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It'll certainly depend on the size of the firm, but the larger you go and the more PE-oriented the structure becomes, the more you'll see an emphasis on interfirm competition. I do understand his reservations about being able to stay. I work at the RE arm of an MF PE fund and can say that while our specific fund's job security isn't a notable concern, you can feel tensions rising among some members who may be down on their personal contributions per quarter. 

Middle management is usually the first to go in stagnant economic periods. While ASO's and S-ASO's certainly aren't exempt from feeling the brunt of termination, I genuinely think that VPs are more concerned. So there's that, but always something to consider when switching. 

I will say - for better or worse, brand name does matter if he did happen to get cut. If he scores a gig at a reputable top-rated developer or a well-known REPE fund, his job prospects after that gig will be a LOT better. Development -> PE is a big jump. I made that jump myself, and can confidently say that if I wanted to leave my current shop, I'd have no issues securing nearly any gig that I wanted after here. That's not me trying to brag, but it's how a lot of this game is played.

You mentioned if the firm would "cut new hires" throughout a consistent market downtrend. The truth is this - most firms know what they're doing. As you hypothesized, this would most likely be factored into the hiring process. Any shop with half a brain would see no upside to taking the time, effort, and financial means to hire a bunch of new faces, and then proceed to immediately cut them. This is all variable to an extent, and some firms may do things in different ways, but I do think that job security in this market is just so complex and based on a number of things. If he has the skills to get the gig, I'd hope that he has the drive and discipline to prove to upper management that he can keep it, regardless of market trends. Hope this helps.