The Falling US Economy: Danielle DiMartino Booth Predicts a Recession Based on Labor Market Indicators

The US economy is facing a potential recession, according to QI Research CEO Danielle DiMartino Booth. Booth argues that a downturn has hit, with rising job losses and downside labor revisions being key indicators. 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. She used indicators developed by Goldman Sachs to support her argument that a recession was triggered in October of last year based on labor revisions through the third quarter of 2023.

Booth has long been skeptical of soft landing talk and believes that recent changes in severance packages are further evidence of the challenges facing the US economy. She noted that six-month severance packages offered in 2023 have dropped to 60 to 90 days currently, indicating a rise in job losses and recession risks. With these challenges looming, it seems likely that the US economy will continue to face challenges in the labor market.