Economy

US Recession Is Already Here, Economy Following China’s Path: Forecaster


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  • The US economy already looks like it’s in a recession, according to Danielle DiMartino Booth.
  • The chief strategist of QI Research pointed to weakness in the job market, with layoffs rising.
  • She said that puts the economy in a precarious state, especially with US debt-taking already looking similar to China’s.

The US economy is already in a downturn — and it could be following in the footsteps of China as the government assumes a growing amount of debt to prop up growth, according to veteran forecaster Danielle DiMartino Booth.

The chief strategist of QI Research has warned for months that the US economy is already in a recession, despite Wall Street’s upbeat outlook for a soft-landing. But a downturn is already evident in the weakening job market, Booth said, pointing recent downward revisions in monthly job growth figures.

The job market remains on solid footing by historical standards. The economy added a more-than-expected 303,000 jobs in March, while the unemployment rate remained near a record-low. 

But new payrolls were revised slightly lower for the month of February, falling to just 270,000. Meanwhile, layoffs and unemployment have inched higher in recent months, with total discharges rising to 1.7 million in February, according to the Bureau of Labor Statistics.

“These revisions, they keep pushing us back further and further from where we thought we were,” Booth said in a recent interview with Fox Business. “It seems like every time companies report their earnings, they’re doing it with a kicker that says hey, we’re going to lay off 2,000 people or 1,500 people or whatever it is.”

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 foresee a weaker labor market, which raises the risk of a recession. The economy could enter a hard-landing by the end of the year, causing the unemployment rate could surge to 5%, top economist David Rosenberg recently predicted.

The economy is already in a rocky position, especially when considering ballooning US debt levels, Booth added. Government debt-taking makes the US economy look precariously similar to China’s, she said, where state-owned enterprises once accounted for as much as 60% of the nation’s GDP, according to a 2019 estimate from FactSet.

“It is not different in any way shape or form,” Booth said on the similarities between America’s and China’s economies. “Right now the public sector is sucking the life out of the private sector … We have to spend less as a country to let the private sector really come out and drive the economy.”

The federal debt balance is at all-high of $34.5 trillion, according to Treasury Department data. Ballooning debt levels could eventually spark an array of problems for the economy, experts have warned, including higher inflation, greater market volatility, and a lower quality of life for Americans.



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