Danielle DiMartino Booth, CEO of QI Research, is not optimistic about the future of the US economy. According to Booth, rising job losses and downward labor revisions indicate that a recession has already begun. She has been warning of a recession for some time, citing data from Goldman Sachs that shows when the unemployment rate’s three-month average increases by 0.3 percentage points from its 12-month low, a recession is likely.
In October of last year, this indicator was triggered with 192,000 job losses reported through the third quarter of 2023. However, fresh data continues to show a worsening labor market environment, with April’s job report indicating a significant slowdown in nonfarm payrolls added. Unemployment also rose slightly to 3.9%, indicating further weakness in the job market.
Booth pointed out that layoffs are increasing, with severance packages expected to decrease from 60 to 90 days, compared to the six to nine-month packages offered in the past. Other analysts are also projecting a rising risk of recession, with economist David Rosenberg warning of a potential hard landing by the end of the year. This could lead to a surge in unemployment rates to 5%.
Despite these challenges, Booth believes that there is still hope for recovery if policymakers act quickly and decisively to address the root causes of the economic downturn.
