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They’ve been very depressed because of the interest rate lock, the housing lock. But those are the stated objectives, and again, shouldn’t be a surprise. These are the policies that were articulated during the presidential campaign. Bringing manufacturing back to the United States is another refrain. You know, as a lever, a lever to get other countries to pursue policies that the administration feel are in the best interests of the United States, you know, like fentanyl and immigration.

Since the Sahm Rule was triggered last week, she’s underscored that point, writing on Wednesday in Bloomberg News that she doesn’t believe the U.S. is in a recession. Her rule, she added, is just one of multiple indicators that have been «disrupted» by the unusual economy of the last four years. Analysts who spoke to ABC News said the economy could dip into a downturn but the outlook remains uncertain.

Consumer beliefs affect retail sales, said Menzie Chinn, a professor in the economics department at the University of Wisconsin. With rates at their highest in more than two decades, the Fed has a lot of room to cut, experts note. Economists and investors, meanwhile, are focused on the Federal Reserve’s next rate decision meeting on September 18. Chair Jerome Powell last month opened the door to a rate cut next month, on the condition that «we do get the data we hope to get,» meaning numbers showing that inflation continues to cool.

It comes as Nord Stream 1, the primary pipeline supplying natural gas to Europe from Russia, is shut down this week for maintenance, raising concerns that it could be turned off indefinitely due to ongoing disputes over Ukraine sanctions. However, he noted — not for the first time — that Europe is on the brink of what he calls a «war-cession,» with the fallout from the war in Ukraine piling economic pressure on the region, particularly as it pertains to energy and food shortages. The comments add to a chorus of voices who have suggested that the economy could be on the cusp of a recession. Exactly when that downturn might hit is harder to predict, however. El-Erian said he believed the U.S. economy would expand by between 1% and 1.5% this year, noting that this represented a “significant change in the growth outlook” when compared with the IMF’s projection of 2.7% U.S. growth made earlier this year.

It is typically an inventory correction, oil shock or other kind of shock that causes a recession. We are updating our call on the 10-year Treasury and expect it to average 3.75% in the current quarter and 3% in the second half of the year. Recession is our base case for this year, in which we expect the economy to contract by 0.8% in the first quarter, 1.2% in the second and 0.5% in the third. Single-family home building has held up well as builders have been able to use interest rate buy-downs and other incentives to maintain sales.

Economists, meanwhile, say that while the Sahm rule doesn’t appear to be accurate this time around in calling a recession, they are seeing rising risks the economy could slip into a contraction. The hiring cooldown hit a wide swath of industries, including manufacturing and the federal government. The overall unemployment rate of 4.2% continued to hover near a historically low level, but unemployment rose among Black workers, which can foretell job losses among other groups.

«That’s the firewall between recession and no recession, is the low layoffs,» he said. «So we’re not in recession, but I’d say the indicator that’s flashing reddest is jobs.» Save now on essential digital access to quality FT journalism on any device. However, New York Federal Reserve President John Williams downplayed these concerns, at an event hosted by Bloomberg, stating that the temporary factors like harsh winter weather and global uncertainty had skewed the data. Lutnick also defended Trump’s aggressive trade policies, arguing that they would ultimately benefit the US economy by»unleashing American wealth across the world.» Despite this, the New York Federal Reserve recently suggested the US could still experience healthy economic growth in the same quarter, intensifying the divide among economic experts.

• Supply shocks make a tradeoff between output and inflation worse, and they’re not something the central bank can make up for.
• Will they pull back on their spending or hold the line, or will they be willing to drop their saving rates sufficiently to maintain their current rates of spending?
• The Conference Board’s closely watched consumer confidence survey tumbled in April to its lowest level since 2020 and the University of Michigan’s consumer sentiment survey registered its largest three-month decline since 1990 from January to April.
• I mean, if California and New York weaken and start to contract, the national economy is going to go into recession.
• And the recently passed tax-and-spending package is expected to add trillions to the deficit.

Americans’ confidence in finding a new job is crumbling

In general, the longer you keep your money in the market, the better your chances of earning positive total returns. If you’re investing in an S&P 500 index fund and were to sell after one year, there’s a 27% chance you’d lose money, according to data from investment firm Capital Group. But by holding that investment for 10 years, there’s only a 6% chance of losing money when you sell.

The Real Economy

The Federal Reserve will cut its key interest rate by 25 basis points on us recession on the horizon when experts think it could hit September 17. If you want to do everything possible to protect your portfolio, your best bet is to invest regularly — no matter what the market is doing at the moment — and then hold your investments for at least a decade or so. But the move has been roundly criticized by Democratic lawmakers and certain Republicans, with many warning this sets a dangerous precedent for political interference in statistical reporting and will erode trust in the bureau’s future work.

The Conference Board’s closely watched consumer confidence survey tumbled in April to its lowest level since 2020 and the University of Michigan’s consumer sentiment survey registered its largest three-month decline since 1990 from January to April. But spending has held up, as March retail sales grew by 1.4% from January to February, according to a report released April 16 by the Census Bureau, better than the 1.2% month-over-month increase projected by economists. Employers added more jobs than forecasted in April as unemployment rate stood at 4.2%. Goldman forecasts unemployment will rise to 4.7% by year’s end, but the jobless rate has ranged between 4% and 4.2% since May 2024. The 4.2% unemployment rate sits well within the healthy historic norm.

The technical definition of a recession is two consecutive quarters of negative growth in gross domestic product, a comprehensive measure of all goods and services produced in a country. The U.S. just recorded its first quarter of negative GDP growth since 2022. While that estimate was likely skewed negatively by its methodology, including how it accounts for a surge in gold imports, some will likely say we have entered a recession if the second quarter agains registers a negative GDP. It’s a question that many of us are asking, given all of the uncertainty created by President Trump’s tariffs. The answer to that could well determine whether we go into recession or not. She served in the Obama administration and is now the chief economist for New Century Advisors.

• But by holding that investment for 10 years, there’s only a 6% chance of losing money when you sell.
• (The president says that Americans should expect a “period of transition.”) Meanwhile, the University of Michigan’s consumer sentiment index has fallen to its lowest level since November 2022.
• Traders on prediction markets — where people wager on such events as the likelihood of a recession — are increasingly betting on an economic downturn.
• Goldman cited the jump in the unemployment rate, noting that «even such a modest increase has been a reliable recession indicator in postwar U.S. business cycle history.»
• But so far, that gauge flashes a far lower likelihood of a recession than it did when it peaked last summer, inspiring a short-lived market selloff in August.

Construction, despite the boom in data center activity, is contracting. So we’re not in recession, but I’d say the indicator that’s flashing reddest is jobs. But a lot of other indicators are also signaling the economy is struggling. GDP growth in the first half of the year was just over 1 percent annualized. The states Zandi described as «treading water» include California and New York, heavyweights who together account for over a fifth of the nation’s GDP.

He added that cuts to the federal workforce by the Department of Government Efficiency (DOGE) were a «key factor» in the BLS revisions, given that government departments are often late in reporting payrolls to the bureau. «Any notion that the economic data misrepresents the reality of how the economy is performing is way off base,» Zandi wrote on Sunday. «The data always suffers big revisions when the economy is at an inflection point, like a recession. It’s thus not at all surprising that we are seeing big downward revisions to the payroll employment numbers.» Much of this data was eclipsed by Friday’s employment report from the Bureau of Labor Statistics (BLS).