A recession is looming in 2024

A recession is looming in 2024, according to Citi.fake images

  • The US economy is headed for a recession by mid-2024, Citi’s chief economist said.

  • The economic data, while strong on the surface, actually hints at signs of decline, as seen in the latest jobs report.

  • Credit card delinquency rates are also rising and retail sales data has shown a bigger-than-expected drop in activity.

The dream of the soft landing is over. Instead, the US economy is headed for a recession in mid-2024, according to Citi.

“There is a very powerful and seductive narrative around a soft landing and we just don’t see it in the data,” Citi chief economist Andrew Hollenhorst said in an interview with CNBC.

On the surface, the data looks excellent: The economy is benefiting from historically low unemployment, strong consumer spending, and robust GDP growth.

But more things happen with numbers than meets the eye.

“The question is where are these forward-looking indicators that show us where we’re going,” Hollenhorst said.

One place where the economy is showing weakness is the labor market. January saw a spectacular jobs report, adding 353,000 jobs to the economy, but look beneath the surface and the number of hours worked is falling. The number of full-time workers also declined and sectors such as the restaurant industry have stalled in hiring.

“That’s the key to economics: what happens in the labor market,” Hollenhorst said. “If the unemployment rate stays low, people continue to spend, the economy holds up. But if that unemployment rate starts to rise, which we think it will… that’s the sign that we’re going to have a further decline.” important in the American economy.”

Hollenhorst also stated that inflation remains too high. This week’s CPI data showed a bigger-than-expected rebound in monthly inflation, dragging stocks lower on Tuesday.

Credit card delinquency rates are also increasing. Prominent economist David Rosenberg has said that a consumer credit default cycle has already arrived, with one in twelve credit card holders failing to make their payments.

“There may be some consumers with excess savings, but those consumers exposed to floating credit card debt with higher rates now, who have been tapping into that excess savings to continue consuming, continue to spend, now those delinquencies are increasing,” he said. Hollenhorst.

And consumer weakness is also being exposed in retail sales figures. Thursday’s release showed a significant drop in activity, recording a 0.8% drop in January.

Hollenhorst is not alone in his pessimism. Apollo Management’s Torsten Sløk recently echoed the sentiment that a soft landing is now the “least likely” scenario.

Read the original article on Business Insider

By Sam