Financial TimesFinancial Times

CEOs beware: Cost-cutting isn’t the same as growth

By Rana Foroohar

16 Jan 2023 · 4 min read

Editor's Note

While cost cuts can keep companies afloat, they come with numerous downsides, Rana Foroohar writes in the FT. Taking a multi-pronged approach is often a better way to respond to an economic crisis.

In challenge, there is opportunity. This truism is especially apt for companies heading into what will probably be a gloomy earnings season amid expectations of a global downturn. S&P 500 earnings forecasts for the fourth quarter of 2022 are worse than they were right after the collapse of Lehman Brothers in 2009 or during the deflation of the dotcom bubble in 2002.

Many companies will respond to this by cutting costs with an extra-large pair of corporate shears. The technology sector, for example, is in the midst of massive lay-offs. And other industries may soon follow Silicon Valley’s lead.

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