Over 53% of US Industries Shed Jobs as Recession Fears Rise

More than half of U.S. industries are currently cutting jobs, a trend that top economists have historically associated with the onset of recessions. Mark Zandi, chief economist at Moody’s Analytics, reiterated his warning that the economy is nearing a downturn, noting that over 53% of industries were shedding workers in July, with only healthcare showing meaningful job gains. Zandi emphasized that such widespread layoffs are a “telling” sign, as past recessions have often been preceded by similar patterns in employment data across multiple sectors [1].

Although the U.S. economy is not yet in a recession, the payroll data has shown troubling signs. Recent revisions to employment figures have been consistently lower than initially reported, with June’s job gains slashed from 147,000 to just 14,000. Over the past three months, the average gain has dropped to 35,000, far below expectations. Zandi argued that if these revisions continue, they could reveal that employment is already in decline [1].

According to the National Bureau of Economic Research (NBER), a recession is defined as a significant and widespread decline in economic activity that lasts more than a few months. Zandi highlighted that employment is the most critical indicator in this determination, with consecutive declines signaling a downturn. While employment has not yet fallen, growth has stagnated since May, raising concerns about the sustainability of the current expansion [1].

The Atlanta Fed’s GDP tracker currently shows continued growth, with the third-quarter forecast at 2.5%, down from 3% in the second quarter. However, Zandi warned that large data revisions are common at economic inflection points, such as a recession. Federal Reserve Governor Lisa Cook echoed this sentiment, noting that significant revisions are typical during turning points in the business cycle [1].

Despite these warnings, the unemployment rate has remained relatively stable, fluctuating within a narrow range between 4% and 4.2% for over a year. Zandi, however, questioned its reliability as an indicator of recession, attributing its stability in part to the decline in the number of foreign-born workers entering the labor force. He emphasized that a recession is defined by a prolonged decline in jobs, which has not yet materialized [1].

Analysts remain divided on the cause of the labor market slowdown. Some, like Bank of America, attribute the trend to weak labor supply, particularly in the context of immigration policy shifts. Others, including UBS, point to weak demand, noting that average workweeks have fallen below 2019 levels. JPMorgan economists also warned of a potential downturn, highlighting that hiring in the private sector has slowed to an average of 52,000 jobs over the past three months, with most sectors outside health and education experiencing stagnation [1].

The widespread nature of job cuts across industries suggests that businesses are anticipating a broader economic slowdown. JPMorgan noted that a significant decline in labor demand is a key signal of an impending recession, particularly when hiring halts even before a growth downshift is perceived. In such cases, the downturn is often more severe, as firms reduce hiring in anticipation of prolonged weakness [1].

As the economy continues to face uncertainty, the upcoming release of the consumer price index (CPI) and producer price index (PPI) will be closely watched for further insight into inflation and economic health. These reports will help determine whether recent policy shifts, including trade measures, have had a measurable impact on price trends [1].

The labor market remains under pressure, particularly in industries affected by technological change and policy shifts. Consulting firms, for example, are reportedly reducing staff in response to a post-pandemic slowdown, driven by AI advancements and evolving market conditions. Meanwhile, businesses are absorbing some of the added costs from tariffs, indicating a fragile balance in the current economic environment [1].

Market sentiment remains cautiously optimistic, with some analysts forecasting a new bull market. Price targets for the S&P 500 have been raised, with some predicting a rise to 7,200 by mid-2026. However, this optimism is tempered by ongoing concerns about labor market stability and inflation expectations, which remain key factors in shaping the trajectory of the economy [1].

Source: [1] https://fortune.com/2025/08/10/recession-warning-economic-outlook-industry-job-losses-employment-declines/?itm_source=parsely-api