This notion of people just balling because their stimulus checks is increasingly tiresome, has always been disconnected from reality, needs to die. How far do you think those things went? You know, for normal people? I only ever see this comment from folks (mostly Republican politicians until now) with zero understanding of the subject. Boggling.
You can lookup how much businesses received in PPP "loans." It's staggering.
This is an anecdote, but I feel like it holds true for many small businesses. I personally know a person whose business received $160k in PPP loans and after it became clear that this was not a "loan" but a "cash payout", he went out and bought two new cars and a nice new house. His business was never really at risk due to COVID, since most of his workers work solo in the field where they never have to interact with others (I used to work for him).
The whole PPP process was a shame. There was very little oversight and it's becoming clear now that it was designed up front to be a giveaway to business owners. Businesses should have been forced to pay those loans back.
I believed the same as well but then last year when I went back to my family doctor after more than 1.5 years, I got to hear another version. My doctor belongs to a group of doctors who have 4-5 offices around San Francisco bayarea. They have been in business for 25+ years and I have been with them for 15+ years. I asked him how did they do during the covid. His response shocked me - he said they came very close to closing their practice and PPP was what saved them. Of course no one was visiting them during pandemic but even when things started opening up they had staff shortages.
I am sure similar scenario would have happened for a lot of people and at the same time some businesses would have taken undue advantage of this as well.
Lemme share still another perspective that hasn't gotten any media time... my accountant at the time recommended we apply for EIDL instead of PPP, for various reasons. So here we sit now several years later with PPP as free money, having to start paying on our EIDL loans, all because we legit needed the money but chose the wrong option. So yeah - very, very frustrating to see the ways that so many people who clearly didn't need the money got a free government handout while those that did need the money just ended up with debt.
> The whole PPP process was a sham [...] it was designed up front to be a giveaway to business owners.
Yes. The goal was to put money into the economy to help absorb the shock caused by short-term COVID restrictions that would otherwise have caused businesses to fail permanently. The point was to allow more businesses to "weather the storm" than otherwise. You can argue about the extent to which businesses should invest in "pandemic insurance" (however you want to define that), but the government does have an interest in stability and preventing a vicious cycle leading to economic collapse.
The obvious point was to leverage the resources already available at banks to vet loan applicants and to reduce the total number of applicants in the first place. It's not perfect, but it's a reasonably good idea given the urgency. Sometimes it's reasonable to accept that some people are going to get away with cheating the system. Do the best you can and move on.
Can you imagine how much MORE it would have cost and how much more money would have gone to waste, had the government just said up-front that it was free money for businesses? How much would it have cost the government to arrange for approving applicant businesses? Was it even feasible given the desired timeline?
The plan was to get the money out the door as fast as possible to stem the pandemic recession, which is important for stimuluses to work right, based on history. If you add all kinds of paper-work to reduce fraud, it slows down the process.
It was a hybrid in terms of "just send out a check" and a business loan. Perhaps in the future they should just send out a check to all businesses having a threshold # of employees.
You hear a lot about these employees who quit and haven't been working since 2 years ago when they got $1800, but not so much about companies that are still hiring because they got millions of dollars of free money from forgiven PPP loans. Funny how that works.
Not everyone lives on the coasts and makes SWE money.
Those stimulus checks ALONE were a TON of money for most people. For the average American just the checks were an entire extra month of net income (avg household = $71K and has two earners). Over 24 months it's $75 of additional spending per consumer per month, which when I was making $30K would have doubled my disposable income per month. Double spending. For two years.
AND stimulus checks weren't even half the of the amount that went out. AND the other half was even more disproportionately allocated to marginal consumers.
Enhanced UI, in particular, played a huge role. Combine that with stimulus checks and a lot of under the table untaxed work (done under the table to keep EUI eligibility), and people were doubling or tripling their net income for a year or more. The general asset bubble and explosion of retail investing didn't help.
It all adds up to a shitload of money in many parts of the country.
I know a good number of people in rural WV who are still living off of savings accrued during 52 or so weeks from 2021 to 2022. I'm willing to bet a much much larger number of people spent the last 2 years returning to the labor force but spending beyond their going-forward means.
> Those stimulus checks ALONE were a TON of money for most people
I don't understand how you think it's reasonable to compare "a ton", as a large amount of weight, to checks that did not cover a month of living expenses.
PPP loans were a nontrivial amount for businesses.
> a lot of under the table untaxed work (done under the table to keep EUI eligibility), and people were doubling or tripling their net income for a year or more
Which could be done before and after. Suggesting that no new conditions somehow tripled income makes no sense.
> I know a good number of people in rural WV who are still living off of savings accrued during 52 or so weeks from 2021 to 2022.
> Those stimulus checks ALONE were a TON of money for most people
Or $0 if you're a SWE living on the coasts.
I realize we make a lot, but we pay a lot in taxes. Just send the $3,000 check to millionaires and don't worry about it. I'm getting frustrated with the government telling me I'm rich while I can't afford an upper middle class home.
No they specifically don't say that. They say that fiscal support caused the 2.3 percentage point inflation. Fiscal support is defined by divergence in all governmental spending. The PPP program for instance is included in that, which has been widely proven to have not been used as direct employee support [0]. The PPP program was almost a trillion dollars that flowed to business owners, yet never seems to get mentioned in talk of inflation. Weird that.
So very this. Anyone making this argument is secretly moralizing about economics. They can't stand the fact that "the government just gave away money to a bunch freeloaders."
The only people secretly moralizing about economics is this chain of comments. The article never claimed that people were "bailing" or "freeloading" because of stimulus checks. It said that they were increasing consumer spending, which is objectively true and literally the entire point of them.
Yeah it's about 1-2 months rent for most people, at a time when many of them were laid off. That's just break-even shit. No one is flush with cash from that certainly
I can only speak for myself, but as an employee of "big tech" from 2016-2021, my own personal inflation resulted from the massive pay those companies offered. My startup was acquired in 2016. Net result of my 1% of stock was $0, but the comp package at the new company, while below average for that role, still represented a 130% pay increase. Over the next two years, stock appreciation alone added another 30% on top of that. Moving to a FAANG ended up being a lateral move, but that companies stock doubled.
The net result was that between 2016 and 2021, my compensation increased a whopping 460%. I know I'm far from alone in that as well. If anyone was ballin', it was (IMHO) far more related to the bull market than anything else.
I think it was the bull market combined with specifically a "hiring bubble" caused by aggressive, competitive hiring and acquisition practices as a risk-mitigation strategy to prevent disruptive competition
I agree with your broader message (stimulus checks were important to a lot of people's survival and they weren't just "free money" for people to play with) but consider that the American population is huge and even a minority of stimulus check receivers could have had an influence on certain aspects of the economy if their behaviour was similar. For every person struggling (and for whom the stimulus was necessary to their survival) there's a person who was getting by just fine and thousands of dollars is a windfall that could radically change their short-term financial behaviour.
And for some reason you don't see those same people complaining about the stock market skyrocketing and creating a much larger feeling of wealth (and actual wealth).
>This notion of people just balling because their stimulus checks is increasingly tiresome, has always been disconnected from reality
What's mind mindbogglingly disconnected from reality not understanding that people will absolutely spend a $1k (or whatever) stimmy payment the just like they would a tax return or bonus.
That said, the stimulus bucks disbursed to individuals were absolutely not enough to matter to the macroeconomic picture. It was basically like having a year with two tax return seasons.
The PPP loans, the changes in unemployment benefits, the people using home equity to buy garbage they don't need, all had a much bigger impact.
Its one of those cockroach ideas that is just too good of a story in some circles for it to ever die. We'll be hearing it for decades, along with the "fact" that people don't want to work due to "enhanced unemployment benefits" (which expired long ago).
This (and OP) is confusing two different things. There were individual stimulus checks, but there was also a separate boost to unemployment such that around 20% of people who ended up on unemployment were making more than they had with the job they lost.
I'm pretty sure that has stopped by now too, though.
There were plenty of posts about small businesses being unable to compete with unemployment because of this back when it was active. In past experience, this is usually what they're referring to.
It was a little bit more than that depending on circumstances. First check was $1200 per adult, $500 per kid. Second one was $600 per adult/kid. So for a family of four that's $3400+$2400 = $5800 in freebies. There's more people than you would think who see that as a pretty sizeable windfall, and start leveraging up accordingly (new car, lots of consumer goods).
Maybe they put it poorly, but COVID was a huge windfall for many people. Aside from the stimulus checks (which for many people totaled more than $1800) you had people taking advantage of PPP "loans", extended and expansive unemployment benefits, eviction moratoriums, student loan forbearance, etc. I personally know people that got laid off due to COVID and made more money sitting on the couch for a year than they ever made in their day job. This glut of money takes time to cycle through the economy, and now the party is over.
the lower-middle class job loss in retail and hospitality from COVID are massive. People who depend on that kind of job, have no backup systems generally.
> How far do you think those things went? You know, for normal people? I only ever see this comment from folks (mostly Republican politicians until now) with zero understanding of the subject
What is the answer to these questions from people who have understanding of the subject?
Normal people didn't do stupid things with the stimulus check, but there's always a few morons who live hand-to-mouth who got them and immediately blew that money on something stupid.
I have several issues with the points made in this article
First is the Hardware cycle which the author admitted himself is a stretch. Because it is. So not sure why it is there
Second, the slower growth of AWS and Azure, how can we be sure if it's because of increased interest rates and not because of big numbers laws? AWS itself generated $21 billion in Q4 2022. How fast can you grow at that size? I am sure interest rates have some impact but it should not be the sole reason for slower growth. AWS is still growing and very profitable.
Third, claiming ATT fixed a problem that doesn't exist is not correct. Surveillance tracking without user consent is a real problem.
Last, when Jassy said advertising, did he mention mobile advertising though? Mobile advertising does not mean every type of advertising. If there is no data, how does he know ATT's impact was underestimated? Financial Times ran an article claiming that ATT's impact on FB was about $10 billion. There was no link to the research or article for that number. FB ran away with that number and made the same claim. But even if that number were true, FB still has billions of users and generates a lot of money. Plus, they already lapped the period impacted by ATT. What investors were worried about is Mark's obsession with VR and the big investments into the field. The layoff is FB's attempt to be leaner and recover investor trust. So I am not sure why ATT is even in the discussion.
> AWS itself generated $21 billion in Q4 2022. How fast can you grow at that size?
More generally there are two types of growth - market growth (new customers) and net-zero growth (taking customers from the competitor). The hyper growth generally comes from both of those being quite high, but almost by definition the net-zero growth one will eventually shrink to zero. Likewise, market growth will slow down after all the low hanging fruit for market growth are exhausted (this is generally conversion from existing older tech for efficiency gains).
Without commenting on the bulk of the article, the opener is a good reminder for this audience: something like 96% of employed people are not in the high tech industry. Our personal mental context for employment is emphatically not typical.
I mainly share this observation because in my experience, us tech types (probably like all humans) have a propensity to subconsciously assume everyone experiences existence in about the same way as we do.
That and the fact that reported "10k layoffs at tech company" doesn't mean 10k developers, sysadmins, and the like are now out of a job. It generally is a mixture of all roles at the company – many of which may not be "techy" in nature (customer service reps, etc.)
Not that anyone losing a job is ever a good thing, but I think a lot of news stories make it seem like a mass-extinction of fullstack devs, when the reality is more complex.
Now I'm distracted by the guaranteed-to-be-frustrating question of how they delineate what industry someone works in. I'm going to guess that if you do any job at a tech company, you're in the "Information" bucket. But I bet if you work at a contractor that services a company, you could suddenly be in another service bucket.
I know you didn't mean it this way, but my morning brain read "high tech industry" as a "high elf vs regular elf" thing and it made it sound pretty funny. I could totally see some sector of tech considering itself the "high tech industry".
I chuckled when I saw the Twitter bio for the item in the lede. Yes, reporter person, you are in an echo chamber, and it means that you're probably failing at your job (charitably assuming that Insider has higher aspirations than serving as a tech gossip rag).
“I mainly share this observation because in my experience, us tech types (probably like all humans) have a propensity to subconsciously assume everyone experiences existence in about the same way as we do.”
What I don't understand is why Thought leaders like Stratechery didn't see this coming? Did they ever write about these "4 horsemen" before these recent events?
If not, they seem to fall under the category of IYI which NNTaleb talks about.
Did you verify that he said he didn't predict this? It looks like he says he pretty much did predict most of these things in previous articles. The fourth one in particular is basically just a rehash of a previous article he wrote.
And certainly many pundits have predicted a tech recession for a long time. If anything, it's the safest thing to predict, because there will always be one coming in the future.
There was a pretty widespread belief that there was going to be a "new normal." And, while I'm not sure that's totally incorrect, it's mostly in relatively subtle ways and I'm not sure typical consumer behavior has really changed all that much.
Initial response is that most tech people, especially in the valley, live in a bubble.
But beyond that: interest rates are far and above the most responsible for the current hits. This has been the case for a long time - https://seekingalpha.com/article/4479097-the-real-reason-tha.... The other three reasons are sort of secondary to this.
>That high end did not materialize: when I covered that earnings call Amazon’s retail growth had pretty much reverted to what it was trending towards pre-pandemic; the last two quarters have been down significantly
A general theme I see is that, while a lot of businesses did accelerate digitization in various ways (much of which isn't obvious to consumers), in general, a (mostly) post-COVID world looks a lot more like a pre-COVID world than a lot of people expected. Travel's pretty much back to 2019 levels. People who weren't getting groceries delivered or picking up curbside pre-COVID, pretty much aren't today. Traffic is as bad as ever. Etc.
Is that true for WFH too? It seems to me that that's one bell that won't be completely unrung. Companies took advantage of WFH to hire outside of their metro, so even those that are forcing their employees back into the office are having trouble making it work.
In general, I think there's more flexibility in many white collar jobs than there was. But I also think tech is something of a bubble. Certainly, on the rare occasions I go into the nearest major city at rush hour, traffic seems as bad as it's ever been--though some of that may be that fewer people seem to use the commuter rail and other public transit than in the past.
I went digging on this, because I thought you were wrong.
Turns out the official book name is indeed singular, and in fact I tracked this singular usage all the way back to Athanasius 39th festal letter in AD 367, listing the accepted books of the New Testament - "the Revelation of John".
"The Revelation" is also the first word of the book in greek. (Ἀποκάλυψις or apokalypsis)
Readit News
This notion of people just balling because their stimulus checks is increasingly tiresome, has always been disconnected from reality, needs to die. How far do you think those things went? You know, for normal people? I only ever see this comment from folks (mostly Republican politicians until now) with zero understanding of the subject. Boggling.
This is an anecdote, but I feel like it holds true for many small businesses. I personally know a person whose business received $160k in PPP loans and after it became clear that this was not a "loan" but a "cash payout", he went out and bought two new cars and a nice new house. His business was never really at risk due to COVID, since most of his workers work solo in the field where they never have to interact with others (I used to work for him).
The whole PPP process was a shame. There was very little oversight and it's becoming clear now that it was designed up front to be a giveaway to business owners. Businesses should have been forced to pay those loans back.
I am sure similar scenario would have happened for a lot of people and at the same time some businesses would have taken undue advantage of this as well.
https://sbax.sba.gov/oigcss/
Yes. The goal was to put money into the economy to help absorb the shock caused by short-term COVID restrictions that would otherwise have caused businesses to fail permanently. The point was to allow more businesses to "weather the storm" than otherwise. You can argue about the extent to which businesses should invest in "pandemic insurance" (however you want to define that), but the government does have an interest in stability and preventing a vicious cycle leading to economic collapse.
The obvious point was to leverage the resources already available at banks to vet loan applicants and to reduce the total number of applicants in the first place. It's not perfect, but it's a reasonably good idea given the urgency. Sometimes it's reasonable to accept that some people are going to get away with cheating the system. Do the best you can and move on.
Can you imagine how much MORE it would have cost and how much more money would have gone to waste, had the government just said up-front that it was free money for businesses? How much would it have cost the government to arrange for approving applicant businesses? Was it even feasible given the desired timeline?
The plan was to get the money out the door as fast as possible to stem the pandemic recession, which is important for stimuluses to work right, based on history. If you add all kinds of paper-work to reduce fraud, it slows down the process.
It was a hybrid in terms of "just send out a check" and a business loan. Perhaps in the future they should just send out a check to all businesses having a threshold # of employees.
Not everyone lives on the coasts and makes SWE money.
Those stimulus checks ALONE were a TON of money for most people. For the average American just the checks were an entire extra month of net income (avg household = $71K and has two earners). Over 24 months it's $75 of additional spending per consumer per month, which when I was making $30K would have doubled my disposable income per month. Double spending. For two years.
AND stimulus checks weren't even half the of the amount that went out. AND the other half was even more disproportionately allocated to marginal consumers.
Enhanced UI, in particular, played a huge role. Combine that with stimulus checks and a lot of under the table untaxed work (done under the table to keep EUI eligibility), and people were doubling or tripling their net income for a year or more. The general asset bubble and explosion of retail investing didn't help.
It all adds up to a shitload of money in many parts of the country.
I know a good number of people in rural WV who are still living off of savings accrued during 52 or so weeks from 2021 to 2022. I'm willing to bet a much much larger number of people spent the last 2 years returning to the labor force but spending beyond their going-forward means.
I don't understand how you think it's reasonable to compare "a ton", as a large amount of weight, to checks that did not cover a month of living expenses.
PPP loans were a nontrivial amount for businesses.
> a lot of under the table untaxed work (done under the table to keep EUI eligibility), and people were doubling or tripling their net income for a year or more
Which could be done before and after. Suggesting that no new conditions somehow tripled income makes no sense.
> I know a good number of people in rural WV who are still living off of savings accrued during 52 or so weeks from 2021 to 2022.
Probably not.
Or $0 if you're a SWE living on the coasts.
I realize we make a lot, but we pay a lot in taxes. Just send the $3,000 check to millionaires and don't worry about it. I'm getting frustrated with the government telling me I'm rich while I can't afford an upper middle class home.
The idea that pumping ~$800 billion into the economy wouldn't affect inflation and the economy in general seems unlikely.
https://files.stlouisfed.org/files/htdocs/publications/revie...
[0] https://www.stlouisfed.org/publications/regional-economist/2...
Not $800 Billion, rather $8000 Billion
What did that do to the economy/prices/inflation and why isn't that headline news every day for 20 years?
https://www.brown.edu/news/2021-09-01/costsofwar
I kind of feel this way, but about the free money given to corporations that didn't really need it -- not individuals.
But it has.
The net result was that between 2016 and 2021, my compensation increased a whopping 460%. I know I'm far from alone in that as well. If anyone was ballin', it was (IMHO) far more related to the bull market than anything else.
What's mind mindbogglingly disconnected from reality not understanding that people will absolutely spend a $1k (or whatever) stimmy payment the just like they would a tax return or bonus.
That said, the stimulus bucks disbursed to individuals were absolutely not enough to matter to the macroeconomic picture. It was basically like having a year with two tax return seasons.
The PPP loans, the changes in unemployment benefits, the people using home equity to buy garbage they don't need, all had a much bigger impact.
I'm pretty sure that has stopped by now too, though.
Edit: https://www.investopedia.com/federal-pandemic-unemployment-p... - ended Sept 2021
There were plenty of posts about small businesses being unable to compete with unemployment because of this back when it was active. In past experience, this is usually what they're referring to.
What is the answer to these questions from people who have understanding of the subject?
Dead Comment
First is the Hardware cycle which the author admitted himself is a stretch. Because it is. So not sure why it is there
Second, the slower growth of AWS and Azure, how can we be sure if it's because of increased interest rates and not because of big numbers laws? AWS itself generated $21 billion in Q4 2022. How fast can you grow at that size? I am sure interest rates have some impact but it should not be the sole reason for slower growth. AWS is still growing and very profitable.
Third, claiming ATT fixed a problem that doesn't exist is not correct. Surveillance tracking without user consent is a real problem.
Last, when Jassy said advertising, did he mention mobile advertising though? Mobile advertising does not mean every type of advertising. If there is no data, how does he know ATT's impact was underestimated? Financial Times ran an article claiming that ATT's impact on FB was about $10 billion. There was no link to the research or article for that number. FB ran away with that number and made the same claim. But even if that number were true, FB still has billions of users and generates a lot of money. Plus, they already lapped the period impacted by ATT. What investors were worried about is Mark's obsession with VR and the big investments into the field. The layoff is FB's attempt to be leaner and recover investor trust. So I am not sure why ATT is even in the discussion.
Feels like some of these points are forced...
Jassy himself has said numerous times in public that less than 5% of all IT spend is on any cloud provider.
He also mentioned that Dell has a much higher revenue than AWS. In the grand scheme of things, AWS’s revenue is not that large.
Disclaimer: Jassy is my (skip * 7 manager). I work at AWS.
More generally there are two types of growth - market growth (new customers) and net-zero growth (taking customers from the competitor). The hyper growth generally comes from both of those being quite high, but almost by definition the net-zero growth one will eventually shrink to zero. Likewise, market growth will slow down after all the low hanging fruit for market growth are exhausted (this is generally conversion from existing older tech for efficiency gains).
Who is harmed?
I mainly share this observation because in my experience, us tech types (probably like all humans) have a propensity to subconsciously assume everyone experiences existence in about the same way as we do.
Not that anyone losing a job is ever a good thing, but I think a lot of news stories make it seem like a mass-extinction of fullstack devs, when the reality is more complex.
I know you didn't mean it this way, but my morning brain read "high tech industry" as a "high elf vs regular elf" thing and it made it sound pretty funny. I could totally see some sector of tech considering itself the "high tech industry".
I mean... a good chunk of Silicon Valley does live in a fantasy world. ;)
Smartest sentence I’ve read on this site.
But if you are an expert, you notice that Ben is often very wrong in his analysis. Makes you question your trust in the rest of this views.
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Dead Comment
If not, they seem to fall under the category of IYI which NNTaleb talks about.
And certainly many pundits have predicted a tech recession for a long time. If anything, it's the safest thing to predict, because there will always be one coming in the future.
NNTaleb: Naseem Nicholas Taleb
But beyond that: interest rates are far and above the most responsible for the current hits. This has been the case for a long time - https://seekingalpha.com/article/4479097-the-real-reason-tha.... The other three reasons are sort of secondary to this.
A general theme I see is that, while a lot of businesses did accelerate digitization in various ways (much of which isn't obvious to consumers), in general, a (mostly) post-COVID world looks a lot more like a pre-COVID world than a lot of people expected. Travel's pretty much back to 2019 levels. People who weren't getting groceries delivered or picking up curbside pre-COVID, pretty much aren't today. Traffic is as bad as ever. Etc.
Turns out the official book name is indeed singular, and in fact I tracked this singular usage all the way back to Athanasius 39th festal letter in AD 367, listing the accepted books of the New Testament - "the Revelation of John".
"The Revelation" is also the first word of the book in greek. (Ἀποκάλυψις or apokalypsis)
So thanks for the enjoyable rabbit trail.
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