Observing the recent trend of large corporations laying off employees, I had initially thought that the situation would improve by mid 2024, as analysts are anticipating multiple cuts in the US interest rate. However, my outlook has changed; I no longer hold that optimism. In fact, I now believe that 2024 could be equally challenging, if not more so, as I don't expect to see the interest rate cuts that many are hoping for.
Reflecting on the 1970s, we saw the federal bank raise interest rates to 6% in an effort to curb rising inflation. Once inflation fell to 3%, the rates were cut, which triggered another wave of inflation, followed by further rate hikes. This pattern repeated itself until Paul Volcker, then Chairman of the Federal Reserve, dramatically increased the interest rate to a historic 19% to tackle what had become rampant inflation.
Currently, there's a narrative suggesting that inflation is largely under control and that we're on the brink of a series of rate cuts. Yet, considering the cautionary tale of the '70s, which I'm sure is not lost on today's Federal Reserve, I question the likelihood of rate cuts, especially when job data appears stable—unusually so in a rising rate environment—and inflation remains somewhat elevated.
These reflections lead me to a somber prediction for 2024. I no longer anticipate a favorable shift in the interest rate climate. Given the lessons of history, us in the gaming industry should be bracing for a difficult year ahead, with potentially more closures of studios and cancellations of game projects. It's a disastrous prospect to consider, and I genuinely hope that I’m wrong—that I’m simply overthinking it, and that the light that we’ve been anticipating since last year isn’t a loose freight train hurling towards us.
Reflecting on the 1970s, we saw the federal bank raise interest rates to 6% in an effort to curb rising inflation. Once inflation fell to 3%, the rates were cut, which triggered another wave of inflation, followed by further rate hikes. This pattern repeated itself until Paul Volcker, then Chairman of the Federal Reserve, dramatically increased the interest rate to a historic 19% to tackle what had become rampant inflation.
Currently, there's a narrative suggesting that inflation is largely under control and that we're on the brink of a series of rate cuts. Yet, considering the cautionary tale of the '70s, which I'm sure is not lost on today's Federal Reserve, I question the likelihood of rate cuts, especially when job data appears stable—unusually so in a rising rate environment—and inflation remains somewhat elevated.
These reflections lead me to a somber prediction for 2024. I no longer anticipate a favorable shift in the interest rate climate. Given the lessons of history, us in the gaming industry should be bracing for a difficult year ahead, with potentially more closures of studios and cancellations of game projects. It's a disastrous prospect to consider, and I genuinely hope that I’m wrong—that I’m simply overthinking it, and that the light that we’ve been anticipating since last year isn’t a loose freight train hurling towards us.