Story at a glance
- A combination of factors including continued economic recovery from COVID-19 and inflation spells concern for some who worry a recession is imminent.
- In a new poll conducted by Bankrate, economists predict job growth will slow in the coming months and unemployment will increase.
- However, because there are more job vacancies than there are unemployed workers, the labor market may be better positioned to withstand a recession than it was in 2008.
Amid rising inflation and threats of a recession in the near future, experts predict hiring will slow and joblessness will increase over the next year, spelling concerns for the nation’s economy.
Opinions were expressed in Bankrate’s Second-Quarter Economic Indicator poll, conducted among economists between June 20 and 27, 2022.
Over the next year, experts expect employers will add 193,000 new jobs each month, a sharp decrease from the 281,000 total predicted in last quarter’s poll.
Most economists surveyed expect the new totals to hover between 100,000 and 200,000 on average over the coming year, another decline compared with the past year’s average pace of 545,000 new jobs per month.
In May, the unemployment rate was 3.6 percent, while experts predict this will increase to 4.2 percent a year from now. In comparison, unemployment was measured at 10 percent during the 2008 Great Recession and joblessness during the COVID-19 pandemic topped 14 percent.
Should the United States enter another recession, the unemployment rate would likely reach 5.5 percent by the end of 2023, Mike Fratantoni, chief economist at Mortgage Bankers Association, told Bankrate in a statement.
“This is an extremely strong job market now, but economic growth is slowing as both households and businesses are feeling the pinch from elevated prices and increased interest rates,” Fratantoni said, adding the unemployment rate may begin to increase later this year.
Among those surveyed, 41 percent of experts also anticipate inflation will be more significant than expected, and more than half expect a recession to take place within the next year.
Employers currently have 11 million open positions, outnumbering the amount of jobless workers. Because the Federal Reserve is raising interest rates in this environment, the labor market may be strong enough to weather the policy, meaning it may not suffer nearly as much as it did in 2008.
Calling a recession in this scenario “unusual,” Lawrence Yun, chief economist at the National Association of Realtors explained how “some industries will lay off workers, but there could still be more job openings than the number unemployed throughout the recession,” in a statement to Bankrate.
Hiring will slow as the risk of a recession looms, which might in turn ease price pressures, experts predict, but they are uncertain as to when this might take place.