The ongoing slide in financial markets is now prompting one economist to declare that the United States is already in a recession, according to several key indicators.
Typically, an economy is only considered to be in a recession after two consecutive quarters of negative growth. The last time that happened was during the Covid-19 pandemic and the shock it caused in mass layoffs, business closures and the total meltdown of the global supply chain. But during a Monday appearance on CNBC, Neil Dutta — who is the head of economics at Renaissance Macro Research (RenMac) — told “Squawk on the Street” anchor Sarah Eisen that there were several telling signs that the U.S. economy was already in negative territory.
“I think we’re jumping into recession. You never just glide in,” Dutta said. “We’re going into it right now.”
The RenMac research head said there were three primary reasons for his characterization of a recession. He pointed to the slump in new home purchases due to persistently high interest rates, investment spending plummeting and an expected jump in unemployment which he believed was just around the corner given the impact of President Donald Trump’s tariffs.
“I don’t like playing this ridiculous game of, like, 50% over the next twelve months,” he continued. “We’re in it. We’re in it.”
As Dutta mentioned, the real estate market is indeed down, with CNBC reporting in February that new home sales hit a new record low. That drop came despite new home inventory increasing, suggesting that scarcity was not the reason for the drop in home buying. And investment spending is indeed dropping, as many investors have cited a fear that consumer spending is likely to contract in the coming months due to the cost of goods increasing as a result of Trump’s tariffs. And if consumer spending declines sharply enough, it will result in layoffs across multiple industries and an uptick in the unemployment rate.
Earlier this month, Trump paused the imposition of new tariffs on most of the world for 90 days. This was reportedly due to institutional investors dumping U.S. Treasury securities, which are typically considered one of the safest investments in the world. However, his tariffs on China remained in effect. He subsequently increased tariffs on Chinese imports to 145% after China announced retaliatory 125% tariffs on American-made products.
Source: Alternet / Digpu NewsTex