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Are we in a recession? Because when we are, it’s very strange.

Sure, we have two quarters of negative economic growth. The demand for manufacturing is shrinking. Construction and housing market activity has slowed. Tech companies are contractors. Financial services and real estate companies are laying off people. Inflation and energy costs remain stubbornly high, interest rates are rising and the stock market is down 18% since the beginning of the year. Just Google “recession” and you will find that the housing market in one, big banks and investors warn of one in Europe goes to one. Over 80 financial advisors say a recession is “coming” and one major investor thinks it will be a “Whopper.”

Maybe we are in a recession. Or maybe it will. But when there are recessions—or even the strong prospect of one—companies lay off people. That’s not happening, is it? The attitude continued to rise. The unemployment rate remains at historically low levels. Jobs are near an all-time high. And here’s the real shocker: the majority of small businesses in the United States — which employ more than half of the nation’s workforce — are not only looking to hire, but struggling to find employees, according to recent survey responses released by the National Federation of Independent Business and employment data from the HR firm Paychex.

“Small businesses are still not showing strong recession signals,” Paychex’s CEO told CNBC last week.

So why are businesses – especially small businesses – looking for workers, instead of firing them?

First, it is increasingly difficult to generalize about the US economy. There are 350 million people and 30m small businesses in this country. Our economy is still 60% bigger than China’s and bigger than Japan, Germany, Great Britain, France and Italy combined. The economy of California is bigger than that of India. The economy of New York is bigger than that of Canada.

You can’t just say “we’re in a recession”.

At any given time in the United States, some industries and regions are doing better than others. Construction, financial services and manufacturing are struggling. So is the energy industry. But given job gains since the pandemic, business services, retail, transportation and warehousing are rocking it. The leisure and hospitality industry has lost the most jobs of any industry since the pandemic, but appears to be clawing its way back. Alaska, New Mexico, New York and Pennsylvania, for example, had unemployment rates higher than the national average, while states such as Minnesota, Florida and North Dakota registered very low unemployment rates. A city where their biggest employer is struggling will struggle with it. But the opposite is also true.

So is the US in a “recession”? Judging from the above, the answer depends on who you ask.

The other reason most small businesses are looking to hire is because most small business owners are not stupid. Democrats will tell us there have been historic job gains the last two years, but we know that’s because the bar was set to zero because of the pandemic. Republicans will warn of recessions and high inflation, but we know that these things are caused by a myriad of factors—European wars, Asian supply chains, and fiscal and monetary policy here in the United States—and that these factors will eventually resolve themselves, though maybe not as fast or as far as we would like. We are not duped by politicians or rhetoric. We live this reality every day. And our reality is that – for most – demand remains relatively strong.

And if there’s one thing I’ve learned, it’s that my smart clients, the business owners who’ve been doing what they’re doing for decades, even generations, are always looking ahead. They are not thinking so much now about 2022 or even the first half of 2023. They are making plans and investments for 2024 and beyond. They know they have people – customers, partners, employees (and their families) – who depend on them for their livelihoods. They, like me, do not see huge bubbles and economic disaster on the horizon. We could be wrong, of course. But we are placing our bets now for the future.

And we still know that people are our most valuable asset. Sure, many companies are replacing less skilled workers with robots and automation. But nothing can replace a skilled employee who is great at their job. Find me someone like that and I’ll hire that person whether we’re in a recession or not. I know that, if treated well, this person will add long-term benefit to my company regardless of the short-term investment.

So no, we are not in a recession. And yes, we are in a recession. And no we are not hiring. But yes, we are. You can make the case either way. That’s what people do. They are right. They are wrong. Arguing away. In the meantime, small businesses that are either in strong industries or growing geographic regions will continue to thrive. And even those who are not, will not pass up the opportunity to invest in good people for when things eventually turn around.

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