CNBC was informed by a “person who knew the situation” that Wall Street giant Goldman Sachs would layoff up to 8% of its workforce in the first quarter of next year, which is perhaps the most cruel move an employer can make just before Christmas.
According to the person who spoke about personnel decisions, the bank will be laying off employees in all divisions. This will most likely occur in January.
This is in advance of a conference for Goldman shareholders, where management will likely present performance targets. New York-based investment bank Goldman typically pays bonuses in January. It’s possible that the layoffs could be a way for them to keep bonus dollars for their remaining employees.
Goldman had already laid off employees in September. It claimed that it was restoring the pre-pandemic rhythm whereby low performers were dismissed before bonus payments were made.
According to someone with direct knowledge, the bank will continue its tradition of annual employee culls. These have traditionally targeted between 1% & 5% of lower performers in all positions within the company.
The lower end of this range, which refers to the expected cull size, means that several hundred jobs will be lost at the New York-based company, which had 47,000 employees as of midyear.
The conditions were created for Wall Street’s first round of layoffs since the pandemic by the steep decline in investment banking activity earlier this year. These annual moves don’t usually lead to deeper cuts.
These new reductions could result in as many as 4000 employees being cut. They follow Morgan Stanley’s 1,600 cuts last week. Hugh Son, a CNBC commentator, noted that Goldman Sachs’ two rounds of cuts could be a sign that the outlook for 2023 is deteriorating. He said that Goldman Sachs might be the largest bank to cut because it tried consumer banking, but that was not a good move.
It seems appropriate that Joe Biden’s largest donors feel the pain first.
According to data released by the Center for Responsive Politics, people in the investment and securities industry will contribute over $74 million to Joe Biden’s 2020 campaign. This is more than President Donald Trump raised from Wall Street.
CNBC reported that Biden also received significant financial contributions from finance leaders, and that the industry strongly supported Biden.
CNBC reported that Biden’s campaign chair, Steve Ricchetti met with finance executives to encourage them to vote for him in January. Roger Altman, Evercore founder, and long-time investor Blair Effron were among the attendees. Jonathan Gray, Blackstone Chief Operating Officer, Ray McGuire, former Citigroup executive, Centerbridge Partners cofounder Mark Gallogly, as well as former U.S. Ambassador Jane Hartley, were also present. Jane Hartley, Ambassador to France
Many of these people supported Biden by hosting fundraising events and donating to his cause.
Hillary Clinton was the only candidate who has received more money from the major players on Wall Street. They all may enjoy their lower bonuses, and less profits.
Their favorite candidate spent extra money in a hot economy, reducing Americans’ savings to a 17 year low. Two thirds of consumers said they spent their savings in June to keep up with inflation. By September, the rate at which household debt was growing was the fastest in 15 years. The number of new business applications is also beginning to decline, after they soared in 2020-2021.
Wall Street layoffs, and other indicators make it difficult for people to take the administration’s optimistic economic outlook seriously. Despite a slight decrease in inflation from November to December, inflation is still at its 40-year peak. Although some predicted that the inflation run was over due to falling prices, Federal Reserve Chairman Jerome Powell dismissed any celebrations this week.
On Wednesday, the Fed increased the interest rate by half an point to 4.4%. Powell also presented a plan for raising rates to 5.1% by 2023. The growth projections for 2023 were also revised by the central bank, from 1.2% to 0.5%. The central bank also increased its unemployment projections to 4.6% in 2023 and 2024.
Possibly, there are some Wall Street donors to Biden. It’s a great return on the Wall Street investment in his election.