Several companies announce layoffs as concerns over recession grow

WASHINGTON (TND) — While employment numbers remain favorable, companies continue to announce layoffs.

Apparel giant Gap, for example, has reportedly cut 500 corporate jobs at their New York, San Francisco and Hong Kong offices. The retailer, which also owns Banana Republic and Athleta, lost $49 million from May to July of this year after a very profitable 2021.

Abercrombie and Fitch is also cutting back jobs as well.

FedEx announced last week that it’s freezing hiring, closing more than 90 of its FedEx Office stores, cutting the number of its flights, reducing Sunday operations at some FedEx Ground locations and taking other steps to fight revenue shortfalls in light of “global volume softness.”

Best Buy, Ford Motor, Walmart and Wayfair also announced layoffs.

Some companies are cutting back after beefing up staffing to met pandemic era needs while others appear to be reorganizing in preparation for a possible looming recession.

Duke University economist Connel Fullenkamp says these layoffs are an adjustment to consumers changing spending their habits post-pandemic.

“You know they really bulked up during the pandemic because their sales soared and they thought that these changes that were induced by the pandemic were going to last, they didn’t,” Fullenkamp said. “So they ended up doing the rational thing which is laying some people off.”

Inflation is also leaving consumers with less discretionary income. Economists are predicting more layoffs ahead but for another reason.

A recent Stifel survey shows that the vast majority of corporate executives and business owners believe a recession is imminent or already here.

Another survey from P&W shows that 50% of business leaders plan to scale back personnel numbers in the next six to 12 months.

Fullenkamp pointed out these layoffs are mostly high-skilled white-collar positions.

“A lot of companies are taking this time to really look at their own kind of headquarters operations and seeing how much leaner they can run,” he said. “I think they’re looking ahead, thinking about the possibility of a recession sometime in 2023 and probably getting their house in order.”

The question economists continue to debate is how a possible recession will impact the “Great Resignation” phenomenon plaguing corporations. With fewer alternatives, workers may have no other option than to hold onto the positions they have.