The same subtle tension can be found in any midsize accounting firm in any American city: a few fewer junior analysts than two years ago, a management team that won’t quite reveal their plans for the upcoming hiring cycle, and a new AI platform handling an increasing amount of what those analysts used to do. No widespread layoffs have been announced. It’s not being referred to as a recession.
However, the number of employees is decreasing, the task is being completed, and the former employees are now elsewhere, attempting to determine what their future professional path entails. From the inside, the next recession is beginning to resemble this in dozens of industries at once, yet it hardly resembles what most economists were taught to identify as a downturn.
Recessions in contemporary economic memory are characterized by a trigger, a precipitous decline, a trough, and ultimately a recovery. Over the course of several months, the 2008 financial crisis—which began with mortgage-backed securities—spread throughout the banking system, causing unemployment rates to rise sharply before gradually declining again as the cycle continued. Similar events occurred after the 2001 dot-com collapse: an asset bubble, a correction, a challenging few years, and finally reconstruction.
Even the more difficult and protracted stagflation of the 1970s followed a clear pattern of institutional response and cause. The Federal Reserve rapidly increased interest rates. Eventually, inflation broke. There was a second act to the story. Because it lacks a clear beginning, a crisis point, and a clear recovery mechanism, what is currently being projected is more difficult to describe.
In economic discourse, the phrase “rolling recession” has begun to arise frequently enough to imply that it describes an actual phenomenon rather than a rhetorical device. The theory is that, rather than the economy as a whole contracting all at once, individual sectors are staggering their declines—manufacturing, then commercial real estate, then technology hiring, then retail—while other sectors boom concurrently.
This prevents aggregate GDP figures from declining to the point where a recession is formally declared, even though millions of people are living in conditions that feel exactly like one. When combined with a “K-shaped” split in the consumer experience, where lower-income households bear the full impact of inflation while higher-income households continue to spend largely unaffected, the outcome is an economy that appears fine on paper but feels awful in practice for a significant portion of the populace.
This recession deviates the greatest from any prior template in the AI displacement factor. Previous recessions resulted in cyclical job losses, which were unpleasant but eventually recoupable due to the underlying demand for the employment. The permanence is what’s different now. When a bank replaces junior analysts with a loan application processing software platform, such jobs do not return when the economy strengthens.
After the next upswing, a logistics company that automates dispatch coordination does not rehire dispatchers. On the other end of the cycle, the jobs are not waiting. This is structural unemployment in real time, spread across industries, and occurring at a rate that has outpaced the majority of policy talks regarding solutions.
Everything is made worse by the policy issue. Governments had the fiscal resources to write huge stimulus checks in 2008 and 2020, and central banks had flexibility to drastically lower interest rates. These days, those tools are severely limited. The level of the national debt is higher than it has ever been. In several categories, inflation is still higher than it was before the outbreak.
When the fiscal buffer has shrunk to this extent and employment losses are structural rather than cyclical, it is still unclear what the equivalent of a stimulus package looks like. Observing economists and politicians deal with this in real time gives the impression that there may not be a chapter in the playbook they were taught on that applies to the current circumstances, which is in and of itself a reason to be closely watching what happens next.
