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Amazon founder Jeff Bezos warns a recession is looming - and Americans should 'prepare for the worst - Stone - 11-15-2022
Amazon founder Jeff Bezos warns a recession is looming - and Americans should 'prepare for the worst'
Market Insider [adapted] | November 14, 2022
- Jeff Bezos warned the US economy is likely to slump in a painful recession.
- Amazon's billionaire founder advised consumers and businesses to delay purchases and stockpile cash.
- Bezos recently suggested it was time to "batten down the hatches."
Jeff Bezos has warned a US recession is looming, and advised consumers and businesses to stockpile cash in case there's a devastating downturn.
"The economy does not look great right now," Amazon's billionaire founder and executive chairman told CNN on Saturday.
"Things are slowing down, you're seeing layoffs in many, many sectors of the economy," he continued. "The probabilities say if we're not in a recession right now, we're likely to be in one very soon."
Bezos recommended American households delay big-ticket purchases such as new TVs, refrigerators, and cars, given the risk that economic conditions worsen. Similarly, he suggested small-business owners consider holding off on investments in new equipment, and build their cash reserves instead.
The e-commerce pioneer declined to estimate how long the recession could last, but he urged people to be ready for an economic disaster.
"Take as much risk off the table as you can," he said. "Hope for the best, but prepare for the worst."
Bezos' latest comments echo his response to Goldman Sachs CEO David Solomon in October, when the bank chief said there's a good chance of a US recession.
"Yep, the probabilities in this economy tell you to batten down the hatches," Bezos tweeted at the time.
Andy Jassy, who succeeded Bezos as Amazon's CEO last summer, appears to share his predecessor's recession fears. Amazon has been cutting costs, slowing spending, and freezing hiring for certain roles in recent months, likely in preparation for a tougher economic backdrop.
Leading investors, executives, academics, and analysts have sounded the recession alarm this year. They have pointed to the Federal Reserve's efforts to combat inflation, which surged to a 40-year high of 9.1% in June, and remained at 7.7% in October.
The US central bank is rushing to cool the economy and alleviate upward pressure on prices by raising interest rates. It has hiked them from nearly zero in March to a range of 3.75% to 4% today, and indicated they could peak above 5% for the first time since 2007.
The upshot is that American consumers and businesses may have to weather soaring prices, surging borrowing costs, and a shrinking economy. Bezos is likely recommending they stockpile cash to help them survive that painful squeeze.