What typically happens to nonfarm payrolls at the onset of a recession in the United States?

At the onset of a recession in the United States, nonfarm payrolls typically go down. This trend is indicative of a broader downturn in economic activity, where businesses often respond to declining demand and revenues by reducing their workforce. As unemployment rises, businesses may implement layoffs, resulting in a decrease in the number of jobs reported in the nonfarm payroll statistics.

Nonfarm payrolls are a key indicator used to assess the health of the labor market and the economy overall. During a recession, the contraction in economic activity leads to increased caution among employers, who may freeze hiring or terminate existing employees to cut costs. This ultimately translates into fewer jobs being created or retained, resulting in a downward trend in nonfarm payroll figures.

The other options suggest outcomes that are less aligned with typical economic behavior during recessionary periods. For example, an increase in nonfarm payrolls would contradict the very definition of a recession, where economic contraction is expected. A constant growth rate would also not reflect the usual trend observed during such economic downturns, as we typically see a clear negative impact on the labor market. Fluctuating payrolls, while possible, do not capture the prevailing trend of job losses that usually accompanies a recession.