Bezos is admirable to comment about the US economy, given Amazon is one of the country's biggest employers that generated $470 billion in net sales last year, making it a key player in the stock market and the economy. Others have also sounded the alarm on a potential global recession due to risks from huge amounts of public and private depth to Russia's invasion of Ukraine. Andy Jassy who replaced Bezos as Amazon's CEO appears to share the same concerns. Amazon has been cutting costs, slowing spending, and freezing hiring for certain roles in recent months, suggesting it's expecting a tougher economic backdrop.
Wednesday, October 19, 2022
Amazon founder Jeff Bezos warns the US economy may slump into a recession - and says people should brace for a painful downturn
Jeff Bezos has warned the US economy may be headed for a recession and recommended American brace for a painful downturn. Recession fears have grown in recent months, partly because the Federal Reserve is actively trying to cool the US economy. The Fed has hiked interest rates from basically 0 percent to a range of 3 to 3.25 percent today. There are even signals that rates could approach 5 percent next year. Higher rates encourage consumers to save rather than spend or invest and make borrowing more expensive, so they typically reduce demand and relieve upward pressure on prices.
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Bezos is essentially telling companies and the economy to "batten down the hatches" in preparation for the looming recession meanwhile Elon Musk, the other richest man, is planning on putting the "petal to the metal". Bezos is taking the safer, and more conservative route when it comes to recessions while Musk plans to keep production high and consistent even in recessions. It's interesting how different the opinions are of these two in the face of the recession considering they are the two richest men in the world and would be expected to share similar sentiments regarding the economy.
ReplyDeleteIt is interesting to see Bezos say that we are headed for a recession as we have had 2 negative quarters which I feel in any other circumstance would mean we are already in one now, I have a feeling we will go back and say we were actually in one but to try and not have the country panic as much we are changing the rules and saying we are not in one to try and keep the economy from taking as big of a hit, Im curious what would make us go into a recession now that would be different from what we are already in. But if the new ceo of amazon and Bezos are both fearful of a recession I feel as if there is going to continue to be a downfall in the economy for a while.
ReplyDeleteWhat I'm wondering is if Amazon will benefit from this recession. Their business style is based on making shopping easier which could been seen as inferior once the recession hits. If Amazon is able to keep their prices around their competitor store like Walmart, they could possibly benefit. Most likely, I see Amazon taking a big hit because of this recession
ReplyDeleteCompanies will often react to the market based on what large-name companies are doing, and adjust their behavior accordingly. With the size of Amazon as a company, and being such a large employer, it is worrying to see that the company is bracing itself for upcoming difficult times. Many other companies may react similarly seeing this, which would almost certainly lead to, or at least worsen the recession.
ReplyDeleteIt's interesting that Bezos is the one who said this because Amazon has greatly impacted other sellers. Although Amazon is efficient and convenient, it takes business away from other places. Amazon will likely be fine or even do well in recession as it is convenient and fairly low priced. Other, smaller stores may have to take more precautions. Should consumers be buying from companies that produce their desired product or go through a 3rd party like Amazon?
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