US Economy May Be Heading Towards Recession, Experts Warn

America may already be in a "plain vanilla recession," says Danielle DiMartino Booth

AI may at first feel like a "weapon of mass destruction" when it comes to layoffs, according to economist DiMartino Booth. The U.S. may already be in a "plain vanilla recession," according to Danielle DiMartino Booth, CEO and chief strategist for Quill Intelligence and a former advisor to the Federal Reserve Bank of Dallas. DiMartino Booth explained how a weakening job market and increasing Chapter 11 bankruptcy filings signal that the U.S. is already in a recession. She believes it started sometime around last October. Additionally, declining housing prices and increasing apartment supply suggest this trend may continue, she said. Artificial intelligence is a key tool for employers looking to cut costs, with the highly regarded CFO Survey from the first quarter of the year showing that nearly 60% of companies overall are using AI. Of the largest companies, 84.2% are using it, up 10 percentage points from the prior quarter. "America's chief financial officers -- tasked as they are with controlling costs in an economic downturn -- have clearly demonstrated that AI will become a mainstay as chapter one of the rollout of this technology continues to play out, replacing warm bodies with technology," DiMartino Booth told CNBC. Currently, employers are adjusting as they discover how AI best fits into their business models. DiMartino Booth suggested that "for the next six to 18 months, AI is going to ... feel like a weapon of mass destruction." However, she also said, "there is going to be a much happier ending to AI," as the technology has the capability to revolutionize the health care and education systems. DiMartino Booth also said the Fed isn't entirely to blame for the high levels of inflation explaining that the "interest rate policy is a blunt instrument." However, she noted the central bank owned over one-quarter of the mortgage-backed securities market coming out of the post-pandemic era, giving its policies a hand in the run-up to the inflation U.S. consumers are feeling today.

US probably in recession - ex-Fed insider -- RT Business News

The downturn could have started sometime around last October, a former Federal Reserve advisor has said The United States may already be in a "plain vanilla recession," a former advisor to the Federal Reserve Bank of Dallas, Danielle DiMartino Booth, told CNBC on Monday. The statement comes as world stock markets nosedive over fears the US economy is weakening. A cyclical or plain vanilla recession is one of the two types of demand-driven recession. These typically follow periods of policy tightening that are aimed at staunching excess demand or inflation problems. According to DiMartino Booth, CEO and chief strategist for Quill Intelligence, the recession started sometime around last October. She pointed to a weakening job market and increasing Chapter 11 bankruptcy filings. Additionally, she said declining housing prices and increasing apartment supply suggest this trend may continue. The US economy suffered an unexpected setback in July as hiring fell sharply and the unemployment rate rose for the fourth straight month, with raised interest rates taking a toll on businesses and households. The jobless rate jumped to 4.3%, up from 4.1% the previous month, the Bureau of Labor Statistics reported on Friday. The figure is the highest since the onset of the Covid pandemic in 2020. The number of unemployed people across the US rose by 352,000 to 7.2 million, a notable increase from the 5.9 million registered a year earlier, when the jobless rate was 3.5%. Friday's report added further fuel to mounting concerns that the Federal Reserve has waited too long to cut rates. US recession worries roiled global markets on Monday. The Fed last Wednesday opted to keep its benchmark interest rate in the 5.25%-5.50% range, where it has been for more than a year. Fed Chair Jay Powell indicated that the first rate cut of the post-pandemic era could come in September. DiMartino Booth told CNBC the Fed is not entirely to blame for the high levels of inflation, claiming that the "interest rate policy is a blunt instrument." She noted however that it owned over one-quarter of the mortgage-backed securities market coming out of the post-pandemic era, giving its policies a hand in the run-up to the current inflation level. The former Fed insider also pointed to artificial intelligence (AI) as a key tool for employers looking to slash costs, suggesting that "for the next six to 18 months, AI is going to... feel like a weapon of mass destruction" when it comes to layoffs.