The temporary employment market has been a reliable barometer of recession risk for decades and is once again sending warning signs of an impending downturn. But it’s probably a bit early to overestimate the leading indicator.
The emphasis on temporary work is clearly based on historical data and logic. For as long as recruitment agencies have existed, companies have used them to stay agile during economic tipping points. Temporary workers are often hired first in an incipient expansion and first laid off in a downturn, so economists have learned to watch them for clues at least since researchers Lewis Segal and Daniel Sullivan wrote about the phenomenon in 1995. In a speech at the University of Chicago’s Booth School of Business this month, Federal Reserve Vice Chair Lael Brainard urged even temporary workers to:
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