The US economy is already in recession and is following the same path as China in becoming dependent on debt, according to a veteran forecaster.

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The US economy already appears to be in recession, says Danielle DiMartino Booth.

QI Research's chief strategist highlighted weakness in the labor market, with layoffs increasing.

She said that put the economy in a difficult situation, especially with U.S. debt resembling that of China.

The U.S. economy is already in recession and could follow in China's footsteps as the government takes on an increasing amount of debt to support growth, said veteran forecaster Danielle DiMartino Booth.

QI Research's chief strategist has been saying for months that the U.S. economy is already in recession, despite Wall Street's optimistic outlook for a soft landing. But a slowdown is evident in the weakening labor market, Booth said, pointing to recent downward revisions to monthly job growth figures.

The job market remains strong by historical standards. The economy created 303,000 more jobs than expected in March, while the unemployment rate remained near a historic low.

But new payrolls were revised slightly downward for February, falling to just 270,000. Meanwhile, layoffs and unemployment have increased slightly in recent months, with the total number of layoffs standing at 1.7 million in February, according to the Bureau of Labor Statistics.

“These revisions are pushing us further and further from where we thought we were,” Booth said in a recent interview with Fox Business. “It seems like every time companies release their results, they do it with a slogan that says, 'Hey, we're going to lay off 2,000 people or 1,500 people or whatever.'”

Layoffs could end up increasing from 150,000 to 370,000 by the end of the year, Booth said in a previous interview.

Other economists also predict a weaker job market, increasing the risk of a recession. The economy could experience a hard landing by the end of the year and cause the unemployment rate to rise to 5%, David Rosenberg, a renowned economist, said recently.

The economy is already in a difficult position, especially considering the skyrocketing level of U.S. debt, Booth added. Taking on government debt makes the U.S. economy similar to China's, she said, where state-owned enterprises once accounted for as much as 60% of GDP, according to a 2019 estimate from FactSet.

“It’s not different one way or another,” Booth said of the similarities between the U.S. and Chinese economies. “Right now, the public sector is sucking the life out of the private sector.”

Booth added: “We need to spend less as a country to allow the private sector to really step in and stimulate the economy. »

The story continues

The federal debt balance hits a record high of $34.5 trillion, according to Treasury Department data. Experts say soaring debt levels could eventually trigger various problems for the economy, including higher inflation, greater market volatility and a lower quality of life for Americans.

Read the original article on Business Insider

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