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!


verizon leaders
Verizon Leaders: Unlocking Connectivity with the Verizon Partner Network
December 1, 2023

For a special episode of The Verizon Partner Network the focus was on the considerable role of partnerships in the Verizon Partner Program and the leaders shared their perspectives on the initiative. Their conversation brought about a lot of thought-providing context on the evolving telecommunications landscape. In today’s era, collaboration and integration are key to […]

Read More
Mark Tina Envisions Differences to the Verizon Partner Network in 2024
December 1, 2023

In the dynamic telecommunications landscape, Verizon’s Partner Network continues to evolve, adapting to new trends and opportunities. For another segment featuring Mark Tina, VP of Indirect Channel Distribution and Channel Chief at Verizon Business Group, he explores exactly what types of significant changes and advancements the Verizon Partner Network will see in 2024. In this […]

Read More
verizon business group
Mark Tina Explores the Importance of Partners in Verizon Business Group Success
December 1, 2023

A special episode of The Verizon Partner Network focuses on an examination of an industry marked by fierce competition and rapid innovation. But most importantly, how the role of partnerships in a company’s success is increasingly vital. Mark Tina, the VP of Indirect Channel Distribution and Channel Chief at Verizon, details why partners are essential […]

Read More