What a Supply Side Recession Means For Labor

A Goldman Sachs report from August 2022 indicates the U.S. could slip into a recession by the middle of 2023. However, they predict a mild recession that would see only a 1% increase in the current unemployment rate. Unlike demand-side recessions that hit the economy hard, often resulting in layoffs, Zaid Rahman, Founder & CEO of Flexbase, believes the U.S. economy is dealing with a supply-side recession. “If you look at the economy, consumers are still buying a lot. Psychologically, while consumer sentiment on the economy has decreased, that’s not reflected in the actual numbers. If you just look at consumer spending, it’s growing quite a lot”.

The real GDP numbers fell for the past two consecutive quarters, but labor numbers still paint a good picture. August unemployment rates rose from 3.5% to 3.7%, but employers still added 315,000 jobs, indicating companies are still in a hiring phase. There is still consumer demand fueling the economy but not enough supply. “There’s the obvious supply chain disruption during Covid that still is the case,” Rahman said. “Surprisingly, places like China and Southeast Asia have still not recovered from a supply chain productivity perspective, and so we still see quite a significant amount of general supply chain issues”.

One question remains about how the Fed’s decision to increase interest rates will impact the supply and demand equation. Theoretically, the rising interest rates will slow the record inflation, thus slowing demand. But what happens if demand softens when the supply chain begins to deliver? Could overstocked inventories turn a supply-side recession into a demand-side one? And in the housing market, which saw a boom during the pandemic, skyrocketing inflation and rising interest rates are already impacting home sales and prices. Several Western states report housing price drops of 5% or more in the past month.

Did the great resignation potentially stave off massive layoffs? With a softening economy, those job numbers again predict how big and long a recession will be, but the picture might be cloudier than at first glance. If employers are short-staffed and have been managing a worker deficit, they may post fewer job openings and hire new workers at a slower pace. Flexible hours with a shorter workweek may keep overall numbers strong while operational costs scale back. One thing is sure: if the U.S. is in recession, it looks far different from any it experienced in its past.

Follow us on social media for the latest updates in B2B!

Image

Latest

Brand experience with APL
Stepping into the Future at Shoptalk 2024: Creating a Flagship Brand Experience with APL
March 28, 2024

The customers of today are no longer satisfied with mere products; they crave brands that provide immersive, distinctive, and tailored brand experiences. Athletic Propulsion Labs (APL) epitomizes this shift, setting a new standard in the luxury performance market with its innovative athletic footwear. APL’s newly opened flagship boutique in Soho, with its artisan plaster walls […]

Read More
Balancing professional growth and personal well-being
Routines, Rituals and a Mission-Driven Approach: MarketScale’s CRO Tim Maitland on Balancing Professional Growth and Personal Well-Being
March 28, 2024

In a world that often demands the relentless pursuit of success, finding the sweet spot between professional growth and personal well-being can seem like an elusive goal. As we navigate the complexities of modern work-life dynamics, the conversation around maintaining this balance has become more pertinent than ever. In this episode of Growthwell, we […]

Read More
marketing careers
The Impact of AI on Marketing Careers
March 28, 2024

In this episode of The Marketing AI SparkCast, host Aby Varma, a B2B Marketing Leader and the Founder of Spark Novus, sits down with Matt Gill, the Founder and Managing Partner of MICA Consulting Group. Spark Novus is a consultancy specializing in strategic AI adoption in marketing. MICA is a leading boutique national marketing […]

Read More
healthcare cybersecurity
Continued Threats Require a Major Shift in Healthcare Cybersecurity Risk Perception
March 28, 2024

Recent cyberattacks on healthcare institutions have thrust cybersecurity from a back-office concern to the forefront of the healthcare industry’s agenda. A significant breach at Change Healthcare disrupted essential services, underlining the vulnerability of healthcare networks to such threats and the dire consequences for patient care. Government and industry responses have stressed the importance of […]

Read More