Amazon founder Jeff Bezos recently warned consumers and businesses that they should consider postponing major purchases in the coming months as the global economy faces a downturn and a possible recession.
The company executive gave his sharpest advice yet on a faltering economy in an exclusive sit-down interview with CNN’s Chloe Melas Saturday at Bezos’ Washington, DC, home.
Bezos urged people to put off spending on expensive items like new cars, televisions and appliances, noting that putting off major purchases is the surest way to keep some “dry powder” in the event of a protracted economic downturn. Meanwhile, small businesses may not want to make major capital expenditures or acquisitions during this uncertain time, Bezos added.
If enough consumers follow Bezos’ advice, it could lead to lower sales for Amazon, the e-commerce giant that Bezos founded and which created the bulk of the billionaire’s wealth.
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. That comes on top of a previously announced hiring freeze in the company’s workforce. The company is second only to Walmart in the number of people it employs in the United States.
Amazon (AMZN) said in October it expects sales for the final three months of the year to be significantly below Wall Street expectations. The weaker forecast came as rising inflation and looming recession fears weigh on consumers’ purchasing decisions as Americans focus more on travel and dining out and less on purchasing discretionary goods.
The company’s stock is down more than 40% as rising prices and changing customer behavior weigh on Amazon and the wider technology sector.
Bezos said the likelihood of economic conditions worsening makes it prudent to save some money if that is an option.
“Take some risks off the table,” he said. “A little bit of risk reduction can make all the difference.”
Last month, Bezos tweeted a warning to his followers on Twitter, recommending that they “shut the shutters”. The advice was aimed at both entrepreneurs and consumers, Bezos said in the interview.
Many may feel the pinch now, he added, but argued that as an optimist, he believes the American Dream “is and will be even more achievable in the future” — projecting that space travel could become widely accessible within his own lifetime for the public.
While the U.S. economy is not technically in 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 of inflation, especially the high prices of basic necessities such as food, fuel and shelter. It hasn’t been a great year for those who invested in stocks either, and that’s especially hard for retirees who live off their investments.
Other business leaders have issued similar messages on the economy in recent months. Elon Musk, CEO of Tesla (TSLA) and Twitter, admitted last month that demand for Tesla’s (TSLA) has been “a little harder” to come by, noting that Europe and China are in “kind of a recession.” Musk also warned that Tesla (TSLA) would fall short of its revenue growth target.
Jamie Dimon, CEO of JPMorgan Chase, scared the stock market in October by saying a recession could hit the United States within six to nine months.