Goldman Sachs Group GS expects to show about 3,200 employees the door this week as the investment bank focuses on new strategies to navigate the current economic landscape. Layoffs will commence on Wednesday, according to Reuters.
Meanwhile, Amazon.com Inc. AMZN is expected to let go of some 18,000 employees, while Salesforce Inc. CRM reduces its staff by 10%.
The layoff trend began in 2022 when Twitter, Meta Platforms Inc. META, Lyft LYFT, Stripe, Snapchat SNAP and Shopify SHOP all cut thousands of workers. But data shows that these massive waves are not representative of the general state of the job market.
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The U.S. job market continued to produce strong numbers throughout the second half of 2022, with 223,000 new jobs added last month, and a historically-low unemployment rate of 3.5%.
Goldman's cutting of 3,200 employees is expected to come from the firm’s investment banking arm due to a drop in dealmaking (M&A is down).
Meanwhile, interest rates keep rising. This makes the cost of borrowing higher, while global factors contribute to volatility and instability. The war in Ukraine, worldwide inflation and U.S.-China tensions are all major contributors.
By the end of Q3 2021, Goldman had 49,100 employees, up 7,000 from the previous year.
In mid-June 2019, the firm had only 35,600 people on its payroll, marking a 27% hike in headcount in just over two years.
This quick growth came as low-interest rates made it easier to expand teams and operations.
Many companies in finance (and also most in the tech sector) went on hiring binges after the pandemic, as company valuations grew through the roof and there were no disincentives to bringing more people on board.
As the markets continue to face a sustained period of hardships, which includes many of the marks of a recession, companies are forced to correct their headcounts in order to make their balance sheets more resilient.
Tech was one of the worst-performing sectors of 2022. For the financial sector, firms in investment banking rely on other sectors thriving to be needed for their business, as investment banks like Goldman Sachs play a key role in accompanying other firms through the process of acquisitions and capital raises.
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