A lot of signs are pointing toward the U.S. economy slipping into a recession in the next year — Treasury yields are sloping downward, freight shipments are dropping and company executives are collectively getting nervous.
The decade-long expansion has been very good to the tech industry.
Tech giants with strong balance sheets have seen their stock prices soar: Since the last recession ended in July 2009, Apple is up almost 900%, Amazon more than 2,000%, and Microsoft — once seen as hopelessly out of touch — is up more than 400%. Smaller companies with lower profits but enviable revenue growth have also done well, like Salesforce (up more than 1,400%) and Netflix (more than 5,000%).
Companies like Twitter and Uber grew from start-up through IPO, collectively achieving well over $100 billion in new market value. Venture money keeps flowing into start-ups, to the point where $100 million fundraising rounds seem unremarkable.
It's gotten to the point where the power and dominance of these companies seem inevitable, and the wisdom of their executives and investors unquestionable.
But as anybody who lived through the dot-com bust or Great Recession can tell you, a lot of things will change in a downturn. Depending on how deep and how long any recession lasts, look out for the following:
Recessions test the mettle of investors and separate the strong companies from the weak. But those who make it through to the other side face less competition, paving the way for massive upside during the next boom. Let's not forget, Amazon Web Services was still a new project when the last recession started in late 2007. Thanks to Amazon's hefty investments at the time, it turned into one of the most successful businesses of the following decade.