A day after the head of America’s banking system said the nation isn’t in a recession, the U.S. Commerce Department said the nation’s economy shrank. Again. For the second quarter in a row.
Conventional wisdom often calls this a recession — or “a significant decline in economic activity that is spread across the economy and lasts more than a few months,” according to the National Bureau of Economic Research, the arbiters of when recessions begin. NBER hasn’t called it yet.
So, are we or are we not in a recession? And if we are, is this linked to last year’s Great Resignation trend that had people up and quitting their jobs? More on quitters below.
But getting back to the “R” word, if we are not already in a recession, there may be one on the way, say Colorado economists who weighed in on the topic.
“Technically, the recession is here but it’s not as severe as it could have been,” said Kishore Kulkarni, an economics professor at Metropolitan State University Denver. “The good news is that both declines are very minor — 0.35 in the first quarter … and in the second quarter 0.2% is a very minor decline in the GDP.”
That’s the gross domestic product change from the first to second quarter, adjusted for inflation. The GDP’s annual rate of decline was 0.9% in the second quarter, according to the Department of Commerce’s Bureau of Economic Analysis.
He pointed to the high number of job openings and low unemployment rates. Those are signs that people are working and employers feel they could produce more — with added staff.
“What we have gotten is a mild dose of recession rather than a severe recession. And there is a difference,” Kulkarni said. “In a severe recession, unemployment is much higher than what it is right now. If you look around, there are a lot of job openings, not just in Denver and Colorado, but nationwide. So why aren’t the jobs being filled? The wages are not keeping up.”
But Brian Lewandowski, executive director of University of Colorado’s Business Research Division at the Leeds School of Business, said he’s hedging on calling what we’re in a recession. And if it is one, it’s very unusual. His forecasts are showing that Colorado’s economy is growing, but slower than before.
“What’s unusual about it is we have consumption growth, employment growth, and income growth that is inconsistent with some of the other metrics that normally signal a recession,” he said. “The slowdown is happening and I think that’s hard to deny. … What the Federal Reserve did (Wednesday) to increase interest rates, that’s meant to slow the economy. That’s what it’s intended to do and is an indicator that areas of the economy are overheating.”
Coming off the pandemic and a two-month recession — the shortest one ever — the recovery has experienced a lot of abnormal situations, including massive numbers of unemployed workers and unprecedented government spending to prop up the economy. That led to more people saving money and then spending it. And consumers are still spending, according to the latest U.S. Bureau of Economic Analysis.
Lewandowski, who also works on tracking Colorado’s economic data for state government, said other factors beyond GDP are considered in determining a recession.
“We have increasing personal income. We have increasing but slowing retail sales. Consumption is up. Investment went down pretty strongly but the consumer still seems to be spending though it looks like they’re drawing on savings to maintain that spending since we saw the personal savings rate come down,” he said. “I think that while there are many reasons why people feel like we’re in a recession right now, we may or may not be in a recession now.”
In Colorado, retail sales have continued to climb month to month, as have sales tax collections by many counties in the state. Higher sales and taxes are linked to inflation. June’s increase in consumer spending saw the largest change in consumer spending, or 48.8% from a year ago June, was paying for more expensive gas and energy, according to the Bureau of Economic Analysis.
The state’s economy is still growing, Lewandowski said, but more slowly.
“My models are projecting a flattening of Colorado employment growth in the third quarter. We’re in the third quarter right now,” he said. “We have seen some layoffs in some industries. We’ve seen the jobless claims increasing from very low levels, not historically low levels, but lowest levels in the last 50 years. … The National Household Survey Shows employment came down a little bit last month but in Colorado, it’s still increasing.”
Hey employers, take the poll: Are you still hiring?
More to explore:
- Colorado’s Taxpayer’s Bill of Rights not keeping up with inflation, The Sun’s Jesse Paul reports. >> Read
- The Olathe corn harvest finally begins, but only after efforts to manage for inflation, labor shortages >> Read
People are still quitting their jobs. Advice to employers
So, about that Great Resignation (a.k.a. Great Attrition, Great Reassessment, Great Renegotiation or whatever you want to call it). The trend started last year when a massive malaise seemed to overtake work and people just up and quit their jobs.
Colorado, for many months, took the lead in the rate of people quitting their jobs, according to Bureau of Labor Statistics data. In the latest Job Openings and Labor Turnover data, which measures who’s coming and going from America’s workforce, Colorado has fallen out of the top 10 of states with the highest rate of job quitters. We’re 12th, according to a chart compiled by What’s Working summer staff reporter Marvis Gutierrez:
Bonnie Dowling, an associate partner at consultancy McKinsey & Company, took a look at the trend last August and found that employees craved investment. They were looking for purpose in their work. The perks of better pay and benefits were also important but “they want meaningful … interactions, not just transactions,” she said.
Fast forward to July and Dowling and her team released an update after checking to see if it was still going on.
TLDR: It is.
“The big thing truly is that there isn’t a big difference,” said Dowling, who works in Denver. “Everything was booming in August. Then we got inflation, economic uncertainty. We started getting questions, ‘Is this really still an issue?’ ‘Is everyone flooding back to their employers?’ So we reran it in late April.”
They found that 39.9% of those surveyed said they were likely to leave their jobs in the next three to six months, virtually unchanged from last August’s 40%.
But here’s the thing employers should note: About 60% of workers are what Dowling calls traditionalists. They’re risk averse. They’re likely to stick with the same company. They don’t quit a job unless they have another lined up. If they do move to a new company, it’s because of a promotion or more pay. They are willing to make trade offs for the sake of keeping their job.
The other 40% don’t have the same traditional priorities, and those are the workers employers must change their tactics in order to attract. Dowling broke them down into four categories:
- Do-it-yourselfers who value autonomy, freedom and sense of purpose
- Caregivers, who typically are taking care of someone at home, like children or aging parents, and look for jobs that allow flexibility and provide more benefits
- Idealists, who tend to be younger and looking for jobs offering meaning and purpose
- The Gronkowskis, named after American football player Rob Gronkowski. He retired, returned to the game because of a flexible contract, great team and on the urging of former teammate Tom Brady, and then retired again. These are also called “The relaxers” because their career doesn’t come first. They’re not looking for a job.
“We’ve had such a huge number of people that quit and didn’t go back into the workforce,” she said. “That’s one of the big challenges we’re facing today in this labor shortage. That disconnect.”
It’s not that those nontraditionalists are new. They just feel more empowered, she added. And while 17% of workers who quit a job between April 2020 and April 2022 left the workforce entirely, 48% who got a new job moved to a different industry.
“These (values) may have always been important and resonated but I think we were given permission over the course of the pandemic and our priorities began to shift,” Dowling said. “As a result of that, we started rethinking the contract we had with our employers and started saying, ‘You know what? These are my values and this is really important to me and it turns out, I don’t have to settle for the same old.’”
So that’s the takeaway for employers who struggle to hire. It’s not always about money.
“Remember, we had over 2 million more retirements over the course of the pandemic than the Bureau of Labor Statistics had predicted,” she said. “They took themselves out of the labor market. … As an economy, as a labor market, we’ve become increasingly dependent on our 65-and-older employees. To have so many of them stepping out does create a gap.”
Other working bits
→ UI trust update: In our ongoing coverage of the state’s unemployment insurance trust fund, we found that Colorado has paid back 87% of its $1 billion loan borrowed to unemployed workers in the pandemic. Here’s how that happened and what employers can expect in the next year. >> Colorado Sun
→ Trucker shortage: CPR’s Elaine Tassy dug deeper into the stats that show that nine out of 10 truck drivers with a commercial drivers license are male and 91% are white. Meet the couple working to get more people of color driving in the truck industry. >> CPR
→ BroncosRide still canceled: The popular RTD service that transported fans to football games remains on hiatus. It started in 2020 and, 9News reports, remains suspended this season “due to staffing issues” and inability to attract enough operators and mechanics. >> 9News
→ The ongoing year of the union: A Trader Joe’s grocery store in Boulder is attempting to unionize, as the United Food and Commercial Workers Local 7 filed for petition this week. >> Daily Camera
→ Another case against King Soopers union: A third worker fights back at union fines for crossing the line in the King Soopers grocery strike in January. Hope Schaefer, who was fined $4,000 by UFCW, joins two other workers in a lawsuit, according to her representatives with the National Right to Work Legal Defense Foundation. >> Release
Share your two cents on how the economy is keeping you down or helping you up at cosun.co/heyww. See you next week! ~ tamara
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