Ride-sharing company Lyft has become the latest US company to lay off employees or announce a hiring freeze amid increasing concerns over an impending recession. The San Francisco-based mobility company said it was shutting down its first-party rental business.
According to Yahoo Finance, as many as 60 employees will be terminated in the process. However, the report says there is no plan to lay off more employees and that the company said the move is a "business decision related to a specific product."
The report also says that Lyft, which operates in ride-hailing, vehicles for hire, motorized scooters, a bicycle-sharing systems, will continue to work with Sixt and Hertz, which provide third-party rental services.
Economic Outlook Turns Gloomy
Earlier, tech majors like Apple, Google and Facebook owner Meta had announced restrictions in hiring in view of the tightening market conditions.
The smartphone behemoth is expected to slow hiring and spending in 2023 as predictions for economic growth have turned gloomy.
Alphabet CEO Sundar Pichai said last week the company will prioritize hiring in the months ahead. Facebook owner Meta is also also scaling back on new hires, CEO Mark Zuckerberg said. "If I had to bet, I'd say that this might be one of the worst downturns that we've seen in recent history," Zuckerberg told employees last week, according to Reuters.
Another big wig to announce brakes on hiring was automotive and tech major Tesla. CEO Elon Musk last week ordered a worldwide hiring pause, saying, he had 'super bad feeling' about the economy.
Headwinds for US Economy
Data showed at the end of June that the US economy contracted in the first quarter at a faster rate than anticipated earlier. According to the Commerce Department's data, the world's largest economy shrank at an annual rate of 1.6 percent in the first quarter.
The contraction was more than the 1.5% previously reported. According to the advance estimate released in April, the GDP decline was 1.4 percent while the second estimate showed the drop would be 1.5 percent.
The report comes at a time when economists believe the US economy could plunge into a recession due to the high inflation, which has reached a four-decade high, coupled with the Federal Reserve's more hawkish stance.
US inflation, which soared to more than 8 percent to hit a 40-year high, has been primarily caused by the Russian invasion of Ukraine and the strain it caused on the global commodities markets.
EU Nations Staring at Recession
A report by the International Monetary Fund (IMF) said last week the European Union nations are staring at the possibility of recession as a reduction in Russian gas supplies will severely cripple their economies. According to the IMF, a total shutdown of Russian gas supplies will lead to as much as a 6 percent drop in GDP of the vulnerable EU countries.
"The prospect of an unprecedented total shutoff is fuelling concern about gas shortages, still higher prices, and economic impacts. While policymakers are moving swiftly, they lack a blueprint to manage and minimize impact," IMF said.
