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The signs that the U.S. economy is starting to fall apart are rising to the surface, further indicating that a recession is likely on its way.
In addition to both Target and Walmart plunging this past week on earnings reports that missed Wall Street’s expectations, other indicators that the country is heading toward recession are also starting to surface.
For example, American households are taking on “record amounts of debt”, according to BNN Bloomberg , as higher prices make it tougher for the consumer to pay for staples like gasoline and food. Mortgage rates on the rise are also squeezing the budgets of consumers while businesses both big and small grapple with increased raw material costs.
Ethan Harris, head of global economics research at Bank of America, told Bloomberg: “I don’t think you can have a completely benign soft landing of the economy at this point. We’re either going to have a weak economy or a recession.”
The report notes that many economists believe there is enough momentum and demand in the economy to make it through the end of this year without beginning to falter. But the outlook isn’t as rosy for next year.
For example, JPMorgan Chase & Co. chief US economist Michael Feroli said last week that he sees growth falling to 2.4% in the second half of this year before moving to 1% in the second half of 2023. Economists at Goldman Sachs also downgraded their 2023 outlook last week. Moody’s Analytics chief economist Mark Zandi thinks things could wind up being much worse: “We put the odds that the economy will suffer a downturn beginning in the next 12 months at one in three with uncomfortable near-even odds of a recession in the next 24 months.”
“You can still have quite a strong labor market if unemployment were to move […]
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