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Recession Fears in 2022 | Snapshot of US Worker Sentiment

Recession fears are growing. Here’s how people really feel about a potential downturn, the 2022 US labor market, and the current economic outlook.

Dominique Goldschmitt
Dominique Goldschmitt
Career Expert
Recession Fears in 2022 | Snapshot of US Worker Sentiment

recession fears

 

Recession. One word that can strike fear into the hearts of millions. From Washington to Wall Street it’s being discussed as a distinct possibility. So how did we get here?

 

Inflation and interest rates rise. Workers’ spirits get low. Experts get pessimistic.

 

But are these fears justified? And what does the average American worker really think?

To get to the bottom of this, we decided to poll 1,000+ employees, and explore how they really feel about a potential recession, the 2022 US labor market, and the current economic outlook.

 

But—

 

Let’s have a look at some recession-related facts first.

 

Recession in a nutshell

 

We’ve all heard the term. Do we understand what recession is all about, though? 

A recession means a significant decline in general economic activity. The macroeconomic term has traditionally been recognized as two consecutive quarters of decline, as reflected by gross domestic product (GDP) and other indicators such as unemployment. However, the National Bureau of Economic Research (NBER) currently defines a recession as a significant decline in economic activity lasting more than a few months—normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.
Investopedia

There have been 19 noteworthy recessions in US history so far. The Great Depression (1929–39) was the longest and deepest economic downturn of all, and included two recessions in 1929 and 1937.

 

Whether we like it or not, a recession is a normal, yet unpleasant, part of the business cycle. Though temporary, it may have a greatly negative and long-lasting effect on the economy.

 

A recession also has many faces.  Let’s face it. Widespread unemployment, growing social fears, and expecting the unexpected are just some of them. And it can literally rewrite the rules for businesses.

 

The world economy is looking fragile and the US is no exception. Keep reading to find out what our study on worker sentiment revealed.

 

General views on the US labor market in 2022

 

recession fears

 

We started by asking the respondents how they feel about the labor market in general. Let’s look more closely at their answers.

 

  • 63% of the survey takers declared a positive attitude to the labor market, 1 in 10 respondents claimed feeling negative, while nearly one-third remained neutral.
  • Who feels best about the current labor market? Employees with 3-5 years of work experience (70%), respondents who are 25 years or younger (69%), and those earning $50,000 to $74,999 (69%).
  • Surprisingly, there were no respondents aged 25 or younger who declared feeling very negative about the labor market in general. What’s more, only 5% of them chose negative as the answer. 
  • On the contrary, the highest level of negative sentiment came from employees earning less than $25,000 (20%), those with 11+ years of work experience (19%), and those with no college degree (18%). 

 

When it comes to the greatest differences between the answers within one demographic group, company size (self-employed vs. 501+ employees) and work experience (1–2 years vs. 3–5 years) seemed to matter the most.

 

  • 9% of self-employed workers claimed that they felt very positive about the labor market, while 7% of them chose very negative as the answer. 
  • At the same time, almost one quarter (22%) of respondents employed in big companies (501+ employees) declared being very positive and only 1% of them were very negative about the labor market in general.
  • 7 in 10 respondents with 3–5 years of work experience felt positive about the labor market in general. The rate of positive and very positive answers drops to 52% given by the survey takers with 1–2 years of work experience. 
  • Those with work experience of 1–2 years were the second-highest number of “very negative” answers 8%, just after 10% given by respondents with the lowest earnings.

 

The longer you work, the less likely you are to get fired? The bigger the company, the more stable the employment? The relationship between bigger companies, greater work experience and feeling much more positive about the labor market may suggest so.

 

Having less life experience, though, may be a reason why young people remain so inexplicably positive in the current economic outlook. With no practical experience of recession to draw on, they don’t know what to expect. And therefore, aren’t bothered. Even if they usually have more precarious employment and are often seen as more cynical about the world of work. 

 

Overall, positivity about the labor market seems quite high for a workforce on the brink of recession. Perhaps an optimistic hangover from the strong labor demand of the Great Resignation? Only time will tell if reality hits home.

 

Another question referred to the employees’ feelings about the future. The answers were the following:

 

  • Optimistic / Very optimistic—23%.
  • Neutral—37%.
  • Pessimistic / Very pessimistic—40%.

 

4 in 10. That’s how many Americans definitely do not see the future in bright colors. With less than a quarter being optimistic.

 

It seems that the labor market isn’t the only factor contributing to our attitude toward the future then. Let’s dig deeper.

 

Here are the other questions we explored:

 

  • How do you feel about your own industry?
  • How do you feel about the global economic outlook?
  • How do you feel about the national economic outlook?
  • How do you feel about the economic outlook in your local area?

 

The answers to each of these questions were quite similar. Around 6 in 10 respondents declared feeling positive, around 15% chose the negative options, and one-fourth remained neutral.

 

Some other interesting research findings to mention here:

 

  • Respondents working in business and finance are the most positive about their own industry (73%).
  • Those who feel most negative about global economic outlook as well as national economic outlook are employees with 11+ years of work experience (1 in 3) and employees earning less than $25 000 (24%).
  • When it comes to the economic outlook in their local area, 1 in 10 respondents feel negative, 28% of them remain neutral, while 62% of survey takers are positive.

 

There were some differences based on location, though. It seems that respondents from the south are more positive about the economic outlook in their local area (Southwest—70%, Southeast—68%) than the rest (Midwest—58%, West—55%, Northeast—56%).

 

So if you’re an optimist in New Hampshire, it might be worth considering a move to New Mexico.

Speaking of moves, time to switch from macro to micro level.

 

Keep reading to find out how our respondents perceive their own jobs, financial situation, and perspectives on the future.

 

Jobs in light of the potential recession

 

recession fears

A potential recession can greatly affect employees' attitudes toward their job. No surprise here.

So let’s check how exactly.

 

In the survey, we asked the question “How secure do you feel in your job now compared to a year ago?”. The answers we got were as follows:

 

  • I feel much less secure now than a year ago—16%.
  • I feel less secure now than a year ago—30%.
  • No change in my feelings of job security compared to a year ago—15%.
  • I feel more secure now than a year ago—32%
  • I feel much more secure now than a year ago—7%.

And that’s not the only concerning finding we uncovered:

 

  • As many as 58% of the survey takers believe that they are likely to lose their job in the next six months. 
  • At the same time, only 22% consider it unlikely they’ll lose their job in the next six months.

 

And perhaps most telling of all

So it seems on a broader scale that there’s still some positivity about the labor market. But on a personal level, workers are getting concerned. So it seems the drumbeat of recession is being heard, after all.

 

The numbers speak for themselves. 

 

American employees on their financial situation in 2022

 

recession fears

If the current economic situation affects the way people feel about the job, is it the same with how respondents view their finances? Let’s take a closer look.

 

We asked our respondents how they’d describe their current financial situation.

 

7 in 10 (71%) respondents believe their financial situation is good or very good, a quarter (26%) describe it as average, while only 3% as bad or very bad.

 

What’s more, as many as 83% of the surveyed declared they had enough savings to cover 3–6 months' worth of expenses in case of a financial emergency.

 

Lucky you, guys! Feeling kind of jealous.

 

But interestingly—

 

48% of the surveyed do not own the property they live in, they rent it. We’re not sure if this is significant, but worth highlighting regardless. 

 

We also asked respondents to complete the sentence “I could afford…” with all the matching options. Here’s how many of the surveyed could afford…

 

  • To go to the movie theater next weekend—75%.
  • To buy a new pair of shoes today—60%.
  • To go to the dentist's next week—56%.
  • An unexpected expense of $400—40%.
  • To go on holiday within two months from now—26%.

 

Which leaves us with a BIG discrepancy.

 

Only 3% of the respondents define their financial situation as bad, but 4 in 10 couldn’t afford to buy a new pair of shoes today.

 

83% claimed they have 3–6 months of savings, yet 60% couldn’t afford an unexpected $400 expense.

 

Perhaps it shouldn’t come as a surprise, though. Americans tend to be much worse with money than they think. A 2018 study revealed that 65% said they don’t know how much they spent last month. And a 2017 study showed that a mere 17% of Americans can be described as having a high level of understanding of personal finance.

 

The responses we received seem to back this up. People have frighteningly unrealistic views of personal finances. And in a situation with such a high level of risk, ignorance is certainly not bliss. 

 

How about views on the broader economy? Next we explored respondents’ views on the current economic climate and its impact on them.

 

Inflation on the rise, living standards in decline?

 

recession fears

Inflation is at a 40-year-high.

 

There’s no need to be a financial expert to know this can have a negative impact on everyone.. Here are our research findings on this burning matter:

 

  • 8 in 10 respondents claimed that rising inflation had already affected their standard of living.
  • Because of rising inflation, half of the surveyed prefer to stay in their current job for security, while almost 4 in 10 (38%) are looking for a new job with better pay.

 

The paradox of inflation? The higher it rises, the lower you feel.

 

When will it stop? And is inflation the greatest recession-related problem?

 

We’re not trying to make you even more scared.

 

But—

 

It’s just the tip of the iceberg.

 

The sum of all recession fears

 

recession fears

Worried, scared, panicked. Me, you, us.

 

Let’s see what our study revealed about current economic fears in society. What worries us the most in 2022 then?

 

  • 82% of the respondents believe there will be a recession in the US in 2022.
  • 9 in 10 survey takers fear the possibility of a recession.

 

And here are the most popular choices for what our respondents consider the worst aspects of a recession:

 

  • Difficulties with finding a new job—45%.
  • Risk of losing a current job—41%.
  • Being unable to pay my rent or mortgage—29%.
  • Being unable to repay other loans—24%.
  • Being unable to pay my bills—19%.
  • Being unable to support my family—11%.
  • Changes in interest rates—6%.
  • Other—1%.

 

It’s easy to claim that money isn’t everything.

 

But that cliché isn’t so convincing when you’ve got a head full of financial worries similar to the above.

 

In your own words

 

Financial frustrations, everyday struggles, and endless worries. New prices, old salaries.

 

That’s the current economic situation in a nutshell for most of the respondents, who were asked “How do you feel about the current economic situation and its potential effect on your job?”

 

Here’s what they told us in their own words:

“With the cost of goods going up, including utilities, my salary has declined by staying the same. I am very frustrated and looking to cut costs anywhere.”

“I am not earning as much now, and I am down a bit in my mind.”

“Financially, I am doing worse. The cost of everything continues to go up. Food, gas, and especially housing in my area, yet the salary we receive is the same.”

“I’m not worried about losing my job, but I am concerned about not being paid enough to live.”

“I hate the inflation that's making me spend more money on things. I don't think my job will be affected because of the specific sector that I work in, but I'm sure hiring will be paused.”

“I feel I have a very safe job working at a hospital, however I don't like the added inflation and the costs on our family. We have a lot less money to spend than we did before and it is making us struggle more.”

“Due to such high inflation rates and the cost of fuel, I am now starting to browse the help wanted ads. I really enjoy my current job but since the pay is not keeping up with inflation I may have to look for another job now.”

“The current economic situation is bleak. I feel as though the economy is going to crash soon and many people will struggle to support themselves.”

“I feel nervous and unprepared for this recession to not only continue, but probably get much worse. I make decent money, especially compared to those making minimum wage, and I still can barely afford 5.50 a gallon for gas to get to and from work, much less anywhere else. Even though I feel fairly confident that I will not lose my job, things can always happen and go wrong, so it is still something I will worry about daily, I am sure.”

“I feel the current economic situation is getting worse and is already affecting my job in retail because prices keep rising but people's salaries remain stagnant, and so people cannot purchase what they once could, even as recently as six months ago.”

“My job seems secure but inflation is killing me.”

“I'm very worried about the economy and am scared we will have several job losses.”

“I feel that the current economic situation is very fragile and negatively impacts my job due to rising inflation.”

“Something is going to have to change. People can't afford housing and food prices are going up. It's hard to wrap your head around how this is happening and no one is doing anything about it.”

“I feel like we are all on shaky ground right now because of everything that is going on in the world.” 

There are also those for whom the glass is always half full. Or, at least, not completely empty. Some respondents believe that we just need to wait for better days:

“Although the economic situation is sluggish, it will improve very soon. Work stability will also be ensured. I am mostly neutral and think the wrong will be righted soon.”

“The economic situation of my life is not good and at the same time not so bad, it gives me the idea of not spending money on unwanted things.”

“This is a difficult time but I will manage.”

Although recession and labor shortage can seem completely at odds with each other, as a matter of fact, they are two important stories about the current US economy. Here are some opinions from our respondents that reflect this:

“Right now is a great time to change jobs as the demand is very high.”

“I feel that there is such a shortage in most workplaces that the bosses and those in control are looking at other methods of getting work done. I feel there will be a lean towards automation or changes in policy that will allow them to use fewer workers, thus putting those of us who are working at risk of losing our jobs. The economic situation is poor and it may be that some businesses close due to expenses, lack of workforce, and failure to get needed parts, equipment, and resources.”

“I just switched jobs and industries, so I am learning a new field, but I am also running an entire program. I think I will keep my job, but I wonder if I will be able to get a raise or a new title. Also, I get people jobs. I run a workforce training class. I wonder if they will start to face more competition for the jobs we work to place them in.”

“It is difficult to work short-staffed all the time. It is exhausting.”

To sum up, it’s okay not to feel okay.

 

But when a fight or flight dilemma occurs, resist the urge to take the second option. I know things are tough but you will survive. 

 

Continue reading to get some inspiration from our respondents for reducing the negative impact of the recession on your life.

 

Minimizing recession damage

 

recession fears

Is there anything we can do to minimize recession damage then? We asked the respondents what their contingency plans for losing a job involved. Here’s what they answered:

 

  • Investment in stocks—55%.
  • Putting aside savings—48%.
  • Investment in cryptocurrency—45%.
  • Investment in real estate—44%.
  • Investment in gold—41%.
  • Gaining new qualifications—30%.
  • Looking for a new job now—21%.
  • Other—4%.

 

Investment in stocks is a preferable option mainly for the respondents aged 26-40 and those employed in the manufacturing industry (answer given by 64% of survey takers in each group) as well as self-employed (62%). 

 

At the same time, 74% of the respondents with no college degree declared they had put aside savings. There are no other disparities between answers given by different demographic groups.

 

These are just some ways to prepare for economically difficult times. Read on to get tips recommended by financial experts.

 

How to recession-proof your life

 

No matter how worried, scared, or insecure you may be, keep panic aside.

 

Even if downturns are a normal part of the economic cycle and a recession is inevitable, you can take some financial moves to prepare for it.

 

  • Reduce expenses and have an emergency fund. Start examining things you spend money on and consider where you can make savings. In light of a potential recession, a rainy day fund may not be enough. Focus instead on a true emergency fund, which may turn out to be a lifesaver in economically challenging times. Most financial advisors recommend having enough savings to cover three to six months of living expenses.
  • Pay off as much of your debts as possible. Just in case. Better safe than sorry. Especially, with rising interest rates and so many people losing their jobs.
  • Have additional source(s) of income. More jobs give more job security, basically. A source of extra income is always a good idea. It can be anything, for example, selling collectibles on eBay.
  • Invest for the long term and diversify your investments. Think ahead, diversify holdings, and be realistic about how much risk you can handle. Also, don’t keep all of your money in one place.
  • Update your resume—improve your skills, get new qualifications, or go back to school to get an advanced degree. It will help you stand out in a candidate pool in case of searching for a new job. A broad and diverse skill set combined with a decent education have the power to improve your future employment opportunities, regardless of the economy.

 

Feeling a bit better equipped with this new valuable knowledge? Same here. 

 

Silver linings of recession clouds?

 

Thinking about possible future benefits is hard when the present hits you in the wallet.

 

Still—

 

However ridiculous it may sound for those of us trembling in economical fear now, financial experts believe that there are at least some long-term positive sides of recessions.

 

Let’s check what the benefits are. Recessions can:

 

  • Balance everyday costs.
  • Change our mindset when it comes to money.
  • Make inefficient companies change for the better.
  • End the misallocation of investment capital
  • Provide opportunities for attractive returns for investors in the long run.

 

Not convinced?

 

Regardless of your opinion, try to keep your spirits up even when times are down. We’re in this together.

 

Probably the best thing about recessions is that they don’t last forever.

 

Key takeaways

 

Here’s a recap of our findings:

 

  • Employees with 3-5 years of work experience (70%), respondents who are 25 years or younger (69%), and those earning $50 000 to 74 999 (69%), feel best about the labor market
  • Employees earning less than $25 000 (20%), those with at least 11 years of work experience (19%), and those with no college degree (18%) feel the worst about the labor market.
  • 4 in 10 respondents are pessimistic about the future.
  • Almost half (46%) feel less secure in their jobs now than a year ago.
  • As many as 58% believe that they’re likely to lose their job in the next six months. 
  • 8 in 10 are looking for a new job now because of the potential recession.
  • Although 71% believe their financial situation is good or very good, only 6 in 10 said they could buy a new pair of shoes today.
  • 8 in 10 claimed that rising inflation had already affected their standard of living.
  • 82% believe there will be an economic recession in the US in 2022. What’s more, this prospect worries 9 in 10 survey takers.
  • The worst aspects of a recession are considered to be: difficulties with finding a new job (45%), risk of losing current job (41%), and being unable to pay rent or mortgage (29%).
  • Respondents’ contingency plans for losing a job involve mainly: investment in stocks (55%), putting aside savings (48%), and investment in cryptocurrency (45%).

 

Methodology

 

The above-presented findings were obtained by surveying 1054 American respondents online via a bespoke polling tool. They were asked questions relating to their attitudes toward the current economic outlook, recession, and US labor market in 2022. These included yes/no questions, scale-based questions relating to levels of agreement with a statement, questions that permitted the selection of multiple options from a list of potential answers, and a question that permitted open responses. All respondents included in the study passed an attention-check question.

 

Limitations

 

The data presented relies on self-reports from a randomized group of respondents. Each person who took our survey read and responded to each question without any research administration or interference. There are many potential issues with self-reported data like selective memory, exaggeration, attribution, or telescoping. Some questions and responses have been rephrased or condensed for clarity and ease of understanding for readers.

 

Fair use statement

 

Want to share the findings of our research? Go ahead. Feel free to use our images and information wherever you wish. Just link back to this page, please—–it will let other readers get deeper into the topic. Additionally, remember to use this content exclusively for non-commercial purposes.

 

Sources

 

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Dominique Goldschmitt
Dominique Goldschmitt
Dominique is a career expert specializing in resume and cover letter writing advice. Having worked for both start-ups and corporations, she knows all the ins and outs of the recruitment process. At ResumeLab, Dominique shares her knowledge with job seekers at all stages of their career paths, from interns to directors to C-suite members.

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