More signs that the U.S. economy is beginning to collapse, further suggesting a recession may be imminent.
Financial blog Zero Hedge pointed to more signs that the U.S. economy is beginning to collapse, further suggesting that a recession may be imminent.
In the past week, in addition to Target and Walmart plunging after earnings reports missed Wall Street’s expectations, several other indicators that the U.S. economy is heading for a recession have also emerged.
For example, U.S. household debt hit a record high as rising gasoline and food prices weighed on U.S. consumers, according to foreign media reports. Not only that, but rising mortgage rates are also squeezing the budgets of U.S. consumers, while U.S. businesses large and small face high costs from rising raw materials.
The housing downturn has also dragged down the U.S. economy. U.S. mortgage rates climbed at the fastest pace in nearly four years, reports say. Jerry Konter, president of the National Association of Home Builders, said:
“The performance of the housing market is indicative of what business cycle we are in right now. Now, the housing market is starting to shut down.”
Doug Duncan, chief economist at Fannie Mae (FNMA, the Federal National Loans Association, founded by the Housing Administration in 1938), expects a “moderate recession” in the U.S. economy. Duncan also expects the U.S. unemployment rate to rise to 4.4% in 2023.
Goldman Sachs analyst Jan Hatzius concluded:
“Consumer borrowing supports consumption in the short term, but ultimately will not be a sustainable source of significant consumption growth. As a result, U.S. consumption will gradually slow down in the future.”
Consumption cannot be guaranteed by itself, how can the economy be immune to itself?
Ethan Harris, head of global economic research at Bank of America, said:
“I don’t think there’s a completely benign soft landing for the U.S. economy right now: either weakness or recession.”
While many economists believe the U.S. economy has sufficient momentum and demand to overcome uncertainty and remain stable by the end of the year, the outlook for the U.S. economy next year is not rosy.
Last week, for example, Michael Feroli, chief U.S. economist at JPMorgan, projected growth in the U.S. economy would slow to 2.4% in the second half of this year and 1% in the second half of 2023. Coincidentally, last week, Goldman Sachs economists also lowered their forecasts for the U.S. economy in 2023.
Mark Zandi, chief economist at Moody’s Analytics, one of the leading credit rating agencies in the United States, believes that the U.S. economy may end up getting worse:
“We see a 33.3% chance of a recession in the next 12 months, and a nearly 50% chance of a U.S. recession in the next 24 months.”
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