Jeff Bezos’ top tips for managing the economic downturn
By Brian Fung, CNN Business
Amazon founder Jeff Bezos recently warned consumers and businesses they should consider postponing large purchases in the coming months as the global economy contends with a downturn and faces a possible recession.
The business leader offered his starkest advice yet on a faltering economy in an exclusive sit-down interview with CNN’s Chloe Melas on Saturday at Bezos’ Washington, DC, home.
Bezos urged people to put off expenditures for big-ticket items such as new cars, televisions and appliances, noting that delaying big purchases is the surest way to keep some “dry powder” in the event of a prolonged economic downturn. Meanwhile, small businesses may want to avoid making large capital expenditures or acquisitions during this uncertain time, Bezos added.
If enough consumers follow through with Bezos’ advice, it could mean lower sales for Amazon, the e-commerce giant Bezos founded and that created the vast majority of the billionaire’s wealth.
The New York Times reported Monday that Amazon plans to slash its workforce, laying off 10,000 workers, the largest reduction in the company’s history. That’s in addition to a previously announced hiring freeze in its corporate workforce. The company is second only to Walmart in the number of people it employs in the United States.
Amazon said in October it expects sales for the final three months of the year to be significantly below Wall Street’s expectations. The weaker forecast came as rising inflation and looming recession fears weigh on consumer purchasing decisions as Americans focus more on travel and dining out and less on buying discretionary goods.
The company’s stock has fallen more than 40% as surging prices and changing customer behavior weigh on Amazon and the broader tech sector.
Bezos said the probability of economic conditions worsening makes it prudent to save some cash if it’s an option.
“Take some risk off the table,” he said. “Just a little bit of risk reduction could make the difference.”
Last month, Bezos tweeted a warning to his followers on Twitter, recommending that they “batten down the hatches.” The advice was meant for business owners and consumers alike, Bezos said in the interview.
Many may be feeling the pinch now, he added, but argued that as an optimist he believes the American Dream “is and will be even more attainable in the future” — projecting that within his own lifetime, space travel could become broadly accessible to the public.
Although the US economy is not, technically, in a recession, nearly 75% of likely voters in a recent CNN poll said they feel as though it is. Wages are up, but not enough to take the sting off inflation, most notably high prices of necessities like food, fuel and shelter. For those invested in stocks, it’s not been a great year, either, and that’s especially hard on retirees who are living off their investments.
Other business leaders have issued similar messages about the economy in recent months. Tesla and Twitter CEO Elon Musk last month admitted demand for Teslas was “a little harder” to come by, and noted that Europe and China are experiencing a “recession of sorts.” Musk also warned that Tesla would fall short of its sales growth target.
JPMorgan Chase CEO Jamie Dimon in October spooked the stock market by saying a recession could hit the United States in as little as six to nine months.
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