Past economic cycles show that unemployment starts to tick up ahead of a recession, with wide-scale layoffs coming only later.
…If the economy worsens more than businesses anticipate, they could be forced to shed workers in a hurry. If that happens, economic conditions could unravel quickly, as job losses cause consumers to pull back on spending, leading to more losses.
“That’s what everybody worries about, because unemployment begets unemployment begets unemployment,” said Andrew Challenger, senior vice president at Challenger, Gray & Christmas, an outplacement firm that tracks labor market data.
Unemployment can rise even without a surge in layoffs, however. What really distinguishes a recession isn’t job losses, but a slowdown in hiring.
That may be counterintuitive, given how synonymous “recessions” and “job losses” are in the popular imagination. Layoffs happen even in a healthy economy — but when people lose their jobs in recessions, they struggle to find new ones…
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Read the full Challenger Report here: Job Cuts Announced by US-Based Companies Surge in August 2024; Hiring Falls to Lowest YTD Since Challenger Began Tracking in 2005
