Courtenay Brown and Neil Irwin have been spot-on with their analysis of the economy recently.
Yesterday, they wrote that the “strong labor market continues to be the economy's bright spot.”
They say it could stay robust even as the Fed sends the economy into a slowdown if, that is, “businesses hoard workers to avoid repeating past mistakes.”
Employers, particularly in industries that have struggled with labor shortages, may be more reluctant to lay people off, even as rising interest rates and other factors slow consumer and business demand.
Brown and Irwin believe if employers maintain their payrolls, it would make the coming “economic slowdown milder and less painful for workers than recent recessions.”
They point to recent company earnings calls, where some employers have reported hesitancy to reduce their headcounts, even as growth deteriorates.
Government quarterly reports show that GDP has shrunk a cumulative 2.5% in the first half of 2022.
Chris Gorman, CEO of bank holding firm KeyCorp, said, "It's been challenging, frankly, to be out in the hiring market in this ride-up in the last couple of years."
That's why he says his company will staff up more in some areas "in sort of a flat or down" environment than they have in the past.
In June, only 1.3 million workers were laid off, fired or otherwise released from their jobs, according to the Labor Department.
That’s down 28% from the average of 1.8 million in 2019 (i.e., before the pandemic) – suggesting that companies are indeed more reluctant now than they were then.