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Will This Recession See Massive Layoffs?
Posted
September 20, 2022
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626,727
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September 20, 2022
626,727
5,457
1,255
1.07%
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From red-hot inflation to a strong jobs market, and all the negative gross domestic product in between, economists are divided on the health of the U.S. economy. A top concern for Americans: Are there layoffs on the horizon? Economists break down the data and economic indicator complexities brought upon by the Covid pandemic and the war in Europe.
More corporate leaders are anticipating a recession, according to a survey from Stifel.
Big companies are already announcing layoffs, including Best Buy, Ford Motor, HBO Max, Peloton, Shopify, Walmart and Wayfair.
Meanwhile, a survey from PwC shows 50% of firms expect to reduce their labor forces in the next six to 12 months.
This comes at a time when the labor market could hardly appear stronger. In July 2022, there were 11.2 million job openings, revealing a shortage of workers for available positions.
"I think it's very important to look at the number of job openings," Julia Pollak, chief economist at ZipRecruiter, told CNBC. "The question is how steeply they will fall, how sharply they will fall, if they go back to 7 million [job openings], the level before the pandemic."
Not to mention, the labor market is facing off against the "Great Resignation." In July, 6.4 million people got new jobs, while another 4.2 million quit jobs.
"The Federal Reserve is raising interest rates at this point in an effort to slow down the job market, and that's going to mean more layoffs," Zandi said.
Federal Reserve Chairman Jerome Powell said it will be a challenge "to return to an environment of stable prices without sacrificing the economic gains of the past two years" during a question-and-answer session at the Cato Institute, a Washington, D.C.-based think tank, earlier this month.
Watch the video above to learn more about how the U.S. defines a recessionary period in the economy, what common economic indicators are revealing and what may happen next in the labor market.
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Will This Recession See Massive Layoffs?
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