Every CEO 'Thinking About Layoffs' as Over 1M Jobs Under Threat Next Year

One of the country's top bankers said that every CEO in the United States is currently thinking of laying off employees, cutting hiring, or dramatically reducing investing as a result of higher interest rates.

Far Point Acquisition Corp. CEO Thomas Farley said Monday on CNBC that though the Federal Reserve had "no choice, certainly over the last six months, to keep raising rates to the point where the economy cools dramatically," the surge in interest rates is pushing companies to shed employees next year.

"Every CEO I talk to right now...every single one is thinking about layoffs, cutting hiring or dramatically reducing investment," Farley said, noting that the labor market is going "ice cold."

"I think the Fed is behind the curve," Farley added. "Now it's the time to act, as opposed to six months from now."

Farley's opinion is one that is shared by many analysts and experts looking at the U.S. economy. Many are predicting that the U.S. labor market will cool down significantly in the next year, as high interest rates are expected to drive unemployment up.

In November (the latest data available) unemployment in the U.S. was at 3.7 percent, unchanged from the previous month and largely within market expectations, according to the U.S. Bureau of Labor Statistics.

Since March, the labor market has remained tight between the narrow range of 3.5 to 3.7 percent, with unemployment reaching the 29-month low of 3.5 percent in September.

The tight labor market has been said to be contributing to the inflationary pressure on the U.S. economy. But the recent drop in employment—though still within the range experienced in the past eight months—indicates that the U.S. labor market is moving in the direction of cooling.

The number of unemployed Americans rose by 48,000 to 6.01 million last month, while the number of employed dropped by 138,000 to 158.5 million.

This number could jump even further if, as predicted by the Federal Reserve, unemployment surges to 4.6 percent next year as a result of the central bank's efforts to clamp down on inflation. For unemployment to reach such a height next year, it would mean that over a million Americans would lose their jobs.

This is the Federal Reserve's worst-case scenario, but many analysts do expect thousands of Americans to lose their jobs next year.

According to finance and insurance company Fitch Ratings, the current imbalance between labor supply and labor demand—with labor demand exceeding supply by around 5 million—won't resist the economic downturn expected in 2023, which is expected to lower labor demand through job losses and fewer job openings.

"The lagged impact of aggressive Fed tightening, the drag on real wages from high inflation, and knock-on impacts from the downturn in Europe will drive the U.S. economy into recession territory next year—with the unemployment rate increasing to 4.7 percent at the end of 2023, and peaking at 5.3 percent in 2024," said Olu Sonola, head of U.S. Regional Economics at Fitch Ratings.

"As a result, the job openings rate...is expected to decline from the current rate of 6.5 percent to 5.2 percent in 2024, reducing job openings by 2.1 million. This would reduce the job openings to unemployment ratio to approximately 1.0 in 2024 from its currently elevated level of 1.86."

Bank of America has also warned against job losses in the next year, writing in its latest market and economic forecast that the U.S. labor market might collapse in 2023.

"Bears (like us) worry unemployment in 2023 will be as shocking to main Street consumer sentiment as inflation in 2022," BofA Chief Investment Strategist Michael Hartnett said.