Amazon.com Inc. (NASDAQ: AMZN) is the second-largest employer in the United States, just behind Walmart Inc. (NYSE: WMT). Since they are also the two largest retailers in the nation, their fortunes provide a good look into the American economy. Amazon is hiring 250,000 workers for the holidays.
The decision says several things. First, the company believes the economy is very strong. It usually employs about a million people in the U.S., who support about $400 billion in Amazon’s annual U.S. sales. Thus, the retailer must believe holiday sales will surge.
Holiday sales are another reason to see the Amazon holiday employment as a good indication of U.S. economic activity. Most retailers make 20% to 30% of their sales in November and December.
Since Amazon does not have many stores, these employees will end up at the warehouses that allow the company to get its nearly infinite inventory into its delivery mechanisms. The increased employment is a sign that the company is expanding its logistics operations. At Walmart, these people might be located in one of its 4,600 stores. The Amazon ramp-up is different from those at brick-and-mortar retailers.
The other sign the new employees bring is that tariffs will not badly damage Amazon’s sales. In fact, it appears that they will be just fine despite tariffs. It is too early to say whether the company will pass most of the costs of those tariffs on to customers or will eat the tariffs, which could squeeze its margins. Some economists worried tariffs would mute the holidays. Amazon shows that is not the case.
There has been concern for several years that Amazon’s retail sales would decline as its AWS business grows. The cloud and artificial intelligence were supposed to be the future of the company. Holiday hiring shows that this is not the case yet.
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