Categories: Business

A new wave of mass layoffs will begin in America in 2024

Starting in 2022, many analysts inside and outside the United States (US) have predicted severe economic crisis In three consecutive years.

The Biden administration, the federal institutions supporting it, and the large left-wing press in the United States appear to have agreed Don’t mention or suggest recessionWhen the reality that Americans are suffering dictates the opposite.

A’s recognition financial crisis Following the banking crisis that unfolded in 2023, there would be panic on Wall Street, international markets, and among large companies and investors due to, among other reasons, the high interest rates imposed by the Federal Reserve to prevent the worst inflation in the country. Five decades.

“Good news” in an election year.

in the subject political interestFor white House An officially confirmed recession would spell the end of Biden’s re-election bid.

For these reasons, the government did not accept the word recession even when one semester was in jeopardy.

what woke you up more doubts From that moment on, gross domestic product (GDP) growth moved “up” from one quarter to the next, and suddenly and as if by magic media bombardment about the so-called “good news” spread by Washington; except one “nose reduction” Of inflation that Americans still don’t see, nor their wallets.

Focus on mid-term elections in 2022 and In the months before the November presidential election The aim of 2024 was to clean up the rarefied atmosphere amid chaotic price increases, costly war in Ukraine, lack of control on the southern border with direct and indirect expenditure of more than $200,000 million per year from 2021; A record debt that has reached $34 trillion today and an unprecedented industrial contraction along with other negative fundamental indicators.

All of the above becomes the breeding ground for a similar wave of layoffs in 2024 – which has just begun – similar to those in late 2022 and the first two quarters of last year.

Various companies, including banks and large technology companies, resumed restructuring processes of their operations and expenses in 2024, including large-scale layoffs.

Restructuring of banks after the crisis

American financial conglomerate Citigroup, to which Citibank belongs, is forecast 20,000 posts cut Medium-term actions to reduce costs from $56.4 billion to $51 billion. But this figure is projected to reach 60,000 fewer employees in 2026.

Citigroup and its financial services subsidiary Citibank combine to form Fourth most powerful bank in America With assets worth $2.39 trillion.

Despite profits, the accounts of major US banks were hit by the banking crisis.

JPMorgan ChaseLargest financial entity registered in the US decline in its net profit in the fourth quarter of last year $9.3 billion (-15%) Near Bank of America (-56%), Whereas Citigroup lost $1.8 billion (-3%)

The Deposit Insurance Agency, or FDIC, reported losses of about $16.3 billion after several US banks went bankrupt due to mass withdrawals, non-payments and reduced access to credit due to high interest.

Silicon Valley Bank (SVB) came under FDIC control and Silvergate Bank closed.

Additionally, Signature Bank and First Republic were sold to New York Community Bank and JPMorgan Chase, respectively.

Less this panoramait cannot be ruled out Other banks begin restructuring processes And trimmed downPerhaps not the largest banks, such as JPMorgan Chase, Bank of America and Wells Fargo, which consolidated their power during the banking crisis.

At this time, federal regulators have requested to limit the fees charged to customers for not maintaining a minimum balance on their accounts from $3 to $14.

According to research conducted by Bankrate in August last year, the average non-sufficient funds fee was $26.61, although some banks charge as much as $39.

New rules could take away billions of dollars in profits from the biggest banks of the country, who were preparing to respond to the proposal even before the announcement.

Bankers said the rules would lead to cuts in services and staff, statements confirming that the biggest wave of bank layoffs is yet to come.

Technology and layoffs

The situation may worsen under the intense competition for Artificial Intelligence in the technology sector. Its use equates to less human labour.

Samsung, the main rival of Apple and its iPhone, launches its latest Galaxy models, this time including Artificial Intelligence (AI).

The premium S24 Ultra, unveiled at an event in San Jose, California, has the ability to translate calls and texts simultaneously in 13 languages and also offers unprecedented search capabilities through a partnership with Google.

Google CEO Sundar Pichai has warned employees hundreds of layoffs are coming In the company, due to its new priorities artificial intelligence,

The tech giant laid off about 12,000 people at the same time last year, which was 6% of its workforce at that time.

Now, the company has confirmed it is eliminating “several hundred” positions from its global advertising team, but left open the possibility of additional cuts in the coming months.

Google announced the departure just days before hundreds of other employees Of your hardware, voice support and engineering teams.

Microsoft decided to eliminate 1,900 jobs, 8% of its workforce, from its entertainment division at a time when it consolidated its purchase of Activision Blizzard, maker of the popular video game “Call of Duty.”

Riot Games, the video game developer responsible for the popular “League of Legends,” will cut 11% of its workforce.

Apple, which was also a protagonist in the wave of layoffs in 2023, faces Holocaust The Supreme Court of the United States has significantly reduced control over its lucrative application store for iPhones.

court order will deprive One of the most profitable companies in the world billions of dollars in revenue, After it stopped being the main driver of its application store on more than 1 billion iPhone phones because it was considered unfair competition.

Declining profits due to cost cutting will inevitably translate into layoffs.

Retailers and large manufacturers

Amazon Said will eliminate hundreds of posts The Prime Video and MGM studios divisions and two of their companies, Audible – an online audiobook and podcast service – and streaming platform Twitch, will lay off 5% of their workforce and more than 500 employees, respectively.

Spotify, Microsoft, Meta and IBM advance equal measures recently.

internet retailer eBay Inc. will make 1,000 people unemployed, 9% of its full-time workforce, as headcount and costs have outpaced its growth in a slowing economy. This is the latest mass layoffs ever made public in the technology sector.

CEO Jamie Iannone said the company will also reduce the number of contracts within its alternative workforce in the coming months.

The economic fallout puts other big companies at the center of this new wave.

US industrial conglomerate General Electric (GE) reported lower net profit in the fourth quarter of 2023.

according to the company Net profit was down 28% Compared to the same period last year. The company attributes the data to adverse tax implications.

The US industrial giant is embroiled in a major restructuring that will see the company split into three independent entities, all of which will be listed on the stock exchange.

Meanwhile, US electric vehicle maker Tesla reported lower-than-expected results in the fourth quarter, hit by a decline in the selling price of its vehicles.

Net income closed 2023 with a 39% decline compared to the same quarter of 2022.

Tesla also warned that the pace of sales growth could slow down “significantly” this year.

Ford will shootfor its part, 1,400 employees At its plant in Dearborn, Detroit, where electric trucks are manufactured. ford production will be halved Of electric F-150s.

A strike Six-week strike by UAW auto workers reduces Ford sales by nearly 100,000 vehicles Due to this the company suffered a loss of 1.7 billion dollars. The automaker said in a recent report that it had lost profits.

additional cost The labor agreement applicable for the next four years and eight months will increase 8.8 billion dollars until the end of the contract

after Close 20 stores in 14 states Over the past year, Walmart would leave two large stores in California in February.

RiteAid is in the process of closing more than 140 stores this year CVS Pharmacies one who concludes 900 establishments eliminatedWhereas Walgreens plans to close 150 stores Before August.

Big Lots has already been mentioned Liquidation of dozens of business premises In New York, North Carolina and Illinois. But the list of companies with forecast closures and layoffs in 2024 is nearly endless.

lmorales@diariolasamericas.com