Ex-Fed Insider Suggests US Likely in Recession
A former Fed advisor has indicated that the declining job market and increasing bankruptcy filings point to a downturn in the American economy. Read Full Article at RT.com.
TroibNews 
The downturn may have begun around last October, according to former Federal Reserve advisor Danielle DiMartino Booth, who spoke with CNBC on Monday. Her comments come amid a significant drop in world stock markets due to concerns about a weakening US economy.
A cyclical or "plain vanilla" recession, as described by Booth, is one of two types of demand-driven recessions, typically following periods of policy tightening aimed at addressing excess demand or inflation issues.
Booth, the CEO and chief strategist of Quill Intelligence, indicated that the recession likely started in October. She cited a weakening job market and a rise in Chapter 11 bankruptcy filings as evidence. Additionally, she noted that falling housing prices and an increase in apartment supply may suggest that this trend is set to continue.
The US economy experienced an unanticipated downturn in July, highlighted by a significant drop in hiring and a continued rise in the unemployment rate for the fourth consecutive month, largely attributable to higher interest rates affecting both businesses and households.
As reported by the Bureau of Labor Statistics on Friday, the unemployment rate rose to 4.3%, up from 4.1% the previous month—the highest rate since the Covid pandemic began in 2020.
The number of unemployed individuals in the US increased by 352,000, reaching 7.2 million, a stark contrast to the 5.9 million reported a year prior, when the jobless rate stood at 3.5%.
This report intensified worries that the Federal Reserve may have delayed too long in reducing interest rates, contributing to US recession fears that shook global markets on Monday.
Last Wednesday, the Fed decided to maintain its benchmark interest rate within the 5.25%-5.50% range, a level it has held for over a year. Fed Chair Jay Powell suggested that the first rate cut of the post-pandemic period could take place in September.
Booth remarked that while the Fed should not bear full responsibility for high inflation levels—calling interest rate policy a “blunt instrument”—it did play a significant role by holding over one-quarter of the mortgage-backed securities market following the pandemic, contributing to the current inflation rise.
Finally, she emphasized the role of artificial intelligence (AI) as a powerful tool for companies aiming to reduce costs, predicting that for the next six to 18 months, AI could become "a weapon of mass destruction" in terms of layoffs.
Max Fischer contributed to this report for TROIB News
A cyclical or "plain vanilla" recession, as described by Booth, is one of two types of demand-driven recessions, typically following periods of policy tightening aimed at addressing excess demand or inflation issues.
Booth, the CEO and chief strategist of Quill Intelligence, indicated that the recession likely started in October. She cited a weakening job market and a rise in Chapter 11 bankruptcy filings as evidence. Additionally, she noted that falling housing prices and an increase in apartment supply may suggest that this trend is set to continue.
The US economy experienced an unanticipated downturn in July, highlighted by a significant drop in hiring and a continued rise in the unemployment rate for the fourth consecutive month, largely attributable to higher interest rates affecting both businesses and households.
As reported by the Bureau of Labor Statistics on Friday, the unemployment rate rose to 4.3%, up from 4.1% the previous month—the highest rate since the Covid pandemic began in 2020.
The number of unemployed individuals in the US increased by 352,000, reaching 7.2 million, a stark contrast to the 5.9 million reported a year prior, when the jobless rate stood at 3.5%.
This report intensified worries that the Federal Reserve may have delayed too long in reducing interest rates, contributing to US recession fears that shook global markets on Monday.
Last Wednesday, the Fed decided to maintain its benchmark interest rate within the 5.25%-5.50% range, a level it has held for over a year. Fed Chair Jay Powell suggested that the first rate cut of the post-pandemic period could take place in September.
Booth remarked that while the Fed should not bear full responsibility for high inflation levels—calling interest rate policy a “blunt instrument”—it did play a significant role by holding over one-quarter of the mortgage-backed securities market following the pandemic, contributing to the current inflation rise.
Finally, she emphasized the role of artificial intelligence (AI) as a powerful tool for companies aiming to reduce costs, predicting that for the next six to 18 months, AI could become "a weapon of mass destruction" in terms of layoffs.
Max Fischer contributed to this report for TROIB News
