Where is the US economy going: the chances of recession increase to 50%

The possibility of a growth decrease in the next 12 months is about 43%, according to 400 consultated between March 17-20.

Although unemployment remains low, most data shows that the US economy is slowing down, confirming data from other studies among business and users who worry that slowing or recession is a growing risk.

Federal Reserve President Jerome Powell He acknowledged fears, but still said the economy remained in general, noting « significant progress against goals over the last 2 years » « 

US Bureau of Economic Analysis

The combination of higher inflation and slow growth increases the risk of staging, which has not been observed since the early 1980s. Few economists believe that these times will be reproduced in the current environment. But there is a chance of changing policies in which the Fed will have to choose between growth stimulation and pricing.

In recent weeks, markets have been tense in anticipation of prospects. Bond Expert Jeffrey Gundlah Doubleline Capital told CNC that he sees the chances of a recession of 50% to 60%.

« At the heart of the unsolved question is that the US may be at risk of stagflation, in which growth slows down and inflation remains stable. »

The BBC’s latest survey for the four -month -old shows that 60% of companies’s general financial directors expect the United States to recession in the second half of the year.

User’s behavior

Consumer costs represent nearly 70% of the country’s GDP, said Economist Jeffrey Frankl of Kennedy Skul in HarvardS It emphasizes that consumption is one of the earliest signals and direct indicators of economic decline.

« Wholesale sales are like navigating a ship in a foggy ocean and trying to see where the harbor is – the first rocks, a harbinger of the land – these are wholesale sales, » Frankl said.

So far, statistics data show that sales are stable.

Loss of confidence

The Conference Board Consumer Trust indicator (CI) dropped by 7.2 points to 92.9, marking the fourth consecutive month of shrinkage. The values ​​are lower than the Dow Jones economists estimated for 93.5 points. Future expectations are for a drop of 9.6 points to 65.2, which is the lowest value of 12 years and well under 80, which is perceived as a signal of recession.

Recession or « detox »

However, history shows that recessions are expensive. The damage is never uniform, and the result, depending on the depth and duration of the recession, is unpredictable.

IMF does not provide a recession but admits delay

Who pays the bill

Reuters

The recession has a price. They reduce business profits, the stock prices fall, although they can then rise, as investors reduce their activity. Income is increasing, the budget deficit increases, as more people receive some social privileges and supplements.

One of the reasons for economic growth to be accelerated after the end of the pandemic restrictions was large -scale state support, both during the Trump first administration and former President Joe Biden. Both administrations have left behind huge budget deficits, which according to some may limit the government’s ability to respond in the event of an economic decline this time.

Usually, however, the most obvious characteristic of recession is the growing unemployment – a factor that casts the whole burden of the crisis on the people who have lost their work.