Danielle DiMartino Booth, the chief strategist of QI Research, believes that the US economy is already in a recession. She points to weaknesses in the job market, such as rising layoffs, as evidence of this downturn. Despite Wall Street’s optimism for a soft landing, Booth argues that the economy is already showing signs of a decline, similar to what China experienced as it took on increasing amounts of debt to sustain growth.
Although the job market has remained relatively strong by historical standards, with 303,000 jobs added in March and a low unemployment rate, there are concerns about downward revisions in monthly job growth figures and increasing layoffs. In February, new payrolls were revised lower to just 270,000, and total discharges rose to 1.7 million. Booth warns that layoffs could continue to increase throughout the year, potentially reaching 370,000 by the end of the year, which could further weaken the labor market and increase the risk of a recession.
David Rosenberg, another economist, also sees a weaker labor market and predicts a potential hard landing for the economy by the end of the year, which could cause the unemployment rate to surge to 5%. These factors, along with the growing US debt levels, put the economy in a precarious position. Booth notes that the US debt levels are reaching record highs, currently at $34.5 trillion, which could lead to various economic problems such as higher inflation, market volatility, and a lower quality of life for Americans.
Booth draws parallels between the US and China, where state-owned enterprises once accounted for a significant portion of GDP. She argues that the growing government debt in the US is reminiscent of China’s economy and believes that the public sector is draining resources from the private sector. To improve the situation, Booth suggests that the country needs to reduce spending and allow the private sector to drive economic growth.
Overall, Booth’s assessment of the US economy paints a grim picture, with indications of a recession already present. The weaknesses in the job market and the increasing US debt levels raise concerns about the economy’s stability and the potential challenges it may face in the near future. As economists like Booth and Rosenberg warn of a possible hard landing and rising unemployment rates, it remains to be seen how the US government and private sector will navigate these turbulent economic waters.
