A 2023 recession would mean job losses for most industries even as others add workers


The mild recession that economists are predicting this year will likely mean job losses for most U.S. industries, from manufacturing to professional services.

But some sectors will be slammed harder than others, experts say. A few will eke out small gains in a tough environment. And a couple is poised to thrive despite any downturn.

Industries that rely on low borrowing costs and demand for consumer goods will likely be hurt most now that the Federal Reserve has raised interest rates sharply and Americans are shifting their spending from goods to services.

“We expect a slowdown pretty much across every industry,” says economist Dante DeAntonio of Moody’s Analytics.

But he added, “You’ve got pockets of weakness…All the interest-rate-sensitive industries will likely struggle more.”

And, he says, “Service industries are set to do better than goods-producing industries.”

That means jobs will probably be lost in manufacturing, construction -- particularly housing -- and retail.

What industries will grow in 2023?

Health care, education and government should post solid gains.

Other service sectors, such as leisure and hospitality, could see roughly stable employment with minimal gains or losses. The industry faces countervailing forces as the health crisis continues to ease even as a downturn crimps household spending.

“This is not going to be a stereotypical recession,” says economist Mike Montgomery of S&P Global Market Intelligence. “There are so many crosscurrents.”

Will the U.S. economy lose jobs?

Overall, S&P predicts the U.S. will lose a net 1.3 million jobs this year – after figuring in hiring, layoffs, and attrition – following a record 6.7 million job gains in 2021 and 4.5 million last year, the second most ever.

By comparison, the nation lost 8.7 million jobs in the Great Recession of 2007-09 and 22 million in the COVID-induced slide of 2020.

Some economists believe the U.S. will dodge a recession as slowing inflation leads the Federal Reserve to halt its rate hikes sooner than expected this year. The Fed is expected to scale back its rate increases again Wednesday to a quarter point.

Moody predicts the nation will avoid recession as it adds a modest 855,000 jobs in 2023.

The jobs report due out Friday will provide the year’s first snapshot of the labor market, with economists estimating 185,000 jobs were added in January, down from 223,000 in December. and an average of 375,000 last year. 

Here’s how job growth could perform in various industries this year, according to S&P’s forecast, starting with those hit hardest percentage-wise.


Construction worker carrying lumber.  

Employment forecast: Decline of 330,000, or 4.3% of jobs

Construction is set to absorb heavy payroll losses as high-interest rates dampen home building. Housing starts fell for the fourth straight month in December. Commercial construction is also weak as many Americans work from home, leaving office vacancy rates high and squashing demand for new office buildings.

Housing boomed early in the pandemic as people moved to bigger houses in the suburbs and took advantage of historically low-interest rates. Construction payrolls reached a record 7.8 million in December, according to the Labor Department and research firm SMBC Nikko.

But, “Construction employment can remain elevated just up to the point of the recession,” says SMBC Chief U.S. Economist Joe LaVorgna.

Professional and business services

Office worker performs task on a PC.  

Employment forecast: Decline of 959,000, or 4.3% of jobs

Most of the losses – 857,000 -- will be among staffing agencies as hiring slows and employers cut lots of temporary workers, Montgomery says. They’re typically the first let go in a downturn since they don’t get severance payments and their layoffs inflict less damage on staff morale.

Temporary help services have shed jobs for five straight months.

Other types of professional services – including lawyers, accountants, engineers, and architects – could see modest job losses as the U.S. enters a recession, Montgomery says.


Man working at a factory machine.  

Employment forecast: Decline of 412,000, or 3.2% of jobs

Manufacturing is already in recession territory with activity declining for the third straight month in January, according to the Institute for Supply Management. Consumers who splurged on furniture, appliances, and used cars while they were stuck at home early in the pandemic have shifted their purchases to services.

Also, manufacturers have excessive inventories after bulking up to cope with supply-chain troubles that are now easing, Montgomery says.

And weak growth in foreign countries – combined with a strong dollar that makes U.S. goods more expensive overseas – have reduced the production of items for export.

But not all sectors will get hammered. Makers of wood products, furniture, and metals will be battered by the pullback in housing and commercial construction, Montgomery says. And the production of factory machines should fall as high-interest rates make the purchases less affordable, says Tom Runiewicz, an industrial economist at S&P.   

But auto manufacturing was decimated early in the crisis as chip supply problems doused production and sales, and it should rebound now that the snarls are being resolved, Montgomery says.

At its 75-employee plant in Lincoln, Nebraska, Yasufuku USA, which makes parts for cars, jet skis, and farming vehicles, is ramping up hiring on its auto team, says Senior Manager Carsen Kuehl. But the factory is adding fewer workers in jet ski part-making as consumers rein in discretionary purchases, says Senior Manager Carsen Kuehl.

"It's just been all over the board," he says.


(FILES) In this file photo taken on June 27, 2022, a worker walks along a path at Googles Bay View campus in Mountain View, California. - Google's parent company Alphabet announced about 12,000 job cuts globally on January 20, 2023, citing a changing "economic reality", becoming the latest US tech giant to enact large-scale restructuring. The layoffs come a day after Microsoft said it would reduce staff numbers by 10,000 in the coming months, following similar cuts by Facebook owner Meta, Amazon and Twitter as the previously unassailable tech sector battles a major economic downturn. (Photo by NOAH BERGER / AFP) (Photo by NOAH BERGER/AFP via Getty Images) ORIG FILE ID: AFP_337G9LU.jpg
Google's parent company Alphabet announced about 12,000 job cuts in January.  

Employment forecast: Decline of 67,000, or 2.2% of jobs

Consumers are likely to scale back phone and cable services as recession worries and layoffs mount, Montgomery says. Meanwhile, Internet giants like Facebook owner Meta, Twitter, and Google already have announced more than 200,000 layoffs since last year and job cuts are projected to spread.

Financial activities

This Wednesday, Oct. 18, 2006 file photo shows the charging bull in lower Manhattan in New York. Police have arrested a 33-year-old woman accused of dumping blue paint over the iconic "Charging Bull" statue on Wall Street. Police say Courtney Fallon was arrested Friday, Sept. 15, 2017 on charges of making graffiti and criminal mischief. (AP Photo/Mary Altaffer, File) ORG XMIT: NY123
The bull statue in Manhattan's Wall Street area  

Employment forecast: Decline of 141,000, or 1.6% of jobs

Goldman Sachs, among other Wall Street firms, has announced thousands of job cuts as higher interest rates dampen borrowing and the stock market’s sell-off last year discourages mergers.

Leisure and hospitality

Fast-food restaurant worker handing food to a drive-thru customer.  

Employment forecast: Decline of 37,000, or 0.2% of jobs

The industry -- which includes restaurants, hotels, sports arenas, and movie theaters -- could endure small payroll losses as it grapples with the effects of a slump, with many Americans dining out and traveling less often.

But after struggling to add workers since 2020, restaurants are more likely to slow hiring than lay people off, Montgomery and DeAntonio say.

At the same time, many people are still resuming going to movies, sporting events, nightclubs, and other entertainment venues as the pandemic become less imposing, Runiewicz says. Leisure and hospitality employment are 932,000 below its pre-pandemic level.

In other words, it could be a close call. Moody’s predicts the industry will gain about 370,000 jobs.


3. Retail trade     • Pct. of workers who quit in Nov. 2021:  4.4%     • Number of quits in Nov. 2021:  686,000     • Number of job openings as of Nov. 2021:  1 million
Retail worker helps customers.  

Employment forecast: Decline of 202,000, or 1.3% of jobs.

The diverse industry is broadly set to be pinched as consumers downshift their spending in a recession and buy more services than goods. Retail also has lost workers because of a long-term shift to online shopping.

But while most retail categories – including general merchandise, apparel, furniture, and groceries –will likely be affected, auto dealers are expected to benefit from the smoother-flowing supply chain, Montgomery says.

Transportation and warehousing

A trucker smiling in his cab.  

Employment forecast: Decline of 37,000, or 0.5% of jobs

Truck fleets and warehouse companies will likely feel the effects of the weakness in manufacturing. 


The West Virginia State Capitol Building stands in Charleston, West Virginia. It's home to the West Virginia state government.
The West Virginia State Capitol Building stands in Charleston, West Virginia. It's home to the West Virginia state government.  

Employment forecast: Gain of 243,000 workers, or 1.1% of jobs

State and local governments benefited from COVID-related stimulus funding and healthy tax revenue during the pandemic's housing boom, Runiewicz says. They're still 452,000 jobs below their pre-COVID level and trying to catch up.

Education and healthcare

A trio of doctors talk while standing at a nurse's station in a hospital.  

Employment forecast: Gain of 536,000, or 2.2% of jobs

Americans are still undergoing elective surgeries and other treatments they put off during COVID. Baby boomers are aging, increasing the demand for health services. And hospitals are still struggling to hire nurses and other workers after many quit during the pandemic, Montgomery and DeAntonio say.

Meanwhile, schools are still trying to add workers after reopening in-person learning following COVID-related lockdowns.

Oil exploration and production is expected to add jobs this year.  

Mining and logging

Oil field services worker holds helmet in front of a rig.  

Employment forecast: Gain of 36,000, or 5.6%, f jobs

Oil exploration and production should record strong gains as energy demand remains sturdy while global supplies are limited by Russia's war in Ukraine. Although gasoline demand could soften in a recession, the industry is still catching up from sharp declines in investment and employment early in the pandemic, Montgomery and DeAntonio say.

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