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Financial Planning

Fortune 500 Employees: Is the U.S. Economy in a Recession?

According to a recent study conducted by AARP (American Association of Retired Persons) in June 2023, it was found that retirees aged 60 and above who experienced a recession during their working years were more likely to be concerned about the impact of a potential recession on their retirement savings. The study revealed that 74% of respondents who had lived through a recession felt uneasy about the current economic climate and its potential implications for their retirement finances. As a Fortune 500 employee, you must be aware of current events that may have an impact on your position.

Due to the high level of public concern, Fortune 500 employees and retirees may find it useful to examine the official definition of a recession and some current indicators of the health or weakness of the U.S. economy.

Business Cycle Dating

The Business Cycle Dating Committee of the National Bureau of Economic Research (NBER), a nonpartisan private organization that began dating business cycles in 1929, measures and declares recessions and expansions in the United States. Composed of eight economists specializing in macroeconomic and business cycle research, the committee was established in 1978.3 Fortune 500 employees who wish to allocate assets in the market must have a comprehensive understanding of recession and expansion metrics.

According to the National Bureau of Economic Research, a recession is "a significant decline in economic activity that is widespread across the economy and lasts for more than a few months." The committee considers the big picture and makes exceptions as necessary. For example, the economic decline in March and April of 2020 was so severe that it was classified as a recession despite lasting only two months.4

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To determine economic activity peaks and valleys, the committee analyzes a variety of monthly economic data, focusing on six indicators: personal income, consumer expenditure, wholesale-retail sales, industrial production, and two employment measures. This is vital information for Fortune 500 employees to comprehend. Because official data is typically reported with a one- to two-month lag and patterns may not become evident until after the fact, it typically takes the committee a while to identify a peak or trough. By the time they were formally announced, some fleeting recessions, including the one in 2020, had ended.5 This information is useful for employees of Fortune 500 who make investment decisions because it clarifies the concept of market timing and describes how information is disseminated.

Strong Employment

Fortune 500 employees may have observed recent inconsistencies in economic data. In May, consumer spending fell after adjusting for inflation, but rebounded in June.The 6th of June saw robust retail sales, but manufacturing output fell for the second consecutive month.7 Employment data has proved to be the most dependable and robust data set. The economy added 372,000 jobs in June, marking the third consecutive month of job growth in this range. Total nonfarm employment is now only 0.3% below pre-pandemic levels, and private sector employment is actually higher (offset by declines in government employment).

The unemployment rate has remained at 3.6% for four consecutive months, which is essentially the same as before the pandemic (3.5%), which was the lowest rate since 1969.Mid-July saw a slight rise in the number of initial claims for unemployment, but the rate remained near record lows.10 The unemployment rate has increased by a median of 3.5 percentage points in each of the 12 recessions that have occurred since World War II.11 Fortune 500 employees must capitalize on this distinguishing metric and reevaluate their market and economic outlook.

Negative GDP Growth

Fortune 500 employees must be aware of the common definition of a recession (a decline in real gross domestic product (GDP) for two consecutive quarters) and how the current economic climate meets this criterion. Real (inflation-adjusted) GDP declined 1.6% annually in the first quarter of 2022 and 0.9% annually in the second.12 Due to the quarterly reporting of GDP, the NBER committee cannot use it to measure monthly economic activity, but it does use it to broadly define recessions. Fortune 500 employees benefit greatly from understanding the definition of a recession because it enables them to make informed market decisions during periods when retail investors are considerably more uncertain.

Since 1948, two consecutive quarters of negative GDP growth have always been followed by the declaration of a recession. Despite this, it is crucial to consider how anomalies in the current employment market and GDP data could make the current situation exceptional.13

Negative first-quarter GDP was caused primarily by a record U.S. trade deficit, as businesses and consumers purchased more imported goods to meet demand. This demonstrated economic strength, not weakness. Consumer spending and corporate investment, the two most important components of gross domestic product, both grew during the quarter.14

The initial second-quarter GDP data revealed a strong positive trade balance but sluggish growth in consumer spending, with an increase in services spending and a decrease in commodities spending. The most significant negative factors were a decline in residential construction and a substantial decrease in the development of business inventories.15 Even though inventory reductions can precede a recession, it is too soon to tell if they portend trouble or simply represent a return to more reasonable levels.16 Until additional monthly data becomes available, it may be impossible for economists to determine whether the economy is contracting.

The Inflation Factor

Given the level of employment, it is debatable whether the current economic climate constitutes a recession. However, Fortune 500 employees must keep in mind that the employment market could change and that both fear and fundamental economic weakness can cause recessions.

The inflation rate of 9.1% in June, the greatest annual rate since 1981, is a cause for concern.17 Fortune 500 employees may have noticed that wages have increased, but not by enough to counteract the erosion of purchasing power, which has caused many consumers to become more wary despite the robust job market.18 Even if a recession is not currently occurring, it is undoubtedly possible if consumer spending slows significantly.

Inflation has compelled the Federal Reserve to raise interest rates aggressively, beginning with a 0.50 percent increase in the federal funds rate in May, followed by 0.75 percent increases in June and July.19 It takes time for the effects of higher interest rates to permeate the economy, and it remains to be seen whether the economy will experience a "soft landing" or a more precipitous, recession-causing stop.

No one possesses a crystal ball, and economists' predictions vary widely, ranging from a remote possibility of a recession to an imminent downturn with a moderate recession in 2023.20 Fortune 500 employees and retirees should remember that recessions are typically fleeting, lasting an average of 10 months since World War II. The typical length of economic expansions is sixty-four months.21 Simply put, good experiences tend to last longer than bad ones.

The forecasts are based on current conditions, are subject to change, and may not occur.


According to a study conducted by the Stanford Center on Longevity, Americans aged 50 and older are most concerned about running out of money in retirement. National Institute on Retirement Security research indicates that the median retirement account balance for those aged 55 to 64 is only $144,000, which is insufficient for the majority of retirees to maintain their standard of living. Therefore, Fortune 500 employees nearing retirement age should ensure they have saved enough for retirement and maximize their savings potential by participating in employer-sponsored retirement savings plans, such as 401(k)s.

Navigating the economy is akin to sailing through uncertain waters. Just as a seasoned sailor reads the currents and weather patterns to chart a successful course, Fortune 500 employees nearing retirement or current retirees must pay attention to economic indicators. Think of the economy as the vast ocean, sometimes calm on the surface, but with hidden storms and currents beneath. By staying informed about the state of the U.S. economy and understanding recession indicators, like analyzing the weather conditions at sea, they can adjust their retirement plans and ensure a smooth and prosperous journey towards financial security and a fulfilling retirement.


1) Investor's Business Daily, July 12, 2022
2) The Wall Street Journal, July 17, 2022
3–5) National Bureau of Economic Research, 2021
6, 12, 15, 21) U.S. Bureau of Economic Analysis, 2022
7) Reuters, July 15, 2022
8–9, 17–18) U.S. Bureau of Labor Statistics, 2022
10) The Wall Street Journal, July 14, 2022
11) The Wall Street Journal, July 4, 2022
13–14) MarketWatch, July 5, 2022
16) The Wall Street Journal, July 28, 2022
19) Federal Reserve, 2022
20) The New York Times, July 1, 2022


This material was prepared by Broadridge Investor Communication Solutions, Inc., and does not necessarily represent the views of The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

The Retirement Group is not affiliated with nor endorsed by your company We are an independent financial advisory group that focuses on transition planning and lump sum distribution. Neither The Retirement Group or FSC Securities provide tax or legal advice. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

The Retirement Group is a Registered Investment Advisor not affiliated with FSC Securities and may be reached at www.theretirementgroup.com.

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