GSU Forecaster: U.S. Economy is in a White-Collar, Middle-Management “Recession”

Wednesday, September 20th, 2023

Job compression in sectors ranging from corporate to transportation resulting in fewer homeowners moving up to bigger and better jobs, combined with a reluctance to take on higher-rate mortgages, has put the nation in a white-collar, middle-class, middle-management “recession,” according to Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business.

Dhawan said the thinning of middle-management ranks began during Covid lockdowns. “Businesses realized technology made it possible to run operations remotely without a large number of supervisors and reduced their ranks. Those jobs are not coming back.”

Frontline employees are a different matter. “Whether a corporation or a restaurant, no business will let go of their frontline employees. Businesses learned their lesson after cutting frontline employees during Covid when they found out how hard it was to recall employees when consumer demand returned,” the forecaster said. “This difficulty filling frontline positions had never been the case during prior recessions, which has now created a situation of ‘labor holding,’” Dhawan said.

“This isn’t a recession in the traditional definition because job creation is continuing in the healthcare, hospitality and construction sectors,” Dhawan said. “But that’s not balanced growth. During the so-called ‘Goldilocks economy’ of the late 1990s, two high-paying jobs were created for every one low-paying job. That is not the case now. High-paying job growth is completely stalled. The question is whether or not Federal Reserve rate cuts can spark a reversal.”

Not so easily, according to the forecaster.

“Gross domestic product (GDP) growth in the last quarter may look good on paper, but parsing the investment spending numbers tell a different story,” Dhawan said. “Investment growth during the second quarter came from specialized areas with one-time effects that were accounting in nature – 

Boeing’s delivery of already manufactured aircraft and vehicle makers’ sales of light-trucks had been held up by chip shortages. The lead economic growth indicator is capital expenditures (CapEx) in technology-based equipment and software. CapEx has been weakening steadily for the past nine months, which is not a good indicator for maintaining 2.5 percent growth going into the future.”

The Fed is done with raising rates, according to Dhawan who posited that “the last few hikes were to buy extra insurance against inflation resurgence.” Consumer-price-index-based inflation has declined from nine percent to just three percent over the past 9-10 months, the fastest drop in living memory. Bank lending standards have tightened sharply since last year, and more so since the March banking crisis. This means that small businesses depending on bank credit lines will feel the impact denting their growth prospects.

“Beginning in spring 2024 when the economy starts to bounce along the bottom, the Fed will come out with rate cuts, and people will be surprised by their aggressive pace,” Dhawan said.

Post-Covid, consumers are continuing to spend. “They have shifted their firepower from purchasing goods to buying services,” Dhawan said. “There is a lot of pent-up demand for domestic travel by car and by air, and that’s not going away anytime soon. This demand, combined with OPEC whittling its oil supply, has pushed up the price of oil by $15 per barrel over the last two months.”

“But it’s not all doom and gloom,” Dhawan said. “Even in this sea of turmoil there are islands of growth.”

Georgia is coping with international factors that are slowing domestic economic growth. But the building of new manufacturing plants and facilities for electric vehicle makers and their numerous parts suppliers – particularly outside the Atlanta metropolitan area – will pay immediate dividends in terms of construction spending and related multiplier effects, followed by future employment growth when the plants are staffed in a few years, according to Dhawan.

“Although the world has emerged from the downturn of the Covid pandemic, multiple factors are contributing to sputtering global economic growth,” Dhawan said. “China is not yet firing on all burners, which is holding down the rest of Asia. The Ukrainian-Russian conflict is casting a dark shadow over European growth. And Latin America economies are not performing well due to factors including bad debt, currency mismanagement and a lack of commodity demand from China.”

Looking at job growth in the Peach State, Dhawan said that overall job addition numbers are positive and will remain so but the jobs will lack purchasing power.

“Georgia’s corporate sector is shedding jobs, especially in the tech and middle-management arenas,” Dhawan said. “And consumers pulling back on Covid-induced spending on goods has shown up as a sharp slowdown in sales tax collections which were running in the high double digits a year ago and are now a low, single digit number.”

Although most Atlanta-based global companies are coping with a downturn, Dhawan pointed out one notable exception. “The city’s largest private corporate employer, Delta Air Lines, which would traditionally suffer in a slowdown, is faring well due to a post-Covid demand for travel.”

Highlights from Rajeev Dhawan’s Economic Forecast of the Nation, Georgia and Metro Atlanta


  • Georgia jobs: The state added 162,500 jobs (47,300 premium jobs) in calendar year 2022, but will moderate sharply to 50,800 jobs in 2023 (5,100 premium). In 2024, the state will add only 35,800 jobs (3,500 premium) and 85,000 jobs (21,200 premium) in 2025.

  • Georgia’s nominal personal income will grow 5.4 percent in 2023, a lower 4.7 percent in 2024, and a better 5.5 percent in 2025.

  • Atlanta jobs: The metro area added 107,300 jobs (32,400 premium) in 2022, but will add an anemic 32,700 jobs (3,100 premium) in 2023, and 24,500 jobs (2,200 premium) jobs in 2024. As recovery takes hold in 2025, the metro area will add a respectable 61,600 jobs (14,600 premium).

  • Atlanta housing permitting activity increased by 19.0 percent in 2022; single-family permits dropped by 20.2 percent, but multi-family permits rose sharply by 170.2 percent. Permit numbers will fall by double digits in both categories in 2023 for an overall decline of 24.3 percent and then drop again by 18.4 percent in 2024. Normalcy will return somewhat in 2025 when permit activity grows by a meager 4.1 percent.

  • U.S. GDP growth will moderate sharply from the expected 2.3 percent in the third quarter of 2023 to less than 0.5 percent in the first half of 2024. As sharp Fed rate cuts start taking hold in Spring 2024, economy will recover by late 2024, and GDP growth will average a trend-like 1.8 percent in 2025.

  • National job growth will turn mildly negative by the first half of 2024 at 68,000 monthly losses, rebounding to 75,000 job gains by mid-2025 as Fed rate cuts spur back investment spending. Job growth will be a better 115,000 monthly rate by late 2025.

  • CPI inflation will come down from its 8.0 percent rate seen in 2022 to 4.1 percent in 2023, moderate to 2.7 percent in 2024, and be 2.5 percent in 2025. Core inflation after averaging 4.9 percent in 2023 will steadily climb down to be 2.4 percent in 2025.

  • The 30-year mortgage rate will average 6.6 percent in 2023, moderate sharply to 5.7 percent in 2024, and further decrease to 5.4 percent in 2025.