Meta announces hiring freeze and company-wide budget cuts - September 30, 2022

Executive Leadership Briefing

The number of Americans seeking unemployment dropped to a five-month low despite the Federal Reserve’s efforts to cool the U.S. job market. The dip marked the first time claims fell below 200,000 since May. With unemployment rates dropping, analysts predicted the Fed will not slow down the pace of its rate hikes with some saying the central bank will continue its policies “until something breaks.” Economists noted that the drop could be linked to employers “hoarding” labor after struggling to hire in the fallout of the COVID-19 pandemic.

Toyota Motor Corp. reinforced its dedication to its electric vehicle strategy after being criticized by shareholders and environmental groups for its slow transition. The company’s CEO said the adoption of electric vehicles depends on the consumer, and despite the company’s stated commitment to EVs, warned a transition to exclusively electric vehicles could leave some consumers behind. Toyota is one of roughly 17 companies that have begun manufacturing EVs or announced plans to do so.

Facebook parent company Meta announced a hiring freeze and budget cuts in an end to the company’s long period of rapid growth. The news came as the company suffered losses in the face of global economic setbacks and a hit to its advertising business linked to iOS privacy changes. Meta reported a 1% dip in revenue in the previous quarter, the first reduction since the company went public. Meta CEO Mark Zuckerberg told managers to identify “weak performers” within their departments and reduce their headcounts accordingly.

President Joe Biden’s administration said it has scaled back eligibility for its student debt relief program following criticism and a lawsuit brought by six Republican-led states. The Department of Education’s new guidance affects roughly 700,000 borrowers and prevents those whose loans are not held by the department from seeking relief through the program. The lawsuit argued the program represents a significant overstep of executive powers by the administration and is unrelated to the financial burden borrowers have suffered as a result of the pandemic.

Used cars have grown too expensive for a number of U.S. consumers due to increased prices and rising interest rates. Used car dealer CarMax reported abysmal quarterly earnings Thursday, driving down its own stock as well as competitors’ stocks in a signal to the market of the growing unaffordability of used vehicles. CarMax CEO Bill Nash cited a shift in consumer spending away from large purchases as a primary reason for the dip in earnings while the company’s chief financial officer said they cut costs to align with lower sales.

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