For months, economists and financial experts have been warning of a potential recession and they might be right in forecasting one for a specific area of the economy: technology.
While tech used to be a giant industry that was almost guaranteed to not fail, there are signs that tech jobs might be hit hard in the early part of 2025, which could tank white collar workers in the industry who are accustomed to making six-figure salaries.
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Should this happen, it could have a ripple effect across the global markets, as well as for those who are used to buying smartphones, computers and other tech at a reasonable price.
So, if the tech jobs recession does come to fruition, how will this affect the price of your favorite gadgets?
The Ripple Effects of a Potential Tech Recession
“If a tech jobs recession hits, it could potentially affect the price of gadgets and tech we use in our daily lives,” predicted Tom South, the director of organic and web at Epos Now, adding that in any recession, layoffs tend to be the go-to strategy for cutting costs.
“Laying off talent will always have a ripple effect on price and quality. Making tech (whether physical or software) will become more expensive, slower and the quality is likely to drop.”
Budgets for research and development — often referred to as “R&D” in the tech sector — could shrink, according to South, which, in turn, might slow innovation for new tech. Instead of new features, consumers around the world could see tech companies leaning on incremental updates to save resources.
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In order to stay profitable, Aljay Ambos, head of marketing and AI expert at Twixify, believes that tech companies could react by raising prices on niche or high-value products, leaving consumers with fewer affordable options.
“Budget cuts often hit R&D the hardest, sidelining projects that don’t deliver quick returns but are vital for future breakthroughs,” Ambos pointed out. “If this trend continues, we could see fewer exciting new technologies and more incremental updates to existing products, which doesn’t exactly inspire.”
“If supply chain issues persist or production scales back, prices could stay high or even increase, especially for premium tech,” South estimated, adding that the general rule is: “the longer it takes, the more expensive it gets.”
Influence of Automation and AI
Ambos highlighted the fact that many tech companies are turning to automation and AI to fill gaps in the loss of workers, putting roles like middle management, customer support and software development in a vulnerable position as businesses look for leaner operations.
“This trend creates a mixed bag for everyday consumers. Automation can reduce production costs, which might make certain tech products more affordable,” Ambos said.
“Fewer high-paying tech jobs could also mean less disposable income in the market, which might affect demand for luxury gadgets,” explained South. “In the long term, a tech jobs recession could shift the industry’s focus. Companies might prioritize mass-market, affordable gadgets over high-end, niche products. We could see more Chinese products entering the market.”
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This article originally appeared on GOBankingRates.com: Could a Potential Tech Job Recession Affect the Price of Your Favorite Gadgets?
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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