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Self Fulfilling Recession

Twitter’s messy layoff of roughly 50% of its workforce today came as tech companies across the United States announce their own job cuts and hiring freezes. What was thought to be a year of recovery of growth has so far been marred by war in Europe, soaring inflation and interest rates. Expecting further downturn, companies move to slim down costs.

But how much of the recession is brought on by the expectation of a recession and the actions guided by that expectation? The insight of the formula for a market with network effect is that expectation and value and thus outcome are inextricably linked. The expectation of the slowdown drives companies to slow down as well, bringing about the slowdown they fear—a self fulfilling recession.

https://www.nytimes.com/2022/11/03/technology/tech-companies-hiring-freeze-job-cuts.html

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