Survey of business economists finds more job cuts are on the way

New York

For the first time since the early days of the pandemic, a majority of business economists expect their companies to lay off workers in the coming months, according to a new survey released Monday.

Only 12% of economists surveyed by the National Association for Business Economics (NABE) expect their firms to increase employment in the next three months, down from 22% this fall.

The share of economists expecting wages at their companies to fall rose to 19%, according to the survey, conducted Jan. 4-Jan. 11.

NABE said it was the first time since 2020 that more respondents expected their company’s employment to decrease rather than increase.

Julia Coronado, president of NABE and MacroPolicy Perspectives, said in the report that the findings point to “widespread fears of a recession this year.”

Just over half of business economists surveyed put the risk of a recession next year at 50% or higher, with the biggest risks including higher interest rates and costs, the survey found.

A spate of layoffs has hit the economy in recent weeks, including those announced Monday by Spotify and Rubbermaid owner Newell Brands. Last week, Google parent Alphabet and Microsoft made further layoffs.

Despite the layoffs, government statistics paint a picture of a historically strong job market. The unemployment rate was at its lowest level since 1969, and initial jobless claims unexpectedly fell to a 15-week low.

Some other key findings from the NABE survey include:

  • Business investment expected to fall
  • Salary increases at the companies most respondents work for in the past three months
  • Many more businesses report declining profit margins than in past three years

The silver lining is that inflation, the biggest problem in today’s economy, continues to ease.

NABE said its material cost index has fallen sharply from a record high last summer to its lowest level in two years. Economists said they expected material costs to continue falling.

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