Earlier this month, GrubHub announced 400 layoffs among the delivery company’s corporate jobs. Uber Technologies said last week that it will cut 200 of its recruiters.
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Instead, layoffs have been striking mainly white collar and professional occupations. And to the surprise of labor market experts, construction companies are also still adding workers despite higher borrowing rates, which often discourage residential and commercial building.
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Restaurants, bars and hotels are still hiring - in fact, they have been a major driver of job gains. This time, so far, it hasn’t happened that way. Sales of high-priced manufactured goods, such as cars and appliances, tend to fall, leading to job losses at factories. As fewer people buy homes, many construction workers are thrown out of work. That’s because in most downturns, as Americans start to pull back on spending, restaurants, hotels and retailers lay off waves of workers. That pattern is different from what typically happens in recessions: Lower-paying jobs, in areas like restaurants and retail, are usually the first to be lost and often in depressingly large numbers. Yet it’s also true that the bulk of high-profile job losses that began last year have been concentrated in higher-paying professions. economy achieves a soft landing, Guha said, “we think these rolling sectoral recessions will be a big part of the story.” IT’S A ‘RICHCESSION’Īffluent Americans aren’t exactly suffering, particularly as the stock market has rebounded this year. Krishna Guha, an analyst at Evercore ISI, notes that some areas of the economy - from education to government to health care - are not so sensitive to higher interest rates, which is why they are still hiring and probably will keep doing so. There are already signs that the industry is starting to recover: Sales of new homes jumped 12% from April to May despite high mortgage rates and home prices far above pre-pandemic levels.Īnd other sectors should continue to expand, providing a foundation for overall growth. Yet by then, housing may have rebounded enough to pick up the baton and drive economic growth. Economists say they expect such spending to slow later this year as the savings that many households had amassed during the pandemic continue to shrink. That trend forced sharp job cuts among tech companies such as Facebook’s parent Meta, video conferencing provider Zoom and Google.Īt the same time, consumers ramped up their spending on travel and at entertainment venues, buoying the economy’s vast service sector and offsetting the difficulties in other sectors. In the aftermath of the pandemic, Americans were spending less time online and instead resumed shopping at physical stores and going to restaurants more frequently.
And while it hasn’t fared as badly as housing, factory production is down 0.3% from a year earlier.Īnd this spring, the technology industry suffered a slump, too.
They’re now 20% lower than they were a year ago. As mortgage rates nearly doubled, home sales plunged. The housing industry was the first to suffer a tailspin after the Fed began sending interest rates sharply higher 15 months ago. When different sectors of the economy take their turns contracting, with some declining while others keep expanding, it’s sometimes called a “rolling recession.” The economy as a whole manages to avoid a full-fledged recession. Here’s how it could all play out in the United States: IT’S A ROLLING RECESSION
into a recession, while Europe’s economy has stagnate d in the past six months. The Bank of England last week raised its key rate a substantial half-point, which could send the U.K. Powell spoke at a global conference in Sintra, Portugal, along with three other central bank leaders whose economies are also struggling with persistently high inflation. On Wednesday, Fed Chair Jerome Powell reinforced that message, saying the central bank’s key rate hasn’t been restraining the economy for “very long” and that “the bottom line is that policy hasn’t been restrictive enough for long enough.”
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