Ever since the recovery from the COVID-19 pandemic started, the U.S. has been in an increasingly tight labor market with the official U.S. unemployment rate in October at 3.7 percent. But with rising interest rates and cooling spending amid rising prices, companies have been starting to pause hiring and even cut their payrolls.

The second half of 2022 has been characterized by a series of tech layoffs as firms from small operations to multinational giants have laid off a significant number of employees. In fact, layoff tracking website Layoffs.fyi reports that more than 100,000 tech workers have been fired in 2022. And that number is likely to grow. The chart below depicts a sorry state of IT industry. The trend shows the layoffs cause a steep decline of the IT industry performance in terms of S&P500 tech market index.

Chart

Futhermore,the public markets have been hit hard in 2022, and that’s trickled down to the private markets. Inflation concerns, rising interest rates and geopolitical issues have all contributed to a roller-coaster stock market.

Startups — especially those that benefited from a pandemic boom that’s starting to cool — are feeling the pressure too. Valuations, particularly at the late stage, have started to dip, and startups say it’s much more difficult to raise new funding in this environment.