Maybe the US is in a recession, but small businesses don’t know it

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Are we in recession? Because it’s so weird if we are.

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Certainly, we have two quarters of negative economic growth. Manufacturing demand is declining. Construction and housing market activity has slowed. Tech companies are contracting. financial Services And real estate firm Getting people out. Inflation and energy costs remain high, interest rates are rising and the stock market is up 18% from the start of the year. Just Google “recession” and you’ll find that the housing market is in one, major banks and investors are warning of one and Europe is heading towards one. above 80 Financial Advisor say a recession is “coming” and a big investor Believes it’s going to be a “whopper”.

But hold on for a moment.


Maybe we are in recession. Or maybe coming. But when there’s a recession — or even a strong possibility of one — companies lay people off. It’s not happening, is it? The process of recruitment is going on. The unemployment rate remains at a historically low level. Job openings near all time high. And here’s the real blow: Most small businesses in the United States — which employ more than half the nation’s workforce — are not only looking to get hired, but are struggling to find employees, according to recent survey Responses released by the National Federation of Independent Business and employment data from HR firm Paychex.

“Small Businesses Still Not Showing Strong Recession Signs,” Paychex CEO told CNBC Last week.

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So why are businesses – especially small businesses – looking for workers, rather than laying them off?

First, it is becoming harder and harder to generalize about the economy of the United States. There are 350 million people and 30m small businesses in this country. our economy Even now 60% larger than China and larger than Japan, Germany, UK, France and Italy combined. California’s economy is larger than of India. The economy of New York is larger than that of Canada.

You can’t just say “we’re in a recession”.

At any given time in America, some industries and sectors are doing better than others. Construction, financial services and manufacturing are struggling. So is the energy industry. but given job benefits Since the pandemic, trade services, retail, transportation and warehouses are shaking it up. The leisure and hospitality industry has lost the most jobs of any industry since the pandemic, but it appears make your way Back. Alaska, New Mexico, New York and Pennsylvania, for example, had Unemployment rate higher than the national average, while states such as Minnesota, Florida and North Dakota recorded very low unemployment rates. A city where its biggest employer is struggling will struggle with it. But the opposite is also true.

So is the United States in a “recession”? Looking from above, the answer depends on who you ask.

The second reason most small businesses are looking to hire is because most small business owners are not fools. Democrats will tell us Historic job gains have taken place over the past two years, but we know that’s because the bar was set to zero because of the pandemic. Republicans will warn of recession and high inflation, but we know these things are being caused by a myriad of factors – the European war, the Asian supply chain and fiscal and monetary policies here in the US – and these factors will eventually resolve themselves, though perhaps Not as fast or as far as we would like. We are not duped by politicians or rhetoric. We are living this reality every day. And our reality is that — for most — demand remains relatively strong.

And if I’ve learned one thing, it’s that my smartest customers, those business owners who have been doing what they’ve been doing for decades, even generations, are always looking forward. They are not thinking so much about 2022 or the first half of 2023 right now. They are 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 devastation on the horizon. We could be wrong, of course. But we are placing our bets on the future right now.

And we still know that people are our most valuable asset. Certainly, many companies are replacing less skilled workers with robots and automation. But nothing can replace a skilled worker who is great at his job. Find me someone like that and I’m going to hire that person, whether we’re in a recession or not. I know that, if treated well, that person will add long-term benefits to my company, regardless of the short-term investment.

So no, we are not in a recession. And yes we are in recession. And no, we are not recruiting. But yes we are. You can make the case either way. That’s what people are doing. They are right. they are wrong. Argue. Meanwhile, small businesses that are either in strong industries or growing in geographies will keep hiring. And even those who aren’t will miss the opportunity to invest in good people, when things eventually turn around.


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