The Fear of a Possible Recession Has Dominated the Minds of Investors and Business Executives Alike in the Second Half of 2022
With the U.S. entering a recession in the near future now almost a certainty, Amazon founder and multi-billionaire Jeff Bezos is sounding the alarm, offering important advice on how best to weather the upcoming financial storm.
Since the turn of the new year, runaway inflation has caused chaos worldwide. Most of the inflation can be tied back to monetary policies enacted during the COVID-19 pandemic and the disruption to the energy industry by the ongoing Russian invasion of Ukraine.
The Federal Reserve responded to inflation in the only way it could: raising interest rates. Then they raised them again. And again. In fact, they increased rates six times in 2022, from 0.25% to 3.75%; the combined 375 bps raise is the largest ever in a single year. It is this sharp rise in interest rates and the resulting damper on business that many fear will push the country into a recession.
Whether that recession actually takes place is still uncertain, but each new rate hike increases the likelihood. One prominent businessman who has seen enough to believe that a recession is coming is Jeff Bezos, the former CEO and current Chairman of Amazon (NASDAQ: AMZN).
Source: CNBC Television YouTube
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In a recent interview, Bezos offered his advice to American consumers ahead of the coming holiday season:
“Take some risk off the table, keep some dry powder on hand. Just a little bit of risk reduction could make the difference for that small business if we do get into even more serious economic problems. You’ve got to play the probabilities a little bit. If you’re an individual considering purchasing a big-screen TV, you might want to wait, hold onto your money, and see what transpires. The same applies to new automobiles, refrigerators, or whatever else. Just remove some risk from the equation.”
This piece of advice is particularly interesting, considering the source. Bezos derives his wealth from Amazon, which has made a business of providing unessential purchases at the tap of a button. Telling consumers to ratchet back their spending habits seems to run counter to his company’s business pursuits.
In the same interview, Bezos announced that he would be giving away most of his $100+ billion fortune to combat climate change and unite humanity, so perhaps this a new, altruistic Bezos making his debut with a pair of announcements meant to benefit society seemingly to his detriment.
Amazon closed trading today at $96.54 per share, up +4.46% on the day. YTD, AMZN stock is down -43.35%.
Learn more about Amazon: Website | Investor Deck | AMZN Chart
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