Amazon founder Jeff Bezos recently warned consumers and businesses that they should consider postponing large purchases in the coming months as the global economy grapples with a downturn and faces a potential recession.
The business leader offered his most blatant advice yet on a faltering economy in an exclusive sit-in interview with CNN’s Chloe Melas at the Bezos home in Washington, DC on Saturday.
Bezos urged people to defer spending on big items like new cars, TVs and appliances, noting that deferring big purchases is the surest way to keep some “dry powder” in the event of a prolonged economic downturn. Meanwhile, small businesses may not want to make big investments or acquisitions during this uncertain time, Bezos added.
If enough consumers heed Bezos’ advice, it could result in lower sales for Amazon, the e-commerce giant that Bezos founded and created most of the billionaire’s fortune.
The New York Times reported Monday that Amazon plans to cut its workforce and lay off 10,000 employees, the largest reduction in the company’s history. This is in addition to a previously announced hiring freeze in the company’s workforce. The company is the second largest company in the number of people it employs in the United States, after Walmart.
Amazon (AMZN) announced in October that sales for the last three months of the year would come in well below Wall Street expectations. The weaker forecast came as rising inflation and looming recession fears weigh on consumer purchasing decisions as Americans focus more on traveling and eating out and less on buying durable goods.
The company’s shares are down more than 40% as rising prices and changing customer behavior weigh on Amazon and the broader tech sector.
Bezos said the likelihood of worsening economic conditions makes it prudent to save some money if that’s an option.
“Take some risk off the table,” he said. “Just a little bit of risk mitigation could make all the difference.”
Last month, Bezos tweeted a warning to his followers on Twitter, telling them to “close the hatches.” The advice is intended for business owners and consumers alike, Bezos said in the interview.
Many might 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” – and predicted that space travel would become more widely accessible to people in his lifetime could be public.
Although the U.S. economy isn’t technically in a recession, nearly 75% of likely voters in a recent CNN poll said they feel it is. Wages have risen, but not enough to take the sting out of inflation, especially high prices for basic necessities like food, fuel and shelter. It hasn’t been a great year for those who have invested in stocks, either, and it’s particularly tough for retirees who make a living from their investments.
Other business leaders have issued similar messages about the economy in recent months. Tesla (TSLA) and Twitter CEO Elon Musk last month acknowledged that demand for Tesla (TSLA) is “a bit tougher,” noting that Europe and China are experiencing “a kind of recession.” Musk also warned that Tesla (TSLA) would miss its revenue growth target.
Jamie Dimon, CEO of JPMorgan Chase, spooked the stock market in October by saying a recession could hit the United States in just six to nine months.