Micron Getting Ready to Reduce Headcount at Idaho Fab

[Nordic]

We're getting into off-topic territory, but I can definitely feel a recession here in the UK already.

Edit: Layoffs in the tech sector are a clear indication of a recession, as people don't have money to buy the gadgets that they did a year ago. No industry is a separate island.

The UK is in a very different place than the US. I was specifically talking about the US if that was not clear. https://www.bbc.com/news/business-64584295

I am not trying to argue which country is or will be in a recession sooner or later. Like Volcker in the 80's, the way to end inflation is to increase interest rates significantly which has a high chance of causing a recession. My argument is that tech alone is not a good indicator of what is to come.

Tech has a unique reliance on low interest rates and cheap loans. Not too long ago the US was experiencing record low interest rates. When interest rates are low, bonds pay very little. Tech is seen as a reletively safe space to park money as well as high growth. With low interest rates, tech had dramatically increased capital and liquidity.

Now that US interest rates are high and growing, other investments become preferable to tech. Capital is leaving tech with less liquidity. Investors are moving their money away from tech to take advantage of the high interest rates. This is happening shortly after the pandemic where tech saw dramatic growth from so many people working from home. Tech went on a hiring spree to support the increased demand from the pandemic.

The tech sector is in a reletively unique situation causing layoffs. Tech has a tiny amount of 1.5% workers in the US. You are right that no industry is an island. When Micron and all the other tech companies reduce labor, it is far less impactful than a larger industry. Hospitality has 10% of US workers. Hospitality has seen the fastest wage growth for low wage workers. Hospitality so far in 2023 cannot find enough people to hire. Tech alone is not a good indicator. Hospitality is a better one. Hospitity tells a very different story than tech. So no, the tech sector alone is not a clear indication of a recession.

 

[dragontamer5788]

The tech sector is in a reletively unique situation causing layoffs. Tech has a tiny amount of 1.5% workers in the US. You are right that no industry is an island. When Micron and all the other tech companies reduce labor, it is far less impactful than a larger industry. Hospitality has 10% of US workers. Hospitality has seen the fastest wage growth for low wage workers. Hospitality so far in 2023 cannot find enough people to hire. Tech alone is not a good indicator. Hospitality is a better one. Hospitity tells a very different story than tech. So no, the tech sector alone is not a clear indication of a recession.

Hospitality (aka: services) in the USA is absolutely massive. Tons of tourism, hotels, international travel, etc. etc.

It should be noted that Hospitality was absolutely demolished by COVID19 in 2020 and 2021, so its the "COVID19 bust". Meanwhile, big-tech was "COVID19-boom". As we're opening up, hospitality is reentering in force (boom-period. Impossible to find enough workers), while tech is now in a bust-period (everyone seems to be laying off at the same time).

Everything going on today in 2023 is easily explained by the opposite boom-or-bust from 2020/2021. Tech over-hired in 2021. Hospitality over-fired in 2021. Today, Hospitality is hiring, while Tech is firing.

 

[AusWolf]

Everything going on today in 2023 is easily explained by the opposite boom-or-bust from 2020/2021. Tech over-hired in 2021. Hospitality over-fired in 2021. Today, Hospitality is hiring, while Tech is firing.

This is what I think, too. The tech sector going down may not be a direct result of the recession, but they're not entirely disconnected, either. I think there are multiple factors at play here. Saying that the low volumes experienced in tech are only the result of the recession is equally wrong as saying that there's no recession at all.

 

[ThrashZone]

Tech is a tiny sector making at most 1.5% of the US economy. So far the monthly reports are showing more people being hired than being laid off overall. Unemployment is continuing to hit new lows. That doesn't mean it can't change, but the tech sector is not a good indicator of what is to come. People have been saying that a deep recession is coming any day now for two years. Economy go brrrrrr despite the nay sayers.

The hospitality industry on the other hand is approximately 10% of the US economy. When we see mass layoffs in hospitality, then things are about to get bad quick.

I'm hoping gpu prices come down. I have no reason to believe they will. But maybe somehow tech layoffs - > cheap gpus

Hi,
Unemployment numbers is a joke of a statistic to go by seeing covid lock down was dropped so people going back to work is obviously going to happen

 

[AusWolf]

Hi,
Unemployment numbers is a joke of a statistic to go by seeing covid lock down was dropped so people going back to work is obviously going to happen

There's many ways to play around statistics. The way Hungary managed it, for example, is by reducing eligibility of unemployment status and benefits from 1 year to 6 months. Fewer people qualify, fewer make it into the national statistics, BOOM, unemployment dropped (officially)!

 

[kapone32]

You can see the drop with the price of storage. You can right now get a 4TB SSD for a cost of a 2TB just a year ago. Now we even have M2 drives at that capacity and price. Talking especially about Micron they are one of the makers with greed coefficient to only allow a maximum of 4 TB. I have said this before but the first Company to give us 8 TB NAND for $400 US will win the storage Wars.

 

[Nordic]

This is what I think, too. The tech sector going down may not be a direct result of the recession, but they're not entirely disconnected, either. I think there are multiple factors at play here. Saying that the low volumes experienced in tech are only the result of the recession is equally wrong as saying that there's no recession at all.

The technical definition of a recession is when an economy shrinks for two consecutive three-month periods. So... technically there is no recession at all, not even in the UK. That doesn't mean there isn't economic pain. Even then with the UK, Q4 2022 had 0% growth which is so incredibly close that they are splitting hairs.

 

[AusWolf]

The technical definition of a recession is when an economy shrinks for two consecutive three-month periods. So... technically there is no recession at all, not even in the UK. That doesn't mean there isn't economic pain. Even then with the UK, Q4 2022 had 0% growth which is so incredibly close that they are splitting hairs.

By technical definition, everything's fine even when the house is on fire. That's why I don't believe in technical definitions when it comes to the economy. I prefer seeing things for myself.

What I mean is, the economy might be seeing x amount of growth, but it doesn't mean much when 9 out of 10 people are worse off than they were a year ago.

 

[ThrashZone]

The technical definition of a recession is when an economy shrinks for two consecutive three-month periods. So... technically there is no recession at all, not even in the UK. That doesn't mean there isn't economic pain. Even then with the UK, Q4 2022 had 0% growth which is so incredibly close that they are splitting hairs.

Hi,
Fuel prices skyrocketed is why recession was predicted early on which effected everything people rely on.

 

[claes]

No one’s saying that a recession isn’t coming, just that the tech sector is not a good indicator of when it’s coming. Between inflation and interest rates a recession is practically inevitable, and the majority of economists are arguing as much. The question is when, and looking at tiny sectors like tech doesn’t tell us much. According to Sahm’s rule it only takes three months of 0.5% increases in unemployment to indicate a recession. It could happen fast, and given market trends, is likely, but a few hundred people is a drop in the bucket.

 

[Nordic]

No one’s saying that a recession isn’t coming, just that the tech sector is not a good indicator of when it’s coming. Between inflation and interest rates a recession is practically inevitable, and the majority of economists are arguing as much. The question is when, and looking at tiny sectors like tech doesn’t tell us much. According to Sahm’s rule it only takes three months of 0.5% increases in unemployment to indicate a recession. It could happen fast, and given market trends, is likely, but a few hundred people is a drop in the bucket.

Exactly. To get inflation in check, it is almost certain the US fed will have to cause a recession. The economists say sweet nothings like "soft landing" but that isn't likely. The worst part is that when it does come, people are going to point at the tech sector as if they were right all along. The UK will probably happen sooner for other reasons. The UK is one rounding error away from a technical recession right now.

One estimate I saw is that it will take a sustained interest rate of 6% or higher to tamp down inflation. The Fed's rate right now is ~4.5%? With the present pace of 0.25% increases a quarter, that gives us 18 months by my napkin math. But sure, the doomers can say the time is now because Micron laid off a tiny percentage of people. My 18 month prediction ain't worth anything either.