Expert Predictions: Will I Lose My Job in 2023?

If the economy slows, companies might slow their hiring or lay people off.

The questions of whether people will lose their jobs and whether we'll enter a recession are closely correlated. On the one hand, the job market has remained relatively strong in recent months. On the other, warnings of a 2023 recession -- which could result in job losses -- have been coming thick and fast.

Inflation in the U.S. continues to be high, and the Federal Reserve has been aggressively raising interest rates to try to bring it down. The idea is that the Fed can put the brakes on the economy by increasing the cost of borrowing. However, some fear that if the Fed's rate hikes trigger a serious recession, the cure will be worse than the disease.

Will I lose my job in 2023?

Economic predictions often vary dramatically, and even more so in the aftermath of an unprecedented global pandemic. In some respects, we're now in uncharted waters. Not only does this make it hard to know how likely a recession really is, it's also unclear how long or how severe it could be. The deeper the recession, the more likely we are to see job losses.

Here's what some top economists and organizations predict is coming next year.

Bank of America: The U.S. could lose 175,000 jobs a month

A recent Bank of America report warned that job growth could fall sharply next year. According to its charts, the U.S. could lose 175,000 jobs a month for parts of 2023. Michael Gapen, head of US economics at Bank of America told CNN the bank envisaged a "harder landing." A hard landing is a sudden, significant economic drop. In contrast, a soft landing which would entail a more gentle, and likely shorter recession. A hard landing would not be good for the job market.

The Federal Reserve: Unemployment could rise to 4.4% by end of 2023

At a press conference following the latest interest rate hikes, Federal Reserve Chair Jerome Powell stressed their commitment to lowering inflation, even if it meant increased unemployment. He pointed to an unbalanced labor market with unemployment at a 50-year low and job vacancies near historical highs. In his view, a failure to deal with inflation would cause more pain further down the road.

The trouble is that if unemployment rises to 4.4% by the end of next year, as he forecasted, that could translate into 1.3 million U.S. job losses. Powell said that level of job loss is not a certainty, but it is possible. "We certainly haven't given up the idea that we can have a relatively modest increase in unemployment," he said.

Olivier Blanchard: Inflation can't be tamed without unemployment rising

Olivier Blanchard is a well-known economist and former chief economist at the International Monetary Fund and he is not optimistic about 2023. He thinks that companies will start to lay people off and slow their hiring if sales decline, which he says is likely.

Speaking to the Goldman Sachs newsletter, Blanchard said it was almost impossible to curb inflation without triggering a recession "Some observers seem to be hoping for an immaculate conception outcome in which job openings decrease and unemployment doesn't increase, but I see zero possibility of that outcome," he said.

Protecting your career against recession

There is a very good chance the job market will restrict next year, though it isn't clear how widespread any layoffs will be. If you're worried about what might happen to your job, here are some steps you can take to protect yourself professionally and financially.

• Prioritize your emergency fund: An emergency fund with at least three to six months' worth of living expenses is an important cushion against being laid off. Having that money in an accessible savings account will give you time to look for a new job, without having to take on debt or sell off your investments. If you don't have an emergency fund, any steps you can take to build one now could help you out next year.
• Make a plan: It's much easier to make a plan now while times are good than when you're actually dealing with a job loss. Think about how you might go about applying for new jobs, what skills you might need, and who might be able to help you. If you're already thinking about changing direction, how might you make this a reality?
• Reconnect with your network: Many people lost contact with their professional connections during the pandemic. There's no harm in reaching out to people now to see how they are doing and what they are thinking. It might make it easier to ask for help further down the line.

Bottom line

We don't know for sure whether a recession will hit next year, nor how much it might impact the job market. However, there is a strong possibility we'll see some form of economic decline, so it's worth being prepared.