As per QI Research CEO Danielle DiMartino Booth, the US economy may already be experiencing a recession. Booth stated that a downturn has hit, with rising job losses and downside labor revisions being key indicators. She argues that a recession was triggered in October 2023 based on one unemployment indicator.
Booth pointed out the significant job loss announcements in May, noting a major pickup in job cuts. She has long been skeptical of soft landing talk and used indicators developed by Goldman Sachs to support her argument. According to these indicators, a recession was triggered in October of last year based on labor revisions through the third quarter of 2023.
Recent data has continued to paint a bleak picture of the labor market, with April’s job report delivering fresh weaknesses. Nonfarm payrolls added significantly below estimates, and unemployment ticked up slightly to 3.9%. Booth noted an acceleration of job cut announcements, with analysts projecting rising recession risk and a potential hard landing by the end of the year.
Booth also highlighted changes in severance packages, noting a drop from six to nine-month packages offered in 2023 to 60 to 90 days currently. With job losses on the rise and recession risks looming, the US economy faces challenges that could further impact the labor market.
