From rising inflation to a red-hot job market and the negative gross domestic product in between, economists are divided on the health of the U.S. economy.
“There has been a lot of talk 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,” Claudia Sahm, founder of Sahm Consulting and a former Federal Reserve Board economist, told CNBC.
A top concern for Americans: Are there layoffs on the horizon?
“There are going to be more layoffs. So you need to be wary of that,” Mark Zandi, chief economist at Moody’s Analytics, told CNBC.
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.