![]() Rising interest rates have meant the end of easy money. Then came the surge of post-pandemic inflation. Hollywood went streaming, content went digital, and the services economy became intermediated by smartphones. Social-media and consumer-tech companies became some of the richest and fastest-growing in the world. and around the world, the app revolution took off. As smartphone penetration rose in the U.S. This created the perfect conditions for an era of endless cash that venture capitalists, seeking high rates of return, poured into low-marginal-cost software companies. The period after the Great Recession was defined by a weak economy with low aggregate demand and low interest rates. The simple, and possibly simplified, answer to this question is: It’s the interest rates, stupid. Watching this surge of mass layoffs in big tech companies, plus the lurid chaos unfolding at Twitter over the past few weeks and the spectacular ongoing implosion of crypto, the big question on my mind is: Why is it all happening at once? The stock valuations for many of these companies have fallen more than 50 percent in the past year. Although overall unemployment is still very low, just about every major tech company-including Amazon, Meta, Snap, Stripe, Coinbase, Twitter, Robinhood, and Intel-has announced double-digit percentage-point layoffs in the past few months. The tech industry seems to be in a recession. This is Work in Progress, a newsletter by Derek Thompson about work, technology, and how to solve some of America’s biggest problems.
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