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Former Fed insider claims America possibly in recession
(MENAFN) Danielle DiMartino Booth, former advisor to the Federal Reserve Bank of Dallas and current CEO of Quill Intelligence, expressed concerns to CNBC on Monday that the United States might already be experiencing what she termed a "plain vanilla recession." This assertion coincides with a global stock market downturn driven by apprehensions over the weakening United States economy.
DiMartino Booth explained that a plain vanilla recession, categorized as a demand-driven downturn, typically follows periods of policy tightening aimed at curbing excessive demand or addressing inflation concerns. She pointed to indicators suggesting that the recession could have started around October of the previous year. Key factors contributing to her assessment include a deteriorating job market, an uptick in Chapter 11 bankruptcy filings, and signs of declining housing prices coupled with an increasing supply of apartments.
The United States economy faced an unexpected setback in July, characterized by a significant decline in hiring and a rise in the unemployment rate for the fourth consecutive month. According to the Bureau of Labor Statistics, the unemployment rate rose to 4.3 percent , marking its highest level since the onset of the Covid-19 pandemic in 2020. This increase translated to 7.2 million unemployed individuals, up notably from 5.9 million a year earlier when the unemployment rate stood at 3.5 percent .
The disappointing jobs report has heightened concerns about the Federal Reserve's strategy, particularly regarding the timing of interest rate adjustments. Many observers believe that delayed rate cuts by the Fed may have exacerbated economic challenges, contributing to fears of a potential recession. These worries have reverberated through global financial markets, contributing to Monday's sharp declines across major indices.
As economists and policymakers assess the implications of recent economic indicators, the focus remains on the Fed's role in navigating the evolving economic landscape. Addressing these challenges effectively will be crucial in restoring confidence and stability to both domestic and international markets amidst ongoing uncertainties.
DiMartino Booth explained that a plain vanilla recession, categorized as a demand-driven downturn, typically follows periods of policy tightening aimed at curbing excessive demand or addressing inflation concerns. She pointed to indicators suggesting that the recession could have started around October of the previous year. Key factors contributing to her assessment include a deteriorating job market, an uptick in Chapter 11 bankruptcy filings, and signs of declining housing prices coupled with an increasing supply of apartments.
The United States economy faced an unexpected setback in July, characterized by a significant decline in hiring and a rise in the unemployment rate for the fourth consecutive month. According to the Bureau of Labor Statistics, the unemployment rate rose to 4.3 percent , marking its highest level since the onset of the Covid-19 pandemic in 2020. This increase translated to 7.2 million unemployed individuals, up notably from 5.9 million a year earlier when the unemployment rate stood at 3.5 percent .
The disappointing jobs report has heightened concerns about the Federal Reserve's strategy, particularly regarding the timing of interest rate adjustments. Many observers believe that delayed rate cuts by the Fed may have exacerbated economic challenges, contributing to fears of a potential recession. These worries have reverberated through global financial markets, contributing to Monday's sharp declines across major indices.
As economists and policymakers assess the implications of recent economic indicators, the focus remains on the Fed's role in navigating the evolving economic landscape. Addressing these challenges effectively will be crucial in restoring confidence and stability to both domestic and international markets amidst ongoing uncertainties.
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