The grim economic rhetoric of recession has caused employee concerns about job risks and layoffs.

James Morton, chief investment officer at Santa Lucia Asset Management, recently said that Americans should brace themselves for a near certain recession this year, despite recent optimism from the Biden administration.

The effect of even a “mild” recession, that is widely forecast will hit the US job market later this year. It is expected to put around 1 million+ jobs at risk. The US job market is going to be surly affected even with mild recession.

United States President Joe Biden has warned the economy could enter a recession and shed millions of jobs unless Republicans agree to raise the country’s $31.4 trillion debt ceiling before a fast-approaching deadline.

The US treasury department has indicated it may be unable to pay its bills as soon as June 1.

According to a jobs calculator created by the Federal Reserve Bank of Atlanta, if those projections are correct, the economy is likely to lose 1.7 million jobs over the following 12 months or so, as the unemployment rate climbs above 4.2%, which is a clear indication of impact of recession on employment.

Job losses in US recession, is due to the effect of inflation, though there has been a consistent pushed back against the recession narrative. Have noted that the softness in the U.S. economy is more consistent with a post boom slowdown than the precursor to a recession. Economic expansions are never smooth and these intracycle slowdowns usually suck in market participants into fearing recession.

One place to be sure a change is incoming is the job market in US with recession. In March, Fed officials expected the unemployment rate to rise to 4.5% by year end. With the jobless rate at 3.4% in April, that leaves a lot of ground to cover. Fed staff anticipate a mild recession, though a rise in, job losses that sharp would represent a more painful downturn.

The impact of mild recession on employment, is anything but mild putting around 1 million jobs at risk.  “136,000. That’s how many employees were cut in major U.S. layoffs over the first three months of 2023—more than the previous two fiscal quarters combined, led by massive headcount reductions at Amazon, Google, Meta and Microsoft”, according to Forbes’ tracker.

Job market outlook in mild recession for US continues to be grim as is evident will various big companies laying off. US recession has led to job losses and the effect of recession can be seen in the US market with big companies laying off in big numbers.

Meta reportedly informed employees that the latest round of cuts will start next week, following a previous batch of layoffs affecting roughly 4,000 employees last month bringing Meta’s total number of job cuts since November to 21,000. The latest layoff announcement this week due to fear of recession. Austin, Texas-based tech company Accenture PLC will slash nearly 550 positions, Microsoft announced plans in a WARN notice to cut 158 employees from its Redmond, Washington, headquarters—separate from the 10,000 employees Microsoft announced it would release in January amid “times of significant change.” Microsoft-owned LinkedIn plans to slash 716 of its roughly 20,000 positions, CEO Ryan Roslansky announced in a statement, amid faltering demand, “shifts in customer behavior” and a “rapidly changing landscape.”

The impact of recession has affected the US job market, evidently as recession fears and high inflation continue to push employers to reduce their head counts.

“Despite massive layoffs continuing at many large companies over the first few months of 2023, the U.S. labor market still managed to add 236,000 jobs in the month of March while the unemployment rate dropped to 3.5% from 3.6% in February”, according to Labor Department data. Though it was the smallest increase in total employment since December 2020, sparking fears among economists that a recession could be underway.

The Bottom Line

Signs point to a recession in 2023, not just in the U.S. but globally, though many experts remain hopeful it will not be too severe. This is good news for everyone, as it could mean fewer people lose their jobs, and household financial impacts will be mild.

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