Most Wall Street economists expect the US to fall into recession during the coming year. What does that mean for American workers?
(Bloomberg) — Most Wall Street economists expect the US to fall into recession during the coming year. What does that mean for American workers?
Using the Jobs Calculator developed by the Federal Reserve Bank of Atlanta, combined with forecasts for peak unemployment, here’s a look at how job losses could accumulate. Among economists who expect a downturn, the average of 15 predictions suggests that the US economy will shed some 1.7 million jobs over the next year-and-a-bit — roughly 120,000 a month.
Of course, every recession is different, with an impact that depends on lots of things including what caused it and how long it lasts. In some cases unemployment reaches its highest point while the economy is still shrinking, and in others the peak comes months after the downturn has officially ended.
Forecasting if and when a recession will begin — and how high unemployment may rise as a result — is notoriously difficult. Economists still try.
A word many of them are using at the moment to describe the expected downturn is “mild” — but even that scenario would involve hundreds of thousands of Americans, at a minimum, losing their jobs. Using the baseline assumptions in the Atlanta Fed’s model, unemployment at 4.2% or above in a year’s time will mean that monthly US payrolls have turned negative.
Bank of America: BofA is predicting a recession beginning in the third quarter of this year, which causes the unemployment rate to rise to 4.7% in early 2024.
- The implication? According to the Atlanta Fed’s Jobs Calculator, that would equate to roughly 97,000 net job losses each month until then — or some 1.1 million net jobs lost by the time of peak unemployment.
Deutsche Bank: Recession begins in the final months of this year; unemployment rises near 5.5% in the second quarter of 2024.
- 149,000 net job losses per month. Total: 2.1 million jobs
UBS: Recession begins in the third quarter of this year; unemployment rises to 5.4% mid-2024.
- 137,000 net job losses per month. Total: 1.9 million jobs
Nationwide: Recession begins in the third quarter of this year; unemployment rises to 5.5% in the third quarter of 2024.
- 106,000 net job losses per month. Total: 1.8 million jobs
Jefferies: Recession begins in the third quarter of this year; unemployment rises to 6.5% in the third quarter of 2024.
- 202,000 net job losses per month. Total: 3.4 million jobs
Federal Reserve: Chair Jerome Powell has indicated he thinks the US can skirt a downturn, but staff at the Fed expect a “mild recession” to begin later this year. The median projection among Fed board members and regional bank presidents in March was for unemployment to rise to 4.5% in the fourth quarter and remain elevated next year.
- That would equate to roughly 128,000 job losses each month through the end of this year
–With assistance from Enda Curran.
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