Why Are Companies Still Hiring When GDP Is Shrinking?

“A persistent economic puzzle is why labor is still so tight amid slowing growth, high inflation and growing fears of recession,” the Wall Street Journal reports.

“Gross domestic product growth slipped into negative territory in the first half of the year. Borrowing costs have risen steeply as the Federal Reserve boosts interest rates in an attempt to reduce inflation. Even so, monthly payrolls have grown an average of 438,000 from January through August, nearly three times their 2019 prepandemic pace.”

“Many employers say they continue to struggle with large staffing shortages that built up during the pandemic and are reluctant to cut head count. In many cases, they are still hiring.”