Goods, Services, and Recessions
Goods, Services, and Recessions

Goods, Services, and Recessions

Having studied business cycles for decades, at ECRI we believe that a recession is likely. Our reasoning includes cyclical insights that not many understand. We are sharing one such insight with you here. (View Highlight)

Even though the service providing sector accounts for over 85% of nonagricultural jobs, compared with less than 15% for the goods-producing sector, it’s the goods sector that’s usually responsible for the lion’s share of job losses during recessions. (View Highlight)

goods sector job losses accounted for 77% to 134% of total recessionary job losses in every recession up to and including the 2001 recession (View Highlight)

In the 2007-09 Great Recession job losses were basically evenly split between the two sectors, with the goods sector accounting for just over half of the job losses, and the service sector for almost half. (View Highlight)

The 2020 Covid recession was another exception, because it was caused by the shutdown of most people-facing services. Consequently, the service sector accounted for almost 90% of recessionary job losses. (View Highlight)

Despite the tight post-Covid labor market, there’s little reason things to be different this time. (View Highlight)

But even though the cyclical risks are clear from our research, uncertainty abounds. If you’re forewarned, this is therefore the time to take stock of where we are in the cycle and exploit the opportunities presented by a confused consensus. (View Highlight)

People forget that the markets, guided by the Fed, were pricing in over 100 basis points of Fed rate hikes in June 2008, fully six months after the Great Recession began in December 2007. Then, as now, most people thought that a soft-landing was at hand. (View Highlight)