Are we in a recession? Because if we are, it’s very strange.
Sure, we’ve had two quarters of negative economic growth. Manufacturing demand is shrinking. Construction and housing market activity has slowed. Tech companies are shrinking. Financial services Y Real estate companies they are laying off people. Inflation and energy costs remain stubbornly high, interest rates are rising, and the stock market is down 18% since the beginning of the year. Just Google “recession” and you’ll find that the real estate market is at one, major banks and investors are warning of one, and Europe is headed for one. On 80 financial advisers say that a recession is “coming” and one big shot investor thinks it’s going to be a whopper.
But wait a minute.
Maybe we are in a recession. Or maybe it’s coming. But when there are recessions, or even the strong prospect of one, companies lay people off. That’s not happening, is it? Hiring has continued to increase. The unemployment rate remains at historically low levels. Job openings are near an all-time high. And here’s the real punch: The majority of small businesses in the United States, which employ more than half of the country’s workforce, are not only looking to hire, but are also struggling to find employees, according to recent survey responses posted by the National Federation of Independent Businesses and employment data from human resources firm Paychex.
“Small businesses are yet to show strong signs of recession,” Paychex CEO he told CNBC In the past week.
So why are companies, particularly small businesses, looking for workers instead of laying them off?
First, it is becoming increasingly difficult to generalize about the US economy. There are 350 million people and 30 million small businesses in this country. our economy it is still 60% larger than China and larger than Japan, Germany, the UK, France and Italy combined. California’s economy is greater than India’s New York’s economy is bigger than Canada’s.
You can’t just say “we’re in a recession”.
At any given time in the US, some industries and regions are doing better than others. Construction, financial services and manufacturing are struggling. So is the energy industry. but given labor earnings since the pandemic, business services, retail, transportation, and warehousing are on the upswing. The leisure and hospitality industry has lost the most jobs since the pandemic, but appears to be clawing its way back. Alaska, New Mexico, New York and Pennsylvania, for example, had unemployment rates higher than the national average, while states like Minnesota, Florida, and North Dakota had very low unemployment rates. A city where his main employer is struggling will fight alongside him. But the opposite is also true.
So is the United States in a “recession”? Judging from the above, the answer depends on who you ask.
The other reason most small businesses look to hire is because most small business owners aren’t stupid. The Democrats will tell us that there have been historic job gains in the last two years, but we know that’s because the bar was set at zero due to the pandemic. Republicans will warn of recessions and high inflation, but we know that these things are being caused by a myriad of factors: European wars, Asian supply chains, and fiscal and monetary policies right here in the US, and that these factors will eventually play out. they will resolve themselves, although perhaps not as quickly or as far as we would like. We are not fooled by politicians or rhetoric. We are living this reality every day. And our reality is that, for most, demand remains relatively strong.
And if there’s one thing I’ve learned, it’s that my smartest customers, those business owners who have been doing what they do for decades, even generations, always look ahead. They’re not thinking so much about 2022 right now or even the first half of 2023. They’re making plans and investments for 2024 and beyond. They know they have people (customers, partners, employees (and their families)) who depend on them for their livelihood. They, like me, do not see huge bubbles and economic catastrophes on the horizon. We could be wrong, of course. But we are placing our bets now for the future.
And we still know that people are our most valuable asset. Sure, many companies are replacing less-skilled workers with robots and automation. But nothing can replace a qualified employee who is excellent at his job. Find me someone like that and I’m going to hire that person, regardless of whether or not we’re in a recession. I know that, if treated well, that person will add long-term profit to my company, regardless of the short-term investment.
So no, we are not in a recession. And yes, we are in a recession. And no, we are not hiring. But yes we are. You can make the case either way. That’s what people are doing. They are right. They are wrong. Discuss away. Meanwhile, small businesses in strong industries or growing geographic regions will continue to hire. And even those who aren’t will jump at the opportunity to invest in good people for when things finally change.