Huge difference between employee compensation in SF vs much of Europe, even after taxes/benefits/etc.
[+] vocram|3 years ago|reply
If the goal is to save money, why not move those jobs to even cheaper countries?
[+] dcolkitt|3 years ago|reply
Without really getting into the economic nitty gritty, the current environment feels a lot like late 2007. While the broader economy was still humming along fine, but the sector (finance then, tech today) that led the growth during the expansion was going off the rails.

During that cycle, the frothiness was led by the financial sector instead of the tech sector. The mega banks like Citi, JP Morgan, and Goldman had a lot of analogies to the FAANG tech giants today. During the bull run their market caps exploded, everyone thought they were geniuses to the point that the orgs started getting complacent, and they were scooping up people left and right paying huge total comp packages. The hedge fund explosion in the mid 2000s felt a lot like the VC and startup excesses of 2021. Money was sloshing around, and basically anyone could raise a ton of funding off a pitch deck with minimal due diligence.

All that being said by late 2007 there was major distress in high finance. The structured credit markets had already basically imploded, the banks knew they were facing major imminent losses, and hiring was basically frozen. But this didn't really affect the broader economy until about a year later. It took a while for the complex credit markets on Wall Street to really impact vanilla credit markets on Main Street. But just because it was slow, didn't mean the tidal wave wasn't massive.

I don't know if history will play out the same. But my point is recessions don't happen all at once. They typically take some time to really unfold across the entire economy. We can expect that there are "leading sectors" and "lagging sectors". Probably the sectors that were really the tip of the spear during the expansion phase are generally most likely to be the canary in the coal mine during the crash. And we know that tech has been responsible for a huge amount of growth in American over the past ten years. My guess is this is very unlikely to play out as "tech gets clobbered and everything else pulls through fine" just as 2007 was very unlikely to play out as "Bear Stearns collapses but the good times keep rolling".

[+] nsxwolf|3 years ago|reply
Oof. The last recession I remember people asking "what recession" just before everything really came tumbling down. There are moments when sentiment shifts in comments seem to portend doom, and I feel right now the way I felt back in late February 2020, when it started to sink in that the tone in HN comments was changing and I realized COVID was going to be a very bad thing.
[+] spencemitty|3 years ago|reply
I think the better heuristic for the state of the job market is job openings rather than headlines. There are still thousands of job openings you can find on LinkedIn. News outlets are built to grab attention and not help you build an accurate representation of reality. The news sounds alarming, but I think all it amounts to is the tech job market cooling off from being red hot, and big tech companies getting bloated because of inflated earnings during the pandemic. That being said, things can change quickly, just a year ago people were paying millions for jpegs on the internet lol.
[+] ghaff|3 years ago|reply
There are job openings and even active recruiting for many of them. But from what I've seen companies are being much more selective, hiring processes are being stretched out, and offers may be less generous.
[+] shmatt|3 years ago|reply
IMO non top paying companies have been hiring more regularly, across the world. It's nice that you do not consider FAANG, but some people do just for the 2x-3x raise is income.

When the top payers do layoffs and/or stop hiring, overall the max compensation you can get goes way down

Just as an example, Stripe who just did layoffs yesterdays, pays $450k a year for a senior software engineer. How does that compare to your recent 20% raise?

The tech sector in the U.S is definitely still hiring if you're a senior software engineer who's willing to make $200k. But lots of people got used to very high compensation, and some also depend on it with loans they took out, that cutting their compensation by 50% would make them go bankrupt

[+] dylanz|3 years ago|reply
A recession is complicated and may not be highly coupled to a specific field of employment.
[+] twoquestions|3 years ago|reply
People have been screaming about a recession for the last year now, with not a whole lot of hard data to back it up. Inflation aside, the US is doing well, and even on that metric we're doing better than most of Europe right now. Stories of doom grab eyeballs, and a bunch of people really want the US/Europe to have a bad time, so there's also a lot of wishcasting going on.
[+] cainxinth|3 years ago|reply
The U.S. and especially the dollar are doing better than pretty much everyone right now… but haven’t we been told for years that we are now part of a globalized economy? If the EU, Japan, and China all fall into recessions at the same time won’t they take the US down with them?
[+] tiahura|3 years ago|reply
People have been screaming about a recession for the last year now, with not a whole lot of hard data to back it up.

Other than 2 quarters of negative GDP growth - which was the common understanding until it became politically inconvenient.

[+] thebigspacefuck|3 years ago|reply
My company stopped hiring for about a month when there was a lot of uncertainty but we seem to be doing well financially and are now hiring more headcount so the mood around hiring seems to have gotten better.
[+] bryanlarsen|3 years ago|reply
Twitter might fire 3500 people this year. Headline news. SpaceX and Tesla will each hire tens of thousands this year. Not news.
[+] t-3|3 years ago|reply
The "recession" is aspirational. They will keep talking about it until investors get spooked and cause a recession.

https://theintercept.com/2022/11/04/federal-reserve-interest...

  > “We see today that there is a bit of a savings buffer still sitting for households, that may allow them to continue to spend in a way that keeps demand strong,” she said. “That suggests we may have to keep at this for a while.”
[+] Vixel|3 years ago|reply
Here in the US, our recession is apparent in every day life. Various issues are causing disruptions in our supply-demand balance, which in turn has caused many essential industries and businesses to remain under staffed. Many of the skilled people I know have been unemployed or under-employed for the better part of a year. This imbalance has also caused the prices of goods and services to be inflated, making it difficult for everyone, including the properly employed, to enjoy life without worrying about finances.
[+] donpark|3 years ago|reply
Choosing to ignore news while asking why your own experience doesn't match news seems disingenuous. News like recession is not made up for political or humourous reasons.
[+] dpedu|3 years ago|reply
I run email servers and one of the pulses I've been keeping an eye on over the last 2 and a half years is recruiter mail, both real and spam. I did notice early to mid 2020 the volume of this type of mail was reduced to almost nothing. But it seemed to recover to normal by the end of the year and has stayed just about that way ever since.

This is subjective - I'm basing this off of how much mail I remember seeing. I haven't ran numbers or anything like that.

[+] oburb|3 years ago|reply
We're not in a recession (a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.), at least not in the US. https://fred.stlouisfed.org/series/GDP