- The US economy already appears to be in recession, according to Danielle DiMartino Booth.
- QI Research’s chief strategist highlighted weakness in the labor market, with layoffs increasing.
- She said this puts the economy in a precarious state, especially with U.S. debt already similar to China’s.
The U.S. economy is already in recession — and it could follow in China’s footsteps as the government takes on a growing amount of debt to support growth, according to veteran forecaster Danielle DiMartino Booth.
QI Research’s chief strategist has been warning for months that the U.S. economy is already in recession, despite Wall Street’s optimistic outlook for a soft landing. But a slowdown is already evident in the weakening labor market, Booth said, pointing to recent downward revisions to monthly job growth figures.
The job market remains strong by historical standards. The economy created 303,000 more jobs than expected in March, while the unemployment rate remained near a historic low.
But new payrolls were revised slightly downward for February, falling to just 270,000. Meanwhile, layoffs and unemployment have increased slightly in recent months, with the total number of layoffs standing at 1.7 million in February, according to the Bureau of Labor Statistics.
“These revisions are pushing us further and further from where we thought we were,” Booth said in a recent interview with Fox Business. “It seems like every time companies release their results, they do it with a message that says, ‘Hey, we’re going to lay off 2,000 people or 1,500 people, or whatever.’
Layoffs could end up rising from 150,000 to 370,000 by the end of the year, Booth predicted in a previous interview.
Other economists also predict a weaker job market, increasing the risk of a recession. The economy could experience a hard landing by the end of the year, causing the unemployment rate to rise to 5%, economist David Rosenberg recently predicted.
The economy is already in a difficult position, especially considering the skyrocketing level of U.S. debt, Booth added. Government debt makes the U.S. economy look precariously similar to China’s, she said, where state-owned enterprises once accounted for as much as 60% of the country’s GDP, according to a 2019 estimate of FactSet.
“There is no difference in shape or form,” Booth said of the similarities between the U.S. and Chinese economies. “Right now the public sector is sucking the life out of the private sector…We need to spend less as a country to let the private sector actually come out and run the economy.”
The federal debt balance hits a record $34.5 trillion, according to Treasury Department data. Rising debt levels could eventually trigger a range of problems for the economy, experts warn, including higher inflation, greater market volatility and a lower quality of life for Americans.
businessinsider
