The Recession Deepens: Amazon Bails On New Warehouses

At a time of year when Amazon has in the past ramped up for the Christmas shopping spree, this year is proving to be quite different. Instead of expanding, Amazon is closing or abandoning plans for as much as 25 million square feet of warehouse space.

“Amazon is a dynamic business and we are constantly exploring new locations,” Amazon spokesperson Maria Boschetti told Fox News Digital. “We weigh a variety of factors when deciding where to develop future sites to best serve customers. We have dozens of fulfillment centers, sortation centers and delivery stations under construction and evolving around the world. It’s common for us to explore multiple locations simultaneously and adjust timetables based on needs across the network.”

Some of the reductions are happening fairly quickly, indicating Amazon is pulling back in a number of markets.

Just this week Amazon warned officials in Maryland that it plans to close two delivery stations next month in Hanover and Essex, near Baltimore, that employ more than 300 people. The moves are a striking contrast with previous years, when the world’s largest e-commerce company typically entered the fall rushing to open new facilities and hire thousands of workers to prepare for the holiday shopping season. Amazon continues to open facilities where it requires more space to meet customer demand. 

The Fed’s campaign of demand destruction appears to be succeeding at least in destroying demand. Whether it will be equally successful in combating inflation has yet to be determined—although the data so far is not encouraging. Despite months of interest rate hikes and jawboning treasury yields higher by the Fed, inflation has even with last month’s decline risen faster than interest rates since early 2021.

Demand destruction without inflation reduction would be the worst of all possible outcomes—and it is unquestionably a potential outcome for the Fed’s interest rate hikes.