Topline

Major US companies laid off thousands of employees so far this summer, as CEOs fear souring inflation could bring the economy into a recession.

Timeline

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May 21, 2022Used car seller Carvana CEO Ernie Garcia III sent an email to 2,500 employees — 12% of the company’s workforce — informing them they had lost their jobs, one week after freezing new hiring, as the company embraced for what looked like a looming recession in car sales, and reports of a “spendthrift” business style had come back to bite the company.

June 14, 2022Some 1,100 coinbase employees learned they had been released after losing access to their work emails, marking an 18% reduction in the crypto company’s staff — a move that CEO Brian Armstrong called essential to “stay healthy during this economic downturn” — and a warning sign of a recession and a “crypto winter” after a 10-plus-year crypto boom.

June 15, 2022Real estate companies Compass and redfin announced plans to cut 10% and 8% of their workforce, respectively, following a 3.4% drop in home sales from April to May, according to the National Association of Realtors, amid concerns the once red-hot housing market had cooled.

June 22, 2022JPMorgan Chase — the nation’s largest bank — laid off and reassigned more than 1,000 of its 274,948 employees, citing rising mortgage rates and increased inflation.

July 7, 2022real estate firm Re/Max announced plans to lay off 17% of its workforce by the end of the year, with a goal of bringing in $100 million in annual mortgage-related revenue by 2028.

July 11, 2022electric automaker Rivian unveiled plans to lay off 5% of the company’s 14,000 employees in areas that grew “too quickly” during the pandemic and to halt hiring of non-factory workers, according to an internal email from CEO RJ Scaringe, Bloomberg reported.

July 12, 2022California-based mortgage lender loanDepot announced plans to lay off 2,000 workers by the end of the year, bringing its 2022 layoffs to 4,800 — more than half of the company’s 8,500 employees — amid a precipitous downturn in the housing market that’s “contracted sharply and abruptly,” CEO Frank Martell said in a statement.

July 12, 2022Tesla laid off 229 employees, primarily in its autopilot division, and shut down its San Mateo, California, office, just weeks after CEO Elon Musk sent an email to executives, saying he had a “super bad feeling” about the economy and planned to cut 10% of his workforce, Reuters reported.

July 14, 2022OpenSea, the New-York based non-fungible token (NFT) company, announced in a tweet it laid off 20% of its staff over fears of “broad macroeconomic instability” with the possibility of “prolonged downturn.”

Key Background

Many experts warned the US may be headed toward recession following reports the economy contracted 1.6% in the first quarter of the year. The Federal Reserve's announcement in June to raise interest rates by 75 basis points, its largest rate hike in 28 years, reignited fears of economic turmoil and recession. Last month, economists at S&P Global Ratings forecast a 2.4% drop in GDP by year's end, a reverse in course from earlier forecasts of 2.4% growth. Bank of America issued a warning Wednesday that "economic momentum has faded," and a "mild recession" is possible by the end of the year. Meanwhile, stocks continue to drop as inflation sores. The latest report from the Bureau of Labor Statistics revealed a 9.1% spike in inflation from June, 2021, with gas, housing and food making up the largest increases.

Contra

Even with the layoffs, the unemployment rate remains low, holding on at 3.6% for the past four months. In an interview with the Washington Post Thursday, US Deputy Secretary of Labor Julie Su said she was optimistic the economy will rebound, citing 9 million jobs created since President Joe Biden took office, and 372,000 new jobs in June.

Big Number

244,000. That's how many people applied for unemployment benefits last week, an eight-month high and a 3.4% increase from 235,000 the previous week, according to a Department of Labor report released Thursday.

Mortgage Giant Cuts Thousands Of Jobs—Warns Of 'Accelerated' Downturn As Housing Market Abruptly Collapses (Forbes)

No, We're Not In A Recession Yet: Strong Job Market Keeping Economy Safe For Now, Goldman Says (Forbes)

JPMorgan Lays Off Home Lending Employees As Housing Market Cools (Forbes)

Weekly Jobless Claims Hit New High For 2022 (Forbes)

Inflation Spiked 9.1% In June—Hitting New 40-Year High As Price Surge Fuels Recession Fears (Forbes)