From soaring inflation to a red-hot job market and negative gross domestic product in between, economists are divided on the health of the U.S. economy.
“There’s been a lot of talk lately that we’re in a recession. We’ve got two quarters of GDP falling, which often happens with the recession. … But we’ve got job growth that’s incredibly strong. We’ve got an unemployment rate that’s rock bottom.” in 50 years,” Claudia Sahm, founder of Sahm Consulting and former Federal Reserve Board economist, told CNBC.
A Major Concern for Americans: Are Layoffs on the Horizon?
“There will be more layoffs, so you have to be wary of that,” Mark Zandi, chief economist at Moody’s Analytics, told CNBC.
More business leaders are anticipating a recession, according to a study by Stifel.
Major companies are already announcing layoffs, including Best Buy, Ford Motor, HBO Max, Peloton, Shopify, Walmart and Wayfair.
Meanwhile, a PwC survey found that 50% of companies expect to reduce their workforce in the next six to 12 months.
This comes at a time when the labor market can hardly seem stronger. In July 2022, there were 11.2 million vacancies, indicating a labor shortage for available positions.
“I think it’s really important to look at the number of job openings,” Julia Pollak, chief economist at ZipRecruiter, told CNBC. “The question is how steeply will they fall, how sharply will they fall, if they go back to 7 million [job openings]the level before the pandemic.”
Not to mention, the job market is facing the “Great Resignation”. In July, 6.4 million people were given new jobs, while another 4.2 million people left.
“The Federal Reserve is currently raising interest rates in an effort to slow the labor market, and that will lead to more layoffs,” Zandi said.
Federal Reserve Chair Jerome Powell said it will be a challenge to “return to an environment of stable prices without sacrificing the economic benefits of the past two years” during a question-and-answer session at the Cato Institute, a Washington, DC-based think tank, earlier this month.
Watch the video above to learn more about how the US defines a recessionary period in the economy, what general economic indicators are revealing, and what might happen next in the job market.