You may have seen companies laying off employees recently. This sucks. We all are in the creative industry and a lot of us know people in the companies that are going through layoffs. I wanted to shed some light on what is going on from an economics standpoint.

To get started we have to go back a few years, back to when Covid first hit. Inflation started to ramp up in a big way. At the base of it all, inflation comes down to supply and demand. It is a dance between how much they can charge till we stop buying. When their is a lot of money going around, they can charge more and people will pay it. So prices go up. When that money dries up the prices stop rising and the economy stagnates until cost of living raises catch up to prices and people start buying again.

Now a big thing to note is the federal reserve also put interest rates at near 0%. This allowed businesses to expand FAR beyond what they would have normally been able to grow organically. With more money in pockets, people kept buying and companies were taking out loans with almost no interest and expanding. This led to massive hiring sprees.

Then we had a hiring and expansion slowdown. The Federal Reserve raised interest rates. This was not to punish consumers, but to pull money out of the economy and more so slow down the growth of businesses to allow things to cool down and let the consumers catch up to the explosive growth that had been happening. We didn’t have enough workers to supply all the jobs available. This was due to a mix of workers dying from COVID and a SEVERE decline in immigration.

The slowdown has been around over the last year or so. People were speculating that the Federal Reserve would start lowering interest rates and companies were holding tight to see what would happen. Then Jerome Powell, the Chair of the Federal Reserve, let everyone know that the rates were going to be holding steady for longer than anticipated due to a still hot job market and hot economy that did not cool off at the rate that they anticipated.

This leads us to today. Companies are having to watch overhead and are looking at departments that are not profitable and are making the decision to layoff employees in order to cut costs. They expanded farther and faster than what the economy could handle due to low interest rates which did not last, and now could not sustain themselves.

This is unfortunate. It really sucks. It isn’t going to be an easy next few months / year. More people will be layed off. Look in every creative space and you will see layoffs happening.

Expect more from Twitch, Amazon, Facebook, all of the companies that produce products that you use for creative work.

If you are in these sectors, I am sorry that you are going through all the stresses that you are. I was previously in ad-sales for a financial company and we saw the drawback months ago in what companies were willing to spend for advertising.

My advice to everyone is to cut expenditures now, save what you can, look at what you can do to cut bills. Things will get better but it will take a while for that to happen.

My Prediction is a housing bubble burst and a tech bubble burst. It may not be as severe as the .com bubble and the 2008 bubble but it is going to happen in my honest opinion.

If you have any questions please feel free to reach out and ask. You can find me on twitter here: @ChefBrandon_

~Chef Brandon