Layoffs On The Horizon For US Workers, Economists Warn

Over the past few weeks, we’ve heard everything from rising inflation to a hotter-than-ever job market to the GDP dipping to negatives from economists. Still, there are divided opinions among economists about how healthy the US economy is.

Claudia Sahm, founder of Sahm Consulting and a former Federal Reserve Board economist gave her opinion to CNBC saying, “There has been a lot of talks recently that we’re in a recession. We have two-quarters of declining GDP that often happens with the recession. ... But we have job growth that is incredibly strong. We have an unemployment rate that is a 50-year low.”

Most Americans are concerned greatly about one thing: Are there layoffs on the horizon of the US job market?

According to Mark Zandi, Chief economist at Moody’s Analytics, there will be more layoffs and people need to be wary of that.

Many corporate leaders are getting ready to face a recession. Big companies such as Best Buy, Ford Motor, HBO Max, Peloton, Shopify, Walmart, and Wayfair have already started announcing layoffs in preparation for the crisis. Almost half of firms are planning to reduce their staffing levels within the next 12 months.

Just in July, we observed a strong labor market, with over 11.2 million job openings. The US job market had a shortage of employees for vacancies at the time.

Julia Pollak, the chief economist at ZipRecruiter, believes that we should look at the number of job openings. She says, “The question is how steeply they will fall, how sharply they will fall if they go back to 7 million, the level before the pandemic.

The “Great Resignation” in July had us seeing 4.2 million workers quitting their jobs while around 6.4 million people got new jobs.

Zandi says, “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.”

According to Federal Reserve Chairman Jerome Powell, it will be a challenge “to return to an environment of stable prices without sacrificing the economic gains of the past two years.”