Recession-omics… the word on everyone’s lips. The probability of a US recession soared this quarter as the Fed aggressively hiked interest rates to tame stubbornly rising inflation. But while #flation hurts the economy, so does fighting it: higher rates discourage borrowing/spending and encourage saving, which should cool consumer demand and prices. They also lower companies’ growth expectations, which have slumped stocks into a bear market. And historically most S&P 500 bear markets have been accompanied by recessions. All eyes are on whether the Fed can cool the economy without igniting a downturn — which seems increasingly tougher.
Crypto winter dawns... Move over, web3. "Contagion" became the quarterly buzzword as the crypto market continued to tumble along with stocks, losing $2T in market cap since its November high. Algorithmic stablecoin TerraUSD's crash wiped out $40B in market value seemingly overnight, while crypto lender Celsius froze billions in customer funds. The trouble spread to other crypto companies like Coinbase, Crypto.com, and Gemini, all of which laid off employees as investors jumped ship. Bipartisan crypto regulation proposed in the Senate could be a win for the struggling industry — though with contentious midterm elections approaching, no one's holding their breath.
A tale of two labor markets… is the quarter’s biggest paradox. While rebounding sectors like hospitality and travel couldn’t hire fast enough (see: travel-pocalypse), pandemic thrivers slowed hiring and cut positions. Unemployment is at record lows and wage growth has doubled from 2019. Still, companies like Meta, Twitter, Netflix, and Uber have had mass layoffs as slowing growth threatens the bottom line. The tech industry made 8X more job cuts last month than it did during the first four months of the year combined. But with two job openings for every unemployed person, job seekers should be better off than in previous downturns.