The Role of Hiring in Economic Downturns

The difference between a typical downturn and a recession lies in hiring patterns rather than layoffs. While the public often associates job losses with economic contractions, the real indicator of impending recession is the slowdown in hiring. In many cases, such as the Great Recession, job cuts are a lagging indicator; for example, after job cuts ceased in 2010, the economic contraction continued. It is the lack of new hiring that triggers the transition from a downturn into a recession and potentially worsens the economic landscape into a depression.