Amazon founder Jeff Bezos warned businesses and consumers that large purchases could be delayed in the coming months, as the global economy struggles with downturns and is at risk of a recession.
In an interview at Bezos’ Washington, DC home on Saturday, the business leader gave his most direct advice on a weakening economy.
Bezos advised people to delay big-ticket purchases such as televisions, new cars, and appliances. He noted that this is the best way to preserve your “dry powder” in case of an economic downturn. Bezos said that small businesses might want to avoid large capital expenditures and acquisitions in this uncertain period.
If enough people follow Bezos’ advice, it could result in lower sales for Amazon. Amazon is the e-commerce giant Bezos started and which has created most of the billionaire’s wealth.
The New York Times reported Monday morning that Amazon intends to reduce its workforce. It will lay off 10,000 employees, which is the largest ever reduction in Amazon’s history. This is in addition to an earlier announced hiring freeze for its corporate workforce. In the United States, the company ranks second to Walmart in terms of the number it employs.
Amazon (AMZN), announced in October that it expects its final three months of year sales to be substantially below Wall Street’s expectations, said the company. This was due to rising inflation and fears of a recession that could impact consumer purchasing decisions. Americans are more focused on dining out and travel, and less on discretionary goods.
Amazon’s surging prices and changing customer behavior have caused the stock to plummet by more than 40%.
Bezos stated that the likelihood of economic conditions getting worse makes it prudent to keep some cash in reserve if you have the option.
He said, “Take some risk off of the table.” “Just a little risk reduction could make a big difference.”
Bezos sent a tweet last month warning his Twitter followers, encouraging them to “batten down their hatches.” This advice was for both business owners and consumers, Bezos stated in the interview.
He acknowledged that many people may feel the pinch right now but said that he is an optimist and believes that the American Dream “is” and “will be even more achievable in the future.” He projected that space travel could be widely accessible within his lifetime.
The US economy is technically not in recession but nearly 75% of respondents to a poll felt it was. Although wages are rising, they are not enough to offset the impact of inflation. This is most evident in high prices for necessities such as food, fuel, and shelter. It’s been a tough year for those who have invested in stocks. This is especially true for retirees who depend on their investments.
In recent months, other business leaders have also issued similar messages regarding the economy. Tesla (TSLA), and Twitter CEO Elon Musk admitted last month that demand for Tesla (TSLA), was “a little more difficult” and pointed out that Europe and China are both experiencing a “recession.” Musk warned that Tesla’s (TSLA), sales growth target would be missed.
Jamie Dimon, CEO of JPMorgan Chase, said that a recession could strike the United States within six to nine months.