Labor Hoarding Holds Key to How Severe a US Recession May Get

A furniture-manufacturing hub around Elvis Presley’s hometown in Mississippi potentially offers an answer to one of the top questions facing the US economy: Will employers hold on to workers as demand slows, or shed the staff they fought so desperately to hire during the pandemic?

If American businesses can resist laying off workers in the face of declining sales at the scale they did in past downturns, the country has a better chance of skirting a deep recession.

Furniture manufacturers in the Tupelo area have already been hit hard by a slump, with orders declining by at least 25% in a few months, according to local executives. How the industry responds may prove to be a test case for a Federal Reserve that’s trying to cool the economy without triggering a surge in unemployment.