OMG: Is it a Recession?
By Rob McGovern, CEO of Jobfox
As the talk of our economy takes center stage, you get the feeling that we're hanging on to the last branch before the abyss. However, it's important for us all to keep things in perspective. The fact is, the economy actually grew 2.8 percent last quarter.
A recession, for those who don't already know, is defined as two consecutive quarters of negative gross domestic product (GDP) growth. We appear to be a long way from that. Companies continue to hire.
Also keep in mind that GDP is a measure of whether the U.S. economy is expanding or contracting. A GDP of 0 percent means that the coffee shop down the road, which as making $25,000 per month, will continue to make $25,000 per month. Not so bad, right? And if the coffee shop loses its head barista, they still have to replace him or her.
The point I'm making is that employers continue to hire, even when they're not growing. This is due to something we call "workplace churn." People quit, get fired, retire, go back to school, etc. In fact, according to the Bureau of Labor Statistics, the average length of time a U.S. professional remains in the same job is about three years.
Bottom line: companies continue to look for talent and job seekers continue to have new career opportunities.
Churn may be even more aggressive during slow-growth times. During periods of high growth, for example, managers often overlook weak performers. They simply sweep problem workers under the rug. However, in times when headcount additions are kept flat, managers are under greater pressure to get rid of dead wood and upgrade teams with smarter new hires.
At the same time, highly talented people will often leave troubled companies during tough economic times to take advantage of opportunities at more promising organizations. Again, more churn.
For all the worried job seekers out there, don't get overly concerned when you hear employers talk about "hiring freezes." For most companies, this simply means that overall headcount must remain at a fixed number. However, companies still have to replace people lost through attrition, terminations and retirements. CFOs will typically talk tough about "no new hires," but companies are hard pressed not to backfill key personnel to keep businesses running.
If you've recently been uprooted from a job, you will certainly feel angst and anxiety about the current economic situation. I feel your pain. Just keep in mind that as one door closes, another will eventually open. Even in tough economic times.
Rob McGovern, CEO of Jobfox, is a regular BetterMondays contributor. He is also the author of "Bring Your 'A' Game: The 10 Career Secrets of a High Achiever." �
Uncategorized | BM | 
October 8, 2008 2:09 pm
7 Comments
Other Links to this Post
RSS feed for comments on this post. TrackBack URI
Subscribe
Loading ...
By Huh?, October 9, 2008 @ 3:45 pm
Are you serious? The economy grew by 2.8%? Where did you find that “fact“?. Unemployment is at a 5 year high according to the Bureau of Labor and Statistic and companies that are laying off thousands of workers are going to turn around and hire? Hewlett-Packard, where you used to work, is laying off 20,000 workers. Financial companies are laying off over 100,000 combined. States are laying off tens of thousands in response to the financial crisis. Hiring freeze means just that: companies close all open positions and will perhaps re-hire from outside but only if they can’t find someone from within to fill it. I suspect that the percentage of “churn” is pretty low. If a coffee shop was making $25,000 last month and they lost their barista this month, chances are they would hire from within to save money. Starbucks recently laid off 12,000 workers, including corporate positions amid growing economic uncertainty.
I think you are talking about a depression and not a recession.
http://money.cnn.com/2008/10/09/news/economy/jobless_claims/index.htm
By BM, October 9, 2008 @ 5:47 pm
It's a matter of opinion.
From Wikipedia:
American newspapers often quote the rule of thumb that a recession occurs when real gross domestic product (GDP) growth is negative for two or more consecutive quarters. This measure fails to register several official (NBER defined) US recessions.
By I don't believe you, October 9, 2008 @ 9:57 pm
I doubt we'll see positive growth for the next two quarters.
When the economy goes into recession, people lose their jobs, businesses fail, and then real estate prices collapse as owners are forced to sell and banks unload properties. Banks fail, enterprises go bust and unemployment soars. Are you telling me that this isn’t happening?
I’m not saying the job market is completely dried up. When I look at the job boards and I see fewer and fewer new jobs posted and more and more of the same job posting over and over again, it makes me wonder how plentiful the job market is. You market for a job board. It’s your job to make the outlook rosy.
Like the old saying goes - “When your neighbor loses their job it’s a recession. When you lose your job it’s a depression“. Yes, it is a matter of opinion.
By RobnAAR, October 23, 2008 @ 10:20 am
Rob,
You have made a mistake in your figures. The link to the Washington Post article announcing the figures is below. GDP Growth at 2.8% for the last quarter was not 2.8%. The GDP grew at a rate which, projected for the whole year is 2.8%. This is a huge difference from a quarterly growth of 2.8% and an annual one.
This is down from the annual projected rate of 3.3% given by the Commerce Department earlier in the year.
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/26/AR2008092603620.html
Robin
By Sandra, October 23, 2008 @ 11:12 am
Aside from the debate on the numbers, I agree totally with your content. Every business has needs and will replace people. They are just more selective in acquiring that new talent. Expectation for the same position (during good times) are now higher. For the job seeker, if they understands and embraces responsibility for their own career path, they will always be prepared to meet any recession. And even be in a position to thrive during a recession period.
....."Churn may be even more aggressive during slow-growth times. During periods of high growth, for example, managers often overlook weak performers. They simply sweep problem workers under the rug. However, in times when headcount additions are kept flat, managers are under greater pressure to get rid of dead wood and upgrade teams with smarter new hires.
At the same time, highly talented people will often leave troubled companies during tough economic times to take advantage of opportunities at more promising organizations. Again, more churn."....
By BM, October 23, 2008 @ 11:28 am
FOR IMMEDIATE RELEASE
CONTACT OFFICE OF PUBLIC AFFAIRS
Friday, September 26, 2008
202-482-4883
Statement by Secretary Gutierrez on Revised Second Quarter GDP
WASHINGTON—Commerce Secretary Carlos M. Gutierrez today released the following statement on the final second quarter real gross domestic product (GDP), which showed that the American economy grew at a rate of 2.8 percent in the second quarter of 2008.
By John, November 6, 2008 @ 1:47 pm
The point being made is that even if the GDP shows that the economy grew at a rate of 2.8 percent in the second quarter, the commerce department said (in the same statement but you left out the big picture) that the GDP expanded more slowly in the second quarter than expected and the 2.8 percent growth rate logged in the second quarter was expected to be 3.3 percent. The nation's concern now are the 3Q earnings projections which are so far drastically lower.
Rob saying we are far from a recession because of a 2.8 percent growth rate in Q2 is simply not true. He is looking in the rear-view mirror and not the road ahead.
You don't wake up one day and say "hey, I think we'll have a layoff" and then start slashing. Letting go the dead weight cuts costs by letting go those employees that aren't significant - the ones they can do without in down times. Workforce cuts are essential in tough economic times for a lot of companies. I don't know anyone who has ditched their job because they are afaid the company is doing poorly. Most of them will stay to see if they get layed off. Why? Because they risk getting layed off at the new company and the salary is probably going to be lower. The unemployment market is crowded. Hiring new employee due to churn still requires investment in training, health insurance and company perks like paid-for parking.
It takes planning and figuring out who are the ones that are essential to the company knowing that they will have to work a bit harder with a smaller workforce. The CTO might have to jump in and do some programming. The CFO might have to take over payroll. The CEO might have to lower their salary. Small businesses can't afford to turn around and hire when they couldn't afford to pay employees they layed off in the first place - bad or good.
I think the churn is more likely to happen once a company has better quarterly projections and the jobs in other companies are more stable.