With large companies announcing layoffs, is a recession looming?

WILMINGTON, NC (WWAY) — With large companies like Amazon, Microsoft, and now Wilmington-based nCino announcing layoffs, some are worried that recession may be looming.

Recession is a scary word for most people.

“Any time you see a slowdown in economic activity, that means people buying fewer things, employers starting to let people go, you’re starting to talk about an economic slowdown. Once that stretches a little bit, you start to move into the recession territory,” Mouhcine Guettabi said.

Mouhcine Guettabi, the regional economist at UNCW, explains the economic slowdown is being powered by the Federal Reserve raising interest rates — making it more difficult for firms to borrow money and for people to buy things.

“The federal reserve has basically said that inflation is such a big problem that they’re willing to raise interest rates and maybe cause an economic decline in order to achieve this slowdown in inflation,” Guettabi said.

The two sectors most impacted by the changes are tech and real estate.

“There are hints that economic activity is starting to slow down. Clearly, some of these layoff announcements tell us that firms that are privy to what’s going on see this slow down in consumer spending and so they’re starting to change their behavior,” Guettabi said.

However, he says large companies laying off employees signals a slowdown, but not necessarily a recession. So, what does all this mean?

“We need to be ready for a slightly different environment but it’s also important to not scare people and make it super clear that the current situation looks nothing like 2007 and 2008,” Guettabi said.

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