Indicators Point to Deepening Slowdown, Spotify Adds to Tech Layoffs, CEO Departures Decline
Indicators Point to Further Slowdown
The U.S. slipped closer to a recession or some type of pullback in the final month of 2022 based on manufacturing, housing construction and other data compiled by a prominent economic research organization.
The Conference Board said Monday its Leading Economic Index, a composite of several metrics, declined 1% in December following a 1.1% pullback in November. The index contracted 4.2% in the second half of 2022, much steeper than the 1.9% decline in the first half.
Ataman Ozyildirim, senior director of economics at the New York-based organization, said the sharp December drop and earlier declines are “continuing to signal recession” for the U.S. economy in the near future. Despite a strong labor market, he said overall U.S. economic activity “is likely to turn negative in the coming quarters before picking up again in the final quarter of 2023.”
He added in a statement that “there was widespread weakness among leading indicators in December, indicating deteriorating conditions for labor markets, manufacturing, housing construction and financial markets in the months ahead.”
Other analysts and business leaders have issued similar warnings about a possible pending recession based on factors including historically high inflation and interest rates, without consensus on whether the U.S. will see a soft or hard landing from any pullbacks. Consulting firm Oxford Economics said Monday the Conference Board’s numbers are “consistent with our forecast for a recession to begin in the second quarter of this year.”
Spotify Adds to Tech Layoffs
Spotify said Monday it is laying off 6% of its global workforce for a total of about 600 employees, as the provider of streaming music and podcasts joins other technology companies reducing workforces in the face of declining profits and advertising revenue.
“Like many other leaders, I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us,” Spotify CEO Daniel Ek said in a statement posted on the Stockholm, Sweden-based company’s website.
“In hindsight, I was too ambitious in investing ahead of our revenue growth,” Ek said, adding he takes “full accountability for the moves that got us here today.” Executives did not specify departments or locations to be affected, but Ek said departures would include Dawn Ostroff, Spotify’s New York-based head of content.
Ek said laid-off workers will receive an average of five months of severance, extended healthcare coverage and assistance with immigration-related matters if their immigration status is tied to their employment. Spotify employs approximately 9,800 workers at locations in 43 cities worldwide, according to its website, with most based in its New York and Los Angeles offices and production studios.
The technology industry was by far the biggest job cutter during the past year, announcing layoffs of nearly 100,000 during 2022 even as major reductions remained infrequent in most other U.S. industries, according to outplacement firm Challenger, Gray and Christmas. Tech layoffs have continued into 2023, with large new reductions announced by companies including Microsoft, Amazon and Google parent Alphabet.
CEO Departures Decline
Despite some high-profile CEO exits in the last weeks of 2022, including those at Disney and Twitter, full-year U.S. departures from top executive posts totaled 1,235, the lowest since 2017, according to outplacement firm Challenger, Gray & Christmas.
That’s not to say the job didn’t have its share of turnover as companies in many industries dealt with declining revenue and stock prices in the final quarter of 2022. There were 100 CEO changes in December, up 5% from November, though down 6% from December 2021.
“Companies appear to be holding steady with their leadership after years of leadership changes and unprecedented uncertainty,” Senior Vice President Andrew Challenger said in a statement Jan. 19. The firm said the nonprofit sector led all industries in CEO turnover during 2022 at 271, followed by technology at 137 and healthcare at 111.
“The pandemic changed how many hospitals and health care companies operated,” Challenger said. “The industry was plagued by staffing issues and burnout at all levels.”
The firm said about one-quarter or 308 U.S. CEO exits were the result of retirements during 2022, with another 272 CEOs stepping down into other positions within the same company, usually in an executive board or other type of C-suite role.