2019 Economy: Up or Down?
January 22, 2019 • by Herb Dew
One substantial benefit of owning a staffing company is that we are traditionally an exceptional indicator of economic health.
Companies, in response to their own sales, flex their labor very quickly based on how the economy is doing. When the economy is robust, they either add full time or temporary employees, and when the economy is softening, they typically reduce their use of temporary employees and slow down their full time hiring. This almost always happens prior to most other leading indicators; making our industry a great one to watch for signs of what is happening in the economy.
Back in 2008-2009, HTI saw our temporary volume decrease by almost 60% over three months.
Our customers that traditionally do full time hiring largely stopped hiring towards the end of 2008. The economy that crashed in 2009 was really foretold in all of that hiring that stopped or slowed down back in June-December of 2008. Looking ahead at 2019, I’m frequently asked, “Herb, what do you think is going to happen in 2019?” Well, let’s take a look at what we’re seeing so far.
2018 ended with companies struggling to find employees that they needed to have, due to a low unemployment environment.
Unemployment claims continue to be low, jobs continue to be added, and we walked into 2019 with lots of full-time and temporary openings. We have heard from several customers they anticipate the “possibility” of a slow down towards the middle of the year. However, when probed about why, it’s more a cautiousness based on the perception that they get from the news, not necessarily a reflection of their own business trends.
In truth, I’ve been in business long enough to recognize the cycles:
7 or 8 years of strength and growth, followed by a slow-down, then a stabilization, followed by 7 or 8 years’ worth of growth. So, following that cycle, we’re at that point where it makes sense that we would have a natural slow-down. Do I think we’re going to fall into a recession? I don’t know, I’m not an economist. I do know that world trade, economic policy, government shut-down, and public opinion can drive confidence down, causing a self-fulfilling prophecy of an economic slow-down.
BUT, looking ahead to 2019, it’s easy to get a job, pay rates are increasing, and people generally seem confident about their employment situation.
So, at least over the next 6 or 8 months, I think 2019 looks to be promising. What will happen towards the back end of the year? I can only guess. But keep watching employment. It’s a good place to watch for what’s happening in the economy.