Recession Ahead for the U.S.? Job Cuts Soar, Hiring Plans Tumble Over 50% Lombardi Letter 2018-07-06 08:40:05 The U.S. job market is starting to look weak. Job cuts are soaring while hiring pulls back. This suggests that a recession could be nearing for the U.S. economy sooner rather than later. Analysis and Predictions 2019,U.S. Economy

Recession Ahead for the U.S.? Job Cuts Soar, Hiring Plans Tumble Over 50%

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Recession Ahead for the U.S.?

Dismal Job Market Outlook Foretells Recession Ahead

The U.S. economy may not be as strong as you think it is. A recession could be looming.

You see, this dire U.S. economic outlook is not based on gut feeling. There’s data that suggests a recession could be likely sooner rather than later.


For instance, look at the U.S. job market; the unemployment rate makes the economy seem great. But look at the details. There are a lot of problems brewing in the U.S. job market.

Consider the Challenger, Gray & Christmas, Inc. 2018 June Job Cut Report. This firm tracks the job cuts announced by companies in the United States. One could even call it a leading indicator of the U.S. job market.

In June, job cuts increased by 18% from May’s 31,517 job cuts; 37,202 job cuts were announced in June. (Source; “2018 June Job Cut Report: Cuts Up 18 Percent to 37,202,” Challenger, Gray & Christmas, Inc., July 5, 2018.)

Remember, higher numbers of job cuts suggest that a recession could be nearing.

Job Market Data Looks Scarier if You Dig Into the Details

Digging deeper into the data…

The average job cuts in the U.S. economy are higher this year than last year.

In the first two quarters of 2018, there were 245,179 job cuts on average. In the first two quarters of 2017, job cuts averaged 227,000. This is an eight percent increase year-over-year.

Here’s the thing; hiring isn’t so strong either. Combined, the job cuts and dismal hiring numbers paint a bleak outlook for the U.S. economy.

Between January and June 2018, U.S. companies announced hiring plans for 233,575 jobs. In the same period a year ago, it was 468,351 jobs.

Doing the simple math, hiring plans have tumbled by over 50% year-over-year. This is scary.

Mind you, in 2017, American companies announced hiring for over 1.1 million jobs. If we annualize what we have seen so far in 2018, it’s nowhere close to that number.

The outlook for the job market isn’t so strong either. Don’t be shocked to hear about more cuts than hiring.

Why? As it stands, there’s a trade war waiting to happen between the U.S. and major economies around the world. The U.S. government has imposed tariffs on goods coming into the country, and other countries are planning to do the same.

This could force companies to adjust and, in the midst, they could be cutting a lot of jobs.

Why Does the Job Market Matter?

Understand that the job market impacts consumer spending.

If the job market becomes dismal, it could cause consumer spending to tumble. This, in turn, could impact the overall U.S. economy. Consumer spending tumbling could send the U.S. economy into a recession.

Consumer spending amounts to roughly over $13.0 trillion on an annual basis in the United States. If it declines a little, the U.S. economy gets impacted a lot. A recession could become reality very quickly when that happens.

What’s in it for investors? If you invested heavily in stocks, know that, if a recession is nearing, a market top could be nearing as well. Stock markets tend to top just before the recession and sell off as a slowdown becomes prevalent and shows up in the data.

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