Recent data paints a stark and troubling picture of the U.S. economy, and it’s not the one you might expect. While the mainstream media continues to push narratives of “resilience” and “recovery,” key indicators are flashing red, particularly when it comes to hiring.
A crucial myth has long persisted in discussions of economic downturns: that recessions are primarily defined by massive waves of layoffs. But as economist Robert Shimer pointed out in his landmark study, that’s not the case. Recessions don’t start with layoffs. They start when businesses stop hiring—and that’s exactly what we’re seeing now.
Hiring Is Collapsing
Let’s look at the hard numbers:
Year-to-date announcements by U.S. employers are down 41% compared to last year. That’s not just bad—it’s the worst year for hiring in two decades. Even in 2008, as the Great Recession took hold, hiring wasn’t this slow during the first eight months of the year.
In August 2024, U.S. employers announced 79,900 hiring plans, down from over 136,000 in August 2023. This is a 41% decrease year-over-year and the lowest year-to-date total since Challenger, Gray & Christmas started tracking this data in 2005.
For comparison, in 2008, companies announced over 80,000 hiring plans through August, showing that the current downturn is even steeper than it was during the onset of the Great Recession.
Contrary to what many might believe, the real trigger for a recession is not layoffs—it’s a lack of hiring. When businesses stop hiring, the economic engine starts to sputter, and layoffs follow as a final confirmation.
AUDIO PODCAST SUMMARY OF THE 2005 paper by Robert Shimer
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