Major Banks Cut 20,000 Jobs Amid Economic Uncertainty

By Patricia Miller


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Jobs cuts are rife in the US banking space, with Wells Fargo and Goldman Sachs leading the way in a spate of reductions that reflect major economic uncertainty.

Wells Fargo windows boarded up with plywood on empty street.

What You Need to Know

The largest U.S. banks are quietly reducing their workforces after a hiring spree during the pandemic. Pressure from higher interest rates, lower mortgage business, and reduced Wall Street activity has led to the loss of around 20,000 banking jobs this year among the top five U.S. banks.

Wells Fargo and Goldman Sachs are particularly affected, each cutting about 5% of their workforce this year. Banks anticipate deeper cuts in 2024 due to rising loan defaults. The decrease in job-hopping has left banks with more staff than expected. JPMorgan Chase is the exception, growing its headcount by 5.1% this year.

However, it appears to be an outlier as smaller rivals struggle. The hiring trend is likely to reverse in the coming quarters as banks seek cost savings and attempt to streamline operations.

Why Does This Matter?

Layoffs in the banking sector are obviously a concern for people losing their jobs, but what kind of wider consequences can we read into from the news?

  1. Investment Risk: The banking sector's job cuts reflect uncertainty, which can affect stock prices. Retail investors need to be aware of this to assess the risk associated with holding or buying bank stocks.

  2. Customer Impact: Reduced headcount could lead to a decrease in customer service quality. Dissatisfied customers might switch to competitors, affecting the banks' revenue and profitability. Retail investors should consider how these changes may impact the banks' long-term financial health.

  3. Reputation Matters: Acknowledging shortcomings in customer service can harm a bank's reputation, affecting its stock performance. Retail investors should understand the potential long-term consequences of a tarnished brand image.

  4. Competitive Positioning: Banks struggling with loyalty and service issues may lose ground to competitors offering better customer experiences. Investors must evaluate how these changes could affect a bank's standing in the highly competitive financial industry.

  5. Investor Sentiment: CEO comments about restructuring and layoffs can influence investor confidence in a bank's strategic planning. A decline in investor sentiment often leads to stock price volatility. Retail investors seeking stable returns should consider these factors in their investment decisions.

Can Investors Use This?

Value Investing: For value-oriented investors, the short-term dip in bank stock prices due to job cuts could present a potential buying opportunity. If banks successfully implement cost-saving measures, their stock could rebound, providing a good return on investment.

Growth Investing: Growth-focused investors might evaluate whether the job cuts will lead to improved operational efficiency in the long run. If banks can adapt to the changing landscape and enhance profitability, it could signal a growth trajectory, making their stocks more appealing.

Momentum Investing: Investors following a momentum strategy may want to wait and observe how the market reacts to these job cuts. If bank stocks show a strong uptrend after the restructuring efforts, it could be an opportune time to buy, expecting further gains. 

Contrarian Investing: The negative sentiment following job cuts might lead to oversold conditions in bank stocks. Contrarian investors might see this as an opportunity to buy when market sentiment is bearish, expecting a correction to bring the stocks back to their intrinsic value.

Dividend Investing: If bank stock prices dip due to these developments, dividend yields could become more attractive. Income-focused investors might find this an opportune time to acquire bank shares if they believe the banks' long-term profitability remains intact.

Sector Rotation: Investors should also consider the broader implications of job cuts in the banking sector on the financial industry. If challenges in the banking sector spread to other financial institutions, investors may consider shifting to sectors showing stronger performance and stability.

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This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Patricia Miller does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Patricia Miller has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of, has not been paid for the production of this piece by the company or companies mentioned above.

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