Amazon founder Jeff Bezos warns the US economy may slump into a recession - and says people should brace for a painful downturn
- Jeff Bezos said the US economy faces a significant risk of recession.
- Amazon's billionaire founder advised people to prepare for a difficult downturn.
Jeff Bezos has warned the US economy may be headed for a recession and recommended Americans brace for a painful downturn.
Amazon's billionaire founder and executive chairman retweeted a CNBC clip of Goldman Sachs CEO David Solomon on Tuesday. In it, the bank chief advised business owners to be cautious and prepare for more market volatility as growth headwinds mount.
"In the distribution of outcomes, there's a good chance we could have a recession in the United States," Solomon said.
"Yep, the probabilities in this economy tell you to batten down the hatches," Bezos tweeted in response.
Recession fears have grown in recent months, partly because the Federal Reserve is actively trying to cool the US economy. The central bank's goal is to bring down inflation, which surged to a 40-year high of 9.1% in June and remained above 8% in September.
The Fed has hiked interest rates from virtually zero in March to a range of 3% and 3.25% today, and signaled they could approach 5% next year. Higher rates encourage consumers to save rather than spend or invest and make borrowing more expensive, so they typically reduce aggregate demand and relieve upward pressure on prices.
Leading investors, executives, academics, and analysts have also sounded the alarm on a potential global recession. They've cited a slew of risks including huge amounts of private and public debt as well as Russia's invasion of Ukraine, which continues to roil food, fuel, and commodity markets.
Bezos is well placed to comment on the US economy, given Amazon is one of the country's biggest employers with 1.5 million full-time and part-time workers as of June 30. The online retailer and cloud-computing titan also commands a $1.2 trillion market capitalization and generated $470 billion in net sales last year, making it a key player in the stock market and the economy.
Amazon CEO Andy Jassy, who took the company's reins from Bezos last summer, appears to share his predecessor's concerns. Amazon has been cutting costs, slowing spending, and freezing hiring for certain roles in recent months, suggesting it's expecting a tougher economic backdrop.